Quanome Technologies, Inc 10-K for FY2026
Quanome Technologies, Inc. (QNME)
About this 10-K
Quanome Technologies, Inc filed this 10-K on September 25, 2026, covering the fiscal year ended June 30, 2026 (FY2026).
Headline figures
Fiscal year ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $5.85M
- up 111.8% from $2.76M a year earlier
- Net loss
- $9.48M
- compared with a net loss of $5.25M a year earlier
- Diluted EPS
- -$0.36
- compared with -$0.69 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the fiscal year 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.) |
(Address of principal executive offices, including zip code)
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Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
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Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by checkmark 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
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Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The Nasdaq Stock Market LLC on December 31, 2025, the last business day of the Registrant’s most recently completed second fiscal quarter, was $
As of September 22, 2026, the Registrant had
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
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EXPLANATORY NOTE
As used in this Annual Report on Form 10-K, unless otherwise indicated or the context otherwise requires, references to:
| ● | “ABL” or “ABL Chicago” refers to American Bear Logistics Corp., an Illinois corporation and formerly a wholly owned subsidiary of Quanome, the disposal of which was completed on February 12, 2026; |
| ● | “AI” refers to artificial intelligence; |
| ● | “API” refers to application programming interface; |
| ● | “China” or the “PRC” refers to the People’s Republic of China, including the Hong Kong Special Administrative Region and the Macau Special Administrative Region; provided, however, that because Hong Kong and Macau have separate legal systems, references to PRC laws and regulations and legal or regulatory matters relating to our operations in the PRC refer to those applicable to our operations in mainland China, unless otherwise specified; |
| ● | “compute capacity” means computing resources made available for processing, inference or other computational workloads, including resources provided through servers, GPUs and related infrastructure; |
| ● | “GPU” means graphics processing unit; |
| ● | “Hupan Pharmaceutical” refers to Hupan Pharmaceutical (Hubei) Co., Ltd., a PRC limited liability company in China and a wholly owned subsidiary of Sichuan Hupan; |
| ● | “model” or “AI model” refers to an artificial intelligence or machine-learning model deployed or used in connection with the AI compute capacity or managed inference services; |
| ● | “Quanome,” “the Company,” “we,” “us,” and “our” refer to Quanome Technologies, Inc., formerly known as Lakeside Holding Limited, together with its consolidated subsidiaries; |
| ● | “Quantum Nexus” refers to Quantum Nexus Technologies Ltd., a Cayman Islands company incorporated on May 15, 2026 and a subsidiary of Quanome; |
| ● | “RMB” and “Renminbi” refer to the legal currency of China; |
| ● | “Sichuan Hupan” refers to Sichuan Hupan Jincheng Enterprise Management Co., Ltd., a PRC limited liability company in China and a wholly owned subsidiary of Quanome; |
| ● | “upstream providers” refers to third-party suppliers, data center operators, hosting providers, hardware vendors, software providers and other service providers supporting the Company’s AI computing infrastructure or related services, if any; |
| ● | “US$,” “U.S. dollars,” “$,” and “dollars” refer to the legal currency of the United States; and |
| ● | “XDT” refers to XDT Infrastructure I, LLC, a Delaware limited liability company incorporated on September 10, 2026, and an indirect subsidiary of Quanome. |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this report, including statements regarding guidance, our future results of operations or financial condition, our future stock repurchase programs or stock dividends, business strategy and plans, user growth and engagement, product initiatives, objectives of management for future operations, and advertiser and partner offerings, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “going to,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. We caution you that the foregoing may not include all of the forward-looking statements made in this report.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Annual Report on Form 10-K primarily on our current expectations and projections about future events and trends, including our financial outlook, macroeconomic uncertainty, geo-political conflicts, and pandemics, that we believe may continue to affect our business, financial condition, results of operations, and prospects. These forward-looking statements are subject to risks, uncertainties, and other factors, including among other things:
| ● | changes in the competitive environment, due to macroeconomic conditions or otherwise, or damage to our reputation; |
| ● | fluctuations in currency exchange, interest or inflation rates that could impact our financial condition or results; |
| ● | changes in our accounting estimates and assumptions on our financial statements; |
| ● | the impact of, and potential challenges in complying with, laws and regulations of the jurisdictions in which we operate, including export control, economic sanctions, data protection, cybersecurity and other requirements applicable to our developing AI compute capacity, managed inference and quantum-related activities, particularly given the possibility of differing or conflicting laws and regulations, or the application or interpretation thereof, across such jurisdictions; |
| ● | uncertainties regarding our ability to develop, commercialize and generate revenue from our AI compute capacity, managed inference and quantum-related activities, including our ability to attract customers and establish commercially viable service offerings; |
| ● | our ability to obtain, deploy and maintain sufficient GPUs, servers, data center capacity and other computing resources on acceptable terms, including through third-party suppliers and infrastructure providers; |
| ● | changes in export control or other regulatory requirements that could restrict our ability to acquire, deploy or provide access to advanced computing equipment, software, technology or services to particular customers, users or jurisdictions; |
| ● | uncertainties relating to the performance, compatibility, availability and reliability of the hardware, software, AI models and other technologies used in connection with our AI-related activities; |
| ● | failure to protect intellectual property rights or allegations that we have infringed on the intellectual property rights of others; |
| ● | the failure to retain, attract and develop experienced and qualified personnel; |
| ● | the effects of natural or man-made disasters; |
| ● | any system or network disruption or breach resulting in operational interruption or improper disclosure of confidential, personal, or proprietary data, and resulting liabilities or damage to our reputation; |
| ● | our ability to develop, implement, update and enhance new technology; |
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| ● | the actions taken by third parties that perform aspects of our business operations and client services; and |
| ● | our ability to continue, and the costs and risks associated with, growing and developing our business, and entering into new lines of business or products. |
Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report on Form 10-K. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Annual Report on Form 10-K. And while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Annual Report on Form 10-K relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this report to reflect events or circumstances after the date of this report or to reflect new information or the occurrence of unanticipated events, including future developments related to geo-political conflicts, pandemics, and macroeconomic conditions, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, dispositions, joint ventures, restructurings, legal settlements, or investments.
Investors and others should note that we may announce material business and financial information to our investors using our filings with the U.S. Securities and Exchange Commission, or SEC, and press releases. We encourage investors and others interested in our company to review the information that we make available through the aforementioned channels.
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PART I
Item 1. Business.
Overview
Our business currently consists of three principal areas of focus: (i) our established, revenue-generating pharmaceutical distribution operations through Hupan Pharmaceutical; (ii) our recently initiated strategic focus on quantum-related and certain other advanced technology activities, which remains in the development and evaluation stage and has not generated revenue as of the date of this report; and (iii) our recently initiated efforts to provide dedicated AI compute capacity and managed inference services, which remain in the preliminary stage and have not resulted in executed customer contracts or generated revenue as of the date of this report.
Prior to February 12, 2026, in addition to engaging in the distribution of pharmaceutical products through Hupan Pharmaceutical, we also operated as a U.S.-based integrated cross-border supply chain solutions provider with a strategic focus on the Asian market. On February 12, 2026, we transferred the operations of ABL Chicago to an unrelated third party, which obtained operational control and substantially all economic interests associated with the business. Following the transfer, we ceased substantive involvement in ABL Chicago’s cross-border freight forwarding and logistics business.
Our revenue from continuing pharmaceutical operations was primarily derived from selling infusion products, foods for special medical purposes, and specialty pharmaceuticals to hospitals, pharmaceutical distributors and other healthcare providers.
The Company is evaluating opportunities to reposition its business from traditional pharmaceutical distribution services toward quantum-related technologies and applications, including those involving quantum computing, artificial intelligence, advanced simulation and intelligent systems. The Company intends to conduct these activities through its subsidiary, Quantum Nexus. As part of this strategic initiative, the Company is evaluating and developing computational capabilities through Quantum Nexus that may have applications across various industries, including therapeutic discovery, healthcare, advanced materials, energy and cybersecurity. The Company may also pursue collaborations, acquisitions or other strategic transactions involving technology providers, laboratories, research teams and other parties engaged in these or related fields. As of the date of this report, the Company has not entered into any definitive agreement with respect to any such transaction, and there can be no assurance that any transaction will be consummated or, if consummated, as to its timing or terms. As of the date of this report, the Company has not generated any revenue from these activities.
To align with this strategic direction, effective August 3, 2026, the Company changed its corporate name from Lakeside Holding Limited to Quanome Technologies, Inc. Beginning with the opening of trading on August 4, 2026, the Company’s common stock began trading on the Nasdaq Capital Market under the Company’s new corporate name and the new ticker symbol “QNME.”
In addition to our initiatives in quantum-related technologies and applications, the Company is actively exploring the deployment of dedicated AI compute and inference capabilities. Beginning in September 2026, the Company, through its indirectly wholly owned subsidiary, XDT Infrastructure I, LLC, a Delaware limited liability company (“XDT”), commenced activities relating to the provision of artificial intelligence compute capacity and managed inference services. Under this business model, the Company’s subsidiary procures, owns and operates servers and related computing infrastructure for its own account, and makes capacity on that infrastructure available to customers as a service. Capacity allocated to a customer is logically and operationally segregated from capacity allocated to other customers, with the level of segregation depending on the applicable customer arrangement. Customers may specify the artificial intelligence models to be deployed on the capacity allocated to them, subject to technical compatibility, licensing and other applicable requirements, as well as the Company’s operation of the underlying infrastructure. XDT’s role is primarily to provide and operate the underlying computing infrastructure and managed inference environment. As of the date of this report, the Company does not plan to develop or train proprietary AI models and does not use customer-provided content to train models unless separately authorized by the applicable customer.
Our Solutions and Services
Pharmaceutical Distribution
Subsequent to the disposal of ABL Chicago, substantially all of our business is operated through Hupan Pharmaceutical. Our current operations are positioned in the midstream segment of the pharmaceutical industrial ecosystem, operating between upstream pharmaceutical manufacturers and downstream medical end customers. We do not manufacture the products that we distribute. We source products from multiple manufacturers and suppliers, and distribute them primarily to hospitals, pharmaceutical distributors and other healthcare providers. Our principal product categories currently include infusion products, foods for special medical purposes, and specialty pharmaceuticals.
Our distribution activities generally involve identifying products suitable for our customer base, coordinating procurement from manufacturers and suppliers, arranging orders and facilitating delivery through logistics and warehousing service providers. Our ability to conduct these activities depends on our relationships with manufacturers, suppliers, agents, customers and other service providers involved in the distribution process.
We conduct sales primarily through agents who assist with customer development, order coordination and ongoing customer relationships. Our sales process may involve hospital procurement procedures, distributor purchase orders, government or regional bidding programs and other applicable procurement arrangements. During the fiscal year ended June 30, 2026, we recognized revenue from more than 60 customers, approximately four of whom accounted for more than 10% of our total revenue each.
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Changes in procurement prices, bidding cycles, hospital demand, government price controls, healthcare reforms, and product availability may lead to fluctuations in our revenue and gross profit margins. In addition, market price competition and participation in government procurement programs may compress profit margins. Because profitability varies among our product categories, adjusting the revenue mix of our product offerings may partially offset such margin pressure.
Meanwhile, we expect to capture additional business growth opportunities and access new business segments in response to industry developments, such as population aging, increased sales volume of innovative and biologic drugs, rising demand for hospital supply, processing and distribution services, expansion of primary medical institutions and direct-to-patient specialty pharmacies, growing demand for professional pharmaceutical logistics services, and consolidation in the pharmaceutical distribution industry. Our ability to pursue these opportunities will depend on, among other factors, customer demand, regulatory requirements, supplier relationships, available capital and our operational capabilities.
Competition
The pharmaceutical distribution industry in China is competitive, with participants operating across the upstream, midstream and downstream segments of the pharmaceutical supply chain. We may compete with national and regional pharmaceutical distributors, wholesalers, specialized distribution and logistics service providers and other companies offering similar products or services. Competition is generally based on factors including product availability and breadth, pricing, supplier and customer relationships, access to hospitals and other healthcare institutions, geographic coverage, procurement and bidding capabilities, logistics and fulfillment capabilities, regulatory qualifications, financial resources, service quality and reputation. Certain competitors may have greater financial resources, broader distribution networks, stronger purchasing power or more established supplier and customer relationships than we do. Our ability to compete depends on, among other things, our ability to maintain relationships with suppliers and customers, secure suitable products on commercially acceptable terms, provide reliable services and respond to changes in market demand and applicable healthcare and procurement policies.
Sales and Marketing
We market and sell products primarily through our sales personnel and agents, who are responsible for customer development, order coordination and maintaining relationships with existing and prospective customers. Our sales and marketing efforts are focused on maintaining long-term relationships with existing customers, understanding their product and procurement needs, identifying potential new customers and expanding sales opportunities within our existing customer base.
Seasonality
We have not experienced material seasonality in our pharmaceutical distribution business, although our results may fluctuate from period to period due to procurement cycles, customer demand, product availability and other factors.
AI Compute Capacity and Managed Inference Services
Beginning in September 2026, the Company, through its indirectly wholly owned subsidiary, XDT Infrastructure I, LLC, a Delaware limited liability company, commenced activities relating to the provision of artificial intelligence compute capacity and managed inference services. These activities remain in an early stage and have not resulted in executed customer contracts or generated revenue as of the date of this report.
Under this business model, the Company’s subsidiary procures, owns and operates servers and related computing infrastructure for its own account, and makes capacity on that infrastructure available to customers as a service. Capacity allocated to a customer is logically and operationally segregated from capacity allocated to other customers, with the level of segregation depending on the applicable customer arrangement. Customers may specify the artificial intelligence models to be deployed on the capacity allocated to them, which may include customer-provided or appropriately licensed third-party models, subject to technical compatibility, licensing and other applicable requirements, while XDT operates the underlying computing infrastructure and managed inference environment.
The Company’s current business model is generally structured around infrastructure capacity. XDT manages the underlying servers, hardware environment and related operational infrastructure, deploys or supports deployment of customer-selected models, and makes the resulting inference capacity available to customers through a managed application programming interface, or API. Customers are generally entitled to the outputs generated by the capacity allocated to them during the applicable service period.
The Company’s principal service commitment under this model is focused on the availability and operation of the dedicated computing infrastructure rather than a guaranteed amount of token output, throughput or latency. Actual token generation and inference performance may vary depending on a number of factors, including the hardware configuration, model architecture, model size, software stack, customer workload, networking conditions and other technical factors. Accordingly, the Company does not currently intend to guarantee a specified quantity of tokens or a particular level of model performance unless otherwise expressly agreed with a customer.
The Company expects this business to generate revenue primarily through fees for compute capacity and related managed infrastructure services, which may include server operation, hosting, model deployment support, API access, monitoring and related technical services. The Company may in the future expand the scope of these services to include additional model optimization, inference management, software orchestration or other AI infrastructure services, depending on customer demand and the availability of suitable computing resources. As of the date of this report, the Company does not plan to develop or train proprietary AI models and does not use customer-provided content to train models unless separately authorized by the applicable customer.
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Depending on the applicable customer arrangement and the infrastructure available from upstream providers, customer workloads may be deployed either on dedicated capacity with physical segregation or on shared infrastructure with logical segregation. In a dedicated configuration, the computing resources allocated to a customer may be deployed on dedicated nodes, GPUs and local storage, and may also be housed in dedicated racks or cages with separate network and storage resources and applicable physical access controls. In a shared configuration, customer workloads may operate on shared underlying hardware but are segregated through measures such as separate credentials, resource quotas, logging and defined storage scopes. The applicable segregation model is determined by the relevant customer agreement and available infrastructure arrangements. The use of dedicated or physically segregated infrastructure does not affect ownership of customer data, which remains with the applicable customer.
As of the date of this annual report, the Company has entered into an agreement to purchase 32 servers designed for high-performance artificial intelligence computing workloads. The Company has not yet generated any revenue from this business and has no executed customer contract as of the date of this annual report. The Company is evaluating customer opportunities, negotiating capacity arrangements, and expanding its technical team and infrastructure capabilities. The business remains at an early stage, and there can be no assurance that the Company will be able to scale these operations, secure sufficient computing resources, attract customers or generate meaningful revenue from this business.
Initiatives in Quantum-Related Technologies and Applications
Starting in the second half of 2026, through our wholly owned subsidiary, Quantum Nexus, we began evaluating opportunities involving the implementation of our quantum application strategy by leveraging third-party technology and development resources to evaluate and develop quantum-related and certain other advanced technology activities across various industries. These activities remain in the development and evaluation stage.
In August 2026, we announced the establishment of our Global Quantum Council and Scientific Advisory Network as part of our broader strategy to expand our access to scientific and technical expertise and identify potential opportunities involving quantum science and related advanced technologies. Through these advisory platforms, we intend to deepen our understanding of emerging technologies, support scientific evaluation and explore potential research collaborations, strategic partnerships, commercial initiatives and investment opportunities. We have begun identifying potential subject matter experts in these areas and expect to formalize certain relationships over time. The Global Quantum Council and Scientific Advisory Network are advisory initiatives and do not, by themselves, constitute separate operating businesses.
As of the date of this report, we have not generated any revenue from these activities. We will continue to assess the technologies, potential use cases, market opportunities and resources that may be required to pursue this strategy. There can be no assurance that our evaluation and development efforts will result in a commercially viable business, product or service.
Our Operations in the PRC
As of the date of this report, substantially all of our business is operated through Hupan Pharmaceutical, our operating subsidiary in the PRC, which is wholly owned by Sichuan Hupan, our intermediate holding company in the PRC. Such structure involves unique legal and operational risks to investors in our common stock. In particular, the PRC government has significant authority to exert influence on the ability of a company with substantive operations in the PRC, such as us, to conduct its business, accept foreign investments or list on a U.S. or other foreign exchanges. For example, we face risks associated with regulatory approvals of offshore offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy. Such risks could result in a material change in our operations and/or the value of our common stock or could significantly limit or completely hinder our ability to offer or continue to offer our common stock to investors and cause the value of such common stock to significantly decline or become worthless.
The PRC government has significant oversight over the conduct of our PRC business, and its laws, regulations and policies may intervene or influence our operations at any time, which could result in a material change in our operations and in the value of the securities we are registering, and could cause the value of our securities to significantly decline or become worthless. The PRC government has recently published new policies that affected certain industries with respect to matters such as cybersecurity, data privacy, antitrust and competition, foreign investments, and overseas listings, and we cannot rule out the possibility that it will in the future release regulations or policies regarding our industry that could adversely affect our business, financial condition and results of operations. Furthermore, the PRC regulatory authorities have recently issued new laws and regulations to exert more oversight and control over overseas securities offerings and other capital markets activities and foreign investment in PRC-based companies. Any such action, once taken by the PRC regulatory authorities, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.
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Our ability to transfer cash within our corporate group and to distribute earnings to our shareholders is subject to applicable PRC laws and regulations governing foreign exchange and cross-border remittances. As a Nevada holding company, we may rely on dividends and other distributions from Hupan Pharmaceutical to fund our operations, satisfy our cash and financing requirements and make distributions to our shareholders. The ability of Hupan Pharmaceutical to make such distributions may also be subject to restrictions under applicable debt arrangements, if any. Accordingly, our ability to transfer funds from our PRC subsidiary to Quanome or to U.S. investors may be limited.
We are subject to a number of prohibitions, restrictions and potential delisting risks under the HFCAA. Pursuant to the HFCAA and related regulations, if we have filed an audit report issued by a registered public accounting firm that the PCAOB has determined that it is unable to inspect and investigate completely, the SEC will identify us as a “Commission-identified Issuer,” and the trading of our securities on any U.S. national securities exchange, as well as any over-the-counter trading in the United States, will be prohibited if we are identified as a Commission-identified Issuer for two consecutive years. Our independent registered public accounting firm is headquartered in Denver, Colorado, and has been inspected by the PCAOB on a regular basis. Notwithstanding the foregoing, in the future, if there is any regulatory change or step taken by PRC regulators that does not permit our auditor to provide audit documentations located in China to the PCAOB for inspection or investigation, you may be deprived of the benefits of such inspection which could result in limitation or restrictions on our access to the U.S. capital markets and trading of our securities.
Cash Transfer and Dividend Distribution
Quanome may transfer cash to its PRC and Cayman Islands subsidiaries through capital contributions, intra-group loans and other permissible arrangements. In particular, Quanome may transfer funds to Sichuan Hupan, our wholly owned intermediate holding company in the PRC, which may in turn transfer such funds to Hupan Pharmaceutical, our PRC operating subsidiary, through capital contributions, intra-group loans or other permissible arrangements to fund Hupan Pharmaceutical’s operations and working capital needs. Cash may also be transferred through our organization by way of intra-group transactions to pay for services or goods provided, subject to applicable laws and regulations. If Hupan Pharmaceutical realizes accumulated after-tax profits, it may, upon satisfaction of applicable statutory conditions and procedures, pay dividends or make other distributions to Sichuan Hupan as its shareholder. Sichuan Hupan may, in turn, subject to applicable PRC laws and foreign exchange requirements, pay dividends or make other distributions to Quanome. Similarly, our Cayman Islands subsidiaries may, subject to applicable laws and the availability of legally distributable funds, make dividends or other distributions to Quanome. With legally available funds, Quanome may pay dividends or make other distributions to its stockholders, including U.S. investors and service any debt it may have incurred.
As of the date of this report, Quanome has provided approximately US$12.7 million in aggregate funding to its PRC subsidiaries. A portion of such funding was retained by Sichuan Hupan, and a portion was transferred to Hupan Pharmaceutical, in each case to support the daily operations and working capital needs of the PRC subsidiaries. Quanome has not transferred any cash to its Cayman Islands subsidiaries. As of the date of this report, other than the cash funding described above, no assets were transferred between Quanome and any of its subsidiaries. No subsidiaries paid any dividends or made any other distributions to Quanome, and Quanome did not pay any dividends or make any other distributions to its stockholders, including U.S. investors. Quanome and its subsidiaries currently do not maintain a formal cash management policy governing transfers of funds within the organization.
Under PRC laws and regulations, we are subject to restrictions on foreign exchange and cross-border cash transfers, including to U.S. investors. Our ability to distribute earnings to Quanome and U.S. investors is also limited. Quanome is a Nevada holding company, and it may rely on dividends and other distributions on equity paid by its PRC subsidiaries for its cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to its shareholders and service any debt it may incur. When the PRC subsidiaries incur debt on their own behalf, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to Quanome. Under PRC laws and regulations, the PRC subsidiaries may pay dividends only out of their respective accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, a PRC company is required to set aside at least 10% of its after-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. At its discretion, a PRC company may allocate a portion of its after-tax profits based on PRC accounting standards to a staff welfare and bonus fund. These reserve fund and staff welfare and bonus fund cannot be distributed to Quanome as dividends. In addition, our PRC operating subsidiary generate its revenue primarily in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of the PRC subsidiaries to pay dividends to Quanome.
Employees
Our people are key to our success. As of June 30, 2026, we had a total workforce of 27 full-time employees across various functions. On occasion, we engage independent contractors to support our efforts. None of our employees are represented by labor unions or work under any collective bargaining agreements. We have not experienced any work stoppages, and we believe that our employee relations are strong.
We work diligently to create an equitable and inclusive work environment for our diverse group of people who are young, energetic, highly educated and multi-lingual. We provide equal opportunities for growth, success, promotion, learning and development, and aim to achieve parity in the way we organize and manage operations. We are focused on building support across all functions and individuals, ensuring everyone has a voice, and treats each other with respect.
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Government Regulations
As a company with business operations in the United States and China, subsidiaries organized in other jurisdictions, including the Cayman Islands, and potential customers, suppliers, service providers and other counterparties located in various countries and regions, our operations are substantially governed by applicable U.S. federal and state laws and regulations and applicable PRC laws and regulations, and may also be subject to the laws and regulations of other jurisdictions depending on the nature and location of the relevant activities and counterparties. We are required to obtain certain licenses, permits and approvals from the relevant governmental authorities in order to operate our business, including, where applicable, licenses and approvals relating to the distribution of pharmaceutical products in China, such as the Pharmaceutical Operation License. Our developing artificial intelligence infrastructure and managed inference activities may also be subject to U.S. export control, sanctions, data protection, cybersecurity and other regulatory requirements, depending on the technologies involved, the jurisdictions and industries of our customers, suppliers and other counterparties, and the applicable end users and end uses. To the extent material to our understanding, as of the date of this report, we believe that we have obtained all licenses, permits and approvals from the relevant governmental authorities necessary for our existing business operations in the jurisdictions in which we currently conduct material operations. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, and the promulgation of new laws and regulations and amendment to the existing ones, we may be required to obtain additional licenses, permits, registrations, filings or approvals for our business operations in the future. We cannot assure you that we will be able to obtain, in a timely manner or at all, or maintain such licenses, permits or approvals, and we or the affiliated entities may also inadvertently conclude that such permissions or approvals are not required. Any lack of or failure to maintain requisite approvals, licenses or permits applicable to us or the affiliated entities may have a material adverse impact on our business, results of operations, financial condition and prospects and cause the value of any securities we offer to significantly decline or become worthless.
This section provides an overview of the key regulations and legal considerations that we believe are material to an understanding of our current business. To the extent material to our understanding, we do not believe any current governmental regulations impose material restraints on our business operations as of the date of this annual report. We further acknowledge that, in the course of our operations, we are committed to complying with applicable laws and regulations in the jurisdictions in which we operate, including applicable data protection laws and regulations that govern the privacy and security of the data we handle.
Permissions Required for Our PRC Operations
As of the date of this report, we believe Hupan Pharmaceutical has obtained all of the material licenses, permits, filings and qualifications required for its current business operations. Each such license, permit, filing, and qualification remains in full force and effect, and none has been denied, revoked, suspended or, to our knowledge, is subject to any pending revocation or suspension proceeding. These licenses, permits and filings include the business license (营业执照), the Drug Business License (药品经营许可证), the Medical Device Business License (医疗器械经营许可证), the Class II Medical Device Business Filing Certificate (第二类医疗器械经营备案凭证) and the Food Business License (食品经营许可证), among others. Sichuan Hupan holds a business license and, as an intermediate holding company that does not conduct operating activities, is not required to hold additional operating licenses or permits. Our subsidiaries do not develop, manufacture or hold marketing authorization for any of the products they distribute; accordingly, drug registration certificates, drug marketing authorization holder status and drug manufacturing licenses are held by, and remain the responsibility of, the manufacturers and marketing authorization holders from which they source. Given the changes and developments of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we or our subsidiaries may be required to obtain additional licenses, permits or approvals or complete additional filings for business operations in the future, including if we expand the range of products we distribute or the geographic scope of our operations. If any of our subsidiaries is found to be in violation of any existing or future laws or regulations, or fails to obtain or maintain any of the required permits or approvals in a timely manner, or at all, the competent regulatory authorities would have discretion to take action regarding such violations or failures.
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PRC Cybersecurity Review
On December 28, 2021, the CAC and 12 other PRC government authorities jointly published the amended Cybersecurity Review Measures, which came into effect on February 15, 2022. The final Cybersecurity Review Measures provide that a “network platform operator” that possesses personal information of more than one million users and seeks a listing in a foreign country must apply for a cybersecurity review. Further, the competent PRC governmental authorities have the authority to initiate a cybersecurity review even without a specific application against a company if they determine certain network products, services or data processing activities of such company affect or may affect national security.
As of the date of this report, neither we nor any of our PRC subsidiaries has been notified by any PRC regulatory authority that it is a “critical information infrastructure operator,” a “network platform operator” or a “data processor” subject to cybersecurity review, and neither we nor any of our PRC subsidiaries has applied for or been required to apply for a cybersecurity review. We do not believe that Hupan Pharmaceutical is required to apply for a cybersecurity review in connection with any future offering under this registration statement or supplements because it is not a network platform operator and has not processed, and does not expect in the foreseeable future to process, the personal information of more than one million users. No cybersecurity review has been applied for and denied. This conclusion is subject to uncertainty as to how the Cybersecurity Review Measures and the Regulation on Network Data Security Management (the “Network Data Regulations”) will be interpreted and enforced.
CSRC Filing Requirements
The Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, together with five supporting guidelines, promulgated by the CSRC, became effective on March 31, 2023 (the “Trial Measures”). Under the Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, directly or indirectly, are required to complete a filing procedure with the CSRC and report relevant information.
Under the Trial Measures, an overseas offering and listing by an issuer is deemed an indirect overseas offering and listing by a PRC domestic company where both of the following conditions are met: (i) 50% or more of any of the issuer's operating revenue, total profit, total assets or net assets, as reflected in its audited consolidated financial statements for the most recently completed fiscal year, is attributable to PRC domestic companies; and (ii) the principal parts of the issuer's business activities are conducted in mainland China, its principal place of business is located in mainland China, or the majority of the senior management personnel responsible for its business operations are PRC citizens or have their usual places of residence in mainland China. The second condition is satisfied if any one of its three limbs is met.
As of the date of this annual report, based on our current business operations, financial position and management structure, we do not believe that we are subject to the CSRC filing requirements under the Trial Measures. However, if we continue to maintain operations in mainland China, we will reassess the applicability of these requirements in connection with any future overseas securities offering. Other than the governmental permissions and licenses required for our PRC subsidiaries as described above, we do not currently believe that we are required to obtain any additional permissions or approvals from the CSRC, the CAC or any other PRC governmental authority in connection with our current operations. We have obtained all requisite permissions and approvals from, and completed all necessary filings with, the competent PRC authorities that are explicitly required under currently effective PRC laws, regulations and rules, and no such permission, approval or filing has been denied.
If we or our PRC subsidiaries (i) fail to obtain or maintain any required permission or approval, (ii) inadvertently conclude that a permission, approval or filing is not required, or (iii) become subject to additional regulatory requirements as a result of changes in our business operations, applicable laws, regulations or their interpretation, we may be unable to satisfy such requirements in a timely manner or at all, and any permission or approval previously obtained may be rescinded. In such circumstances, we and our PRC subsidiaries could be subject to fines, monetary penalties, orders to rectify, warnings, confiscation of income, suspension or revocation of licenses, restrictions or suspension of operations, and other regulatory, civil or criminal liabilities.
We could also face delays or restrictions in completing future overseas securities offerings, be required to delist our securities from a U.S. exchange, or be prohibited from offering securities to foreign investors. Any of these outcomes could materially and adversely affect our operations, financial condition and the value of our securities, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause the value of our securities to significantly decline or become worthless.
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Regulatory Requirements on PRC Foreign Exchange and Cross-Border Transfers
Capital contributions to PRC subsidiaries that are foreign-invested enterprises may be subject to applicable corporate registration, foreign exchange registration and other procedures with the relevant PRC authorities or qualified banks. Loans by an offshore parent to its PRC subsidiaries may constitute foreign debt under PRC law and are subject to applicable statutory limits, foreign exchange registration and other requirements. Accordingly, if our PRC subsidiaries require additional funding from us in the future, including funding derived from the proceeds of any offering under this registration statement, our ability to provide such funding may depend on our completion of applicable registrations, filings and other procedures under PRC law.
Regulations Relating to Labor and Employment
Pursuant to federal and state laws, we adhere to labor and employment laws at the federal and state levels. This includes fair employment practices, wage and hour regulations, worker safety, and anti-discrimination law. We are committed to providing a fair and inclusive workplace environment that respects the rights of our employees and fosters a culture of diversity and equality.
Regulations Relating to Data Protection and Security
Across our various business lines, including pharmaceutical distribution, healthcare, artificial intelligence infrastructure and other technology-related activities, data protection, cybersecurity and information governance have become increasingly important regulatory considerations. Our current operations are primarily conducted in mainland China, and our collection, use, storage, transfer and other processing of personal information may be subject to applicable PRC data protection, cybersecurity and data security laws and regulations. See “—PRC Cybersecurity Review.”
As our business expands into additional jurisdictions or involves customers, suppliers, service providers or other counterparties located outside China, we may also become subject to data protection and privacy requirements in those jurisdictions. Depending on the nature and geographic scope of our activities, other privacy and data protection laws may also apply. For example, the General Data Protection Regulation (the “GDPR”) may require covered businesses to provide specified notices regarding the processing of personal data, establish a lawful basis for such processing, implement appropriate data protection and security measures, and honor certain rights of individuals, including rights of access, correction and deletion. In certain circumstances, the GDPR may also impose restrictions or additional requirements on transfers of personal data outside the European Economic Area. As another example, the California Consumer Privacy Act, as amended by the California Privacy Rights Act (collectively, the “CCPA”), imposes obligations on covered businesses that collect or process personal information of California residents and provides consumers with rights relating to access, deletion, correction, use and disclosure of sensitive personal information, and the sale or sharing of personal information. The CCPA also imposes requirements relating to privacy notices, data minimization, purpose limitation and the handling of consumer requests, and certain covered businesses may be subject to additional cybersecurity audit, risk assessment and automated decisionmaking requirements under implementing regulations.
Regulations Relating to Distribution of Pharmaceutical Products in China
According to the “Regulations on the Supervision and Administration of the Quality of Pharmaceutical Operation and Use” implemented by the State Administration for Market Regulation of China in January 2024, the entity which is engaged in pharmaceutical wholesale or retail activities within the territory of the People’s Republic of China should obtain the Pharmaceutical Operation License. The local departments of the National Medical Products Administration pharmaceutical and the State Administration for Market shall supervise the daily operation of those entities through regular and casual inspections. Those inspections are aiming at the whether the purchase, storage, sales and other operating activities of the pharmaceutical selling entities are compliant with the related regulations. In August 2025, Hubei Pharmaceutical passed an on-site inspection from Hubei Administration for Market.
Regulations Relating to Quantum Computing and Artificial Intelligence
Our emerging quantum-related and certain other advanced technology activities may be conducted through Quantum Nexus, our Cayman Islands subsidiary, and our AI-related activities are conducted through our U.S. subsidiaries. These activities may be subject to various laws and regulations applicable to technology companies, depending on the nature and location of the activities conducted. These may include laws and regulations relating to data privacy and security, intellectual property, consumer protection, cybersecurity, export controls and restrictions on the transfer or use of certain technologies. The applicability of particular requirements may depend on multiple factors, including the types of technologies or applications involved, the categories of information collected or processed, the location from which such information is collected, the location of users or other data subjects, the jurisdictions in which the relevant activities are conducted, and the industries in which the technologies are deployed.
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Because our quantum-related and certain other advanced technology activities remain in the development and evaluation stage, and our AI compute capacity and managed inference services are at an early stage of development and have not yet generated customer revenue, we do not currently believe that such activities require any material governmental licenses or approvals beyond those generally applicable to our operations. However, as we further develop or commercialize technologies or applications, enter into collaborations, collect or process additional categories of information, or expand into new industries or jurisdictions, including through Quantum Nexus, we may become subject to additional U.S. federal, state, foreign or other regulatory requirements. Compliance with such requirements could increase our costs, restrict certain activities or require us to modify our technologies, data practices, business arrangements or proposed commercial activities.
We intend to evaluate applicable regulatory requirements in light of the specific jurisdictions, customer requirements and use cases involved as commercial relationships are established. In addition, as we further develop or commercialize quantum-related technologies or applications, expand our AI infrastructure and managed inference services, enter into collaborations, collect or process additional categories of information, or expand into new industries or jurisdictions, we may become subject to additional U.S. federal, state, foreign or other regulatory requirements. Compliance with such requirements could increase our costs, restrict certain activities or require us to modify our technologies, data practices, business arrangements or proposed commercial activities.
Regulations Relating to Export Controls and Trade Compliance
Our artificial intelligence infrastructure business involves the procurement, ownership and operation of high-performance computing equipment, including servers incorporating advanced graphics processing units, or GPUs. Certain of these items, as well as related software and technology, may be subject to U.S. export control laws and regulations, including the Export Administration Regulations administered by the U.S. Department of Commerce’s Bureau of Industry and Security, or BIS.
Depending on the classification of the applicable hardware, software or technology, the location, nationality or ownership of the customer or end user, the destination of the relevant equipment or services, the intended end use and other transaction-specific factors, certain exports, reexports, transfers or other transactions involving advanced computing items may require a license, license exception, authorization, certification, customer or end-user diligence, recordkeeping or other compliance measures. These requirements may also affect our ability to provide access to computing capacity to certain customers outside the United States or to customers whose ownership, ultimate parent, end users or intended uses present heightened export-control concerns.
As we develop this business, we expect to evaluate applicable export-control requirements on a transaction-by-transaction basis, including the classification of relevant equipment, customer and beneficial ownership information, end-user and end-use restrictions, geographic location and any applicable licensing or authorization requirements. We may also be required to obtain or maintain information or certifications from customers, suppliers or other parties in our supply chain in order to support such compliance.
U.S. export-control requirements applicable to advanced computing and artificial intelligence technologies continue to evolve. Changes in these requirements, or the imposition, denial or delay of any required license or authorization, could restrict the customers, jurisdictions or uses we are able to serve, delay deployment of equipment, increase compliance costs or require us to modify our commercial arrangements, customer screening procedures or operations.
Corporate Information
Quanome Technologies, Inc. (formerly Lakeside Holding Limited) was incorporated under the laws of the State of Nevada on August 28, 2023. On July 31, 2026, Quanome filed with the Secretary of State of the State of Nevada a Certificate of Amendment to change its name from “Lakeside Holding Limited” to “Quanome Technologies, Inc.” (the “Name Change Amendment”). The Name Change Amendment became effective at 5:00 p.m. Eastern Time on August 3, 2026. Beginning with the opening of trading on August 4, 2026, the Company’s common stock began trading on The Nasdaq Capital Market under the Company’s new corporate name, Quanome Technologies, Inc., and the new ticker symbol “QNME” (the “Symbol Change”). The CUSIP number for the Company’s common stock did not change in connection with the Name Change Amendment or the Symbol Change.
Hupan Pharmaceutical and Sichuan Hupan Jincheng Enterprise Management Co., Ltd (“Sichuan Hupan”) was incorporated in the People’s Republic of China on November 21, 2024 and July 10, 2024, respectively. Smart Reserve Holding LTD, Smart Reserve Inc and Quantum Nexus Technologies Ltd. were incorporated in the Cayman Islands on September 16, 2025, September 25, 2025 and May 15, 2026, respectively. XDT, Inc., XDT US HoldCo, LLC, XDT Infrastructure I, LLC, and XDT Infrastructure II, LLC were incorporated in the State of Delaware on September 10, 2026. Quanome Technologies, Inc. (formerly Lakeside Holding Limited) is a holding company, and Hupan Pharmaceutical, Smart Reserve Holding LTD, Smart Reserve Inc, Quantum Nexus Technologies Ltd., XDT Infrastructure I, LLC, and XDT Infrastructure II, LLC are our operating subsidiaries through which all of our business is conducted. Our principal executive office is located at 112W 34th St, FL 18, Room 18022, New York, NY 10120, and our telephone number is (778) 888-7232.
Available Information
Our website address is https://quanometech.com. The information on, or that can be accessed through, our websites is not part of this report and is not incorporated by reference herein. We have included our website address as inactive textual reference only.
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Item 1A. Risk Factors.
We are a smaller reporting company and are not required to provide the information required under this item. However, we believe this information may be valuable to our shareholders for this filing. We reserve the right to not provide risk factors in our future filings. Our primary risk factors and other considerations include:
Risks Related to Our Business and Development
Our pharmaceutical distribution business depends on our relationships with manufacturers, suppliers and other business partners and our ability to maintain an adequate supply of products.
We rely on pharmaceutical manufacturers, suppliers, agents, logistics providers and other third parties to obtain and distribute the products we sell. Our ability to maintain or expand our pharmaceutical distribution business depends in part on maintaining these relationships and obtaining products on commercially acceptable terms. We may experience interruptions or changes in product supply as a result of manufacturing constraints, changes in supplier relationships, product shortages, regulatory actions, changes in pricing or commercial terms, logistics disruptions or other factors beyond our control. If we are unable to obtain sufficient quantities of products, maintain important supplier relationships or secure alternative sources on acceptable terms, our ability to satisfy customer demand and our revenue and profitability could be adversely affected.
We face competition and changes in customer demand, procurement practices and pricing that could adversely affect our revenue and profitability.
The pharmaceutical distribution industry in China is competitive, and we compete with national and regional pharmaceutical distributors, wholesalers and other companies offering similar products and services. Certain competitors may have greater financial resources, broader product portfolios and distribution networks, stronger purchasing power or more established relationships with manufacturers, hospitals and other customers. In addition, our results may be affected by changes in hospital and customer demand, procurement and bidding cycles, government or regional procurement programs, competitive pricing and changes in our product mix. We may also depend on significant customers for a portion of our revenue, and the loss or reduction of purchases by such customers could adversely affect our results. If we are unable to maintain customer relationships, compete effectively, participate successfully in applicable procurement processes or manage pricing and margin pressure, our business, financial condition and results of operations could be materially and adversely affected.
We may not be successful in expanding into new business areas or markets, and such expansion may expose us to additional operational, regulatory and execution risks.
Our current operating business is primarily focused on pharmaceutical distribution through Hupan Pharmaceutical. We continue to evaluate opportunities to expand and diversify our business, including into areas in which we have limited or no prior operating experience. As part of these initiatives, we expect to develop computational capabilities through Quantum Nexus that may have applications in therapeutic discovery, and we may pursue collaborations, acquisitions or other strategic transactions involving laboratories and research teams engaged in therapeutic discovery and clinical research. We have not generated any revenue from these activities and, as of the date of this report, have not entered into any definitive agreement with respect to any such transaction.
Our ability to successfully enter and develop these or other new business areas is uncertain. We may lack relevant industry experience, technical capabilities, personnel, customer relationships or regulatory expertise, and we may be unable to identify or successfully complete suitable collaborations, acquisitions or other strategic transactions. Any expansion may require significant capital and management resources and may expose us to additional regulatory, technological, competitive and operational risks. There can be no assurance that any such initiative will be successfully implemented, generate revenue or achieve profitability. If we are unable to successfully execute our expansion or diversification initiatives, our business, financial condition, results of operations and prospects could be materially adversely affected.
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Our long-term growth and competitiveness are highly dependent on our ability to control costs.
Our ability to grow our business and improve profitability depends in part on our ability to effectively manage operating costs while maintaining the quality and reliability of our products and services. In addition, our evaluation and potential development of new business initiatives may require substantial additional expenditures before generating any revenue, if at all. Such initiatives may require investments in technology, specialized personnel, research capabilities, professional services, regulatory compliance and infrastructure, and we may not be able to accurately estimate or control these costs.
If our operating expenses increase more rapidly than our revenues, if we are unable to achieve expected efficiencies, or if we incur significant costs in connection with new business initiatives that do not result in commercially successful operations, our margins, liquidity, financial condition and results of operations could be materially adversely affected.
Any failure to obtain or maintain requisite approvals, licenses, permits or other regulatory authorizations applicable to our business could materially adversely affect our business, financial condition and results of operations.
Our current pharmaceutical distribution and related activities are subject to various licensing, permitting, filing and other regulatory requirements in the jurisdictions in which we operate. We are required to obtain and maintain applicable approvals, licenses and permits and to comply with laws and regulations governing, among other matters, pharmaceutical distribution, product quality, business operations and other related activities. These requirements may change from time to time, and the interpretation or enforcement of applicable laws and regulations may also evolve.
Any expansion into new business areas may subject us to additional regulatory regimes and require additional approvals, licenses, registrations or permits. Because these initiatives remain preliminary, we cannot currently determine the full scope of requirements that may apply. If we fail to obtain or maintain any required authorization, we could face fines, penalties, operational restrictions, increased compliance costs or suspension of operations, any of which could materially adversely affect our business, financial condition and results of operations.
Failure to renew our current leases or locate desirable premises for our facilities, or challenges on the use of certain leased properties by us or our service providers, could materially and adversely affect our business, financial condition and results of operations.
We lease properties used in our pharmaceutical distribution operations, and certain service providers may also lease premises used for storage, transportation or distribution. If we or our service providers are unable to renew existing leases on commercially reasonable terms, we may need to relocate affected operations, resulting in disruption, additional costs or delays. As our business develops, we may also need additional warehousing or distribution capacity, and suitable premises may not be available on acceptable terms or within the required timeframe. Any resulting disruption or increase in occupancy costs could materially adversely affect our business, financial condition and results of operations.
None of our service agreements with our customers is on an exclusive basis.
Our customers may purchase pharmaceutical products or obtain related distributions from other suppliers in addition to or instead of us. Although we have established relationships with certain major customers, there can be no assurance that they will continue to purchase from us at historical levels or at all. Any reduction in purchases by major customers could materially and adversely affect our business, financial condition and results of operations.
We may be subject to potential liability in connection with pending or threatened legal proceedings and other matters, which could adversely affect our business, financial condition or results of operations.
From time to time, we may become a party to various legal or administrative proceedings arising in the ordinary course of our business. We may also be subject to potential liabilities in connection with pending or threatened legal proceedings arising from breach of contract claims and other matters. These proceedings, investigations, claims and complaints could be initiated or asserted under or on the basis of a variety of laws in different jurisdictions, including data protection and privacy laws, trucker or consumer protection laws, labor and employment laws, transportation laws, advertising laws, intellectual property laws, securities laws, tort laws, contract laws and property laws. There is no guarantee that we will be successful in defending ourselves in legal and administrative actions or in asserting our rights under these various laws. If we fail to defend ourselves in these actions, we may be subject to restrictions, fines or penalties that will materially and adversely affect our business, financial condition and results of operations. Even if we are successful in the attempt to defend ourselves in legal and regulatory actions or to assert our rights under various laws and regulations, the process of communicating with relevant regulators, defending ourselves and enforcing our rights against the various parties involved may be expensive and time-consuming. These actions could expose us to negative publicity, substantial monetary damages and legal defense costs, injunctive relief and criminal and civil fines and penalties, including but not limited to suspension or revocation of licenses to conduct business.
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Our newly launched AI compute and managed inference business is at an early stage and may not develop as expected.
Beginning in September 2026, we commenced activities relating to the provision of artificial intelligence compute capacity and managed inference services through our indirectly owned subsidiary XDT Infrastructure I, LLC. This business is at an early stage, and our operating model, customer base, pricing structure, infrastructure requirements and service capabilities are still developing. We have limited operating history in this area and may encounter difficulties in acquiring and deploying computing resources, attracting and retaining customers, managing technical operations, controlling costs and scaling the business. We may also be required to make significant expenditures before generating meaningful or recurring revenue. If we are unable to successfully develop and commercialize this business, our results of operations and financial condition could be adversely affected.
Our ability to provide AI compute services depends on the availability, performance and cost of specialized computing infrastructure.
Our business depends on access to servers, graphics processing units, networking equipment, hosting capacity and related infrastructure. Specialized computing hardware may be expensive, subject to supply constraints, technological obsolescence or extended procurement lead times. Increases in hardware, hosting, electricity, networking, maintenance or other infrastructure costs could reduce our margins or limit our ability to expand capacity. In addition, hardware failures, shortages of replacement components or delays in deploying additional capacity could affect our ability to serve existing or prospective customers.
Interruptions, failures or security incidents affecting our infrastructure or service providers could disrupt our operations.
Our new service line depends on the continuous availability of servers, data center facilities, power, networking, software systems, APIs and other infrastructure operated by us or third-party service providers. Such infrastructure may be affected by hardware failures, software errors, power outages, network disruptions, cyberattacks, human error, natural disasters or other events. Even where customer environments are physically or logically segregated, a failure affecting underlying infrastructure may interrupt customer access or reduce service availability. Any prolonged or repeated interruption could result in contractual claims, service credits, customer loss and reputational damage.
We may depend on third-party technology, software, models and infrastructure that we do not control.
Our services may rely on third-party hardware, software frameworks, model architectures, APIs, hosting providers or other technology. We may be required to comply with applicable license terms, usage restrictions and technical requirements imposed by such third parties. If a third party modifies or terminates our access to its technology, changes its pricing or licensing terms, experiences service interruptions, or determines that our use is inconsistent with its terms, our ability to provide services to customers may be adversely affected. We may also incur additional costs to replace or modify affected technology.
Our use and deployment of customer-selected artificial intelligence models may expose us to intellectual property, licensing and other legal risks.
Under our current service plan, customers may request that specific artificial intelligence models, software or other technology be deployed on infrastructure allocated to them. We may not independently verify all intellectual property rights, licenses or restrictions applicable to customer-selected models or related software. If a model, dataset, software component or other technology is used without sufficient authorization, we could become involved in intellectual property, contractual or other disputes. We may also face uncertainty regarding ownership or permitted use of model outputs, fine-tuned models, configuration files or other technology generated or modified through our services.
Our business may be subject to evolving export control, sanctions, data protection, cybersecurity and other regulatory requirements, which could restrict our ability to provide AI computing services to certain customers or in certain jurisdictions.
As of the date of this annual report, we have not generated revenue from this new service line, nor have we engaged any customers. We cannot assure you that the future provision of advanced computing infrastructure, artificial intelligence-related services, software and technical access will not subject to export control, sanctions, data protection, cybersecurity and other regulatory requirements in the jurisdictions in which we and our customers operate.
In particular, certain high-performance GPUs, servers incorporating such GPUs, related software and technology, and certain transactions involving advanced computing capabilities are subject to U.S. export controls administered by the U.S. Department of Commerce’s Bureau of Industry and Security. Depending on the applicable hardware or technology, destination, customer, ultimate parent, end user and intended end use, applicable requirements may restrict or prohibit certain transactions, require governmental licenses or other authorizations, or require enhanced customer screening, end-user and end-use diligence, certifications, recordkeeping, technical controls or contractual restrictions. Export-control requirements may also affect our ability to provide remote access to computing capacity or related services to certain customers, users or jurisdictions.
U.S. export-control requirements relating to advanced computing, artificial intelligence and semiconductor technologies have changed significantly in recent years and may continue to change. Such requirements could limit the equipment we are able to deploy, the customers or jurisdictions we are able to serve, the manner in which customers may access or use our computing infrastructure, or our ability to obtain or maintain equipment and services from suppliers. They may also require us to modify customer onboarding, know-your-customer and beneficial ownership procedures, technical access controls, contractual arrangements, or other aspects of our operations. Similar restrictions may arise under applicable sanctions regimes or foreign laws.
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Because we have not yet engaged customers for this service line, we have not yet fully evaluated the regulatory requirements that may apply to particular customer arrangements, jurisdictions or use cases. We expect to conduct such assessments based on the location and ownership of the customer and end users, the nature and classification of the applicable equipment or technology, the intended use of the computing capacity and other relevant circumstances. We cannot assure you that required licenses or authorizations, if any, will be available or obtained on acceptable terms or within the required timeframe.
Any failure or perceived failure to comply with applicable export control, sanctions, data protection, cybersecurity or other regulatory requirements could result in governmental investigations, civil or criminal penalties, denial or suspension of export privileges, restrictions on our operations, contractual liability, reputational harm or increased compliance costs. Regulatory requirements relating to artificial intelligence, advanced computing and cross-border technology access continue to evolve, and compliance may require additional screening, technical controls, contractual restrictions and other measures. Failure to comply with applicable requirements could result in penalties, restrictions on our operations or reputational harm.
Rapid technological change could impair the value of our infrastructure and require significant additional investment.
Artificial intelligence hardware, model architectures and inference technologies are evolving rapidly. New generations of processors, networking technologies, model optimization techniques or software frameworks may make our existing infrastructure less competitive or economically efficient. We may need to upgrade, replace or reconfigure hardware and software sooner than anticipated in order to remain competitive. Such investments may be substantial and may not generate sufficient returns before becoming obsolete.
Our emerging quantum- and certain other advanced technology activities may become subject to an evolving and potentially complex regulatory framework, which could increase our costs or restrict our activities.
Our quantum- and certain other advanced technology activities remain in the development and evaluation stage. As we further develop these activities, we may become subject to a variety of U.S. federal and state, foreign and other laws, regulations and governmental policies relating to, among other matters, artificial intelligence, quantum technologies, data privacy and security, cybersecurity, intellectual property, consumer protection, export controls and the transfer or use of certain technologies. The laws and regulations applicable to these activities may depend on a number of factors, including the nature of the technologies and applications we develop or use, the types of information we collect or process, where such information is collected or processed, the location of users or other data subjects, the jurisdictions in which we or our subsidiaries conduct activities, the industries in which our technologies may be applied, and the nature of our relationships with technology providers, research institutions and other collaborators. As a result, the regulatory requirements applicable to our activities may change as our business develops.
Laws, regulations and governmental policies relating to emerging technologies continue to evolve, and their interpretation and application may be uncertain. New or changing requirements could require us to obtain licenses, approvals or other authorizations, modify our technologies or data practices, impose limitations on collaborations or cross-border activities, increase compliance costs or restrict our ability to develop or commercialize certain applications. We may also incorrectly determine that a particular law, regulation or licensing requirement does not apply to us. Any failure to identify or comply with applicable requirements, or any significant change in the regulatory framework applicable to our activities, could delay or limit our development efforts, increase our costs and materially and adversely affect our business, financial condition, results of operations and prospects.
We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and non-compliance with such laws could adversely affect our business, results of operations, financial condition and reputation.
We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in the jurisdictions in which we operate or may operate, including the U.S. Foreign Corrupt Practices Act, or the FCPA, to the extent applicable. The FCPA generally prohibits corrupt payments or offers of value to foreign officials for the purpose of obtaining or retaining business and also imposes certain books, records and internal controls requirements. As we evaluate potential expansion into new business areas or jurisdictions, including the possibility of conducting or generating revenue from U.S.-related business activities in the future, we may become subject to additional compliance obligations under U.S. and other applicable laws. Any non-compliance could result in investigations, fines, penalties, remedial measures, legal expenses or reputational harm, which could materially and adversely affect our business, results of operations and financial condition.
If we fail to implement and maintain effective internal control over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud, and investor confidence and the market price of our common stock may be materially and adversely affected.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Based on management’s evaluation as of June 30, 2026, our internal control over financial reporting was not effective due to material weaknesses relating to (i) inadequate segregation of duties and effective risk assessment and (ii) insufficient written policies and procedures for accounting and financial reporting under U.S. GAAP and SEC requirements.
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We are taking steps to remediate these material weaknesses, including hiring additional accounting personnel with U.S. GAAP and SEC reporting experience, implementing formal period-end financial reporting procedures and controls, and enhancing our internal audit function and Sarbanes-Oxley compliance processes. However, the implementation of these measures is ongoing, and we cannot assure you that they will be sufficient to remediate the identified material weaknesses or prevent additional deficiencies in the future.
If we are unable to remediate these material weaknesses or otherwise maintain effective internal control over financial reporting, we may be unable to produce timely and accurate financial statements, investors may lose confidence in our financial reporting, and we may become subject to regulatory scrutiny or additional compliance costs, any of which could materially adversely affect our business, financial condition, results of operations and the market price of our common stock.
Our insurance coverage may not be sufficient, which could expose us to significant costs and business disruptions.
We have obtained or caused relevant counterparties to obtain insurance to cover certain potential risks and liabilities. There can be no assurance that our insurance coverage is sufficient to prevent us from any loss or that we will be able to successfully claim our losses under our current insurance policies on a timely basis, or at all. If we incur any loss that is not covered by our insurance policies, or the compensated amount is significantly less than our actual loss, our business, financial condition and results of operations could be materially and adversely affected.
Risks Related to Our Business Operations in the PRC
The PRC government may exert significant influence over our PRC subsidiaries’ operations, which could result in a material change in our operations and/or in the value of the securities we are registering, and could cause the value of our securities to significantly decline or become worthless.
Our operating subsidiary, Hupan Pharmaceutical, is a China-based company and has business operations in the PRC. Accordingly, the PRC government has significant oversight, control and discretion over the conduct of Hupan Pharmaceutical’s business and may intervene or influence our operations at any time. The PRC government has recently published new policies that significantly affected certain industries, and we cannot rule out the possibility that it will in the future do the same regarding Hupan Pharmaceutical’s industry, including policies that could require us to seek permission from the PRC authorities to continue to operate our PRC business.
In February 2023, the China Securities Regulatory Commission (the “CSRC”) released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises (the “Trial Measures”), which came into effect on March 31, 2023. The Trial Measures comprehensively improve and reform the existing regulatory regime for overseas offering and listing of PRC domestic companies’ securities and regulate both direct and indirect overseas offering and listing of PRC domestic companies’ securities by adopting a filing-based regulatory regime.
In February 2023, the CSRC and other PRC governmental authorities jointly issued the Provisions on Strengthening the Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (the “Confidentiality Provisions”), which came into effect on March 31, 2023. According to the Confidentiality Provisions, PRC domestic companies that directly or indirectly conduct overseas offerings and listings shall strictly abide by the laws and regulations on confidentiality when providing or publicly disclosing, whether directly or through their overseas listed entities, materials to securities services providers. In the event such materials contain state secrets or working secrets of government agencies, PRC domestic companies shall first obtain approval from authorities, and file with the secrecy administrative department at the same level with the approving authority; in the event that such materials, if divulged, will jeopardize national security or public interest, PRC domestic companies shall comply with procedures stipulated by national regulations.
Following the disposition of our U.S. business in February 2026, a substantial majority of our current revenue is derived from its PRC operations. We intend to develop additional business lines through subsidiaries in the Cayman Islands. However, these planned businesses remain subject to development and commercialization risks, and there can be no assurance that we will successfully establish meaningful operations or generate material revenue outside China.
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If (i) we mistakenly conclude that certain regulatory filings, permissions and approvals are not required, (ii) applicable laws, regulations, or interpretations change, or (iii) we are required to obtain such filings, permissions or approvals in the future, we may be unable to obtain them in a timely manner, or at all, and such filings, permissions or approvals may be denied or rescinded even if obtained. We may face adverse actions or sanctions by the CSRC or other PRC regulatory agencies if we are unable to comply with such requirements, which may result in fines and penalties, restrictions on our operations, having to delist from a stock exchange outside of China, the halting of securities offerings to foreign investors and/or other actions that could materially and adversely affect our operations.
Any such actions or sanctions, once taken by the PRC government, could significantly limit, delay or hinder our ability to offer or continue to offer securities to investors, could result in a material change in our operations and/or in the value of the securities we are registering, and could cause the value of our securities to significantly decline or become worthless. We currently expect to fund our operations primarily through cash generated from our existing business operations and, as appropriate, through future capital raising activities. To the extent additional capital is required to support the research and development, commercialization or expansion of our planned quantum-enabled artificial intelligence, post-quantum cryptography or other new business initiatives, including any strategic acquisitions or collaborations, our ability to successfully pursue such initiatives may depend in part on our ability to access the capital markets. If governmental actions or regulatory restrictions were to limit, delay or prevent us from conducting future securities offerings, our ability to obtain additional financing could be adversely affected, which could in turn delay or limit the development, commercialization or expansion of our planned new business activities.
Changes in political, economic and other policies of the PRC government could have a material adverse effect on the overall economic growth of the PRC, which could reduce the demand for products offered by Hupan Pharmaceutical, and therefore adversely affect our financial results.
The PRC government has implemented various measures to promote economic development and regulate the allocation of resources. Although some of these measures may benefit the PRC economy generally, they may adversely affect Hupan Pharmaceutical’s medical product wholesale and distribution operations.
Hupan Pharmaceutical’s ability to maintain and grow its business in the PRC depends on a number of factors beyond our control, including macroeconomic and market conditions, demand for medical and healthcare products, changes in healthcare and pharmaceutical distribution policies, product pricing and reimbursement policies, procurement practices, import and export requirements, supply chain conditions, tax policies and the interpretation and enforcement of applicable laws and regulations. Changes in government procurement programs, centralized purchasing policies, distribution licensing requirements or restrictions on the sale, storage, transportation or importation of medical products could affect the products Hupan Pharmaceutical is permitted to distribute, the prices and margins at which it operates, and its ability to maintain relationships with suppliers and customers.
If Hupan Pharmaceutical is unable to adapt to these regulatory, policy or market developments in a timely and effective manner, our results of operations, financial condition and prospects could be materially and adversely affected.
There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.
The PRC legal system is a civil law system based on written codes and statutes. Unlike the common law system, prior court decisions may be cited as persuasive authority, but have limited precedential value. Since the late 1970s, the PRC government has promulgated a comprehensive system of laws, rules and regulations governing economic matters in general. In particular, as a result of the recency of implementation of certain laws and regulations, the non-precedential nature of court decisions, and the discretion regulators have in interpretation and enforcement of such laws, rules and regulations, the PRC legal system involves significant uncertainties, and can be inconsistent in its implementation, interpretation and enforcement. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we may experience. These uncertainties may impede our ability to enforce our contracts and could materially and adversely affect our business, financial condition and results of operation.
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The PRC legal system is based in part on government policies and internal rules which may be amended from time to time with little advance notice and which may not be timely published or otherwise made publicly available. Rules and regulations in China can change quickly, and amendments may in certain circumstances be given retroactive effect. We may not be aware of our violation of these policies and rules until after the occurrence of the violation, and we may be found to be in violation if we fail to adapt to these regulatory developments in a timely and effective manner. Such potential violations, including violations concerning the scope and effect of our contractual, property (including intellectual property) and procedural rights, could materially and adversely affect our business and impede our ability to continue our operations. As a result, sudden or unexpected changes in laws and regulations in the PRC with little advance notice could result in a material change in our operations and/or the value of the securities we are registering for sale, and could cause the value of our securities to significantly decline or become worthless.
Failure to obtain, renew or maintain the licenses, permits and filings required for our business operations, or to comply with the conditions and scope limitations attached to them, could materially and adversely affect our business, financial condition and results of operations.
The distribution of pharmaceuticals, medical devices and foods for special medical purposes in the PRC is a licensed activity, and each of the product categories we distribute is administered under a separate regulatory regime. Hupan Pharmaceutical currently holds a Drug Business License (药品经营许可证), a Medical Device Business License (医疗器械经营许可证), a Class II Medical Device Business Filing Certificate (第二类医疗器械经营备案凭证), and a Food Business License (食品经营许可证), in addition to its business license. Each of these licenses has a term of five years and must be renewed in advance of its expiration in accordance with applicable statutory procedures.
Each license and filing authorizes only the categories of products specified on its face, and in certain cases the mode of operation, the scope of business and the registered premises and storage facilities. If Hupan Pharmaceutical distributes a product outside the authorized scope of the relevant license or filing, changes its premises, warehouses or cold-chain facilities, changes its legal representative or responsible personnel, or otherwise alters particulars recorded on a license or filing without obtaining the required amendment or completing the required updating procedures, it may be found to be in violation of applicable requirements.
We cannot assure you that Hupan Pharmaceutical will be able to renew any of its licenses or filings on a timely basis, on comparable terms, or at all, or that the authorities will not narrow the scope of any license upon renewal. If Hupan Pharmaceutical fails to obtain, renew or maintain any required license, permit or filing, operates outside its authorized scope, or is found to be in violation of applicable requirements, it could be subject to warnings, orders to rectify, fines, confiscation of products and of income derived from the relevant operations, suspension of operations, and suspension or revocation of the relevant license or filing. Because substantially all of our revenue depends on products that may only be distributed under these licenses, the loss, suspension or non-renewal of any one of them, or a narrowing of its authorized scope, could require us to cease distributing an entire product category. In addition, changes in the interpretation or enforcement of applicable requirements, in the risk classification of a medical device Hupan Pharmaceutical distributes, in the licensing items applicable to foods for special medical purposes, or in centralized procurement, tender qualification or product pricing and reimbursement policies could require Hupan Pharmaceutical to obtain additional licenses or complete additional filings, or could restrict the products Hupan Pharmaceutical is permitted to distribute. Any of the foregoing could materially and adversely affect our business, financial condition and results of operations.
Restrictions on the ability of our PRC subsidiaries to make dividends and other distributions to us could limit our ability to fund our operations and make distributions to shareholders.
We are a Nevada holding company that conducts substantially all of our business through our PRC operaing subsidiary. As a holding company, we may rely on dividends and other distributions from Hupan Pharmaceutical to satisfy our cash and financing requirements, including funding our operations, pursuing strategic growth initiatives, servicing any indebtedness and making distributions to Quanome’s shareholders.
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Under applicable PRC laws and regulations, dividends and other distributions by our PRC subsidiary are subject to various restrictions and procedures, including those relating to foreign exchange registration and the conversion of Renminbi into foreign currencies. In addition, Hupan Pharmaceutical may make distributions to us only out of its accumulated after-tax profits, if any, as determined in accordance with PRC accounting standards and regulations. PRC laws also require enterprises to set aside a portion of their after-tax profits each year to fund certain statutory reserve funds before they may distribute dividends. These reserve funds are not distributable as cash dividends.
Furthermore, if Hupan Pharmaceutical incurs debt in the future, the instruments governing such indebtedness may restrict its ability to pay dividends or make other distributions to us. Any limitation on the ability of Hupan Pharmaceutical to transfer funds to us could adversely affect our liquidity and our ability to fund our operations, pursue acquisitions or other strategic transactions, support the development and commercialization of new business initiatives or make distributions to Quanome’s shareholders.
As a result, there can be no assurance that our PRC subsidiary will be able to make dividends or other distributions to us in the amounts or at the times we anticipate, or at all. Any restrictions on cash transfers within our corporate group could materially and adversely affect our business, financial condition, results of operations and the value of our securities.
PRC regulation of loans to and direct investment in PRC entities by offshore holding companies may restrict or delay us from using the proceeds of future offerings to make loans or additional capital contributions to our PRC subsidiaries, which may adversely affect our liquidity and our ability to fund and expand our business.
Any funds we provide to our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, may be subject to approval by or registration with relevant governmental authorities in China. According to the relevant PRC regulations on foreign-invested enterprises in China, capital contributions to our PRC subsidiaries may require registration with the State Administration for Market Regulation (the “SAMR”) or its local counterpart and registration with a local bank authorized by SAFE. In addition, (i) any foreign loan procured by our PRC subsidiaries is required to be registered with SAFE or its local branches, and (ii) any of our PRC subsidiaries may not procure loans which exceed the difference between its total investment amount and registered capital or, as an alternative, they may only procure loans subject to the calculation approach and limitation as provided by the People’s Bank of China.
Under applicable SAFE regulations, Renminbi converted from the foreign-currency-denominated capital of a foreign-invested enterprise may not be used for expenditures beyond the enterprise’s business scope, may not be used to provide entrusted loans or to repay loans between non-financial enterprises, and may not be lent to non-affiliated entities. Foreign-invested enterprises may settle their foreign exchange capital and convert foreign debt into Renminbi on a discretionary basis, and non-investment foreign-invested enterprises may use capital funds to make domestic equity investments provided that the investment does not fall within the negative list for foreign investment. Interpretation and application of these requirements continue to evolve, and violations may result in monetary or other penalties.
Historically, we have provided funding to a PRC subsidiary through capital contributions. We currently have no plans to provide additional funding to our PRC subsidiaries. However, if our PRC subsidiaries require additional funding from Quanome in the future, including funding derived from proceeds of any offering under this registration statement, our ability to provide such funding may depend on the completion of applicable registrations, filings, reporting and other procedures under PRC law. We cannot assure you that we will be able to complete any such required procedures on a timely basis, or at all. Any failure or delay in completing applicable procedures, or any restrictions on the conversion or use of such funds, could restrict or delay our ability to use proceeds from future offerings to fund or expand the operations of our PRC subsidiaries and could materially and adversely affect our liquidity, business and results of operations.
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Regulatory restrictions on currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.
The PRC government imposes regulatory restrictions on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China, and requires approval or registration in accordance with regulatory requirements. Substantially all of our revenues are denominated in Renminbi. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE, provided that certain procedural requirements are complied with and supporting documentation is presented to designated banks. Approval from, or registration with, appropriate government authorities is, however, required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital account items, such as the repayment of loans denominated in foreign currencies or the repatriation of investment. As a result, we may not be able to convert Renminbi into U.S. dollars, or to remit funds out of China, in a timely manner or at all. The PRC government may at its discretion further restrict access to foreign currencies for current account or capital account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, service any foreign currency-denominated obligations or fund business activities outside the PRC.
Implementation of the labor laws and regulations in the PRC may adversely affect our business and results of operations, and failure to fully comply with PRC labor-related laws may expose us to potential liabilities and penalties.
Pursuant to the PRC Labor Contract Law, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees’ probation and unilaterally terminating labor contracts. It is uncertain as to how the labor contract law and its implementation rules will affect Hupan Pharmaceutical’s current employment policies and practices. Hupan Pharmaceutical’s employment policies and practices may violate the labor contract law or its implementation rules, and we may thus be subject to related penalties, fines or legal fees.
Compliance with the labor contract law and its implementation rules may increase the operating expenses. In the event that Hupan Pharmaceutical decides to terminate some of its employees or otherwise change its employment or labor practices, the labor contract law and its implementation rules may also limit its ability to effect those changes in a desirable or cost-effective manner, which could adversely affect its business and results of operations. According to the Social Insurance Law, employees must participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance and maternity insurance, and the employers must, together with their employees or separately, pay the social insurance premiums for such employees. The PRC government’s enhanced measures relating to social insurance collection may lead to stricter enforcement.
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As the interpretation and implementation of these laws and regulations are still evolving, there can be no assurance that Hupan Pharmaceutical’s employment practice policy will at all times be deemed to be in full compliance with labor-related laws and regulations in the PRC, which may subject Hupan Pharmaceutical to labor disputes or government investigations. If Hupan Pharmaceutical is deemed to have violated relevant labor laws and regulations, it could be required to provide additional compensation to its employees, and, therefore, our financial condition and results of operations could be materially and adversely affected.
Fluctuations in exchange rates may result in foreign currency exchange losses.
The change in the value of the Renminbi against other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions and the PRC’s foreign exchange policies, as well as supply and demand in the local market. We are exposed to the risks of market forces or government policies and their impact on the exchange rate between Renminbi or other currencies in the future. Subsequent to the disposal of our U.S. logistics business in February 2026 and as of the date of this report, most of our revenue and costs are denominated in Renminbi and most of our cash are also denominated in Renminbi. Any significant fluctuations in the value of the Renminbi may materially and adversely affect our liquidity and cash flows.
Changes in the relations between the PRC and the United States may affect our business, financial condition and results of operations.
Due to Hupan Pharmaceutical’s operations in the PRC, our business, results of operations and financial condition may be influenced to a certain degree by changes in government relations between the PRC and the United States or other governments. There is significant uncertainty about the future relationship between the United States and the PRC with respect to trade policies, treaties, government regulations and tariffs.
The PRC’s political relationships with those foreign countries and regions may affect our current and future relationships with third parties. There can be no assurance that our existing or potential collaborators will not alter their perception of us or their preferences as a result of adverse changes to the state of political relationships between the PRC and the relevant foreign countries or regions, and such alteration may cause a decline in the demand for Hupan Pharmaceutical’s products, and adversely affect our business, financial condition, results of operations, cash flows and prospects.
In July 2021, the PRC government provided new guidance on the PRC-based companies raising capital outside of the PRC, including through arrangements called variable interest entities (“VIEs”). In light of such developments, the SEC has imposed enhanced disclosure requirements on the PRC-based companies seeking to register securities with the SEC. Although Hupan Pharmaceutical is our wholly-owned subsidiary and we do not have a VIE structure, due to operations in the PRC, any future PRC, U.S. or other rules and regulations that place restrictions on capital raising or other activities by companies with operations in the PRC could affect our business and results of operations. Changes in the state of relations between the PRC and the United States or other governments are difficult to predict and could adversely affect our operations and our business in the PRC and United States.
You may experience difficulties in effecting service of legal process upon, enforcing foreign judgments against, or bringing original actions in the PRC against us or certain of our directors and officers, and your ability to protect your interests through the U.S. courts may be limited.
A substantial portion of our operations and assets are located in the PRC. In addition, two of our directors and executive officers reside in the PRC. Mr. Long Yi is a foreign citizen residing in the PRC, and Ms. Zhengyi (Janice) Fang is a PRC national residing in the PRC. Substantially all or a significant portion of the assets of such individuals may be located outside the United States. As a result, it may be difficult or costly for investors to effect service of process within the United States upon us or such persons, or to bring actions in the United States against us or such persons based on the civil liability provisions of the U.S. federal securities laws or the securities laws of any state in the United States.
Even if an investor successfully obtains a judgment against us or any of our directors or officers in a U.S. court, the investor may not be able to enforce that judgment against assets located in the PRC. The recognition and enforcement of foreign judgments in the PRC are governed by the PRC Civil Procedure Law. PRC courts may recognize and enforce a foreign judgment pursuant to an applicable treaty or on the basis of reciprocity, subject to the satisfaction of applicable statutory requirements and public-policy considerations. The PRC and the United States do not currently have a bilateral treaty providing for the reciprocal recognition and enforcement of civil and commercial judgments. Accordingly, there is substantial uncertainty as to whether, and under what circumstances, a PRC court would recognize or enforce a judgment rendered by a U.S. court against us or our directors or officers, particularly a judgment predicated upon the civil liability provisions of U.S. federal or state securities laws.
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There is also uncertainty as to whether PRC courts would entertain an original action brought in the PRC against us or our directors or officers based solely upon U.S. federal or state securities laws. Investors seeking to bring such an action in the PRC may be required to establish an independent cause of action under PRC law, satisfy applicable jurisdictional and procedural requirements, arrange for the translation, notarization and authentication of evidence generated outside the PRC, and incur significant legal fees and other costs. Such proceedings may be time-consuming, and the remedies available under PRC law may differ from, or be more limited than, the remedies available under U.S. securities laws.
Accordingly, investors may face significant practical and legal obstacles, as well as substantial costs and delays, in pursuing claims against us or our directors and officers and in enforcing judgments against assets located in the PRC. As a result, your ability to protect your interests and obtain an effective remedy for violations of U.S. federal or state securities laws may be materially limited.
We may be required to complete filing procedures with the CSRC in connection with future offerings of our securities under this registration statement, and we cannot assure you that we will be able to complete such filings in a timely manner or at all.
On February 17, 2023, the China Securities Regulatory Commission, or the CSRC, promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, together with five supporting guidelines, which became effective on March 31, 2023. The Trial Measures establish a filing-based regulatory regime for direct and indirect overseas securities offerings and listings by PRC domestic companies, including certain subsequent offerings conducted by companies that are already listed on an overseas stock exchange.
Under the Trial Measures, an overseas offering and listing by an issuer will be deemed an indirect overseas offering and listing by a PRC domestic company if both of the following conditions are satisfied: (i) 50% or more of any of the issuer’s operating revenue, total profit, total assets or net assets, as reflected in its audited consolidated financial statements for the most recently completed fiscal year, is attributable to PRC domestic companies; and (ii) the principal parts of the issuer’s business activities are conducted in mainland China, its principal place of business is located in mainland China, or the majority of the senior management personnel responsible for its business operations and management are PRC citizens or have their usual places of residence in mainland China. The determination is made based on the substance of the issuer’s activities and other relevant facts and circumstances.
We are filing the registration statement of which this report forms a part to register securities that we may offer and sell from time to time. We believe that the filing or effectiveness of this registration statement, by itself, does not constitute a completed overseas securities offering requiring a filing with the CSRC under the Trial Measures. However, the CSRC or other relevant PRC governmental authorities may reach a different conclusion.
If, at the time of a future offering or takedown under this registration statement, our operations satisfy the criteria for an indirect overseas offering and listing by a PRC domestic company under the Trial Measures, including because our PRC operations continue to account for 50% or more of one or more of the applicable financial measures and the other applicable condition is also satisfied, such offering may be regarded as a subsequent overseas securities offering in the same overseas market. In that event, we may be required to complete a filing with the CSRC within three working days after the completion of such offering. The applicable filing requirements may depend on the structure, timing and terms of the particular offering, as well as the facts and circumstances existing at that time.
There remain uncertainties regarding the interpretation, implementation and enforcement of the Trial Measures and the related guidance. We cannot assure you that the CSRC or other relevant PRC governmental authorities will agree with our determination that no filing is required in connection with the filing of this registration statement, or that any future offering under this registration statement will not require a CSRC filing. If a filing is required in connection with a future offering, we cannot assure you that we will be able to complete it in a timely manner or at all.
If we fail to complete any required CSRC filing, or if the CSRC determines that we have conducted an overseas securities offering without satisfying the applicable filing requirements, we may be subject to regulatory actions, including orders to rectify, warnings and monetary penalties. Such actions could delay or prevent us from completing future offerings under this registration statement, limit our ability to raise capital, materially and adversely affect our business, financial condition and results of operations, and cause the value of our securities to decline significantly or become worthless.
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Compliance with the PRC’s laws, regulations and guidelines relating to data security, cybersecurity and privacy and any other future laws and regulations may entail significant expenses and could affect our business.
The PRC has implemented or will implement rules and is considering a number of additional proposals relating to data protection. The Data Security Law provides that the data processing activities must be conducted based on “data classification and hierarchical protection system” for the purpose of data protection and prohibits entities in the PRC from transferring data stored in the PRC to foreign law enforcement agencies or judicial authorities without prior approval by the PRC government. Additionally, the PRC’s Cybersecurity Law and the Administrative Measures for the Hierarchical Protection of Information Security require companies to take certain organizational, technical and administrative measures and other necessary measures to ensure the security of their networks and data stored on their networks. Under the rules, regulations and guidelines relating to the multi-level protection scheme, entities operating information systems must have a thorough assessment of the risks and the conditions of their information and network systems to determine the level of the entity’s information and network systems.
Recently, the Cybersecurity Administration of China (“CAC”) has taken action against several PRC internet companies in connection with their initial public offerings on U.S. securities exchanges for alleged national security risks and improper collection and use of the personal information of PRC data subjects. According to the official announcement, the action was initiated based on the National Security Law, the Cyber Security Law and the Cybersecurity Review Measures, which are aimed at “preventing national data security risks, maintaining national security and safeguarding public interests.”
Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators procuring network products and services, and online platform operators (as opposed to “data processors” in the Revised Draft CAC Measures) carrying out data processing activities which affect or may affect national security, shall conduct a cybersecurity review pursuant to the provisions therein. In addition, online platform operators possessing personal information of more than one million users seeking to be listed on foreign stock markets must apply for a cybersecurity review.
On September 24, 2024, the State Council of the PRC published the Network Data Regulations, which became effective on January 1, 2025. The Network Data Regulations provide detailed implementing rules and guidance on various aspects of data compliance requirements under the existing data protection framework pillars of the Cybersecurity Law, the PRC Data Security Law and the PRC Personal Information Protection Law. The Network Data Regulations supplement the requirements on several aspects of the PRC Personal Information Protection Law regarding notification, consent, and the exercise of personal rights, provide more detail on compliance requirements for processors of important data, and also provide more guidance to streamline cross-border data transfers.
As of the date of this report, neither we nor Hupan Pharmaceutical has received any notice from any PRC regulatory authority identifying us as a “critical information infrastructure operator,” “online platform operator” or “data processor,” or requiring us to go through the cybersecurity review procedures pursuant to the Cybersecurity Review Measures and Regulation on Network Data Security Management (the “Network Data Regulations”). Based on our understanding of the Cybersecurity Review Measures, and the Network Data Regulations, we believe it is unlikely that Hupan Pharmaceutical will become subject to cybersecurity review by the CAC for issuing securities to foreign investors because: (i) the business customer information Hupan Pharmaceutical handles in its business operations, either by its nature or in scale, does not normally trigger significant concerns over PRC national security and (ii) Hupan Pharmaceutical has not processed, and does not anticipate to process in the foreseeable future, personal information for more than one million users or persons. However, there remains uncertainty as to how the Cybersecurity Review Measures, and the Network Data Regulations, if enacted as currently proposed, will be interpreted or implemented. Furthermore, there remains uncertainty as to whether the PRC regulatory authorities may adopt new laws, regulations, rules, or detailed implementation and interpretation in relation, or in addition, to the Revised CAC Measures and the Draft Management Regulations. While we intend to closely monitor the evolving laws and regulations in this area and take all reasonable measures to mitigate compliance risks, we cannot guarantee that Hupan Pharmaceutical’s business and operations will not be adversely affected by the potential impact of the Cybersecurity Review Measures, the Network Data Regulation or other laws and regulations related to cybersecurity, privacy and data security.
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Furthermore, the Personal Information Protection Law provides a comprehensive set of data privacy and protection requirements that apply to the processing of personal information and expands data protection compliance obligations to cover the processing of personal information of persons by organizations and individuals in the PRC, and the processing of personal information of persons in the PRC outside of the PRC if such processing is for purposes of providing products and services to, or analyzing and evaluating the behavior of, persons in the PRC. The Personal Information Protection Law also provides that critical information infrastructure operators and personal information processing entities who process personal information meeting a volume threshold to be set by PRC cyberspace regulators are also required to store in the PRC personal information generated or collected in the PRC, and to pass a security assessment administered by PRC cyberspace regulators for any export of such personal information. Lastly, the Personal Information Protection Law contains proposals for significant fines for serious violations of up to approximately $7.2 million or 5% of annual revenues from the prior year and may also be ordered to suspend any related activity by competent authorities. Neither we nor Hupan Pharmaceutical currently maintain, or intend to maintain in the future, personally identifiable health information of patients in the PRC.
Interpretation, application and enforcement of these laws, rules and regulations evolve from time to time and their scope may continually change, through new legislation, amendments to existing legislation or changes in enforcement. Compliance with the PRC’s new Cyber Security Law and Data Security Law could significantly increase the cost to us of conducting our business, require significant changes to our operations or even prevent us from providing certain service offerings in jurisdictions in which we currently operate or in which we may operate in the future. Despite our efforts to comply with applicable laws, regulations and other obligations relating to privacy, data protection and information security, it is possible that our practices, offerings or platform could fail to meet all of the requirements imposed on us by the Cyber Security Law, the Data Security Law and/or related implementing regulations. Any failure on our part to comply with such law or regulations or any other obligations relating to privacy, data protection or information security, or any compromise of security that results in unauthorized access, use or release of personally identifiable information or other data, or the perception or allegation that any of the foregoing types of failure or compromise has occurred, could damage our reputation, discourage new and existing counterparties from contracting with us or result in investigations, fines, suspension or other penalties by PRC government authorities and private claims or litigation, any of which could adversely affect our business, financial condition and results of operations. Even if our practices are not subject to legal challenge, the perception of privacy concerns, whether or not valid, may harm our reputation and brand and adversely affect our business, financial condition and results of operations. Moreover, the legal uncertainty created by the Data Security Law, the Cybersecurity Review Measures and the recent PRC government actions could adversely affect our ability, on favorable terms, to raise capital.
The enacted “Holding Foreign Companies Accountable Act” and the “Accelerating Holding Foreign Companies Accountable Act” call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors. These developments could add uncertainties to the market for our common stock.
The HFCAA requires certain issuers of securities to establish that they are not owned or controlled by a foreign government. Specifically, an issuer must make this certification if the PCAOB is unable to audit specified reports because the issuer has retained a foreign public accounting firm not subject to inspection by the PCAOB. Furthermore, if the PCAOB is unable to inspect the issuer’s public accounting firm for three consecutive years, the issuer’s securities are banned from trading on a national exchange or through other methods. In December 2022, the Accelerating Holding Foreign Companies Accountable Act amended the HFCAA by decreasing the number of non-inspection years from three to two, thus reducing the time period before our common stock may be prohibited from trading or delisted if the PCAOB were to determine that it could not inspect our auditor.
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In March 2021, the SEC adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the HFCAA. The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction. In December 2021, the SEC adopted amendments finalizing such rules to require that any such identified registrant is required to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction, and to also required to disclose in the registrant’s annual report the audit arrangements of, and governmental influence on, such a registrant.
In December 2021, the PCAOB issued a Determination Report which found that the PCAOB was then unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the PRC, because of a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. The PCAOB has made such designations as mandated under the HFCAA. Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms and thus are at risk of such suspensions in the future.
In August 2022, the CSRC, the Ministry of Finance of the PRC, and the PCAOB signed a Statement of Protocol (the “Protocol”), governing inspections and investigations of audit firms based in mainland China and Hong Kong. Pursuant to the Protocol, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. In December 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. While vacating those determinations, the PCAOB noted that, should it encounter any impediment to conducting an inspection or investigation of auditors in mainland China or Hong Kong as a result of a position taken by any authority there, the PCAOB will consider the need to issue a new determination. Notwithstanding the foregoing, if the PCAOB is not able to inspect and investigate completely our auditor’s work papers in China, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading of our securities may be prohibited under the HFCAA.
Our auditor, ZH CPA, LLC, an independent public accounting firm registered with the PCAOB, is headquartered in Denver, Colorado. Our auditor is subject to laws in the U.S. pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Notwithstanding the foregoing, in the future, if there is any regulatory change or step taken by PRC regulators that does not permit our auditor to provide audit documentations located in China to the PCAOB for inspection or investigation, you may be deprived of the benefits of such inspection which could result in limitation or restrictions on our access to the U.S. capital markets and trading of our securities.
Risks Related to Our Securities
If we are unable to regain and maintain compliance with Nasdaq listing standards, our common stock could be delisted, which could adversely affect the liquidity of our common stock and our ability to raise capital.
On January 7, 2026, we received notice from Nasdaq that we were not in compliance with the minimum bid price requirement because the closing bid price of our common stock had remained below $1.00 per share for 30 consecutive business days. On July 9, 2026, the Company received a second notice (the “Second Notice”) from Nasdaq indicating that, while the Company has not yet regained compliance with the bid price requirement, the Staff has determined that the Company is eligible for an additional 180 calendar day period, or until January 4, 2027 (the “Second Compliance Period”), to regain compliance. According to the Second Notice, the Staff’s determination was based on (i) the Company meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on the Nasdaq Capital Market, with the exception of the bid price requirement, and (ii) the Company’s written notice of its intention to cure the deficiency during the Second Compliance Period by effecting a reverse stock split, if necessary. However, there can be no assurance that we will be able to regain or maintain compliance with Nasdaq’s listing requirements.
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If our common stock is delisted from Nasdaq, the market liquidity of our common stock could be materially adversely affected, and our ability to raise capital on favorable terms, or at all, could be impaired. Delisting could also adversely affect investor confidence, analyst coverage, and business development opportunities. In addition, our common stock could become subject to the SEC’s penny stock rules, which may further reduce trading activity and limit investors’ ability to buy or sell our common stock.
If you purchase our securities, you may experience future dilution as a result of future equity offerings or other prior equity issuances.
We may seek additional capital in the future due to market conditions, strategic opportunities or other considerations, even if we believe we have sufficient funds for our current operating plans. To raise additional capital, we may issue additional shares of our common stock or securities convertible into, exchangeable for, or exercisable for our common stock. We cannot assure you that future issuances will be made at a price equal to or greater than the price paid by investors in this offering, and investors in future financings may receive rights, preferences or privileges senior to those of existing stockholders.
In addition, as of the date of this report, we have outstanding warrants to purchase shares of our common stock. Certain of these warrants contain anti-dilution and price-adjustment provisions that may, under specified circumstances, reduce the applicable exercise price and increase the number of shares issuable upon exercise. The exercise of such warrants, or adjustments pursuant to their terms, could result in additional dilution to our stockholders.
The market price of our common stock and the trading volume of our common stock have been and may continue to be volatile, and such volatility could cause the market price of our common stock to decrease.
Between September 24, 2025, and September 24, 2026, the market price of our common stock fluctuated from a low of $0.2504 per share to a high of $1.68 per share, and our stock price continues to fluctuate. The market price and trading volume of our common stock may continue to fluctuate in response to numerous factors, some of which are beyond our control, such as:
| ● | our ability to maintain or increase sales of our products; | |
| ● | our ability to maintain and expand relationships with pharmaceutical manufacturers and suppliers; | |
| ● | changes in supply terms, pricing arrangements, product availability, or procurement costs; | |
| ● | announcements by us or our competitors regarding acquisitions, strategic alliances, new products, or other business developments; | |
| ● | changes in reimbursement policies, healthcare regulations, or governmental oversight affecting our products or customers; | |
| ● | developments concerning regulatory oversight and approvals; | |
| ● | changes in earnings estimates or recommendations by securities analysts, if our common stock is covered by analysts; | |
| ● | successes or challenges in our collaborative arrangements or alternative funding sources; | |
| ● | developments affecting the pharmaceutical distribution, healthcare, and life sciences industries; | |
| ● | actual or perceived changes in the interpretation or enforcement of laws, regulations, and governmental policies in China that affect our business, industry, or corporate structure; | |
| ● | adverse effects on our business condition and results of operations from general economic and market conditions and overall fluctuations in the United States and international markets; | |
| ● | future issuances of common stock or other securities; |
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| ● | the addition or departure of key personnel; and | |
| ● | general market conditions and other factors, including factors unrelated to our operating performance. |
Further, the stock market in general, and the securities of smaller-cap healthcare and pharmaceutical companies in particular, have experienced significant price and volume volatility. Continued market fluctuations could result in substantial volatility in the market price of our common stock, which could cause investors to lose some or all of their investment.
Item 1B. Unresolved Staff Comments.
We are a smaller reporting company and are not required to provide the information required under this item.
Item 1C. Cybersecurity.
Risk Management and strategy
We track and log security incidents across our company and our customers to remediate and resolve any such incidents. Significant incidents, if any, shall be reviewed by chief executive officer and chief financial officer, with the assistance from our information technology department, to assess and determine its materiality or potentiality of becoming material. Our senior management makes the final materiality determinations and disclosure and other compliance decisions.
Governance
Our board of directors does not have a standing risk management committee, but rather directly administers its oversight function as a whole. Our board of directors will (i) lead in a direction that minimizes the risk of unauthorized and malicious use, disclosure, potential theft, alteration or damaging effects of our operations while concurrently enabling the sharing of information in cyberspace, and (ii) ensure that risks to the confidentiality, integrity or availability of Company-owned information assets are managed appropriately, and (iii) review disclosure concerning cybersecurity matters in our annual report on 10-K presented by our chief executive officer, chief financial officer, and other personnel in charge of cybersecurity matters.
Item 2. Properties.
We lease two premises with a gross floor area of approximately 599 square meters in Wuhan, Hubei Province, China, for the daily business activities and office use of our pharmaceutical distribution and supply chain service, with lease terms from January 1, 2025 to December 31, 2029, and from March 22, 2026 to March 21, 2027, respectively. Our executive office is located at 112W 34th St, FL 18, Room 18022, New York, NY 10120 with lease terms from September 1, 2026 to August 31, 2027.
We may add additional offices as we expand our business to other states and countries. We believe that our facilities are sufficient for our current needs and that, should it be needed, additional facilities will be available to accommodate the expansion of our business.
Item 3. Legal Proceedings.
From time to time, we may be subject to legal proceedings, investigations and claims incidental to the conduct of our business. We are currently not a party to, nor are we aware of, any legal proceedings, investigations or claims which, in the opinion of our management, are likely to have a material adverse effect on our business, financial condition or results of operations.
Item 4. Mine Safety Disclosures.
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common stock trades on the Nasdaq Capital Market under the symbol “QNME.”
Holders of Record
As of September 22, 2026, we had approximately 25 holders of record of our common stock.
Dividend Policy
We have never declared or paid, and do not anticipate declaring or paying, any cash dividends on our capital stock. Any future determination as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors that our board of directors may deem relevant.
Securities Authorized for Issuance under Equity Compensation Plans
The following table contains information about our equity compensation plan as of June 30, 2026. We maintain one equity compensation plan, which was approved by our stockholders in December 2025, the 2025 Equity Incentive Plan. As of the date of this report, no securities have been issued under the 2025 Equity Incentive Plan.
| Plan | Securities Authorized for Issuance | Securities Issued During FY2026 | Securities Issuable Upon Exercise of Outstanding Options, Warrants or Rights | Securities Remaining Available for Future Issuance | ||||||||||||
| 2025 Equity Incentive Plan | 5,000,000 | — | — | 5,000,000 | ||||||||||||
| Total | 5,000,000 | — | — | 5,000,000 | ||||||||||||
Stock Performance Graph
We are a smaller reporting company and are not required to provide the information required under this item.
Recent Sale of Unregistered Securities and Use of Proceeds
The Company did not sell any securities that were not registered under the Securities Act during the period covered by this report that have not been previously disclosed on a Form 10-Q or Form 8-K.
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Use of Proceeds from Initial Public Offering of Common Stock
On July 1, 2024, we completed our IPO of 1,500,000 shares of common stock, at a price of $4.50 per share, before underwriting discounts and commissions. The offering was registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-278416), which was declared effective by the SEC on June 27, 2024. As of the date of this report, with the proceeds of the IPO, we used approximately $3.3 million for in marketing activities and business expansion and used approximately $2.4 million for working capital needs. There has been no material change in the planned use of proceeds from the IPO as described in the prospectus dated June 28, 2024, filed with the SEC pursuant to Rule 424(b) under the Securities Act.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
There were no purchases of the issuer’s securities by the issuer or affiliated purchasers, as defined in Rule 10b-18(a) (3) the Exchange Act, during the fourth quarter of the fiscal year ended June 30, 2026.
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. All amounts included herein with respect to the years ended June 30, 2026 and 2025 are derived from our consolidated financial statements included elsewhere in this annual report. Our financial statements have been prepared in accordance with the U.S. GAAP.
Overview
Prior to February 12, 2026, we operated as a U.S.-based integrated cross-border supply chain solutions provider with a strategic focus on the Asian market, including China, through ABL Chicago, and were also engaged in the distribution of pharmaceutical products in China through Hupan Pharmaceutical. On February 12, 2026, we transferred the operations of ABL Chicago to an unrelated third party, which obtained operational control and substantially all economic interests associated with the business. Following the transfer, we ceased substantive involvement in ABL Chicago’s operations. Accordingly, the operations of ABL Chicago were classified as discontinued operations in our consolidated financial statements. The disposal represents a strategic shift in our business operations and allows management to further streamline resources and focus on the development and expansion of our pharmaceutical distribution business.
Our continuing operations are focused on the distribution of pharmaceutical products in China through Hupan Pharmaceutical. Revenue from continuing pharmaceutical operations was primarily derived from infusion products, specialty prescription drugs, and medical nutrition products. We procure products from manufacturers, store the products at designated warehouses, and distribute them to hospitals, distributors and other healthcare providers, primarily through agents. The Company operates within a highly regulated healthcare environment and generates revenue through sales to distributors, hospitals, and clinics.
Beginning in September 2026, the Company, through its indirectly wholly owned subsidiary, XDT Infrastructure I, LLC, a Delaware limited liability company, commenced activities relating to the provision of artificial intelligence compute capacity and managed inference services. Under this business model, the Company’s subsidiary procures, owns and operates servers and related computing infrastructure for its own account, and makes capacity on that infrastructure available to customers as a service. Capacity allocated to a customer is logically and operationally segregated from capacity allocated to other customers, with the level of segregation depending on the applicable customer arrangement. Customers may specify the artificial intelligence models to be deployed on the capacity allocated to them, subject to technical compatibility, licensing and other applicable requirements, as well as the Company’s operation of the underlying infrastructure. XDT’s role is primarily to provide and operate the underlying computing infrastructure and managed inference environment. As of the date of this report, the Company does not plan to develop or train proprietary AI models and does not use customer-provided content to train models unless separately authorized by the applicable customer.
The Company continually evaluates potential opportunities to expand and diversify its business operations. Smart Reserve Holding LTD and Smart Reserve Inc were formed in connection with the Company’s preliminary evaluation of potential opportunities relating to digital asset business activities. As of the date of this report, the Company has not commenced any such business and has not adopted any concrete operational plan relating thereto. Any future expansion initiatives may be affected by factors including market conditions, capital availability, regulatory developments, operational execution, technological requirements, and management resources.
The Company’s results of operations for the period reflect the performance of its continuing pharmaceutical distribution business, and accordingly, prior period results have been recast to present the disposed business as discontinued operations where applicable. Management evaluates the performance of the continuing operations based on revenue growth, gross margin, operating efficiency, and working capital.
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Key Factors Affecting Our Results of Operations
We believe the most significant factors that affect our business and results of operations include the following:
Regulatory Environment in China
The pharmaceutical industry in China is subject to extensive government regulation, including pricing controls, tendering processes, and reimbursement policies. Government initiatives, such as centralized procurement programs and healthcare reforms, may affect product pricing, sales volumes, and margin levels.
Supplier and Manufacturer Relationships
The Company relies on relationships with pharmaceutical manufacturers and suppliers for product sourcing. Changes in supply terms, pricing arrangements, or product availability may impact revenue and gross margins.
Customer Concentration and Hospital Demand
A significant portion of the Company’s sales is generated from hospitals and large distributors. Purchasing patterns, tender cycles, and changes in hospital demand or procurement policies can lead to fluctuations in revenue. During the year ended June 30, 2026, we have generated revenue from the distribution of pharmaceutical products from 63 customers, of which, four customers took over 10% of the revenue.
Pricing Pressure and Competition
The Company operates in a competitive market with pressure from both domestic and international pharmaceutical distributors. Competitive pricing dynamics and participation in government bidding processes may compress margins.
Product types and composition
During the year ended June 30, 2026, the pharmaceutical products we distribute mainly consist of infusion drugs, specialty foods, and therapeutic drugs. The profitability level of different products varies, and the proportion of various products affects our gross profit level.
Accounts receivable collection
The current payment term provided by us to our main customers is between 0-90 days; while the payment term from the supplier is 60 days. There is also a situation of prepaying payment to the supplier. If the accounts receivable cannot be collected in a timely manner or there are identifiable uncollectible balances, our cash flow in operating activities may be negatively affected.
Foreign Currency Fluctuations
As the Company operates primarily in China while reporting in United States Dollar (“USD”), fluctuations in foreign exchange rates, particularly between the Renminbi and the reporting currency, may impact reported revenue and profitability.
Key Components of Results of Operations
Revenues. We currently generate revenue from the distribution of pharmaceutical and medical products. We purchase products from manufacturers, receive and hold the products at designated warehouses, and deliver them to customers’ warehouses or other designated locations. Revenue is recognized at a point in time when control of the products is transferred to and accepted by the customers.
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Prior to the disposition of our cross-border logistics business in February 2026, we also generate revenues primarily by providing customized cross-border ocean freight solutions and airfreight solutions to customers that specifically cater to their requirements and needs in transporting goods into the U.S. Under the service agreements with our customers, we offer a wide variety of integrated services under our cross-border ocean freight solutions and cross-border airfreight solutions, including (i) cross-border freight consolidation and forwarding services, (ii) customs clearance services, (iii) warehousing and distribution services and (iv) U.S. domestic ground transportation services.
Cost of Revenues. Our cost of revenues from the distribution of pharmaceutical and medical products comprises cost of pharmaceutical products from manufacturers. Our cost of revenues from customized cross-border ocean and air freight solutions mainly comprises transportation and delivery costs, warehouse service charges, custom declaration and terminal charges, freight arrangement charges and other overhead cost allocation which includes operating and financing lease-related costs, depreciation expenses of property and equipment and other miscellaneous expenses.
Selling Expenses. Our selling expenses primarily include salaries expense, advertising expenses, marketing expense of a system, entertainment expenses and traveling expense of sales team engaged in developing potential customers and maintaining customer relationships and transportation cost for selling pharmaceutical products.
General and Administrative Expenses. Our general and administrative expenses primarily include salaries and staff benefits, repair and maintenance expenses, depreciation on property and equipment, amortization on intangible assets, lease expenses on office premises, travelling and entertainment expenses, bank charges, legal and professional fees, insurance expenses and other office expenses.
Write-off of supplier advance: The expense consists of the write-off of an advance payment made to a supplier for inventory intended for a new business initiative.
Provision of allowance for expected credit loss on loan receivable: The expense consists of the allowance recognized for expected credit losses on loans receivable from third parties, based on the borrowers’ creditworthiness, repayment history, current financial condition and relevant economic factors.
Other Income. Our other income primarily consists of interest income in connection with third-party loan.
Interest Expenses. Our interest expenses primarily consist of the interest expenses incurred for convertible debts and other loans.
Income Tax Expenses. Our income tax expenses consist primarily of PRC enterprise income tax.
Results of Operations
Continuing Operation
Our continuing operations are focused on the distribution of pharmaceutical products in China. Revenue from continuing pharmaceutical operations was primarily derived from infusion products, specialty prescription drugs, and medical nutrition products. The Company operates within a highly regulated healthcare environment and generates revenue through sales to hospitals through agent, and other healthcare providers.
Discontinued Operation
ABL Chicago is a U.S.-based integrated cross-border supply chain solution provider with a strategic focus on the Asian market including China. We primarily provide customized cross-border ocean freight solutions and airfreight solutions in the U.S. that specifically cater to our customers’ requirements and needs in transporting goods into the U.S. We offer a wide variety of integrated services under our cross-border ocean freight solutions and cross-border airfreight solutions, including (i) cross-border freight consolidation and forwarding services, (ii) customs clearance services, (iii) warehousing and distribution services and (iv) U.S. domestic ground transportation services.
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On February 12, 2026, the sale of 100% of the issued and outstanding shares of ABL Chicago was duly approved and adopted by the Company’s shareholders. Accordingly, the Company consummated the transfer of the ABL Chicago business. Immediately prior to the Transaction, the Company forgave $3,402,808 of amounts due from ABL Chicago. The Company recorded a gain on the sale of the ABL Chicago business in the amount of $2,556,315 as follows:
| Cash consideration for sale of ABL Chicago | $ | 1 | ||
| Less: book value of assets sold: | ||||
| Cash | 167,536 | |||
| Accounts receivable – third parties, net | 1,078,847 | |||
| Accounts receivable – related party, net | 358,246 | |||
| Prepaid expenses and other assets | 337,616 | |||
| Other receivable – related parties | 1,141,959 | |||
| Loan receivable – related parties | 386,541 | |||
| Contract assets | 43,365 | |||
| Investment in other entity | 15,741 | |||
| Property and equipment, net | 132,366 | |||
| Right of use operating lease assets, net | 1,697,873 | |||
| Right of use financing lease assets, net | 71,692 | |||
| Net book value of assets sold | 5,431,782 | |||
| Add: Liabilities assumed by buyer | ||||
| Accounts payable– third parties | 1,907,730 | |||
| Accounts payable– related party | 153,353 | |||
| Accrued expenses and other liabilities | 794,091 | |||
| Obligations under operating leases | 2,150,449 | |||
| Obligations under financing leases | 92,323 | |||
| Tax payable | 79,825 | |||
| Other loan payable | 2,243,159 | |||
| Due to a related party | 260,144 | |||
| Due to shareholder | 182,846 | |||
| Amounts due to ultimate holding company | 3,402,808 | |||
| Loan payable to related party | 124,176 | |||
| Total liabilities assumed | 11,390,904 | |||
| Less: Amounts due from ABL Chicago | 3,402,808 | |||
| Gain on Sale of ABL Chicago | $ | 2,556,315 |
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The following table summarizes the results of consolidated statements of operations and comprehensive loss for the years ended June 30, 2026 and 2025 in U.S. dollars.
| For the Years Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | $ | 5,850,681 | $ | 2,762,465 | ||||
| Cost of revenue | 2,535,639 | 1,212,318 | ||||||
| Gross profit | 3,315,042 | 1,550,147 | ||||||
| Operating expenses: | ||||||||
| Selling expenses | 2,642,667 | 393,290 | ||||||
| General and administrative expenses | 5,689,682 | 2,614,499 | ||||||
| Provision of allowance for expected credit loss on accounts receivable | 58,801 | 32,807 | ||||||
| Write-off of supplier advance | 2,859,594 | |||||||
| Provision of allowance for expected credit loss on loan receivable | 2,256,647 | - | ||||||
| Total operating expenses | 13,507,391 | 3,040,596 | ||||||
| Loss from operations | (10,192,349 | ) | (1,490,449 | ) | ||||
| Other income (expense) | ||||||||
| Other income, net | 295,299 | 33,217 | ||||||
| Interest expense | (149,657 | ) | (229,254 | ) | ||||
| Total other income (expense) | 145,642 | (196,037 | ) | |||||
| Loss before income taxes | (10,046,707 | ) | (1,686,486 | ) | ||||
| Income tax expense | 91,711 | 212,296 | ||||||
| Net loss from continuing operations | (10,138,418 | ) | (1,898,782 | ) | ||||
| Income (loss) from discontinued operation, net of tax provision: | ||||||||
| Loss from discontinued operation before the sale of ABL Chicago | (1,901,927 | ) | (3,347,354 | ) | ||||
| Gain on sale of ABL Chicago | 2,556,315 | - | ||||||
| Net income (loss) from discontinued operation | 654,388 | (3,347,354 | ) | |||||
| Net Loss | $ | (9,484,030 | ) | $ | (5,246,136 | ) | ||
For the Year Ended June 30, 2026 Compared to the Year Ended June 30, 2025
The following table summarizes our consolidated results of operations and percentages of certain items in relation to total revenues for the years ended June 30, 2026 and 2025, and provides information regarding the dollar and percentage increase or (decrease) during such periods. The operating results in any historical period are not necessarily indicative of the results that may be expected for any future period.
| For the years ended June 30, | ||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||
| Amount | % of total Revenues | Amount | % of total Revenues | Amount Increase (Decrease) | Percentage Increase (Decrease) | |||||||||||||||||||
| Revenue | $ | 5,850,681 | 100.0 | % | $ | 2,762,465 | 100.0 | % | $ | 3,088,216 | 111.8 | % | ||||||||||||
| Cost of revenue | 2,535,639 | 43.3 | % | 1,212,318 | 43.9 | % | 1,323,321 | 109.2 | % | |||||||||||||||
| Gross profit | $ | 3,315,042 | 56.7 | % | $ | 1,550,147 | 56.1 | % | $ | 1,764,895 | 113.9 | % | ||||||||||||
Revenues
Revenue from the distribution of pharmaceutical products increased by approximately $3.1 million, or 111.8%, from approximately $2.8 million for the year ended June 30, 2025 to approximately $5.9 million for the year ended June 30, 2026. The increase was primarily attributable to higher sales of infusion products, an increase in the number of active customers from 8 to 12, and the inclusion of a full year of operations for the year ended June 30, 2026. The Company commenced its pharmaceutical distribution operations in December 2024; accordingly, the results for the year ended June 30, 2025 reflected only a partial year of operations.
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Infusion products accounted for approximately 91.1% and 82.9% of pharmaceutical distribution revenue for the years ended June 30, 2026 and 2025, respectively. Revenue from infusion products increased by approximately $3.0 million, from approximately $2.3 million in fiscal 2025 to approximately $5.3 million for the year ended June 30, 2026. The increase was primarily driven by higher sales volumes and new customer acquisitions.
Cost of Revenues and Gross Profit
Cost of revenue from the distribution of pharmaceutical products increased by approximately $1.3 million, or 109.2%, from approximately $1.2 million for the year ended June 30, 2025 to approximately $2.5 million for the year ended June 30, 2026. The increase was primarily driven by higher sales volume, consistent with the significant growth in revenue during the period as the Company continued to expand its pharmaceutical distribution operations.
Gross profit margin increased from approximately 56.1% for the year ended June 30, 2025 to approximately 56.7% for the year ended June 30, 2026. The increase in gross margin was primarily attributable to changes in supplier incentives, specifically a growth in purchase rebates offered by suppliers in the current period compared to the prior-year period.
Selling Expenses
Our selling expenses amounted to approximately $2.6 million for the year ended June 30, 2026, compared to approximately $0.4 million for the same period in 2025. The increase was primarily attributable to: (i) an approximately $1.0 million increase in advertising expenses to increase market awareness, promote our products and support the growth of our pharmaceutical distribution business; (ii) an approximately $0.6 million increase in market research and business development expenses incurred to identify prospective customers and develop customer relationships; (iii) an approximately $0.1 million increase in business entertainment expenses; and (iv) an approximately $0.3 million increase in salaries and related costs resulting from the expansion of our sales team.
General and Administrative Expenses
Our general and administrative expenses increased by approximately $3.1 million, or 117.6%, from approximately $2.6 million for the year ended June 30, 2025, to approximately $5.7 million for the year ended June 30, 2026. The increase was mainly due to an increase in our professional expense.
Our professional fees increased by approximately $3.1 million, or 247.4%, from approximately $1.2million for the year ended June 30, 2025, to approximately $4.3 million for the year ended June 30, 2026. Our professional fee represented 75.9% and 47.6% of our total general and administrative expenses for the year ended June 30, 2026 and 2025, respectively. The increase was primarily due to advisory and consulting expenses for strategic planning initiatives. These costs included external support for market assessments, financial and operational due diligence, and the development of long-term strategic plans to guide future growth.
Write-off of supplier advance
During the year ended June 30, 2026, the Company made an advance payment of $2,947,635 (RMB 20,000,000) to a supplier for the purchase of inventory intended for a new business initiative. The supplier subsequently failed to fulfill its obligations under the purchase agreement. As a result, the Company did not receive the inventory and was unable to recover the advance payment. Accordingly, the Company determined that the advance was not recoverable and wrote off the full amount, recognizing a loss of $2,859,594 (RMB 20,000,000) in write-off of supplier advance in the consolidated statement of operations for the year ended June 30, 2026.
Provision of allowance for expected credit loss on loan receivable
During the year ended June 30, 2026, the Company recognized an expected credit loss of approximately $2.3 million on loans to third parties. The provision was recorded based on management’s assessment of the borrowers’ creditworthiness, repayment history, current financial condition, and other relevant economic factors. The Company will continue to monitor the collectability of these loans and update its expected credit loss estimates as additional information becomes available.
Other Income, net
Our other income, net, increased by $262,082, or 789.0%, from $33,217 for the year ended June 30, 2025, to $295,299 for the year ended June 30, 2026. The increase was primarily due to an increase in interest income in connection with a third-party loan.
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Interest Expenses
Our interest expenses decreased by $79,597, or 34.7%, from $229,254 for the year ended June 30, 2025, to $149,657 for the year ended June 30, 2026. The decrease in interest expense was mainly due to reduced interest expense related to the convertible note following partial conversion of the note for the year ended June 30, 2026.
Loss Before Income Taxes
We had a net loss before income taxes of approximately $10.0 million and approximately $1.7 million for the years ended June 30, 2026 and 2025, respectively. The increase in loss before income taxes was primarily attributable to higher operating expenses, including the write-off of a supplier advance and the provision for expected credit losses on third-party loans, partially offset by an increase in gross profit from the pharmaceutical distribution business.
Income Tax Expense
We had income tax expenses of $91,711 and $212,296 for the years ended June 30, 2026 and 2025, respectively. A current income tax provision of $174,611 was recognized for a subsidiary with net assessable income while no current income tax provision was recognized for subsidiaries in net operating loss for the year ended June 30, 2026.
Based on management’s assessment of future taxable income, the Company determined that it was no longer more likely than not that sufficient future taxable income would be available to utilize the deferred tax benefits. As a result, the Company recorded a full valuation allowance against its DTAs and did not recognize any deferred tax assets. We recognized a deferred income tax credit of $82,900 due to credit loss allowance and amortization of intangible assets, resulting in a net income tax credit of $91,711 for the year ended June 30, 2026.
A current income tax provision of $233,855 was recognized for a subsidiary with net assessable income while no current income tax provision was recognized for subsidiaries in net operating loss for the year ended June 30, 2025. We recognized a deferred income tax credit of $21,559 due to amortization of intangible assets and credit loss allowance, resulting in a net income tax expense of $212,296 for the year ended June 30, 2025.
Net loss from continuing operation
As a result of the foregoing, we had a net loss of approximately $10.1 million and approximately $1.9 million for the year ended June 30, 2026 and 2025, respectively.
Result of Discontinued Operation
Net income (loss) from discontinued operations for the period from July 1, 2025 to date of disposal and for the year ended June 30, 2025 is as follows:
| For the Period from July 1, 2025 to Date of Disposal | For the Year Ended June 30, 2025 | Amount Increase (Decrease) | Percentage Increase (Decrease) | |||||||||||||
| Revenue | $ | 10,678,106 | $ | 15,027,960 | $ | (4,349,854 | ) | (28.9 | )% | |||||||
| Cost of revenue | 9,768,331 | 13,699,648 | (3,931,317 | ) | (28.7 | )% | ||||||||||
| Operating expenses | 2,661,614 | 4,797,033 | (2,135,419 | ) | (44.5 | )% | ||||||||||
| Loss from operation | (1,751,839 | ) | (3,468,721 | ) | 1,716,882 | (49.5 | )% | |||||||||
| Gain on sale of ABL Chicago | 2,556,315 | - | 2,556,315 | n/a | ||||||||||||
| Other (expense) income, net | (150,088 | ) | 210,948 | (361,036 | ) | (171.1 | )% | |||||||||
| Net income (loss) from discontinued operations, before tax | 654,388 | (3,257,773 | ) | 3,912,161 | (120.1 | )% | ||||||||||
| Income tax | - | 89,581 | (89,581 | ) | (100.0 | )% | ||||||||||
| Income (loss) from discontinued operations, net of tax provision | $ | 654,388 | $ | (3,347,354 | ) | $ | 4,001,742 | $ | (119.5 | )% | ||||||
32
We recognized income from discontinued operations, net of income taxes, of approximately $0.7 million for the period from July 1, 2025 to date of disposal, compared with a net loss of approximately $3.3 million for the year ended June 30, 2025, representing an improvement of approximately $4.0 million. It was primarily attributable to a gain of approximately $2.6 million recognized upon the sale of the ABL Chicago business on February 12, 2026, as well as a decrease of approximately $1.7 million in the loss from operations.
Revenue from discontinued operations decreased by approximately $4.3 million, or 28.9%, from approximately $15.0 million for the year ended June 30, 2025 to approximately $10.7 million for the period from July 1, 2025 to date of disposal. Cost of revenue decreased by approximately $3.9 million, or 28.7%, while operating expenses decreased by approximately $2.1 million, or 44.5%. These decreases primarily reflected the shorter operating period resulting from the disposition of the ABL Chicago business on February 12, 2026. Prior to the disposition, the discontinued business generated an operating loss of approximately $1.8 million during the period from July 1, 2025 to date of disposal, compared with approximately $3.5 million for the full year ended June 30, 2025. After giving effect to the gain on disposal and other expenses of approximately $0.2 million, income from discontinued operations before income taxes was approximately $0.7 million for period from July 1, 2025 to date of disposal.
Liquidity and Capital Resources
The following table summarizes our total current assets, current liabilities and working capital from continuing operations as of June 30, 2026 and 2025, respectively:
| As of June 30, 2026 | As of June 30, 2025 | |||||||
| Current assets | $ | 11,019,992 | $ | 10,278,926 | ||||
| Current liabilities | $ | 4,486,989 | $ | 9,666,053 | ||||
| Working capital Surplus | $ | 6,533,003 | $ | 612,873 | ||||
As of June 30, 2026, we had a cash balance of approximately $0.7 million. Our current assets were approximately $11.0 million, and our current liabilities were approximately $4.5 million, resulting in a current ratio of 2.46 and working capital surplus of approximately $6.5 million. Total stockholders’ equity as of June 30, 2026 was approximately $7.0 million.
As of June 30, 2026 and 2025, we had accounts receivable net of allowance of approximately $1.1 million and approximately $1.4 million, respectively. We periodically review our accounts receivable and allowance level to ensure our methodology for determining allowances is reasonable and to accrue additional allowances if necessary. For accounts receivable as of June 30, 2026 and 2025, we provided a credit loss allowance of $95,494 and $33,039, respectively.
As of June 30, 2026, our liquidity position is significantly influenced by a material loan receivable from an unaffiliated third party. The gross principal balance is governed by a loan agreement dated July 3, 2025, bearing interest at 4.35% per annum with a maturity date of July 8, 2027.
As of June 30, 2026, the carrying value of this receivable was approximately $9.4 million, net of an allowance for credit losses of approximately $2.3 million. This net balance represents 65.2% of our total current assets, constituting a significant concentration of credit risk.
Our ability to fund future operating activities and working capital requirements is partially dependent on the timely collection of this principal and interest. While we continue to monitor the counterparty’s creditworthiness and currently believe they maintain the financial capacity to meet their obligations, the recorded allowance reflects our estimate of expected credit losses under the CECL (Current Expected Credit Loss) model. Any material default or significant delay in payment by this third party could adversely impact our short-term liquidity and necessitate alternative financing. There can be no assurance that the balance will be collected in full in accordance with its contractual terms.
33
In assessing our liquidity, we monitor and analyze our cash on hand, our ability to generate sufficient revenues sources in the future, and our operating and capital expenditure commitments. Historically, we have funded our working capital needs primarily through operations, issuances of convertible debts, private placements, loans, initial public offerings and working capital loans from stockholders. Our working capital requirements are influenced by the efficiency of our operations, the volume and dollar value of our revenue contracts, the progress in the execution of customer contracts, and the timing of accounts receivable collections.
Cash Flows
The following table sets forth a summary of our cash flows from continuing operations for the periods indicated:
| For the Years Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash used in operating activities - continuing operations | $ | (3,183,694 | ) | $ | (778,830 | ) | ||
| Net cash used in investing activities - continuing operations | (9,152,409 | ) | (330,793 | ) | ||||
| Net cash provided by financing activities - continuing operations | 7,767,642 | 8,581,938 | ||||||
| Net cash used in discontinued operation | (141,188 | ) | (2,649,117 | ) | ||||
| Effect of exchange rate changes on cash | 423,870 | 9,312 | ||||||
| Net (decrease) increase in cash | (4,285,779 | ) | 4,832,510 | |||||
| Cash, beginning of the year – continuing operation | 4,814,872 | 2,000 | ||||||
| Cash, beginning of the year – discontinued operation | 141,188 | 121,550 | ||||||
| Total cash, beginning of the year | 4,956,060 | 123,550 | ||||||
| Cash, end of the year | 670,281 | 4,956,060 | ||||||
| Less: cash and cash equivalents of discontinued operations | - | 141,188 | ||||||
| Cash, end of the year for continuing operations | $ | 670,281 | $ | 4,814,872 | ||||
Operating Activities - continuing operations
Net cash used in operating activities was $3,183,694 for the year ended June 30, 2026, primarily reflecting a net loss from continuing operations of $10,138,418, adjusted for non-cash items of $8,430,011 and changes in working capital deficits of $1,475,287. The non-cash items primarily included $94,413 straight-line lease expense related to operating leases, $3,254,580 stock-based compensation for consulting expenses, $52,012 depreciation, $109,753 amortization of discount and bond issuance cost, $85,484 amortization of intangible assets, $2,859,594 write-off of supplier advance, $268,711 interest income from third-party loan, $2,256,647 from provision of allowance for expected credit loss on loan receivable, $58,801 from provision of allowance for expected credit loss on accounts receivable and a decrease of $82,900 from deferred tax liabilities. The adjustments for changes in working capital mainly included a decrease of $279,861 in accounts receivable due to a decrease of revenues near period end, an increase of $2,840,631 in prepayment, deposit and other receivable and a payment of $82,497 for operating lease liabilities, partially offset by a decrease of $411,766 in accounts payable, a decrease of $66,732 in note receivable, an increase of $745,330 in refund liabilities, an increase of $154,119 in income tax payable, and an increase of $772,122 in accrued liabilities and other payables, an increase in inventory of $91,890, an increase in right of return asset of $341,296 and an increase in due to related party of $220,220.
Net cash used in operating activities was $778,830 for the year ended June 30, 2025, including net loss from continuing operations of $1,898,782, adjusted for non-cash items for $311,581 and changes in working capital surplus of $808,371. The non-cash items primarily included $80,419 straight-line lease expense of operating leases, $15,809 depreciation expense, $53,427 amortization of intangible asset, $39,804 interest expense of convertible notes, $138,994 amortization of discount and bond issuance cost, $32,807 provision of allowance for expected credit loss on accounts receivable, $28,120 uncollected interest income from a third-party loan and a decrease of $21,559 from deferred tax liabilities. The adjustments for changes in working capital mainly included an increase of $1,450,463 in accrued expense and other payable, an increase of $233,078 in income tax payable, an increase of $1,018,228 in accounts payable and an increase of $15,355 in contract liabilities, partially offset by an increase of $1,439,727 in accounts receivable, an increase of $96,534 in inventories, an increase of $150,919 in prepayment, deposit and other receivable, an increase in right of return asset of $141,687 and a decrease of $91,969 in operating lease liabilities.
34
The $2,404,864 increase in cash used in operating activities for the year ended June 30, 2026, compared to the prior year, was primarily due to an increase in advance deposits of $2,689,712 to suppliers.
Investing Activities - continuing operations
Net cash used in investing activities was $9,152,409 and $330,793 for the years ended June 30, 2026 and 2025, respectively. Net cash used in investing activities for the year ended June 30, 2026, was primarily attributable to loans of $9,150,361 to a third party. The cash used in the same period of last year was primarily attributable to net cash payments of $276,356 for intangible assets through the acquisition of 100% equity interest in Hupan Pharmaceutical.
Financing Activities - continuing operations
Net cash provided by financing activities was $7,767,642 and $8,581,938 for the years ended June 30, 2026 and 2025. The increase was primarily due to proceeds from private placement of financing activities compared with the prior period. During the year ended June 30, 2026, we generated cash inflows from private placements of $8,236,231, which were partially offset by $432,948 in principal repayments of convertible debt. During the year ended June 30, 2025, we had the net proceeds of $5,351,581 from the offering and net proceeds of $1,170,513 from issuance of convertible note and advances of $2,999,700 from Hupan Pharmaceutical prior to acquisition, partly offset by repayment of $805,946 to shareholders, during the year ended June 30, 2025.
Cash Flows from Discontinued Operations
Cash flows from discontinued operations are associated with the disposal of ABL Chicago. Cash used in operations of approximately $141,188 and approximately $2.6 million for the years ended June 30, 2026 and 2025. Net loss of ABL Chicago were the primary components of operating cash flows for the years ended June 30, 2026 and 2025. Cash used in investing activities of approximately $0.4 million for the year ended June 30, 2025, which is related to loan to related parties. Cash provided by financing activities of approximately $1.4 million for the year ended June 30, 2026 due to loan borrowing. Cash used in financing activities of approximately $0.4 million for the year ended June 30, 2025 due to advances to related parties. See Note 17. “Discontinued Operations” to our consolidated financial statements for additional information.
Capital Expenditure
Our capital expenditures are incurred primarily in connection with the purchase of fixed assets, including machinery and equipment, furniture and fixtures, leasehold improvement and vehicles. Our capital expenditures amounted to 2,048 and $71,177 for the years ended June 30, 2026 and 2025, respectively.
We expect that our capital expenditures will increase in the future as our business continues to develop and expand. We intend to fund our future capital expenditures with our existing cash balance, proceeds of loans and issuance of convertible debts and private placement offering.
Critical Accounting Policies and Estimates
We prepare our consolidated financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect our reported amounts of assets, liabilities, revenue, costs and expenses, and any related disclosures. Actual results could materially differ from those estimates. Critical accounting policy is both material to the presentation of financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on financial condition or results of operations. Accounting estimates and assumptions may become critical when they are material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and that have a material impact on financial condition or operating performance.
Critical accounting estimates are estimates that require us to make assumptions about matters that were highly uncertain at the time the accounting estimate were made and if different estimates that we reasonably could have used in the current period, or changes in the accounting estimate that are reasonably likely occur from period to period, have a material impact on the presentation of our financial condition, changes in financial condition or results of operations. The management of the Company believes the following critical accounting estimate is the most significantly affected by judgments and assumptions used in the preparation of our consolidated financial statements.
35
Common Stock Warrants Instruments
The Company accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own ordinary shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the instruments are outstanding. The Company determined, upon further review of the warrant agreement and the convertible debt agreement, that the common stock warrants are qualified for equity accounting treatment. The fair value of equity-classified warrants is estimated as of the date of issuance using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model includes various assumptions, including the fair market value of our common stock, expected life of stock options, the expected volatility and the expected risk-free interest rate, among others. These assumptions reflect our best estimates, but they involve inherent uncertainties based on market conditions generally outside our control.
Allowance of expected credit losses on loan receivable from third parties
The Company accounts for its allowance for credit losses on loan receivables in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 326, Financial Instruments—Credit Losses (“ASC 326”). The Company assesses the credit risk of its third-party loan receivables at each reporting date to ensure that the allowance reflects management’s current estimate of expected credit losses over the contractual life of the instrument.
The measurement of the allowance for expected credit losses is primarily determined using a Probability of Default (“PD”) and Loss Given Default (“LGD”) methodology. This assessment considers whether the borrower meets its contractual obligations and involves an evaluation of the borrower’s historical performance, current financial condition, and the value of any underlying collateral.
The PD × LGD model includes various assumptions, including the selection of forward-looking macroeconomic forecasts (such as interest rate environments), the borrower’s credit rating, and estimated recovery rates. This assessment, which requires the use of significant professional judgment, is conducted at the time of loan inception and as of each subsequent quarterly period end date while the loan is outstanding. These assumptions reflect management’s best estimates based on current and supportable information, but they involve inherent uncertainties based on economic and market conditions generally outside of the Company’s control. Changes in these estimates are recognized in the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) in the period in which they occur.
Refer to Notes 2 to the consolidated financial statements included in this report for further discussion of our significant accounting policies and the effect on our consolidated financial statements.
Recent Accounting Pronouncements
The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued, see Note 2 - Summary Of Significant Accounting Policies in the note of financial statement.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company and are not required to provide the information required under this item.
36
Item 8. Financial Statements and Supplementary Data.
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Quanome Technologies, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Quanome Technologies, Inc. (formerly known as Lakeside Holding Ltd.) and its subsidiaries (the Company) as of June 30, 2026 and 2025, and the related consolidated statements of operation and comprehensive loss, changes in shareholders’ equity, and cash flows for each of the years in the two-year period ended June 30, 2026, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2026 and 2025, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2026, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt About the Company's Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company’s recurring net losses, negative cash flows from operations and accumulated deficit raised substantial doubt about its ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 2 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/
We have served as the Company’s auditor since 2023.
September 25, 2026
999 18th Street, Suite 3000, Denver, CO, 80202 USA Phone: 1.303.386.7224 Fax: 1.303.386.7101 Email: admin@zhcpa.us
F-2
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS
LAKESIDE HOLDING LIMITED)
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2026 AND 2025
| As of June 30, 2026 |
As of June 30, 2025 |
|||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net of credit loss allowance of $ | ||||||||
| Note receivable | ||||||||
| Prepaid expense, deposit and other receivable, net | ||||||||
| Inventories, net | ||||||||
| Right of return asset | ||||||||
| Loan receivable from third parties, net of credit loss allowance of $ | ||||||||
| Current assets from discontinued operation | ||||||||
| Total current assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Property and equipment at cost, net of accumulated depreciation | ||||||||
| Intangible assets, net | ||||||||
| Right of use operating lease assets, net | ||||||||
| Deposit | ||||||||
| Non-current assets from discontinued operation | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payables | $ | $ | ||||||
| Accrued liabilities and other payables | ||||||||
| Current portion of obligations under operating leases | ||||||||
| Loan payable, current | ||||||||
| Contract liabilities | ||||||||
| Income tax payable | ||||||||
| Due to a related party | ||||||||
| Convertible debts - current | ||||||||
| Refund liabilities | ||||||||
| Current liabilities from discontinued operation | ||||||||
| Total current liabilities | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Loan payable, non-current | ||||||||
| Deferred tax liabilities | ||||||||
| Obligations under operating leases, non-current | ||||||||
| Non-current liabilities from discontinued operation | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and Contingencies | ||||||||
| EQUITY | ||||||||
| Common stocks, $ | ||||||||
| Subscription receivable | ( | ) | ||||||
| Additional paid-in capital | ||||||||
| Statutory reserve | ||||||||
| Deficits | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total equity | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS
LAKESIDE HOLDING LIMITED)
CONSOLIDATED STATEMENT OF OPERATION AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED JUNE 30, 2026 AND 2025
| For the Years Ended June 30, |
||||||||
| 2026 | 2025 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Selling expenses | ||||||||
| General and administrative expenses | ||||||||
| Provision of allowance for expected credit loss on accounts receivable | ||||||||
| Write-off of supplier advance | ||||||||
| Provision of allowance for expected credit loss on loan receivable | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Other income, net | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other income (expense) | ( | ) | ||||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Income tax expense | ||||||||
| Net loss from continuing operations | ( | ) | ( | ) | ||||
| Income (loss) from discontinued operation, net of tax provision: | ||||||||
| Loss from discontinued operation before the sale of ABL Chicago | ( | ) | ( | ) | ||||
| Gain on sale of ABL Chicago | ||||||||
| Net income (loss) from discontinued operation | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Other comprehensive loss: | ||||||||
| Foreign currency translation income | ||||||||
| Comprehensive loss attributable to the Company | $ | ( | ) | $ | ( | ) | ||
| Basic and Diluted Net Loss per Common Share | ||||||||
| Continuing operations | $ | ( | ) | $ | ( | ) | ||
| Discontinued operations, net of tax | $ | $ | ( | ) | ||||
| Weighted Average Shares Outstanding – basic and diluted | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS
LAKESIDE HOLDING LIMITED)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED JUNE 30, 2026 AND 2025
| For The Years Ended June 30, 2026 and 2025 | ||||||||||||||||||||||||||||||||
| Common Shares |
Amount | Subscription Receivable |
Additional Paid in Capital |
Statutory Reserves |
Deficits | Accumulated Other Comprehensive Income (Loss) |
Total | |||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||
| Paid in capital | — | |||||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Statutory reserve | — | ( | ) | |||||||||||||||||||||||||||||
| Initial public offering, net of share issuance costs | ||||||||||||||||||||||||||||||||
| Issuance of convertible debts with detachable warrants | — | |||||||||||||||||||||||||||||||
| Issuance of common shares - through a private placement | ||||||||||||||||||||||||||||||||
| Foreign currency translation gain | — | |||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Common shares issued for consulting services | ||||||||||||||||||||||||||||||||
| Issuance of common shares upon exercise of Convertible note | ||||||||||||||||||||||||||||||||
| Issuance of common shares through private placement | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation gain | — | |||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS
LAKESIDE HOLDING LIMITED)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2026 AND 2025
| For the Years Ended June 30, |
||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Less: Income (Loss) from discontinued operation, net of tax provision | ( | ) | ||||||
| Net loss from continuing operations | ( | ) | ( | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of intangible asset | ||||||||
| Lease expense of operating lease assets | ||||||||
| Provision of allowance for expected credit loss on accounts receivable | ||||||||
| Provision of allowance for expected credit loss on loan receivable | ||||||||
| Write-off of supplier advance | ||||||||
| Amortization of discount and bond issuance cost | ||||||||
| Accrued interest expense of convertible debt | ||||||||
| Deferred tax expense | ( | ) | ( | ) | ||||
| Interest income | ( | ) | ( | ) | ||||
| Stock-based compensation expense for consulting services | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Note receivables | ( | ) | ||||||
| Inventories | ( | ) | ( | ) | ||||
| Right of return asset | ( | ) | ( | ) | ||||
| Prepayment, deposit and other receivable | ( | ) | ( | ) | ||||
| Accounts payables | ( | ) | ||||||
| Contract liabilities | ||||||||
| Accrued expense and other payables | ||||||||
| Due to a related party | ||||||||
| Refund liabilities | ||||||||
| Income tax payable | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities from continuing operations | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of furniture and equipment | ( | ) | ( | ) | ||||
| Payment for leasehold improvement | ( | ) | ||||||
| Cash payment for assets acquisition | ( | ) | ||||||
| Cash acquired from assets acquisition | ||||||||
| Loan to a third party | ( | ) | ||||||
| Interest received from loan to third parties | ||||||||
| Net cash used in investing activities from continuing operations | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from loan borrowing | ||||||||
| Repayment of loans | ( | ) | ||||||
| Net proceeds from issuance of convertible notes | ||||||||
| Repayment of principal of convertible debt | ( | ) | ( | ) | ||||
| Repayment of equipment and vehicle loans | ( | ) | ||||||
| Proceeds from initial public offering, net of share issuance costs | ||||||||
| Proceeds from a private placement | ||||||||
| Repayment to shareholders | ( | ) | ||||||
| Net cash provided by financing activities from continuing operations | ||||||||
| CASH FLOWS FROM DISCONTINUED OPERATION | ||||||||
| Operating activities | ( | ) | ( | ) | ||||
| Investing activities | ( | ) | ||||||
| Financing activities | ( | ) | ||||||
| Cash outflow in connection with sales of ABL Chicago | ( | ) | ||||||
| Net cash used in discontinued operation | ( | ) | ( | ) | ||||
| Effect of exchange rate changes on cash | ||||||||
| Net (decrease) increase in cash | ( | ) | ||||||
| Cash, beginning of the year – continuing operation | ||||||||
| Cash, beginning of the year – discontinued operation | ||||||||
| Total cash, beginning of the year | ||||||||
| Cash, end of the year | ||||||||
| Less: cash and cash equivalents of discontinued operations | ||||||||
| Cash, end of the year for continuing operations | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for income tax | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| NON-CASH ACTIVITIES | ||||||||
| Issuance of common shares in exchange for consulting service | $ | $ | ||||||
| Convertible notes converted to common shares | $ | $ | ||||||
| Addition to property and equipment included in loan payable | $ | $ | ||||||
| Property disposal through loan payable | $ | $ | ||||||
| Right of use assets obtained in exchange for operating lease obligations | $ | $ | ||||||
| Right of use assets obtained in exchange for finance lease obligation | $ | $ | ||||||
| Additions to property and equipment through accounts payable and other payable | $ | $ | ||||||
| Additions to leasehold improvement through accounts payable and other payable | $ | $ | ||||||
| Due to shareholder offset against loan receivables from a third party | $ | $ | ||||||
| Due to shareholder offset against loan receivables related parties | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION
Quanome Technologies, Inc. (formerly known as Lakeside Holding Limited) (the “Company”), is a holding company established on August 28, 2023 under the laws of the State of Nevada. The Company, acting through its subsidiary, is primarily engaged in distribution of pharmaceutical and medical products.
As of June 30, 2026, the Company’s subsidiaries are as follows:
| Name | Date of Incorporation/ Acquisition | Jurisdiction of Formation | Percentage of direct/indirect Economic Ownership | Principal Activities | ||||
| Parent Company | ||||||||
| Quanome Technologies, Inc. (formerly known as Lakeside Holding Limited) | Parent | |||||||
| Subsidiaries/companies with ownership | ||||||||
| American Bear Logistics Corp. (“ABL Chicago”)* | ||||||||
| Sichuan Hupan Jincheng Enterprise Management Co., Ltd (“Sichuan Hupan”) | ||||||||
| Hupan Pharmaceutical (Hubei) Co., Ltd (“Hupan Pharmaceutical”) | ||||||||
| Smart Reserve Holding LTD | ||||||||
| Smart Reserve Inc | ||||||||
| Quantum Nexus Technologies Ltd |
| * |
F-7
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and principles of consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and have been consistently applied.
The accompanying consolidated financial statements include the financial statements of Quanome Technologies, Inc. (formerly known as Lakeside Holding Limited) and its subsidiaries. All inter-company balances and transactions have been eliminated upon consolidation.
Going concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.
As of June 30, 2026, the Company had an accumulated deficit of approximately $
These factors, among others, raise the substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties. Management believes that the actions presently being taken to obtain additional funding and implement its strategic plan provide the opportunity for the Company to continue as a going concern.
Discontinued Operations
On May 15, 2026, the Company entered into a Share Purchase Agreement with an unrelated third party for the disposition of ABL Chicago (the “Transaction”) and the transaction was legally finalized on May 16, 2026.
Effective February 12, 2026, the buyer assumed substantive decision-making authority and operational control over the transferred business and obtained the rights to substantially all economic benefits and obligations associated with the ownership of the business. In addition, the Company no longer retained substantive continuing involvement in the operations of ABL Chicago.
F-8
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Discontinued Operations (cont.)
Accordingly, the Company accounted for the Transaction as a disposal/deconsolidation effective February 12, 2026 in accordance with ASC 810-10-40-4.
The Company recognized a gain on disposal of $
The assets and liabilities related to ABL Chicago were classified as discontinued operations and presented as “Assets of discontinued operations” and “Liabilities of discontinued operations,” respectively, in the accompanying consolidated balance sheets prior to disposal. The results of operations of ABL Chicago are included in “Loss from discontinued operations, net of tax provision” in the accompanying consolidated statements of operation and comprehensive loss. For comparative purposes, all prior periods presented have been reclassified to reflect the classifications on a consistent basis (see Note 17).
Use of estimates and assumptions
In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant accounting estimates required to be made by management include allowance for credit losses on account receivable and loan receivable from a third party, return liabilities, percentage of performance obligation completed at the reporting period, the measurements of convertible debts with accompanying warrants. The Company evaluates its estimates and assumptions on an ongoing basis and its estimates on historical experience, current and expected future conditions and various other assumptions that management believes are reasonable under the circumstances based on the information available to management at the time these estimates and assumptions are made. Actual results and outcomes may differ significantly from these estimates and assumptions.
Cash
Cash consists of unrestricted balances held with banks and deposits at banks or other financial institutions, which are available for withdrawal or use and have original maturities of three months or less. The Company maintains its bank accounts in the United States, which are insured by Federal Deposit Insurance Corporation (“FDIC”) at a limit of $
As of June 30, 2026 and 2025, the Company had approximately $
F-9
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Accounts receivable, net
Accounts receivables are carried at the original invoiced amount less an estimated allowance for expected credit losses based on the probability of future collection. The Company reviews its accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. The Company grant credit to customers, without collateral, under normal payment terms. The Company estimates expected credit losses on accounts receivable using a loss-rate method. In estimating the allowance, the Company considers historical credit loss and collection experience, the aging of outstanding balances, customers’ payment histories and financial condition, current economic conditions, and reasonable and supportable forecasts of future economic conditions, when appropriate. Accounts receivable that are more than one year past due and other receivables identified as having elevated credit risk are evaluated individually for collectability. The Company writes off potentially uncollectible accounts receivable against the allowance for credit losses if it is determined that the amounts will not be collected. As of June 30, 2026 and 2025, the Company recorded the allowance of credit loss of $
Notes receivable, net
Notes receivable represents bank acceptance notes issued by financial institutions in the People’s Republic of China (“PRC”), typically received from customers as settlement for trade receivables. These notes are payable at a specified future date and are guaranteed by the issuing bank.
As of June 30, 2026 and 2025, the Company held notes receivable totaling $ and $
Loan receivable from third parties and allowance for credit losses
Loans receivable from third parties are recorded at amortized cost, representing the principal amount and interest receivable outstanding net of any allowance for credit losses (see Note 5). The Company accounts for credit losses under ASC Topic 326, Financial Instruments—Credit Losses, which requires the immediate recognition of estimated credit losses expected to occur over the remaining life of the financial asset. The Company determines the allowance for credit losses by utilizing a Probability of Default (“PD”) and Loss Given Default (“LGD”) methodology. As of June 30, 2026 and 2025, the Company recorded an allowance for expected credit losses of $
Inventories, net
Inventories are stated at the lower of cost or net realizable value, using the first-in, first out (FIFO) method. Costs include the cost of pharmaceutical products. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is estimated using selling price in the normal course of business less any costs to complete and sell products. As of June 30, 2026 and 2025, the Company did not record any inventory provision.
F-10
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Property and equipment
Property and equipment are stated at cost less accumulated depreciation.
| Useful life | ||
| Furniture and fixtures | ||
| Machinery equipment | ||
| Vehicles | ||
| Software | ||
| Leasehold improvement |
Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in other income or expenses in the consolidated statements of loss and other comprehensive loss.
Intangible Assets, net
Intangible assets consist primarily of business license acquired from asset acquisition. It grants the Company the right of selling and distributing pharmaceutical products and solutions in mainland China.
Intangible assets are stated at cost less accumulated amortization. The license is amortized using the straight-line method over the estimated useful economic life of
Accounts payable
Accounts payable primarily represent amounts due to suppliers for goods received in the ordinary course of business, payable within
Impairment of long-lived asset
Long-lived assets, including plant, property and equipment and intangible asset, are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount may not be fully recoverable or that the useful life is shorter than the Company had originally estimated. When these events occur, the Company evaluates the impairment by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Company recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. The Company reviews the impairment of its right-of-use assets and intangible asset consistent with the approach applied for its other long-lived assets. impairment charge was recognized for the years ended June 30, 2026 and 2025, respectively.
F-11
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Asset acquisition
When an acquisition is related to a single asset or a group of similar assets, or does not meet the definition of a business combination, as the acquired entity does not have an input and a substantive process that together significantly contribute to the ability to create outputs, we account for the acquisition as an asset acquisition. In an asset acquisition, any direct acquisition-related transaction costs are capitalized as part of the purchase consideration. Deferred taxes are recorded on temporary book/tax differences in an asset acquisition using the simultaneous equations method and adjusted the assigned value of the non-monetary assets acquired to include the deferred tax liability (see Note 22).
Leases
The Company evaluates the contracts it entered into to determine whether such contracts contain leases at inception. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee.
Operating Leases
A lease for which substantially all the benefits and risks incidental to ownership remain with the lessor is classified by the lease as an operation lease. Operating leases are included in the line items right-of-use (ROU) asset, lease liabilities, current, and lease liabilities, non-current in the consolidated balance sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. For operating leases, the Company measures its lease liabilities based on the present value of the total lease payments not yet paid discounted based on the more readily determinable of the rate implicit in the lease or its incremental borrowing rate, which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease. The Company uses its incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. The Company measures ROU assets based on the corresponding lease liability adjusted for payments made to the lessor at or before the commencement date, and initial direct costs it incurs under the lease. The Company begins recognizing lease expense when the lessor makes the underlying asset available to the Company. Lease expenses for lease payments are recognized on a straight-line basis over the lease term.
For leases with lease term less than one year (short-term leases), the Company has elected not to recognize a lease liability or ROU asset on its consolidated balance sheet. Instead, it recognizes the lease payments as expenses on a straight-line basis over the lease term. Short-term lease costs are immaterial to its consolidated statements of operations and cash flows.
F-12
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Related parties
The Company adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.
Fair value of financial instruments
ASC 820, “Fair Value Measurements” (ASC 820) and ASC 825, “Financial Instruments” (ASC 825), requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure 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. It prioritizes the inputs into three levels that may be used to measure fair value:
| Level 1 — | Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities | |
| Level 2 — | Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. | |
| Level 3 — | Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. |
The carrying value of cash, accounts receivable, other receivables, loan receivable from third parties, accounts payable, convertible debts - current, other payables and accrued expenses and other current liabilities approximate fair value due to their short-term nature. For lease liabilities and loans payable, their carrying value approximate the fair value at the year-end, as the interest rates used to discount the host contracts approximate market rates. The Company noted no transfers between levels during any of the periods presented. The Company did not have any instruments that were measured at fair value on a recurring nor non-recurring basis as of June 30, 2026 and 2025.
Convertible debts
In accordance with ASC 470, Debt (“ASC 470”) the Company records its
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Derivatives and Hedging (Topic 815), or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. The guidance also requires the if-converted method to be applied for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. Adoption of the standard requires using either a retrospective or a retrospective approach. The Company adopted ASU 2020-06 on July 1, 2024, using the modified retrospective method. The adoption of ASU 2020-06 did not have a material impact on the Company’s consolidated financial statements and related disclosures.
F-13
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Convertible debts (cont.)
Debt issuance costs
Direct and incremental costs and original issue discounts and premiums incurred in connection with the issuance of long-term debt are deferred and amortized to interest expense using the effective interest method or, if the amounts approximate the effective interest method, on a straight-line basis. All debt issuance costs are presented as a direct reduction of debt on the consolidated balance sheets. Amortization of debt issuance costs and original issue discounts and premiums recognized as interest expense was $
Common stock warrants
The Company evaluates common stock warrants under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity. The Company assesses whether common stock warrants are freestanding financial instruments and whether they meet the criteria to be classified in stockholders’ equity, or classified as a liability. Where common stock warrants do not meet the conditions to be classified in equity, the Company assesses whether they meet the definition of a liability under ASC 815.
Revenue recognition
The Company adopted ASC Topic 606 “Revenue from Contracts with Customers” and all subsequent ASUs that modified ASC 606. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the Company applies the following steps:
Step 1: Identify the contract (s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
F-14
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Revenue recognition (cont.)
The Company generates revenue from providing cross-border ocean and airfreight solutions and distribution of pharmaceutical products. No practical expedients were used when adoption ASC606. Revenue recognition policies are as follows:
Revenue recognized from continuing operations during the years ended June 30, 2026 and 2025 was from the following sources:
Revenue from distribution of pharmaceutical products
The Company generates revenue from the distribution of pharmaceutical and medical products. The Company orders products from the manufacturer, receives and carries the product at a designated warehouse, and delivers the product directly to its customers’ warehouses or designated locations. Revenue is recognized at a point in time when control of goods is transferred to the customers upon goods delivered to the customers and accepted by the customers.
Principal and agent considerations
In the Company’s distribution of pharmaceutical products business, the Company determined that in all of its major business activities, it serves as a principal rather than an agent within their revenue arrangements under the fact that the Company controls the goods before they are transferred to customers, bears inventory risk, and has discretion in establishing pricing. As a principal, the Company recognizes revenue on a gross basis within the consolidated statements of operation and comprehensive loss.
Contract liabilities
Contract liabilities represent estimated advances received from customers. The contract liabilities are reported in a net position on a customer-by-customer basis at the end of each reporting period. Contract liabilities are recognized when the Company receives prepayment from customers resulting from purchase order. Contract liabilities will be recognized as revenue when the products are delivered. As of June 30, 2026 and 2025, the Company recorded contract liabilities of $
Refund liabilities and right of returned assets
Refund liabilities represent the estimated amount of consideration expected to be refunded to customers and are recorded at the time revenue is recognized. Refund allowances are recorded as a reduction in sales with corresponding refund liabilities, and the estimated cost of refunded inventory is recorded as a reduction to cost of sales and an increase of right of return assets. The estimate is based on historical refund patterns, current trends, and contractual terms. If actual results differ from the estimates, the Company revises its estimated refund liabilities accordingly. Each period end, the Company reviews and reassesses the adequacy of its recorded refund liabilities and adjusts the amount as necessary. As of June 30, 2026 and 2025, the Company recorded refund liabilities of $
Cost of revenues
In the Company’s distribution of pharmaceutical products business, cost of revenues primarily consists of cost of products, less discount and rebate.
F-15
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Selling expenses
Selling expenses primarily include salaries expense, advertising expense, marketing expense of a system, entertainment expense and traveling expense of sales team engaged in developing potential customers and maintaining customer relationships and transportation cost for selling pharmaceutical products.
General and administrative expenses
General and administrative expenses primarily include salaries and staff benefits, amortization on intangible assets, depreciation on property and equipment, lease expenses of office premises, travelling and entertainment, bank charges, legal and professional fees, insurance expenses and other office expenses.
Employee defined contribution plan
Full-time employees of the Company in the PRC participate in a government-mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to them. Chinese labor regulations require that the Company make contributions to the government for these benefits based on government prescribed percentage of the employee’s salaries. The Company has no legal obligation for the benefits beyond the contributions. The total amount was expensed as incurred. For the years ended June 30, 2026 and 2025, employee welfare contribution expenses amounted to approximately $
Value added tax (“VAT”)
Revenue represents the invoiced value of goods and service, net of VAT. The VAT is based on gross sales price and VAT rates range up to
Income taxes
Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.
The Company accounts for uncertain tax positions in accordance with FASB ASC Topic No. 740, Accounting for Uncertainty in Income Taxes. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. As of June 30, 2026 and 2025, the Company did not have a liability for unrecognized tax benefits. It is the Company’s policy to include penalties and interest expense related to income taxes as a component of other expense and interest expense, respectively, as necessary. The Company’s historical tax years will remain open for examination by the local authorities until the statute of limitations has passed.
In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which improves income tax disclosures. The amendments require the disclosure of specific categories in rate reconciliation and additional information for reconciling items that meet a quantitative threshold. The amendments also require disaggregated information about the amount of income taxes paid (net of refunds received), Income (or loss) from continuing operations before income tax expense (or benefit) and Income tax expense (or benefit) from continuing operations. The new guidance is required to be applied either prospectively or retrospectively. The Company adopted ASU 2023-09 effective July 1, 2025, using the prospective method. The adoption resulted in additional income tax disclosures but did not affect the recognition or measurement of income taxes in the Company’s consolidated financial statements. See Note 15—Income Taxes
F-16
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Statutory reserves
The Company’s PRC subsidiaries are required to allocate at least
Comprehensive loss
Comprehensive loss consists of two components, net loss and other comprehensive loss. Other comprehensive loss refers to revenue, expenses, gains and losses that under GAAP are recorded as an element of equity but are excluded from net income. Other comprehensive loss consists of a foreign currency translation adjustment resulting from the Company not using the U.S. dollar as its functional currencies.
Basic and diluted loss per share
The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the years ended June 30, 2026 and 2025, the Company reported a net loss. As a result, all potentially dilutive securities, including the convertible debenture, were excluded from the calculation of diluted loss per share because their inclusion would have been antidilutive.
Foreign currency transactions
Our reporting currency is the U.S. dollar. The functional currency of our operations, except for Sichuan Hupan and Hupan Pharmaceutical, is the U.S. dollar. The functional currency of Sichuan Hupan and Hupan Pharmaceutical is the RMB. The assets, liabilities, revenues, and expenses of Sichuan Hupan and Hupan Pharmaceutical are remeasured in accordance with ASC 830. For the year ended June 30, 2026, assets and liabilities of Sichuan Hupan and Hupan Pharmaceutical are translated into U.S. dollars based upon exchange rates prevailing at the end of the year. Revenues and expenses of Sichuan Hupan and Hupan Pharmaceutical are translated at average exchange rates during the reporting period. The resulting translation adjustment is included in accumulated other comprehensive loss.
The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:
| June 30, 2026 | June 30, 2025 | |||||||
| Balance sheet items, except for equity accounts | US$ | US$ | ||||||
| Items in the statements of income and cash flows | US$ | US$ |
F-17
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Commitments and contingencies
In the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
If the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingency liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
Concentrations and risks
a. Concentration of credit risk
The Company estimates credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash, accounts receivable, note receivable, other receivable and loan receivable balance from third parties. The Company has designed their credit policies with an objective to minimize their exposure to credit risk.
The maximum exposure of such assets to credit risk is their carrying amounts at the balance sheet dates. The Company maintains majority of bank accounts in mainland China, where there is a RMB
The Company also has the bank accounts at financial institutions in the United States, where there is $
The Company has adopted a credit policy of dealing with creditworthy counterparties to mitigate the credit risk from defaults. The management team conducts credit evaluations of its customers, and generally does not require collateral or other security from them. The Company establishes an accounting policy to provide for allowance for credit loss based on the individual customer’s financial condition, credit history, and the future economic conditions. Except loan receivable from a third party and other receivable are monitored on an ongoing basis with the result that the Company’s exposure to impairment is not significant. As of June 30, 2026 and 2025, the Company recognized an allowance for credit loss of $
F-18
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Concentrations and risks (cont.)
b. Foreign exchange risk
Our subsidiaries in PRC have functional currency in RMB. PRC subsidiaries’ expense transactions are denominated in RMB and their assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. The value of the Chinese Yuan against the U.S. dollar is affected by the changes in China and United States economic conditions. We do not believe that we currently have any significant direct foreign exchange risk and have not used any derivative financial instruments to hedge exposure to such risk. Also, considering the volume of its business, the impact of foreign exchange risk is limited.
c. Interest rate risk
The interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. Our exposure to interest rate risk primarily relates to the interest rates from our lessors, convertible debenture and our private lenders. We have not been exposed to material risks due to the fact that our leasing obligations’ interest rate and the private loan’s interest are fixed at commence date of the leases and loans and we have not used any derivative financial instruments to manage our interest risk exposure. However, we cannot provide assurance that we will not be exposed to material risks due to changes in market interest rate in the future.
d. Liquidity risk
Liquidity risk arises through the excess of financial obligations over available financial assets due at any point in time. Our objective in managing liquidity risk is to maintain sufficient readily available reserves in order to meet our liquidity requirements at any point in time. The Company monitors and analyzes its cash flow position, its ability to generate sufficient revenue sources in the future and its operating and capital expenditure commitments. The Company typically funds the working capital needed primarily from operations, loans, shareholder advances to the Company, as well as the external financing activities.
e. Significant customers and suppliers
For the year ended June 30, 2026, four third-party customers individually accounted for
As of June 30, 2026, four third-party customers individually accounted for
For the year ended June 30, 2026, two third-party suppliers individually accounted for
As of June 30, 2026, two third-party suppliers individually accounted for
F-19
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Recent accounting pronouncements
The Company considers the applicability and impact of all accounting standards updates issued by the Financial Accounting Standards Board (“FASB”). Accounting standards that have been issued but are not listed below were assessed and determined either to be not applicable or not expected to have a material impact on the Company’s consolidated financial statements or related disclosures.
Accounting standards issued but not yet adopted
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” and issued subsequent amendment within ASU 2025-01. The amendments require disaggregation disclosure for certain expense captions presented on the face of income statement, as well as additional disclosure about selling expenses. This guidance is effective for the Company for the year ending June 30, 2028 and interim reporting periods during the year ending December 31, 2029. Early adoption is permitted. The Company is evaluating the impact of the adoption of this guidance on its disclosures.
In November 2024, the FASB issued ASU 2024-04, “Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments,” which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The amendments also clarify some specific applications of induced conversion guidance and that the guidance applies to a convertible debt instrument that is not currently convertible as long as it had a substantive conversion feature as of both its issuance date and the date the inducement offer is accepted. The new guidance is required to be applied either prospectively or retrospectively. This guidance is effective for the Company for the year ending June 30, 2027. Early adoption is permitted. The Company is evaluating the impact of the adoption of this guidance.
In May 2025, the FASB issued ASU 2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity,” which requires an entity involved in an acquisition transaction effected primarily by exchanging equity interests when the legal acquiree is a VIE that meets the definition of a business to consider specific factors to determine the accounting acquirer and removes the requirement that the primary beneficiary always is the acquirer for certain transactions. Under the amendments, acquisition transactions in which the legal acquiree is a VIE will, in more instances, result in the same accounting outcomes as economically similar transactions in which the legal acquiree is a voting interest entity. The amendments do not change the accounting for a transaction determined to be a reverse acquisition or a transaction in which the legal acquirer is not a business and is determined to be the accounting acquiree. The new guidance is required to be applied prospectively to any acquisition transaction that occurs after the initial application date. This guidance is effective for the Company for the year ending June 30, 2028. Early adoption is permitted. The Company is evaluating the impact of the adoption of this guidance.
F-20
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Recent accounting pronouncements (cont.)
In July 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2025-05, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”. ASU 2025-05 provides a practical expedient that allows entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when estimating expected credit losses for current accounts receivable and current contract assets. The amendments of ASU 2025-05 should be applied prospectively and are effective for annual and interim periods beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-05 on its consolidated financial statements and related disclosures.
In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Scope Refinements. This update clarifies the application of derivative accounting to certain contracts and refines the guidance for share-based noncash consideration received from customers. Specifically, ASU 2025-07 introduces a scope exception for contracts that are not exchange-traded and whose underlying is tied to operations or activities specific to one party. It also clarifies that share-based noncash consideration from a customer should initially be accounted for under Topic 606 until the right to receive or retain such consideration becomes unconditional, at which point financial instruments guidance may apply. The amendments are effective for the Company for the year ending June 30, 2028, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025-07 on its consolidated financial statements and related disclosures.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of operation and comprehensive loss and statements of cash flows.
NOTE 3 — ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consists of the following:
| June 30, 2026 | June 30, 2025 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: allowance for credit loss | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
The movement of allowance for credit loss for the years ended June 30, 2026 and 2025 is as follows:
| June 30, 2026 | June 30, 2025 | |||||||
| Beginning balance | $ | $ | ||||||
| Provision of expected credit loss allowance | ||||||||
| Effect of foreign exchange translation | ||||||||
| Ending balance | $ | $ | ||||||
The Company recorded addition of allowance for credit loss of $
F-21
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 — INVENTORIES, NET
Inventories, net consists of the following:
| June 30, 2026 | June 30, 2025 | |||||||
| Finished goods | $ | $ | ||||||
| Less: inventory allowance | ||||||||
| Inventories, net | $ | $ | ||||||
NOTE 5 — LOAN RECEIVABLE FROM THIRD PARTIES, NET
Loan receivable from third parties, net consists of the following:
| June 30, 2026 | June 30, 2025 | |||||||
| Unrelated individual A (1) | $ | $ | ||||||
| Unrelated individual B (2) | ||||||||
| Unrelated individual C | ||||||||
| Gross loan receivable | ||||||||
| Less: allowance for credit loss | ( | ) | ||||||
| Loan receivable, net | ||||||||
| (1) | |
| (2) |
The Company recognized interest income of $
For the year ended June 30, 2026, the Company recognized an allowance for expected credit loss allowance of $
F-22
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 — PREPAYMENT, DEPOSIT AND OTHER RECEIVABLE, NET
| June 30, 2026 | June 30, 2025 | |||||||
| Prepayment, other receivable and deposit (1) | $ | $ | ||||||
| Rent deposits | ||||||||
| Advance to suppliers (2) | ||||||||
| Ending balance | ||||||||
| Less: non-current portion | ( | ) | ( | ) | ||||
| Current portion | $ | $ | ||||||
| (1) | |
| (2) | During the year ended June 30, 2026, the Company advanced $ |
NOTE 7 — PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following:
| June 30, 2026 | June 30, 2025 | |||||||
| Furniture and Fixtures | $ | $ | ||||||
| Machinery equipment | ||||||||
| Vehicles | ||||||||
| Software | ||||||||
| Leasehold improvement | ||||||||
| Subtotal | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expense was $
F-23
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 — INTANGIBLE ASSETS, NET
Net intangible assets consist of the following:
| June 30, 2026 | June 30, 2025 | |||||||
| License | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Intangible asset, net | $ | $ | ||||||
On November 5, 2024, the Company purchased a license of pharmaceutical distribution in Mainland China through its acquisition of
For the years ended June 30, 2026 and 2025, the Company recorded amortization expense of $
NOTE 9 — LEASES
The Company has two lease agreements for offices. During the year ended June 30, 2026, the Company terminated an office lease before its original expiration date and derecognized the related operating lease right-of-use asset and lease liability. No gain or loss was recognized upon termination. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Total operating lease expenses on offices for the years ended June 30, 2026 and 2025 were $
The following table includes supplemental cash flow and non-cash information related to leases:
| For the Years Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash paid of amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from operating leases | $ | $ | ||||||
| Right-of-use assets obtained in exchange for lease obligations: | ||||||||
| Operating lease liabilities | $ | $ | ||||||
The weighted average remaining lease terms and discount rates for all of operating lease is as follows:
| June 30, 2026 | June 30, 2025 | |||||||
| Weighted-average remaining lease term (years): | ||||||||
| Operating lease | ||||||||
| Weighted average discount rate: | ||||||||
| Operating lease | % | % | ||||||
F-24
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 — LEASES (cont.)
The following is a schedule of maturities of operating lease liabilities as of June 30, 2026:
Operating leases
| Twelve months ending June 30, | Repayment | |||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Total future minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total operating lease liabilities | $ | |||
NOTE 10 — ACCRUED LIABILITIES AND OTHER PAYABLES
Accrued liabilities and other payables comprise the following amounts relating to the operation of the Company
| June 30, 2026 | June 30, 2025 | |||||||
| Credit card payables | $ | $ | ||||||
| Payroll liabilities | ||||||||
| Accrued expense | ||||||||
| Other payables | ||||||||
| Total | $ | $ | ||||||
NOTE 11 — LOANS PAYABLE
The loan balance consists of the following:
| June 30, 2026 | June 30, 2025 | |||||||
| Loan A | $ | $ | ||||||
| Loan B | ||||||||
| Loan C | ||||||||
| Loan D | ||||||||
| Total | ||||||||
| Less: loan payable, current | ( | ) | ( | ) | ||||
| Loan payable, non-current | $ | $ | ||||||
F-25
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 — LOANS PAYABLE (cont.)
| (A) | |
| (B) | The Company entered a loan of RMB |
| (C) | The Company entered a loan of $
During the year ended June 30, 2026, the Company cancelled an insurance policy associated with a loan arrangement and, as a result, was legally released from its obligation to repay the related loan. The Company determined that the liability had been extinguished as it was no longer the primary obligor. Accordingly, the Company derecognized the outstanding loan balance and recognized a gain on extinguishment of debt of $ |
| (D) | The Company entered a loan of RMB |
NOTE 12 — CONVERTIBLE DEBTS
On March 5, 2025, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with an institutional investor (the “Investor”).
Under the Securities Purchase Agreement, the Company agreed to issue
Pursuant to the Securities Purchase Agreement, the Company agreed to issue, upon the consummation of the closing of each tranche, common stock purchase warrants (“Warrants”) to the Investor, in each case to purchase a number of shares of common stock determined by dividing
F-26
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 — CONVERTIBLE DEBTS (cont.)
The Note does not bear any interest absent an Event of Default (as defined in the Note) and matures on June 5, 2026. Commencing on the earlier of (i) the 60-day anniversary after the date hereof and (ii) the date on which the first Resale Registration Statement shall have been declared effective by the Commission, the Company is required to pay to the Investor the outstanding principal balance under the Note in monthly installments, on such date and each one (1) month anniversary thereof, in an amount equal to
On April 22, 2025, the Second Closing of the First Tranche was consummated. The Company issued Investor Warrants to purchase
The Company evaluated the Note with conversion features and the detachable warrant under the guidance of ASC 470-20, “Debt with Conversion and Other Options, as amended by ASU 2020-06” and ASC 815, “Derivatives and Hedging.” The Company determined that the warrant met the criteria for equity classification under ASC 815-40. Accordingly, the relative fair value of the warrant was recorded as a component of additional paid-in capital on the issuance date.
The Company determined that embedded derivative meets the definition of derivative instruments under ASC 815, Derivatives and Hedging. Following the adoption of ASU 2020-06, the Notes are recorded as a single unit within liabilities in the consolidated balance sheets as the conversion features within the Notes are not derivatives that require bifurcation and the Notes do not involve a substantial premium.
The Company accounted for the host debt as a liability recorded at amortized cost under ASC 470-10, net of issuance costs and any discount that allocated to debt component.
The debt discount and issuance cost will be amortized to interest expense over the term of the Note using the effective interest method.
The Company recorded $
The Company recorded $
F-27
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 — CONVERTIBLE DEBTS (cont.)
The relative fair value of warrants of first closing of the first tranche was estimated using the Black-Scholes pricing model with the following weighted-average assumptions: market value of underlying share of $
The relative fair value of warrants of second closing of the first tranche was estimated using the Black-Scholes pricing model with the following weighted-average assumptions: market value of underlying share of $
The Company applied the relative fair value method to allocate the proceeds from the issuance of convertible debt. The Note’s original issue discount and incurred total issuance costs were allocated to the note payable and warrants on the relative fair value basis in accordance with ASC 835-30 and ASC 470-20. The debt discount and issuance cost allocated to the loan component will be amortized to interest expense over the term of the Convertible Debts using the effective interest method.
The initial purchaser’s discount and debt issuance costs primarily consisted of underwriting fees, lawyers fee, investor legal fee, auditor fee and SEC registration fee.
| Amount | Equity Component | Debt Component | ||||||||||
| Initial purchaser’s debt discount | $ | $ | $ | |||||||||
| Debt issuance cost | ||||||||||||
| Total | $ | $ | $ | |||||||||
The portion allocated to debt component is amortized to interest expense using the effective interest method over the effected life of the Notes, or approximately
During the year ended June 30, 2026, the holder of the Company’s convertible notes converted portions of the outstanding principal balance into shares of the Company’s common stock pursuant to the original terms of the respective note agreements.
The conversions occurred on multiple dates throughout the period and resulted in the issuance of an aggregate of
The conversions were accounted for in accordance with ASC 470-20, Debt with Conversion and Other Options, as conversions under the original terms of the agreements. Accordingly, the carrying amount of the debt, including any unamortized discount, was reclassified to equity upon conversion, and no gain or loss was recognized.
F-28
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 — CONVERTIBLE DEBTS (cont.)
As of June 30, 2026, the Company had $
| June 30, 2026 | June 30, 2025 | |||||||
| Long term debt | ||||||||
| Outstanding principal | $ | $ | ||||||
| Unamortized Initial Purchaser’s debt discount and debt issuance cost | ( | ) | ||||||
| Accrued interest | ||||||||
| Net carrying amount | $ | $ | ||||||
| Convertible debts, current | $ | $ | ||||||
The Company recognized interest expense of $
Subsequent to June 30, 2026, the Company repaid in full the outstanding principal balance, together with accrued interest. As a result, the Company had no further obligations under the convertible debt.
NOTE 13 — GENERAL AND ADMINISTRATIVE EXPENSES
| For the Years Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Payroll and staff benefit expense | $ | $ | ||||||
| Professional expense | ||||||||
| Travelling and entertainment | ||||||||
| Office expense | ||||||||
| Lease expense | ||||||||
| Insurance | ||||||||
| Other expense | ||||||||
| Depreciation on plant property and equipment | ||||||||
| Advertising | ||||||||
| Rent expense of short-term lease | ||||||||
| Amortization on intangible assets | ||||||||
| Bank charge | ||||||||
| Motor expense | ||||||||
| Management fee | ||||||||
| Repair & maintenance | ||||||||
| Total | $ | $ | ||||||
F-29
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 — SELLING EXPENSES
| For the Years Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Advertising | $ | $ | ||||||
| Payroll | ||||||||
| Market research expense | ||||||||
| Warehousing and logistics expenses | ||||||||
| Entertainment expense | ||||||||
| Business development expense | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
NOTE 15 — INCOME TAXES
Corporate Income Taxes
Under current U.S. federal tax law, corporations are subject to a federal corporate income tax rate of
Under the PRC Enterprise Income Tax Law (the “EIT Law”), the standard enterprise income tax rate for domestic enterprises and foreign invested enterprises is
Under the current tax laws of Cayman Islands, the Company’s subsidiaries in Cayman Islands are not subject to tax on income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.
As of June 30, 2026 and 2025, the Company did not have an accrued liability for uncertain tax positions and does not anticipate recognition of any significant liabilities for uncertain tax positions during the next 12 months. For the years ended June 30, 2026 and 2025, amounts were incurred for income tax uncertainties or interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals, or material deviation from its position. The Company’s tax years since its formation remain subject to possible income tax examination by its major taxing authorities for all periods.
The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures on a prospective basis for the year ended June 30, 2026
The Income tax expense applicable to loss before income taxes consists of the following:
| For the Years Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Current income tax expense: | ||||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| Foreign | ||||||||
| Total current income tax | ||||||||
| Deferred income tax benefit | ||||||||
| Federal | ||||||||
| State | ||||||||
| Foreign | ( | ) | ( | ) | ||||
| Total deferred income tax benefit | ( | ) | ( | ) | ||||
| Income tax expense | $ | $ | ||||||
F-30
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 — INCOME TAXES (cont.)
Corporate Income Taxes (cont.)
(Loss) income before income tax consists of the following:
| For the Years Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| U.S. | ( | ) | ( | ) | ||||
| Foreign | ( | ) | ||||||
| Loss before income tax | $ | ( | ) | $ | ( | ) | ||
The income tax expense differs from the amount computed by applying the U.S. federal statutory rate of
| For the Year Ended June 30, | ||||||||
| 2026 | ||||||||
| US Federal Statutory Tax Rate | $ | ( | ) | % | ||||
| State and Local Income Taxes, Net of Federal Income Tax Effect (1) | ||||||||
| Change in valuation allowance | ( | )% | ||||||
| Foreign tax effects | ||||||||
| PRC | ||||||||
| Statutory tax rate difference between PRC and US | ( | ) | % | |||||
| Non-deductible expense | ( | )% | ||||||
| Change in valuation allowance | ( | )% | ||||||
| Other adjustment | ( | ) | % | |||||
| Other foreign jurisdictions | % | |||||||
| Total income tax expense | $ | ( | )% | |||||
| (1) |
The income tax expense differs from the amount computed by applying the U.S. federal statutory rate of
| For the Year Ended June 30, | ||||
| 2025 | ||||
| Loss before tax | $ | ( | ) | |
| Statutory state tax rate | % | |||
| Income tax recovery at the federal statutory rate | ( | ) | ||
| Non-deductible expense | ||||
| Change in valuation allowance | ||||
| Foreign tax rate differential | ||||
| Total income tax expense | $ | |||
F-31
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 — INCOME TAXES (cont.)
Corporate Income Taxes (cont.)
The amount of cash paid for income taxes (net of refunds) for the year ended June 30, 2026 is as follows:
| For the Year Ended June 30, | ||||
| 2026 | ||||
| Federal | $ | |||
| State | ||||
| Foreign | ||||
| PRC | ||||
| Total income taxes paid, net of refunds | $ | |||
The Company’s deferred tax assets and liabilities consist of the following:
| June 30 2026 | June 30, 2025 | |||||||
| Deferred tax assets: | ||||||||
| Allowance for credit loss – account receivable | $ | $ | ||||||
| Allowance for credit loss – loan receivable | ||||||||
| Allowance for credit loss – advances to supplier | ||||||||
| Accrued advertising expense | ||||||||
| Refundable liability net of right of return asset | ||||||||
| Non-capital loss carried forward | ||||||||
| Total deferred tax assets | ||||||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Total deferred tax assets, net of valuation allowance | ||||||||
| Net off against deferred tax liabilities | ( | ) | ( | ) | ||||
| Deferred tax assets, net | $ | $ | ||||||
| Deferred tax liabilities: | ||||||||
| Intangible asset – license | $ | ( | ) | $ | ( | ) | ||
| Total deferred tax liabilities | ( | ) | ( | ) | ||||
| Net off against deferred tax assets | ||||||||
| Deferred tax liabilities, net | $ | $ | ( | ) | ||||
As a result of the disposition of ABL Chicago, the Company derecognized approximately
As of June 30, 2026 and 2025, the accumulated tax losses of subsidiary incorporated in the U.S. of approximately $
The deferred tax liability related to the license is expected to reverse through future amortization over the period ending October 22, 2029, and the resulting taxable income is expected to be offset by the Company’s tax loss carryforwards, accordingly, this deferred tax liability has been offset against the Company’s deferred tax assets
F-32
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 — INCOME TAXES (cont.)
Corporate Income Taxes (cont.)
Uncertain tax positions
The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of June 30, 2026 and 2025, the Company did have any significant unrecognized uncertain tax positions. The Company did not incur interests and penalties tax for the years ended June 30, 2026 and 2025.
PRC
According to PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or withholding agent. The statute of limitations will be extended to five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB
U.S.
The statute of limitations for the Company’s subsidiary in the U.S. is
NOTE 16 — RELATED PARTY TRANSACTION AND BALANCE
The relationship of related parties is summarized as follows:
| Name of Related Party | Relationship with the Company | |
| Mr. Yang Li (“Mr. Li”) |
The Company had the following balances with related parties:
| For the Years Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Amount due to a related party | ||||||||
| Mr. Li (1) | $ | $ | ||||||
| (1) |
F-33
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 — DISCONTINUED OPERATIONS AND SALES OF ABL CHICAGO
During the third quarter of 2026, the Company entered into the Share Purchase Agreement (“SPA”) to sell the equity interests of its subsidiaries that own and operate its ABL business (the “Sale Transaction”), subject to shareholder and regulatory approvals, for a total base purchase price of $
On February 12, 2026, the sale of 100% of the issued and outstanding shares of ABL Chicago was duly approved and adopted. Accordingly, the Company consummated the sale of the ABL Chicago business.
As of June 30, 2025, the major of assets and liabilities from discontinued operation included the following:
| As of June 30, 2025 | ||||
| ASSETS: | ||||
| Current Assets: | ||||
| Cash | $ | |||
| Accounts receivable – third parties, net | ||||
| Accounts receivable – related party, net | ||||
| Prepaid expenses and other assets– third parties | ||||
| Other receivable – related parties | ||||
| Contract assets | ||||
| Loan receivable – Related parties | ||||
| Current assets from discontinued operation | $ | |||
| Non-current Assets: | ||||
| Long-term investment | $ | |||
| Property and equipment, net | ||||
| Right of use operating lease assets, net | ||||
| Right of use financing lease assets, net | ||||
| Prepaid expenses and other assets | ||||
| Non-current assets from discontinued operation | $ | |||
| LIABILITIES | ||||
| Current liabilities | ||||
| Accounts payable– third parties | $ | |||
| Accounts payable– related party | ||||
| Accrued expenses and other liabilities | ||||
| Obligations under operating leases | ||||
| Obligations under financing leases | ||||
| Other loan payable | ||||
| Tax payable | ||||
| Current liabilities from discontinued operation | $ | |||
| Non-current liabilities | ||||
| Other loan payable | $ | |||
| Loan payable to related party | ||||
| Obligations under operating leases | ||||
| Obligations under financing leases | ||||
| Non-current liabilities from discontinued operation | $ | |||
F-34
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 — DISCONTINUED OPERATIONS AND SALES OF ABL CHICAGO (cont.)
Results of Discontinued Operations
Net income (loss) from discontinued operations details is as follows:
| For the Period from July 1, 2025 to Date of Disposal | For the Year Ended June 30, 2025 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Operating expenses | ||||||||
| Loss from operation | ( | ) | ( | ) | ||||
| Gain on sale of ABL Chicago | ||||||||
| Other expense, net | ( | ) | ||||||
| Net income (loss) from discontinued operations, before tax | ( | ) | ||||||
| Income tax expense | ||||||||
| Income (loss) from discontinued operations, net of tax provision | $ | $ | ( | ) | ||||
Revenue from discontinued operation
ABL Chicago generates revenue from providing cross-border ocean and airfreight solutions. No practical expedients were used when adoption ASC606. Revenue recognition policies are as follows:
Revenue from cross-border freights solutions
The Company provides comprehensive services in the United States for customers to transport goods from overseas to the United States and from the United States to overseas. Operating under service contracts, for goods entering the United States, after the goods arrive at a U.S. seaports or airports, the Company offers customs clearance, container unloading, storage, unpacking, packing, and transportation services to the locations specified by the customers. For customers shipping goods overseas, the Company provides cargo space arrangements, storage, packing, export customs clearance, and arranges transportation to seaports or airports for loading.
The transaction price is determined based on the range of services provided and the volume of goods. The Company considers these comprehensive services as one performance obligation since these promises are not distinct within the context of the contract, and the bundle of integrated services represents a combined output. This performance obligation is satisfied over time as customers receive the benefits of these services during the process of transporting goods from one location to another.
For goods entering the United States, the Company determines that the performance period for revenue recognition is between the pickup date and the date of completing delivery. For customers shipping goods overseas with cargo space booking service, the Company determines that the performance period for revenue recognition is between the container or cargo space confirmed date and the date of arrival at destination. For customers shipping goods overseas without cargo space booking service, the Company determines that the performance period for revenue recognition is between pickup date and the date when the goods depart from airport or port. The performance period may be estimated if the date of completing delivery or the departure date or arrival date has not occurred by the reporting date. The Company has determined that revenue recognition over the time in transit provides a reasonable estimate of the transfer of services to its customers as it depicts the pattern of the Company’s performance under the contracts with its customers. Determining the performance period and the progress of the transportation as of the reporting date requires management’s estimation and judgement, which may impact the timing of revenue recognition.
For customers with goods entering the United States, we offer customs clearance, container unloading, storage, unpacking, packing, and transportation services to customer-specified locations after the goods arrive at a U.S. seaport or airport. For customers shipping goods overseas, we provide cargo space arrangement, storage, packing, export customs clearance, and transportation to the seaport or airport for loading. The performance obligation is satisfied over time as customers receive the benefits of these services during the process of transporting goods from one location to another. As a result, we recognize revenue over time. We believe that the methodology employed is comparable to that of other global logistics companies and offers faithful depiction of the services rendered to customers.
F-35
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 — DISCONTINUED OPERATIONS AND SALES OF ABL CHICAGO (cont.)
Principal and agent considerations
In the Company’s transportation business, the Company utilizes independent contractors and third-party carriers and related party carriers in the performances of some transportation services as and when needed. U.S. GAAP requires us to evaluate, using a control model, whether the Company itself promises to provide services to the customers (as a principal) or to arrange for services to be provided by another party (as an agent). Based on the Company’s evaluation using a control model, the Company determined that in all of its major business activities, it serves as a principal rather than an agent within their revenue arrangements. Revenue and the associated purchased transportation costs are both reported on a gross basis within the consolidated statements of income (loss) and comprehensive income (loss).
Accounts receivable, net
Accounts receivables are carried at the original invoiced amount less an estimated allowance for expected credit losses based on the probability of future collection. The Company reviews its accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. The Company grant credit to customers, without collateral, under normal payment terms. The Company uses a loss rate method to estimate allowance for credit losses for accounts receivable from cross-border freights solutions. Loss-rate approach is based on the historical loss rates. The Company evaluates the expected credit loss of accounts receivable based on customer financial condition and historical collection information adjusted for current market economic conditions and forecasts of future economic performance when appropriate. For those past due balances over one year and other higher risk receivables identified by the Company are reviewed individually for collectability. The Company writes off potentially uncollectible accounts receivable against the allowance for credit losses if it is determined that the amounts will not be collected. As of June 30, 2025, the Company recorded the allowance of credit loss of $
Accounts receivable, net consists of the following:
| June 30, 2025 | ||||
| Accounts receivable – third-party customers | $ | |||
| Less: allowance for credit loss – third-party customers | ( | ) | ||
| Accounts receivable from third-party customers, net | $ | |||
| Accounts receivable – related party customers | $ | |||
| Less: allowance for credit loss – related party customers | ||||
| Total accounts receivable– related party customers, net | $ | |||
Prepayment, deposit and other receivable – third party
| June 30, 2025 | ||||
| Prepayment and other deposits | $ | |||
| Rent deposits | ||||
| Total | ||||
| Less: non-current portion | ( | ) | ||
| Current portion | $ | |||
Contract assets
Contract assets represent estimated amounts for which the Company has the right to consideration for the services provided while a delivery is still in-transit and has not yet invoiced the customer. The estimated contract asset is based on the estimated completion percentage of the performance obligation. We believe that customers simultaneously benefit from the comprehensive services we provided. Upon completion of the performance obligations, which can vary in duration based upon the method of transport and billing the customer, these amounts become classified within accounts receivable. As of June 30, 2025, the Company recorded contract assets $
F-36
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 — DISCONTINUED OPERATIONS AND SALES OF ABL CHICAGO (cont.)
Investment in other entity
The Company assesses its investment in ABL Wuhan and determines that no significant influence over investee existed, as defined in ASC 323-10-15-6, and therefore accounts for the investment used the measurement alternative under ASC 321-10-35-2. Under this approach, the investment is measured at cost, and adjusted for impairments, with changes recognized in net income. The investment in other entity that does not report net asset value is subject to qualitative assessment for indicators of impairments.
On August 4, 2023, ABL Wuhan ceased to be the ABL Chicago’s subsidiary and became the ABL Chicago’s long-term investment. As of June 30, 2025, the Company’s investment in ABL Wuhan amounted to $
Property and equipment, net
Property and equipment are stated at cost less accumulated depreciation. The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets.
Lease
ABL Chicago has multiple lease agreements for warehouses, warehouse machinery and equipment and offices.
The following table includes supplemental cash flow and non-cash information related to leases:
| For the Period from July 1, 2025 to Date of Disposal | For the Year Ended June 30, 2025 | |||||||
| Cash paid of amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from discontinued operation - operating leases | $ | $ | ||||||
| Operating cash flows from discontinued operation - finance leases | $ | $ | ||||||
| Financing cash flows discontinued operation - from finance leases | $ | $ | ||||||
| Right-of-use assets obtained in exchange for lease obligations: | ||||||||
| Operating lease liabilities | $ | $ | ||||||
| Finance lease liabilities | $ | |||||||
F-37
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 — DISCONTINUED OPERATIONS AND SALES OF ABL CHICAGO (cont.)
Accrued liabilities and other payables
Accrued liabilities and other payables comprise the following amounts relating to the discontinued operation:
| June 30, 2025 | ||||
| Credit card payables | $ | |||
| Payroll liabilities | ||||
| Accrued expense | ||||
| Other payables | ||||
| Total | $ | |||
Loan payable to a related party
On March 1, 2025, the Company entered into a loan agreement with a related party – ABL Shenzhen for a principal amount up to $
Loan payable
The Company obtained multiple loans to finance the purchase of vehicles and warehouse machinery and obtained other loans to support its working capital needs.
The loan balance consists of the following:
| June 30, 2025 | ||||
| Equipment loans (a) | $ | |||
| Vehicle loans (b) | ||||
| Other loans (c) | ||||
| Total | ||||
| Less: loan payable, current | ( | ) | ||
| Loan payable, non-current | $ | |||
(a) Equipment loans
The Company made the total principal repayments of $
(b) Vehicle loans
The Company made the total principal repayments of $
F-38
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 — DISCONTINUED OPERATIONS AND SALES OF ABL CHICAGO (cont.)
Loan payable (cont.)
(c) Other loans
The Company made the total principal repayments of $
Related party transactions
a) Other receivable from related parties
Other receivable from related parties consists of balances with the parties listed below, arising from interest receivable, storage income, rental income, contractor salaries charged by related parties, other expenses paid on their behalf:
| June 30, 2025 | ||||
| Other receivable from Weship | $ | |||
| Other receivable from Intermodal | ||||
| Other receivable from ABL LAX | ||||
| Other payable to ABL Shenzhen | ( | ) | ||
| Total | $ | |||
b) Summary of balances payable to related parties
| June 30, 2025 | ||||
| Account payable to Weship | $ | |||
| Account payable to ABL Wuhan | ||||
| Account payable to Intermodal | ||||
| Total | $ | |||
c) Summary of balances receivable from related parties
| June 30, 2025 | ||||
| Accounts receivable from Weship | $ | |||
| Accounts receivable from ABL Shenzhen | ||||
| Accounts receivable from ABL Wuhan | ||||
| Total | $ | |||
F-39
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 — DISCONTINUED OPERATIONS AND SALES OF ABL CHICAGO (cont.)
Related party transactions (cont.)
d) Loan receivable from related parties
| June 30, 2025 | ||||
| Loan receivable from Weship | $ | |||
| Loan receivable from ABL LAX | ||||
| Total | $ | |||
The Company entered into a loan agreement with related parties to support working capital needs. The loan bears interest at an annual rate of
e) Summary of related parties’ transactions
| For the Period from July 1, 2025 to Date of Disposal | For The Year Ended June 30, 2025 | |||||||
| Revenue from Weship (a) | $ | $ | ||||||
| Revenue from ABL Wuhan (a) | $ | $ | ||||||
| Revenue from ABL Shenzhen (a) | $ | $ | ||||||
| Revenue from ABL LAX (a) | $ | $ | ||||||
| Rental income from Weship (c) | $ | $ | ||||||
| Rental income from Intermodal (d) | $ | $ | ||||||
| Cost of revenue charged by Weship (b) | $ | $ | ||||||
| Cost of revenue charged by Intermodal (e) | $ | $ | ||||||
| Cost of revenue charged by ABL Wuhan (f) | $ | $ | ||||||
| Cost of revenue charged by ABL LAX (f) | $ | $ | ||||||
| Interest expenses charged by ABL Shenzhen | $ | $ | ||||||
During the years ended June 30, 2026 and 2025, the Company had the following transactions with its related parties — Weship, ABL Wuhan, ABL Shenzhen, ABL LAX and Intermodal
| (a) |
| (b) |
| (c) |
| (d) | ||
| (e) |
| (f) |
F-40
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 — DISCONTINUED OPERATIONS AND SALES OF ABL CHICAGO (cont.)
Related party transactions (cont.)
f) Salaries and employee benefits paid to major shareholders
| For the Period from July 1, 2025 to Date of Disposal | For The Year Ended June 30, 2025 | |||||||
| Mr. Henry Liu | $ | $ | ||||||
| Mr. Shuai Li | ||||||||
| Total | $ | $ | ||||||
Transaction
On February 12, 2026, the sale of
| Cash consideration for sale of ABL Chicago | $ | |||
| Less: book value of assets sold: | ||||
| Cash | ||||
| Accounts receivable – third parties, net | ||||
| Accounts receivable – related party, net | ||||
| Prepaid expenses and other as sets | ||||
| Other receivable – related parties | ||||
| Loan receivable – related parties | ||||
| Contract assets | ||||
| Investment in other entity | ||||
| Property and equipment, net | ||||
| Right of use operating lease assets, net | ||||
| Right of use financing lease assets, net | ||||
| Net book value of assets sold | ||||
| Add: Liabilities assumed by buyer | ||||
| Accounts payable– third parties | ||||
| Accounts payable– related party | ||||
| Accrued expenses and other liabilities | ||||
| Obligations under operating leases | ||||
| Obligations under financing leases | ||||
| Tax payable | ||||
| Other loan payable | ||||
| Amounts duo related party | ||||
| Amounts due to shareholder | ||||
| Amounts due to ultimate holding company | ||||
| Loan payable to related party | ||||
| Total liabilities assumed | ||||
| Less: Amounts due from ABL Chicago | ||||
| Gain on Sale of ABL Chicago | $ |
Management has determined that there are no current federal or state income taxes payable in connection with the sale of ABL Chicago, after considering the Company’s tax basis in the stock of ABL Chicago as well as the Company’s projected tax losses. Further, if needed, the Company has net operating loss carryforwards that are available to offset any tax liability.
F-41
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18 — STOCKHOLDERS’ EQUITY
Common Stocks
The Company was incorporated under the laws of the State of Nevada on August 28, 2023. In accordance with the Company’s Articles of Incorporation, the Company is authorized to issue
On October 25, 2023, the Company amended its Articles of Incorporation to increase its number of authorized common stocks from
On March 29, 2024, a
On July 1, 2024, the Company closed its IPO of
Private offering
On June 24, 2025, the Company entered into a Securities Purchase Agreement with certain investors for the issuance and sale of an aggregate of
On July 16, 2025, the Company entered into Securities Purchase Agreements with certain investors for the issuance and sale of an aggregate of
On August 4, 2025, the Company entered into Securities Purchase Agreements with certain investors for the issuance and sale of an aggregate of
On December 15, 2025, the Company entered into Securities Purchase Agreements with certain investors for the issuance and sale of an aggregate of
F-42
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18 — STOCKHOLDERS’ EQUITY (cont.)
Common Stocks (cont.)
Private offering (cont.)
On December 29, 2025, the Company entered into Securities Purchase Agreements with certain investors for the issuance and sale of an aggregate of
Convertible debts conversion
During the year ended June 30, 2026, holders of the Company’s convertible notes elected to convert an aggregate principal amount of $
Common Shares Issued for Service
On July 4, 2025, the Company signed a consulting agreement (the “Consulting Agreement”) with FirsTrust China Ltd. (“FirsTrust”) to provide professional consulting and advisory services to the Company for twelve months from July 7, 2025 in exchange for
On July 4, 2025, the Company entered into a consulting agreement (the “Consulting Agreement”) with SNC Investment Group Limited (“SNC”), under which SNC will provide strategic planning and corporate communication services to the Company for a twelve-month period beginning August 7, 2025. As compensation for these services, the Company agreed to issue
On July 21, 2025, the Company entered into a consulting agreement (the “Consulting Agreement”) with China PINX International Investment Group Limited (“China PINX”) to provide merger and acquisition consulting and other related service to the Company for a period from July 21, 2025 to June 30, 2026. Upon signing the agreement, the Company issued
On August 1, 2025, the Company entered into a consulting agreement (the “Consulting Agreement”) with Jolly Good River Group Limited (“Jolly”) to provide strategic consulting services to the Company for a twelve-month period beginning August 1, 2025. As compensation for these services, the Company agreed to issue
On December 13, 2025, the Company entered into a consulting agreement (the “Consulting Agreement”) with Nan Zhang to provide management consulting and advisory services to the Company for a twelve-month period beginning December 13, 2025. As compensation for these services, the Company agreed to issue
On December 15, 2025, the Company entered into a consulting agreement (the “Consulting Agreement”) with Zhixin Li to provide business expansion, merger and acquisition consulting services to the Company for a twelve-month period beginning December 15, 2025. As compensation for these services, the Company agreed to issue
F-43
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18 — STOCKHOLDERS’ EQUITY (cont.)
Common Stocks (cont.)
Common Shares Issued for Service (cont.)
On December 23, 2025, the Company entered into a consulting agreement (the “Consulting Agreement”) with Shengrong Venture Limited (“Shengrong”) to provide general operating advisory services to the Company for a twelve-month period beginning December 23, 2025. As compensation for these services, the Company agreed to issue
On December 23, 2025, the Company entered into a consulting agreement (the “Consulting Agreement”) with SNC Investment Group Limited (“SNC”) to provide capital markets advisory services and guidance to the Company for a twelve-month period beginning December 23, 2025. As compensation for these services, the Company agreed to issue
For the year ended June 30, 2026, the Company issued
As of June 30, 2026 and 2025,
Representative’s Warrants
Pursuant to the Underwriting Agreement, the Company issued to the Representative and its designee warrants (the “Representative’s Warrants”) to purchase
Management determined that these warrants meet the requirements for equity classification under ASC 815-40 because they are indexed to their own shares and meet the requirements for equity classification. The warrants were recorded at their fair value on the date of grant as a component of shareholders’ equity. The fair value of these warrants was $
As of June 30, 2026,
F-44
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18 — STOCKHOLDERS’ EQUITY (cont.)
Common stock purchase warrants
Pursuant to the Securities Purchase Agreement, the Company agreed to issue, upon the consummation of the closing of each tranche, common stock purchase warrants (“Warrants”) to the Investor (see Note 12).
As of June 30, 2026,
As of June 30, 2026,
Subscription receivable
During the year ended June 30, 2026, the Company entered into a private placement agreement. As of June 30, 2026, a total of $
This amount is recorded as Subscription Receivable and is presented as a deduction from Shareholders’ Equity in the accompanying Consolidated Balance Sheets. The Company expects to collect the full outstanding balance during the next quarter.
Statutory reserves
The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve are required to be at least
NOTE 19 — LOSS PER SHARE
For the years ended June 30, 2026 and 2025, all potentially dilutive securities, including the convertible debenture and warrants, were excluded from the calculation of diluted loss per share because the Company was in a loss position.
| For The Years Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Net income (loss) from discontinued operation | ( | ) | ||||||
| Net loss attributable to the Company | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding – Basic and Diluted | ||||||||
| Basic and Diluted Net Income (Loss) per Common Share | ||||||||
| Continuing operations | $ | ( | ) | $ | ( | ) | ||
| Discontinued operations, net of tax | $ | $ | ( | ) | ||||
| Total Basis and diluted loss per share attributable to the Company | $ | ( | ) | $ | ( | ) | ||
F-45
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20 — SEGMENT INFORMATION
The Company follows Financial Accounting Standards Board (FASB”) Accounting Standards codification “ASC”) Topic 280, Segment Reporting, as amended by Accounting Standards Update (“ASU”) No.2023-07. Segment Reporting Topic 280: Improvements to Reportable Segment Disclosures, the Company continually monitors the reportable segments for changes in fact and circumstances to determine whether changes in the identification or aggregation of operating segments are necessary. An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Company’s chief operating decision maker in order to allocate resources and assess performance of the segment. The Company adopted ASU 2023-07 on July 1, 2024 and applied the amendments retrospectively to all prior periods presented. The adoption affected the Company’s segment disclosures but did not affect the recognition or measurement of amounts in its consolidated financial statements.
The Company’s CODM is Mr. Yang Li, the . The Company has determined that it has only operating segment and therefore reportable segment after considering several sources of information, including the Company’s internal organizational structure, the basis on which budgets and forecasts are prepared, the financial information that the Company’s CODM reviews in evaluating company performance and determining how resources should be allocated, and how the Company releases information to the public and analysts. The CODM manages all business activities on a consolidated basis, and as a result, the Company has concluded that as of June 30, 2026, there is only one operating segment and therefore one reportable segment.
The Company’s one reportable segment serves its customers primarily by providing pharmaceutical products in China. The Company generates a substantial percentage of its revenue from selling pharmaceutical products on a direct basis, whereby it is exposed to the risks and rewards of ownership of the material while in its possession.
As the one reportable segment is managed on a consolidated basis, the measure of segment profit or loss is consolidated net loss.
The Company regularly provides the CODM with a reporting package that is structured similarly to the statements of earnings, and the CODM reviews consolidated net earnings (loss) as a key performance measure of profit (loss) for the Company’s single reportable segment and reviews significant expenses on a consolidated basis consistent with the presentation on the consolidated statements of earnings. The CODM’s review is focused on the consolidated results for the Company.
The following table presents the significant expenses that are regularly provided to the CODM for the one reportable segment and the required disclosable amounts that are included in consolidated and combined net earnings for the years ended June 30, 2026 and 2025.
| For the years ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Revenue from external customers | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross profit | ||||||||
| Selling expense | ||||||||
| General and administrative expense | ||||||||
| Provision of allowance for expected credit loss on accounts receivable | ||||||||
| Write-off of supplier advance | ||||||||
| Provision of allowance for expected credit loss on loan receivable | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Other income, net | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Loss before income tax | ( | ) | ( | ) | ||||
| Income tax expense | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
F-46
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 21 — COMMITMENTS AND CONTINGENCIES
Contractual Commitments
As of June 30, 2026, the Company’s contractual obligations consist of the following:
| Contractual Obligations | Total | Less than 1 year | 1 – 3 years | 3 – 5 years | More than 5 years | |||||||||||||||
| Operating lease obligations | $ | $ | ||||||||||||||||||
| Vehicle loans | ||||||||||||||||||||
| Other loans | ||||||||||||||||||||
| Convertible debts | ||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||
Contingencies
The Company may be involved in certain legal proceedings, claims and disputes arising from the commercial operations, which, in general, are subject to uncertainties and in which the outcomes are not predictable. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. Although the Company can give no assurances about the resolution of pending claims, litigation or other disputes and the effect such outcomes may have on the Company, the Company believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided or covered by insurance, will not have a material adverse effect on the Company’s unaudited consolidated financial position or results of operations or liquidity as of June 30, 2026.
NOTE 22 — ASSETS ACQUISITION
Hupan Pharmaceutical (Hubei) Co., Ltd acquisition
On November 5, 2024, the Company entered into an equity transfer agreement (the “Equity Transfer Agreement”) with Hubei Haoyaoshi Zhenghe Pharmacy Chain Co., Ltd and Hubei Huayao Pharmaceutical Co., Ltd to acquire
Pursuant to the Equity Transfer Agreement, Sichuan Hupan will acquire the entirety of the equity interests that Hubei Haoyaoshi Zhenghe Pharmacy Chain Co., Ltd and Hubei Huayao Pharmaceutical Co., Ltd. hold in Hupan Pharmaceutical, for a total consideration of RMB
The acquisition was accounted for as an asset acquisition because the acquisition was related to the pharmaceutical distribution license, a single asset. The acquisition was closed on November 21, 2024.
| Amount | ||||
| Total consideration in cash | $ | |||
| Assets acquired and liabilities assumed: | ||||
| Cash acquired | ||||
| Original paid in capital paid to Hupan Pharmaceutical | ||||
| Intangible assets – license of pharmaceutical distribution | ||||
| Other payables | ( | ) | ||
| Deferred tax liabilities | ( | ) | ||
| Total assets acquired | $ | |||
The Company recorded impairment of intangible assets of for the years ended June 30, 2026 and 2025.
F-47
QUANOME TECHNOLOGIES, INC. (FORMERLY KNOWN AS LAKESIDE HOLDING LIMITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 23 — SUBSEQUENT EVENTS
The Company evaluated all events and transactions that occurred after June 30, 2026 up through the date the consolidated financial statements were issued, and unless disclosed below, there are not any material subsequent events that require disclosure in these consolidated financial statements.
Amendments to the Articles of Incorporation and Bylaws
On July 2, 2026, the Company filed a Certificate of Amendment to its articles of incorporation, as amended (“Amended Articles of Incorporation”), with the Secretary of State of the State of Nevada (the “Nevada Secretary of State”) to (i) increase the number of authorized shares of common stock, par value $
Loan extension agreement
On July 3, 2026, the Company entered into an agreement with the third party to extend the loan’s maturity date from July 9, 2026 to July 8, 2027, while other terms remain unchanged.
New subsidiaries incorporation
On September 10, 2026, XDT, Inc., a Delaware corporation specializing in dedicated artificial intelligence compute capacity and managed inference services, was incorporated as a wholly owned subsidiary of Quanome Technologies, Inc.
On September 10, 2026, XDT US HoldCo, LLC, a Delaware limited liability company specializing in dedicated artificial intelligence compute capacity and managed inference services, was established as a wholly owned subsidiary of XDT, Inc.
On September 10, 2026, XDT Infrastructure I, LLC, a Delaware limited liability company specializing in dedicated artificial intelligence compute capacity and managed inference services, was established as a wholly owned subsidiary of XDT US HoldCo, LLC.
On September 10, 2026, XDT Infrastructure II, LLC, a Delaware limited liability company specializing in dedicated artificial intelligence compute capacity and managed inference services, was established as a wholly owned subsidiary of XDT US HoldCo, LLC.
Purchase and Sale Agreement
On September 16, 2026, the Company entered into a Purchase and Sale Agreement and related purchase order (collectively, the “Purchase Agreement”) with Compal Electronics, Inc. for the purchase of
F-48
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report.
Based upon this evaluation, our management concluded that as of June 30, 2026, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2026, based on the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 Framework). Based on this evaluation under the 2013 Framework, our principal executive officer and principal financial officer have concluded that our internal control over financial reporting was not effective as of June 30, 2026 due to the following material weaknesses:
| ● | We are lacking adequate segregation of duties and effective risk assessment; and |
| ● | We are lacking sufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both the U.S. GAAP, and SEC guidelines. |
A material weakness is a deficiency, or a combination of deficiencies, within the meaning of PCAOB Auditing Standard AS 2201, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. We plan to address the weaknesses identified above by implementing the following measures:
| (i) | Continuously hiring additional accounting staffs with comprehensive knowledge of U.S. GAAP and SEC reporting requirements; |
| (ii) | Designing and implementing formal procedures and controls supporting the Company’s period-end financial reporting process, such as controls over the preparation and review of account reconciliations and disclosures in the consolidated financial statements; and |
| (iii) | Ameliorating our internal audit to assist with assessment of Sarbanes-Oxley compliance requirements and improvement of internal controls related to financial reporting. |
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the fourth quarter of the fiscal year ended June 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections.
None.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Our executive officers and directors, and their ages and positions as of the date of this report, are set forth below:
| Name | Age | Position(s) | ||
| Yang Li | 44 | Chief Executive Officer, Chief Operating Officer, Chairman and Director | ||
| Long (Leo) Yi | 49 | Chief Financial Officer and Director | ||
| Zhengyi (Janice) Fang | 34 | Independent Director | ||
| Chao Liu | 44 | Independent Director | ||
| Aik Siang Goh | 49 | Independent Director |
Mr. Yang Li joined us as our Chief Operating Officer and Chairman of the Board of Director in August 2025 and brings extensive leadership experience. Mr. Li was later appointed as our Chief Executive Officer in December 2025. Before joining us, Mr. Li served as Chief Executive Officer of Shanghai Nanchao Technology Inc. from 2014 to 2025, Managing Partner at Consensus Capital from 2017 to 2018, Chief Technology Officer of Dealuse Technology Inc. from 2010 to 2014, and began his career at TBA Digital Inc. from 2008 to 2010. Mr. Li holds a Bachelor of Arts in Computing Science from Simon Fraser University, and served as an Adjunct Lecturer at Fudan University’s Master of Science in Engineering program from 2016 to 2018.
Mr. Long (Leo) Yi has served as our chief financial officer since June 2024. Mr. Yi is a certified public accountant in the state of Illinois with 15 years of working experience in the accounting and financing field. From July 2019 to January 2023, Mr. Yi served as the chairman of audit committee in Color Star Technology Co., Ltd. (NASDAQ: ADD), an entertainment technology company focusing on the application of technology and artificial intelligence in the entertainment industry. From January 2018 to July 2021, Mr. Yi served as the chief executive officer of Urban Tea, Inc. (NASDAQ: MYT). From April 2019 to January 2020, he served as the chief financial officer of iFresh Inc (OTC: IFMK). From November 2012 to January 2018, Mr. Yi served as the chief financial officer of TD Holdings, Inc. (NASDAQ: GLG). Mr. Yi received a bachelor’s degree in accounting from Northeastern University (Shenyang, China) in September 1998, a master’s degree in accounting and finance from University of Rotterdam in June 2004 and another master’s degree in accounting and finance from McGill University in August 2006.
Ms. Zhengyi (Janice) Fang has served as an independent director since June 2024. Ms. Fang is a professional accountant certified by the American Institute of Certified Public Accountants in Washington. From December 2020 to present, Ms. Fang has served as a senior consultant at Ernst & Young in Haikou, China, in charge of, valuation, modeling, and economic consulting services. From September 2018 to November 2020, Ms. Fang worked as an audit associate and assistant manager at KPMG. Ms. Fang received her bachelor’s degree in business administration in accounting in June 2014 and her master’s degree in professional accounting in June 2017 from Seattle University. We believe that Ms. Fang’s significant experience in finance and accounting qualifies her to serve on our board.
Ms. Chao Liu has served as an independent director since September 21, 2026. Ms. Chao Liu brings more than a decade of leadership experience across investment, real estate and non-profit organizations. Ms. Liu has served as President of Prosperity Alliance Singapore, an affiliate of the United Nations Institute for Training and Research (UNITAR) since 2025, as Chief Executive Officer of The HLW Investment (Singapore) since 2023, and as Chief Executive Officer of The HLW Investment USA since 2013, where Ms. Liu is responsible for real estate investment and property management. Ms. Liu founded the Brotherhood Cup Foundation USA in November 2021 and served as founder of the Brotherhood Cup (China), a charity organization, from 2008 to 2019. Ms. Liu received a Bachelor’s degree in Tourism and Hospitality Management from the University of Surrey in the United Kingdom and a Master’s degree in Human Resource Management from the University of Sydney in Australia.
Mr. Aik Siang Goh has served as an independent director since September 2025. As a seasoned entrepreneur and business leader with over two decades of experience, Mr. Goh focus on leveraging cutting-edge technologies to drive innovation and growth. From 2022 to 2025, Ms. Goh served as Founder and Chairman of Edge Matrix Computing (EMC). Mr. Goh earned a Master of Finance Management degree from the Macquarie Graduate School of Management in 2008 and a Bachelor of Commerce (Finance) in University of Melbourne in 1999.
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Board Composition and Election of Directors
Our board of directors currently consists of five members. Each of our current directors will continue to serve until the first annual meeting of the stockholders or until their successor(s) shall have been elected and qualified.
Director Independence
Our common stock is listed on the Nasdaq Capital Market (the “Nasdaq”). Under the rules of the Nasdaq, independent directors may comprise a majority of a listed company’s board of directors within one year following the listing date of the company’s securities. Under the rules of the Nasdaq, a director will only qualify as an “independent director” if that that company’s board of directors affirmatively determines that such person does not have a relationship with the company that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Our board of directors has undertaken a review of the independence of each director and, based on the information provided by each director concerning his or her background, employment and affiliations, our board of directors has determined that Zhengyi (Janice) Fang, Chao Liu and Aik Siang Goh qualify as independent directors in accordance with the Nasdaq rules. Our board of directors has made a subjective determination as to each independent director that no relationships exist that, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, our board of directors reviewed and discussed information provided by the directors and us with regard to each director’s relationships as they may relate to us and our management, including the beneficial ownership of our capital stock by each director.
Role of the Board of Directors in Risk Oversight
Risk assessment and oversight are an integral part of our governance and management processes. Our board of directors encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews these risks with the board of directors at regular board meetings as part of management presentations that focus on particular business functions, operations, or strategies, and presents the steps taken by management to mitigate or eliminate such risks.
Our board of directors does not have a standing risk management committee, but rather administers this oversight function directly through our board of directors as a whole, as well as through various standing committees of our board of directors that address risks inherent in their respective areas of oversight. While our board of directors has a fiduciary duty to monitor and assess strategic risk exposure, our audit committee is responsible for overseeing our major financial risk exposures and the steps our management has taken to monitor and control these exposures, overseeing cybersecurity risks and assisting the board of directors in its oversight over enterprise risk management. The audit committee also approves or disapproves any related person transactions. Our nominating and corporate governance committee monitors the effectiveness of our corporate governance guidelines and manages risks associated with the independence of the board of directors. Our compensation and leadership development committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.
Committees of the Board of Directors
We have established an audit committee, a compensation committee and a nominating and corporate governance committee under the board of directors. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below.
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Audit Committee. Our audit committee consists of Ms. Zhengyi (Janice) Fang, Ms. Chao Liu and Mr. Goh, and is chaired by Ms. Fang. Ms. Fang, Ms. Liu and Mr. Goh each satisfies the “independence” requirements of Rule 5605(c)(2) of the Listing Rules of the Nasdaq and meet the independence standards under Rule 10A-3 under the Exchange Act, as amended. We have determined that Ms. Fang qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:
| ● | selecting the independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by the independent registered public accounting firm; |
| ● | reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response; |
| ● | reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; |
| ● | discussing the annual audited financial statements with management and the independent registered public accounting firm; |
| ● | reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of material control deficiencies; |
| ● | annually reviewing and reassessing the adequacy of our audit committee charter; |
| ● | meeting separately and periodically with management and the independent registered public accounting firm; and |
| ● | reporting regularly to the board of directors. |
Compensation Committee. Our compensation committee consists of Ms. Fang, Ms. Liu and Mr. Goh, and is chaired by Ms. Liu. Ms. Fang, Ms. Liu and Mr. Goh each satisfies the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq. The compensation committee assists the board of directors in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our executive officers may not be present at any committee meeting during which their compensation is deliberated upon. The compensation committee is responsible for, among other things:
| ● | reviewing the total compensation package for our executive officers and making recommendations to the board of directors with respect to it; |
| ● | approving and overseeing the total compensation package for our executives other than the three most senior executives; |
| ● | reviewing the compensation of our directors and making recommendations to the board of directors with respect to it; and |
| ● | periodically reviewing and approving any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, and employee pension and welfare benefit plans. |
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Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Ms. Fang, Ms. Liu and Mr. Goh, and is chaired by Mr. Goh. Ms. Fang, Ms. Liu and Mr. Goh each satisfies the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board of directors and its committees. The nominating and corporate governance committee is responsible for, among other things:
| ● | recommending nominees to the board of directors for election or re-election to the board of directors, or for appointment to fill any vacancy on the board of directors; |
| ● | reviewing annually with the board of directors the current composition of the board of directors with regards to characteristics such as independence, age, skills, experience and availability of service to us; |
| ● | selecting and recommending to the board of directors the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself; and |
| ● | monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. |
Compensation committee interlocks and insider participation
None of the members of our compensation committee is or has been our current or former officer or employee. None of our executive officers served as a director or a member of a compensation committee (or other committee serving an equivalent function) of any other entity, including any entity whose executive officers served as a director or member of our compensation committee.
Family Relationships
No family relationships existed among any of our directors or executive officers.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics, or the Code of Conduct, applicable to all of our employees, executive officers and directors.
Insider Trading Policy
We have
Delinquent Section 16(A) Reports
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than ten (10) percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Officers, directors and greater than ten percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on our review of Forms 3, 4 and 5 and any amendments thereto furnished to us, we believe that during the fiscal year ended June 30, 2026, all filing requirements applicable to our executive officers and directors and 10% stockholders under the Exchange Act were met in a timely manner, except Xiaoou Li failed to file a Form 3 upon becoming an insider on August 29, 2025.
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Item 11. Executive Compensation.
Summary Compensation Table
The following table sets forth information with respect to compensation earned by our named executive officers (“NEOs”) for the fiscal years ended June 30, 2025 and 2026.
| Name and Principal Position | For the Fiscal Year Ended June 30, | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation ($) | All Other ($) | Total ($) | |||||||||||||||||||||||||||
| Yang Li (1) | 2026 | 56,250 | - | - | - | - | - | - | 56,250 | |||||||||||||||||||||||||||
Chief Executive Officer, Chairman, Chief Operating Officer and Director | 2025 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Henry Liu (2) | 2026 | 50,677 | - | - | - | - | - | - | 50,677 | |||||||||||||||||||||||||||
| Former Co-Chief Executive Officer | 2025 | 73,200 | - | - | - | - | - | - | 73,200 | |||||||||||||||||||||||||||
| Shuai Li (3) | 2026 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Former Chief Operating Officer | 2025 | 83,882 | - | - | - | - | - | - | 83,882 | |||||||||||||||||||||||||||
| Long Yi (4) | 2026 | 95,000 | - | - | - | - | - | - | 95,000 | |||||||||||||||||||||||||||
| Chief Financial Officer | 2025 | 80,000 | - | - | - | - | - | - | 80,000 | |||||||||||||||||||||||||||
| Lan Su (5) | 2026 | 38,543 | - | - | - | - | - | - | 38,543 | |||||||||||||||||||||||||||
| Former Chief Operating Officer | 2025 | 34,127 | - | - | - | - | - | - | 34,127 | |||||||||||||||||||||||||||
| (1) | Mr. Li became our Chief Operating Officer and Chairman of the Board of the Company on August 29, 2025. Effective December 15, 2025, Mr. Li became our joint Chief Executive Officer. Effective June 2, 2026, following Mr. Liu’s resignation as Co-Chief Executive Officer, Mr. Li became our sole Chief Executive Officer. |
| (2) | Mr. Liu served as our Chief Executive Officer until December 15, 2025, and as our Co-Chief Executive Officer from December 15, 2025 until his resignation as Co-Chief Executive Officer effective June 2, 2026. |
| (3) | Effective December 9, 2024 and March 13, 2025, Mr. Shuai Li resigned as the Chief Operating Officer and the director of the Company, respectively. Meanwhile, he remains one of the senior management of ABL. |
| (4) | Mr. Yi became our Chief Financial Officer upon the completion of our initial public listing on June 27, 2024. |
| (5) | Mr. Su became our Chief Operating Officer on December 9, 2024. Effective August 29, 2025, Mr. Su resigned from the Board of the Company. Meanwhile, he remains one of the senior managements of Hupan Pharmaceutical. |
Employment Agreements
We have entered into employment agreements with each of our NEOs (collectively, the “Employment Agreements”). The Employment Agreements establish an initial base salary for each of our NEOs and provide that each of our NEOs is eligible to participate in our standard employee benefit plan. The employment of each of our NEOs can be terminated by us at any time with or without cause. Each of the NEOs may (i) resign if such resignation is approved by our board of directors or an alternative arrangement with respect to his services is agreed to by the board of directors, and (ii) terminate his employment at any time with a one-month prior written notice to the Company, if (a) there is a material reduction in his authority, duties and responsibilities, or (b) there is a material reduction in his annual salary.
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None of our NEOs is entitled to any cash severance payment upon a termination of their employment for “cause” (as defined in such employment agreement), or for death and disability.
If any of the NEOs’ employment is terminated by us without cause, he will be entitled to severance payments and benefits of: (i) a lump sum cash payment equal to six months of his base salary as of the date of such termination; (ii) a lump sum cash payment equal to a pro-rated amount of his target annual bonus for the year immediately preceding the termination, if any; (iii) payment of premiums for continued health benefits under the Company’s health plans for 12 months following the termination, if any; and (iv) immediate vesting of 100% of the then-unvested portion of any outstanding equity awards held, if any.
If any of the NEOs’ employment is terminated by himself due to the above-mentioned reasons, he will receive remuneration equivalent to three months of his base salary that he is entitled to immediately prior to such termination.
In addition, in the event that any of the NEOs is terminated following a change in control of the Company, he shall be entitled to the severance payments and benefits of: (i) a lump sum cash payment equal to three months of his base salary at a rate equal to the greater of his annual salary in effect immediately prior to the termination, or his then current annual salary as of the date of such termination; (ii) a lump sum cash payment equal to a pro-rated amount of his target annual bonus for the year immediately preceding the termination; (iii) payment of premiums for continued health benefits under the Company’s health plans for three months following the termination; and (iv) immediate vesting of 100% of the then-unvested portion of any outstanding equity awards held, if any.
Equity-Based Compensation
During the fiscal year ended June 30, 2026 and as of the date of this report, no equity-based compensation was granted to our executive officers, including under the 2025 Equity Incentive Plan.
Other Compensation and Benefits
We maintain a 401(k) plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees are able to defer eligible compensation up to certain limits in the U.S. Internal Revenue Code of 1986, as amended (the “Code”), which are updated annually. We have the ability to make matching and discretionary contributions to the 401(k) plan. Currently, we do not make matching contributions or discretionary contributions to the 401(k) plan. The 401(k) plan is intended to be qualified under Section 401(a) of the Code, with the related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) plan are deductible by us when made, and contributions and earnings on those amounts are not generally taxable to the employees until withdrawn or distributed from the 401(k) plan.
Our NEOs did not participate in, or earn any benefits under, a non-qualified deferred compensation plan sponsored by us during the fiscal year ended June 30, 2026. Our board of directors may elect to provide our officers and other employees with non-qualified defined contribution or other non-qualified deferred compensation benefits in the future if it determines that doing so is in our best interests.
Our NEOs did not participate in, or otherwise receive any benefits under, any pension or retirement plan sponsored by us during the fiscal year ended June 30, 2026.
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Director Compensation
The following table sets forth certain information concerning the compensation of our then-serving executive directors for the fiscal year ended June 30, 2026, except that the compensation of Mr. Yang Li, Mr. Long Yi and Mr. Lan Su as a director is included in “- Summary Compensation Table”:
| Name and Principal Position | For the Fiscal Year Ended June 30, | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation ($) | All Other ($) | Total ($) | |||||||||||||||||||||||||||
| Yiye Zhou (1) | 2026 | 5,000 | 5,000 | |||||||||||||||||||||||||||||||||
| Zhengyi (Janice) Fang | 2026 | 20,000 | 20,000 | |||||||||||||||||||||||||||||||||
| Cynthia Vuong (2) | 2026 | 5,000 | 5,000 | |||||||||||||||||||||||||||||||||
| Xiaoou Li (3) | 2026 | 15,000 | 15,000 | |||||||||||||||||||||||||||||||||
| Aik Siang Goh(4) | 2026 | 15,000 | 15,000 | |||||||||||||||||||||||||||||||||
| (1) | Effective September 30, 2025, Ms. Yiye Zhou resigned from the Board of the Company. |
| (2) | Effective August 15, 2025, Ms. Vuong resigned from the Board of the Company. |
| (3) | Effective August 29, 2025, Ms. Xiaoou Li was elected to the Board of the Company. Effective September 21, 2026, Ms. Li resigned from the Board of the Company. |
| (4) | Effective September 30, 2025, Mr. Aik Siang Goh was elected to the Board of the Company. |
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The table below sets forth information, as of the date of this report, with respect to the beneficial ownership of our shares of common stock by: (a) each named executive officer, each of our directors, and our directors and executive officers as a group; and (b) each person or entity known by us to own beneficially more than 5% of our shares of common stock. Percentage ownership is based on an aggregate of 34,427,559 shares of common stock outstanding as of the date of this report. We have determined beneficial ownership in accordance with the rules of the SEC.
| Shares of Common Stock Beneficially Owned | ||||||||
| Name and Address of Beneficial Owner | Number | %† | ||||||
| Executive Officers and Directors | ||||||||
| Yang Li | - | - | ||||||
| Long (Leo) Yi | - | |||||||
| Aik Siang Goh | - | |||||||
| Zhengyi (Janice) Fang | - | |||||||
| Chao Liu | - | |||||||
| All Executive Officers and Directors as a group | - | |||||||
| 5% or Greater Holders | ||||||||
| Brink Holding Limited (1) | 2,950,000 | 8.6 | % | |||||
| Changfu Zhou (2) | 2,700,600 | 7.8 | % | |||||
| (1) | Represents 2,950,000 shares of common stock held of record by Brink Holding Limited, a company wholly owned by Ms. Huifen Hua organized under the laws of British Virgin Islands. The registered address of Brink Holding Limited is Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands. |
| (2) | The contact address of Changfu Zhou is 588 Messina Gardens Ln, San Jose, CA 95133. |
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Item 13. Certain Relationships and Related Transactions, and Director Independence.
Transactions with Related Persons
The following sets forth the transactions we have entered into since July 1, 2023, and any currently proposed transactions, to which we were or are expected to be a participant where (i) the amount involved exceeded or will exceed the lesser of $120,000 or 1% of our total assets at year-end for the last two completed fiscal years, and (ii) any of our executive officers, directors, or holders of more than 5% of any class of our voting securities, or any affiliate or member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest, other than the compensation and other arrangements we describe in “Item 11. Executive Compensation” of this report.
| For the Period from July 1, 2025 to Date of Disposal | For the year ended June 30, 2025 | For the year ended June 30, 2024 | ||||||||||
| Revenue from Weship (a) | $ | 15,435 | $ | 8,241 | $ | 28,870 | ||||||
| Revenue from ABL Wuhan (a) | $ | 831,021 | $ | 1,196,119 | $ | 1,835,377 | ||||||
| Revenue from ABL Shenzhen (a) | $ | 530,888 | $ | 698,371 | $ | - | ||||||
| Revenue from ABL LAX | $ | 2,585 | $ | 3,084 | $ | - | ||||||
| Cost of revenue charged by Weship (b) | $ | 402,846 | $ | 869,975 | $ | 1,555,680 | ||||||
| Rental income from Weship (c) | $ | 155,344 | $ | 331,665 | $ | 288,185 | ||||||
| Rental income from Intermodal (d) | $ | 8,199 | $ | 20,021 | $ | - | ||||||
| Cost of revenue charged by Intermodal (e) | $ | 386,468 | $ | 673,823 | $ | 564,519 | ||||||
| Cost of revenue charged by ABL Wuhan (f) | $ | 96,310 | $ | 133,403 | $ | 162,625 | ||||||
| Cost of revenue charged by ABL LAX (g) | $ | - | $ | 2,737 | $ | - | ||||||
| Interest expense charge by ABL Shenzhen | $ | 6,448 | $ | 2,418 | $ | - | ||||||
During the years ended June 30, 2026 and 2025, the Company had the following transactions with its related parties — Weship, ABL Wuhan, ABL Shenzhen, ABL LAX and Intermodal.
| (a) | The Company provides logistic forwarding services to Weship, ABL Wuhan and ABL Shenzhen and charges Weship, ABL Wuhan and ABL Shenzhen at its regular market rate for the services provided. |
| (b) | Weship is one of the Company’s vendors for truck delivery service. |
| (c) | The Company subleased portion of its warehouse space to Weship for rental income. The Company subleased its warehouse in Chicago to Weship in July 2023 and again for the period from January 2024 to February 12, 2026. The Company also subleased another warehouse with monthly rent of $6,500 from August 01, 2023 to October 31, 2024. |
| (d) | The Company subleased portion of its warehouse space to Intermodal for year ended February 12, 2026. | |
| (e) | Intermodal is one of the Company’s vendors, providing truck delivery service and provides labor forces. |
| (f) | ABL Wuhan provides labor force and certain cross-border freight consolidation and forwarding services and is one of our cross-border freight consolidation and forwarding service providers. |
Related Party Transaction Policy
Our board of directors have adopted a written related party transaction policy, setting forth the policies and procedures for the review and approval or ratification of related party transactions. This policy covers, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement, or relationship, or any series of similar transactions, arrangements, or relationships, in which we were or are to be a participant, where the amount involved in any fiscal year exceeds the lesser of $120,000 or 1% of our total assets at year-end for the last two completed fiscal years, and a related party had, has, or will have a direct or indirect material interest, including without limitation, purchases of goods or services by or from the related party or entities in which the related party has a material interest, indebtedness, guarantees of indebtedness, and employment by us of a related party.
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In reviewing and approving any such transactions, our audit committee has primary responsibility to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction and the extent of the related party’s interest in the transaction.
Item 14. Principal Accountant Fees and Services.
The following table represents the aggregate fees from our current principal accounting firm, ZH CPA, LLC for the fiscal years ended June 30, 2025 and 2026, respectively.
| 2025 | 2026 | |||||||
| Audit Fees | $ | 270,000 | $ | 250,000 | ||||
| Audit Related Fees | $ | - | $ | - | ||||
| Tax Fees | $ | - | $ | - | ||||
| All other fees | $ | - | $ | - | ||||
| Total Fees | $ | 270,000 | $ | 250,000 | ||||
Audit Fees - This category includes the services performed for the audit of our annual financial statements, review of the interim financial statements and for the audits of our financial statements in connection with our initial public offering, and comfort letter in connection with the underwritten public offering that are normally provided by the independent auditors in connection with engagements for those fiscal years.
Audit-Related Fees - This category consists of assurance and related services by the independent auditors that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees”.
Tax Fees - This category consists of professional services rendered by the Company’s independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.
All Other Fees - This category consists of fees for other miscellaneous items.
Pre-Approval Policies and Procedures
All of the services rendered to us by our independent registered public accountants were pre-approved by the Audit Committee.
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PART IV
Item 15. Exhibits, Financial Statement Schedules.
We have filed the following documents as part of this Annual Report on Form 10-K:
| (1) | Index to Consolidated Financial Statements |
| (2) | Financial Statement Schedules: |
| (3) | Exhibits required by Item 601 of Regulation S-K |
The documents set forth below are filed herewith or incorporated herein by reference to the location indicated.
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| * | Filed herewith |
| # | This certification is deemed not filed for purpose of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act. |
Item 16. Form 10-K Summary.
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
| Date: September 25, 2026 | Quanome Technologies, Inc. | |
| By: | /s/ Yang Li | |
| Name: | Yang Li | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| By: | /s/ Long (Leo) Yi | |
| Name: | Long (Leo) Yi | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Title | Date | |||
| /s/ Yang Li | Chief Executive Officer | September 25, 2026 | ||
| Yang Li | ||||
| /s/ Long (Leo) Yi | Chief Financial Officer | September 25, 2026 | ||
| Long (Leo) Yi | ||||
| /s/ Aik Siang Goh | Independent Director | September 25, 2026 | ||
| Aik Siang Goh | ||||
| /s/ Zhengyi (Janice) Fang | Independent Director | September 25, 2026 | ||
| Zhengyi (Janice) Fang | ||||
| /s/ Chao Liu | Independent Director | September 25, 2026 | ||
| Chao Liu |
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Exhibit 4.3
Description of the Registrant’s Securities
Quanome Technologies, Inc. (“Quanome”) had one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: Common Stock, par value $0.0001 per share (“Common Stock”). The following description of the Common Stock and certain provisions relating to the Company’s authorized preferred stock is a summary that is not complete and is qualified in its entirety by reference to the Company’s Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”) and the Company’s Amended and Restated Bylaws (“Bylaws”).
General
Our authorized capital stock consists of 2,000,000,000 shares of common stock, par value $0.0001 per share, and 1,000,000,000 shares of preferred stock, par value $0.0001 per share. Unless our Board determines otherwise, we will issue all shares of our capital stock in uncertificated form.
Common Stock
Each share of our common stock is entitled to one vote on all matters submitted to a vote of the stockholders, including the election of directors. Except as otherwise required by law, the holders of common stock will possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a majority of the votes entitled to be cast by all shares of common stock that are present in person or represented by proxy. Holders of common stock representing a majority of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. Our articles of incorporation do not provide for cumulative voting in the election of directors. Holders of common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.
Voting
Holders of shares of our common stock do not have cumulative voting rights; meaning that the holders of 50.1% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, and, in such event, the holders of the remaining shares will not be able to elect any of our directors.
Dividends
The declaration of any future cash dividend will be at the discretion of our board of directors and will depend upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
Liquidation Rights
In the event of our liquidation, dissolution or winding-up, the holders of our common stock shall be entitled to share equally, on a per share basis, in all assets remaining after the payment of any liabilities.
Preferred Stock
Our amended and restated articles of incorporation filed with the Nevada Secretary of State on July 2, 2026 authorize a total of 1,000,000,000 shares of preferred stock.
Under the terms of our amended and restated articles of incorporation, our board of directors is authorized to direct us to issue shares of preferred stock in one or more series without stockholder approval. Our board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.
The purpose of authorizing our board of directors to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions, future financings and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or could discourage a third party from seeking to acquire, a majority of our outstanding voting stock.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Transhare Corporation.
Listing
Our common stock is listed for trading on Nasdaq under the trading symbol “QNME.”
Our Bylaws and Articles of Incorporation
The following summary of certain provisions of our amended bylaws and articles of incorporation, is qualified by reference to our Bylaws and articles of incorporation, as may be amended from time to time, and the applicable provisions of Nevada law.
Our Board of Directors
Under our amended articles of incorporation, the number of directors may be increased or decreased to any number of full-age members by a majority vote of the stockholders as provided in our bylaws, but such number of members shall not be increased above the maximum of ten (10) full-age members nor decreased below a minimum of one (1) full-age member. We currently have five member on our board of directors.
Removal of Directors
Pursuant to the amended bylaws, any one or more of the directors may be removed either with or without cause at any time by the vote or written consent of the shareholders representing not less than two-thirds (2/3) of the issued and outstanding capital stock entitled to voting power.
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Special Meetings of Stockholders
Pursuant to the amended bylaws, special meetings of the stockholders shall be held at the registered office of the Company or at such other place as shall be specified or fixed in a notice thereof. Such meetings of the stockholders may be called at any time by the chief executive officer, president or secretary, or by a director, and shall be called by the president on the written request of the holders of record of at least 10% of the number of shares of the Company then outstanding and entitled to vote, which written request shall state the object of such meeting.
Action by Written Consent of the Stockholders in Lieu of a Meeting
Pursuant to our amended bylaws and NRS 78.320, any action required or permitted to be taken at a meeting of stockholders may be taken without a meeting if a written consent setting forth the action so taken is signed by stockholders holding at least a majority of the voting power, except that, if a different proportion of voting power is required for such action at a meeting, written consents representing such proportion of the voting power will be required.
Amendment to Our Bylaws
Pursuant to our amended bylaws, the bylaws may be altered, amended or repealed, and new bylaws may be adopted, at any annual or special meeting of stockholders by the affirmative vote of stockholders holding a majority of the voting power of the shares entitled to vote thereon. The bylaws may also be altered, amended or repealed, and new bylaws may be adopted, by the Board of Directors at any regular or special meeting at which a quorum is present, provided that notice of any proposed amendment or repeal is included in the notice of any special meeting. Any amendment adopted by the Board of Directors may not be inconsistent with or contrary to any amendment adopted by the stockholders.
Amendment to Our Articles of Incorporation
Pursuant to our amended articles of incorporation, the affirmative vote of holders of at least fifty percent (50%) of the outstanding voting power of the Company is required to amend, alter, change or repeal any provision of our Articles of Incorporation, except as otherwise provided by applicable Nevada law.
Acquisition of a Controlling Interest
Sections 78.378 through 78.3793 of the NRS govern certain acquisitions of a controlling interest in qualifying Nevada corporations and generally restrict an acquiring person’s ability to exercise voting rights with respect to control shares unless such voting rights are approved by the corporation’s stockholders. The NRS permits a corporation to opt out of these provisions through its articles of incorporation or bylaws. Our amended bylaws provide that these sections regarding acquisition of a controlling interest shall not apply to us.
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Exhibit 10.1
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made as of [●] by and between Quanome Technologies, Inc., a company incorporated and existing under the laws of the State of Nevada (the “Company”), and [Name of Director] ([Passport/ID] Number [●]) (the “Indemnitee”).
WHEREAS, the Indemnitee has agreed to serve as a director or executive officer of the Company and in such capacity will render valuable services to the Company; and
WHEREAS, in order to induce and encourage highly experienced and capable persons such as the Indemnitee to render valuable services to the Company, the board of directors of the Company (the “Board of Directors”) has determined that this Agreement is not only reasonable and prudent, but necessary to promote and ensure the best interests of the Company and its shareholders;
NOW, THEREFORE, in consideration of the premises and mutual agreements hereinafter set forth, and other good and valuable consideration, including, without limitation, the service of the Indemnitee, the receipt of which hereby is acknowledged, and in order to induce the Indemnitee to render valuable services the Company, the Company and the Indemnitee hereby agree as follows:
1. Definitions. As used in this Agreement:
(a) Change in Control” shall mean a change in control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar or successor schedule or form) promulgated under the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (collectively, the “Act”), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred (irrespective of the applicability of the initial clause of this definition) if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Act, but excluding any trustee or other fiduciary holding securities pursuant to an employee benefit or welfare plan or employee share plan of the Company or any subsidiary or affiliate of the Company, or any entity organized, appointed, established or holding securities of the Company with voting power for or pursuant to the terms of any such plan) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities without the prior approval of at least two-thirds of the Continuing Directors (as defined below) in office immediately prior to such person’s attaining such interest; (ii) the Company is a party to a merger, consolidation, scheme of arrangement, sale of assets or other reorganization, or a proxy contest, as a consequence of which Continuing Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors of the Company (or any successor entity) thereafter; or (iii) during any period of two (2) consecutive years, Continuing Directors cease for any reason to constitute at least a majority of the Board of Directors of the Company.
(b) “Continuing Director” shall mean an individual (i) who served on the Board of Directors of the Company at the effective date of the closing of the business combination as contemplated in the Company’s filing of Schedule 14A; or (ii) whose election or nomination for election by the Company’s shareholders was approved in accordance with the Articles of the Company.
(c) “Disinterested Director” with respect to any request by the Indemnitee for indemnification or advancement of expenses hereunder shall mean a director of the Company who neither is nor was a party to the Proceeding (as defined below) in respect of which indemnification or advancement is being sought by the Indemnitee.
(d) The term “Expenses” shall mean, without limitation, expenses of Proceedings, including attorneys’ fees, disbursements and retainers, accounting and witness fees, expenses related to preparation for service as a witness and to service as a witness, travel and deposition costs, expenses of investigations, judicial or administrative proceedings and appeals, amounts paid in settlement of a Proceeding by or on behalf of the Indemnitee, costs of attachment or similar bonds, any expenses of attempting to establish or establishing a right to indemnification or advancement of expenses, under this Agreement, the Company’s Memorandum of Association and Articles of Association as currently in effect (the “Articles”), applicable law or otherwise, and reasonable compensation for time spent by the Indemnitee in connection with the investigation, defense or appeal of a Proceeding or action for indemnification for which the Indemnitee is not otherwise compensated by the Company or any third party. The term “Expenses” shall not include the amount of judgments, fines, interest or penalties, which are actually levied against or sustained by the Indemnitee to the extent sustained after final adjudication.
(e) The term “Independent Legal Counsel” shall mean any firm of attorneys reasonably selected by the Board of Directors of the Company, so long as such firm has not represented the Company, the Company’s subsidiaries or affiliates, the Indemnitee, any entity controlled by the Indemnitee, or any party adverse to the Company, within the preceding [five (5) years]. Notwithstanding the foregoing, the term “Independent Legal Counsel” shall not include any person who, under applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s right to indemnification or advancement of expenses under this Agreement, the Company’s Articles, applicable law or otherwise.
(f) The term “Proceeding” shall mean any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, or other proceeding (including, without limitation, an appeal therefrom), formal or informal, whether brought in the name of the Company or otherwise, whether of a civil, criminal, administrative or investigative nature, and whether by, in or involving a court or an administrative, other governmental or private entity or body (including, without limitation, an investigation by the Company or its Board of Directors), by reason of (i) the fact that the Indemnitee is or was a director or officer of the Company, or is or was serving at the request of the Company as an agent of another enterprise, whether or not the Indemnitee is serving in such capacity at the time any liability or expense is incurred for which indemnification or reimbursement is to be provided under this Agreement, (ii) any actual or alleged act or omission or neglect or breach of duty, including, without limitation, any actual or alleged error or misstatement or misleading statement, which the Indemnitee commits or suffers while acting in any such capacity, or (iii) the Indemnitee attempting to establish or establishing a right to indemnification or advancement of expenses pursuant to this Agreement, the Company’s Articles, applicable law or otherwise.
(g) The phrase “serving at the request of the Company as an agent of another enterprise” or any similar terminology shall mean, unless the context otherwise requires, serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, limited liability company, trust, employee benefit or welfare plan or other enterprise, foreign or domestic. The phrase “serving at the request of the Company” shall include, without limitation, any service as a director/an executive officer of the Company which imposes duties on, or involves services by, such director/executive officer with respect to the Company or any of the Company’s subsidiaries, affiliates, employee benefit or welfare plans, such plan’s participants or beneficiaries or any other enterprise, foreign or domestic. In the event that the Indemnitee shall be a director, officer, employee or agent of another corporation, partnership, joint venture, limited liability company, trust, employee benefit or welfare plan or other enterprise, foreign or domestic, 50% or more of the ordinary shares, combined voting power or total equity interest of which is owned by the Company or any subsidiary or affiliate thereof, then it shall be presumed conclusively that the Indemnitee is so acting at the request of the Company.
2. Services by the Indemnitee. The Indemnitee agrees to serve as a director or officer of the Company under the terms of the Indemnitee’s agreement with the Company for so long as the Indemnitee is duly elected or appointed or until such time as the Indemnitee tenders a resignation in writing or is removed from the Indemnitee’s position; provided, however, that the Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or other obligation imposed by operation of law).
3. Proceedings by or in the Right of the Company. The Company shall indemnify the Indemnitee if the Indemnitee is a party to or threatened to be made a party to or is otherwise involved in any Proceeding by or in the right of the Company to procure a judgment in its favor by reason of the fact that the Indemnitee is or was a director or officer of the Company, or is or was serving at the request of the Company as an agent of another enterprise, against all Expenses, judgments, fines, interest or penalties, which are actually and reasonably incurred by the Indemnitee in connection with the defense or settlement of such a Proceeding, if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Company; except that no indemnification under this section shall be made in respect of any claim, issue or matter as to which such person shall have been adjudicated by final judgment by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the Company for willful misconduct in the performance of his/her duty to the Company, unless and only to the extent that the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such amounts which such other court shall deem proper.
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4. Proceeding Other Than a Proceeding by or in the Right of the Company. The Company shall indemnify the Indemnitee if the Indemnitee is a party to or threatened to be made a party to or is otherwise involved in any Proceeding (other than a Proceeding by or in the right of the Company) by reason of the fact that the Indemnitee is or was a director or officer of the Company, or is or was serving at the request of the Company as an agent of another enterprise, against all Expenses, judgments, fines, interest or penalties, which are actually and reasonably incurred by the Indemnitee in connection with such a Proceeding, to the fullest extent permitted by applicable law; provided, however, that any settlement of a Proceeding must be approved in advance in writing by the Company (which approval shall not be unreasonably withheld).
5. Indemnification for Costs, Charges and Expenses of Witness or Successful Party. Notwithstanding any other provision of this Agreement (except as set forth in subparagraph 9(a) hereof), and without a requirement for determination as required by Paragraph 8 hereof, to the extent that the Indemnitee (a) has prepared to serve or has served as a witness in any Proceeding in any way relating to (i) the Company or any of the Company’s subsidiaries, affiliates, employee benefit or welfare plans or such plan’s participants or beneficiaries or (ii) anything done or not done by the Indemnitee as a director or officer of the Company or in connection with serving at the request of the Company as an agent of another enterprise, or (b) has been successful in defense of any Proceeding or in defense of any claim, issue or matter therein, on the merits or otherwise, including the dismissal of a Proceeding without prejudice or the settlement of a Proceeding without an admission of liability, the Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee in connection therewith to the fullest extent permitted by applicable law.
6. Partial Indemnification. If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for a portion of the Expenses, judgments, fines, interest or penalties, which are actually and reasonably incurred by the Indemnitee in the investigation, defense, appeal or settlement of any Proceeding, but not, however, for the total amount of the Indemnitee’s Expenses, judgments, fines, interest or penalties, then the Company shall nevertheless indemnify the Indemnitee for the portion of such Expenses, judgments, fines, interest or penalties to which the Indemnitee is entitled.
7. Advancement of Expenses. The Expenses incurred by the Indemnitee in any Proceeding shall be paid promptly by the Company in advance of the final disposition of the Proceeding at the written request of the Indemnitee, to the fullest extent permitted by applicable law; provided, however, that the Indemnitee shall set forth in such request reasonable evidence that such Expenses have been incurred by the Indemnitee in connection with such Proceeding, a statement that such Expenses do not relate to any matter described in subparagraph 9(a) of this Agreement, and an undertaking in writing to repay any advances if it is ultimately determined as provided in subparagraph 8(b) of this Agreement that the Indemnitee is not entitled to indemnification under this Agreement.
8. Indemnification Procedure; Determination of Right to Indemnification.
(a) Promptly after receipt by the Indemnitee of notice of the commencement of any Proceeding, the Indemnitee shall, if a claim for indemnification or advancement of Expenses in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof in writing. The failure and delay to so notify the Company will not relieve the Company from any liability which the Company may have to the Indemnitee under this Agreement unless the Company shall have lost significant substantive or procedural rights with respect to the defense of any Proceeding as a result of such omission to so notify.
(b) The Indemnitee shall be conclusively presumed to have met the relevant standards of conduct, if any, as defined by applicable law, for indemnification pursuant to this Agreement and shall be absolutely entitled to such indemnification, unless a determination is made that the Indemnitee has not met such standards by (i) the Board of Directors by a majority vote of a quorum thereof consisting of Disinterested Directors, (ii) the shareholders of the Company by majority vote of a quorum thereof consisting of shareholders who are not parties to the Proceeding due to which a claim for indemnification is made under this Agreement, (iii) Independent Legal Counsel as set forth in a written opinion (it being understood that such Independent Legal Counsel shall make such determination only if the quorum of Disinterested Directors referred to in clause (i) of this subparagraph 8(b) is not obtainable or if the Board of Directors of the Company by a majority vote of a quorum thereof consisting of Disinterested Directors so directs), or (iv) a court of competent jurisdiction; provided, however, that if a Change in Control shall have occurred and the Indemnitee so requests in writing, such determination shall be made only by a court of competent jurisdiction.
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(c) If a claim for indemnification or advancement of Expenses under this Agreement is not paid by the Company within thirty (30) days after receipt by the Company of written notice thereof, the rights provided by this Agreement shall be enforceable by the Indemnitee in any court of competent jurisdiction. Such judicial proceeding shall be made de novo. The burden of proving that indemnification or advances are not appropriate shall be on the Company. Neither the failure of the directors or shareholders of the Company or Independent Legal Counsel to have made a determination prior to the commencement of such action that indemnification or advancement of Expenses is proper in the circumstances because the Indemnitee has met the applicable standard of conduct, if any, nor an actual determination by the directors or shareholders of the Company or Independent Legal Counsel that the Indemnitee has not met the applicable standard of conduct shall be a defense to an action by the Indemnitee or create a presumption for the purpose of such an action that the Indemnitee has not met the applicable standard of conduct. The termination of any Proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself (i) create a presumption that the Indemnitee did not act in good faith and in a manner which he reasonably believed to be in the best interests of the Company and/or its shareholders, and, with respect to any criminal Proceeding, that the Indemnitee had reasonable cause to believe that his conduct was unlawful or (ii) otherwise adversely affect the rights of the Indemnitee to indemnification or advancement of Expenses under this Agreement, except as may be provided herein.
(d) If a court of competent jurisdiction shall determine that the Indemnitee is entitled to any indemnification or advancement of Expenses hereunder, the Company shall pay all Expenses actually and reasonably incurred by the Indemnitee in connection with such adjudication (including, but not limited to, any appellate proceedings).
(e) With respect to any Proceeding for which indemnification or advancement of Expenses is requested, the Company will be entitled to participate therein at its own expense and, except as otherwise provided below, to the extent that it may wish, the Company may assume the defense thereof, with counsel reasonably satisfactory to the Indemnitee. After notice from the Company to the Indemnitee of its election to assume the defense of a Proceeding, the Company will not be liable to the Indemnitee under this Agreement for any Expenses subsequently incurred by the Indemnitee in connection with the defense thereof, other than as provided below. The Company shall not settle any Proceeding in any manner which would impose any penalty or limitation on the Indemnitee without the Indemnitee’s written consent. The Indemnitee shall have the right to employ his/her own counsel in any Proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense of the Proceeding shall be at the expense of the Indemnitee, unless (i) the employment of counsel by the Indemnitee has been authorized by the Company, (ii) the Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee in the conduct of the defense of a Proceeding, or (iii) the Company shall not in fact have employed counsel to assume the defense of a proceeding, in each of which cases the fees and expenses of the Indemnitee’s counsel shall be advanced by the Company. The Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or as to which the Indemnitee has reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee.
9. Limitations on Indemnification. No payments pursuant to this Agreement shall be made by the Company:
(a) To indemnify or advance funds to the Indemnitee for Expenses with respect to (i) Proceedings initiated or brought voluntarily by the Indemnitee and not by way of defense, except with respect to Proceedings brought to establish or enforce a right to indemnification under this Agreement or any other statute or law or otherwise as required under applicable law or (ii) Expenses incurred by the Indemnitee in connection with preparing to serve or serving as a witness in cooperation with any party or entity who or which has threatened or commenced any action or proceeding against the Company, or any director, officer, employee, trustee, agent, representative, subsidiary, parent corporation or affiliate of the Company, but such indemnification or advancement of Expenses in each such case may be provided by the Company if the Board of Directors finds it to be appropriate;
(b) To indemnify the Indemnitee for any Expenses, judgments, fines, interest or penalties sustained in any Proceeding for which payment is actually made to the Indemnitee under a valid and collectible insurance policy, except in respect of any excess beyond the amount of payment under such insurance;
(c) To indemnify the Indemnitee for any Expenses, judgments, fines, interest or penalties sustained in any Proceeding for an accounting of profits made from the purchase or sale by the Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Act or similar provisions of any foreign or United States federal, state or local statute or regulation;
(d) To indemnify the Indemnitee for any Expenses, judgments, fines, interest or penalties for which the Indemnitee is indemnified by the Company otherwise than pursuant to this Agreement;
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(e) To indemnify the Indemnitee for any Expenses (including without limitation any Expenses relating to a Proceeding attempting to enforce this Agreement), judgments, fines, interest or penalties on account of the Indemnitee’s conduct if such conduct shall be finally adjudged to have been knowingly fraudulent or deliberately dishonest or to have constituted willful misconduct, including, without limitation, breach of the duty of loyalty; or
(f) If a court of competent jurisdiction finally determines that any indemnification hereunder is unlawful. In this respect, the Company and the Indemnitee have been advised that the Securities and Exchange Commission takes the position that indemnification for liabilities arising under securities laws is against public policy and is, therefore, unenforceable;
(g) To indemnify the Indemnitee in connection with Indemnitee’s personal tax matter; or
(h) To indemnify the Indemnitee with respect to any claim related to any dispute or breach arising under any contract or similar obligation between the Company or any of its subsidiaries or affiliates and such Indemnitee.
10. Continuation of Indemnification. All agreements and obligations of the Company contained herein shall continue during the period that the Indemnitee is a director or officer of the Company (or is or was serving at the request of the Company as an agent of another enterprise, foreign or domestic) and shall continue thereafter so long as the Indemnitee shall be subject to any possible Proceeding by reason of the fact that the Indemnitee was a director or officer of the Company or serving in any other capacity referred to in this Paragraph 10.
11. Indemnification Hereunder Not Exclusive. The indemnification provided by this Agreement shall not be deemed to be exclusive of any other rights to which the Indemnitee may be entitled under the Company’s Articles, any agreement, vote of shareholders or vote of Disinterested Directors, provisions of applicable law, or otherwise, both as to action or omission in the Indemnitee’s official capacity and as to action or omission in another capacity on behalf of the Company while holding such office.
12. Successors and Assigns.
(a) This Agreement shall be binding upon the Indemnitee, and shall inure to the benefit of, the Indemnitee and the Indemnitee’s heirs, executors, administrators and assigns, whether or not the Indemnitee has ceased to be a director or officer, and the Company and its successors and assigns. Upon the sale of all or substantially all of the business, assets or share capital of the Company to, or upon the merger of the Company into or with, any corporation, partnership, joint venture, trust or other person, this Agreement shall inure to the benefit of and be binding upon both the Indemnitee and such purchaser or successor person. Subject to the foregoing, this Agreement may not be assigned by either party without the prior written consent of the other party hereto.
(b) If the Indemnitee is deceased and is entitled to indemnification under any provision of this Agreement, the Company shall indemnify the Indemnitee’s estate and the Indemnitee’s spouse, heirs, executors, administrators and assigns against, and the Company shall, and does hereby agree to assume, any and all Expenses actually and reasonably incurred by or for the Indemnitee or the Indemnitee’s estate, in connection with the investigation, defense, appeal or settlement of any Proceeding. Further, when requested in writing by the spouse of the Indemnitee, and/or the Indemnitee’s heirs, executors, administrators and assigns, the Company shall provide appropriate evidence of the Company’s agreement set out herein to indemnify the Indemnitee against and to itself assume such Expenses.
13. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.
14. Severability. Each and every paragraph, sentence, term and provision of this Agreement is separate and distinct so that if any paragraph, sentence, term or provision thereof shall be held to be invalid, unlawful or unenforceable for any reason, such invalidity, unlawfulness or unenforceability shall not affect the validity, unlawfulness or enforceability of any other paragraph, sentence, term or provision hereof. To the extent required, any paragraph, sentence, term or provision of this Agreement may be modified by a court of competent jurisdiction to preserve its validity and to provide the Indemnitee with the broadest possible indemnification permitted under applicable law. The Company’s inability, pursuant to a court order or decision, to perform its obligations under this Agreement shall not constitute a breach of this Agreement.
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15. Savings Clause. If this Agreement or any paragraph, sentence, term or provision hereof is invalidated on any ground by any court of competent jurisdiction, the Company shall nevertheless indemnify the Indemnitee as to any Expenses, judgments, fines, interest or penalties, which are incurred with respect to any Proceeding to the fullest extent permitted by any (a) applicable paragraph, sentence, term or provision of this Agreement that has not been invalidated or (b) applicable law.
16. Interpretation; Governing Law. This Agreement shall be construed as a whole and in accordance with its fair meaning and any ambiguities shall not be construed for or against either party. Headings are for convenience only and shall not be used in construing meaning. This Agreement shall be governed and interpreted in accordance with the laws of the State of New York.
17. Amendments. No amendment, waiver, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by the party against whom enforcement is sought. The indemnification rights afforded to the Indemnitee hereby are contract rights and may not be diminished, eliminated or otherwise affected by amendments to the Company’s Articles, or by other agreements, including directors’ and officers’ liability insurance policies, of the Company.
18. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each party and delivered to the other.
19. Notices. Any notice required to be given under this Agreement shall be directed to the [Chief Financial Officer] of the Company at 1475 Thorndale Avenue, Suite A, Itasca, Illinois 60143, and to the Indemnitee at [ADDRESS] or to such other address as either shall designate to the other in writing.
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IN WITNESS WHEREOF, the parties have executed this Indemnification Agreement as of the date first written above.
Quanome Technologies, Inc.
| By: | ||
| Name | ||
| Title |
INDEMNITEE
| By: | ||
| Name |
[Signature Page to Indemnification Agreement of Quanome Technologies, Inc.]
Exhibit 10.2
FORM OF EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the “Agreement”), is entered into as of [●] (the “Effective Date”), by and between Quanome Technologies, Inc., incorporated under the laws of the State of Nevada (the “Company”), and [●], an individual (the “[●]”) (individually, each a “Party” and collectively, the “Parties”).
WHEREAS, the Company desires to employ the [●] as [●] to assure itself of the services of the [●] during the term of Service (as defined below).
WHEREAS, the [●] desires to be employed by the Company as its [●] during the term of Service and upon the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual promises contained herein, the adequacy and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:
| 1. | POSITION |
The [●] hereby accepts the positions of a [●] (the “Service”) of the Company.
| 2. | TERM |
Subject to the terms and conditions of this Agreement, the term shall commence on the Effective Date and until [[●]’s earlier death, resignation or removal] (the “Term”).
| 3. | DUTIES AND RESPONSIBILITIES |
| (a) | The [●]’s duties at the Company will include all jobs of a [●] customarily related to this function as may be determined and assigned by the Board and as may be required by the Memorandum and Articles of Association of the Company, as amended and restated from time to time (the “Charter Documents”), and the guidelines, policies and procedures of the Company approved from time to time by the Board. |
| (b) | The [●] shall devote as much working time and attention as necessary to the perform [his/her] duties at the Company, including [duties as a member of one or more committees of the Board, to which the [●] may hereafter be appointed]. The [●] shall perform such duties described herein in accordance with the [●]. |
| (c) | The [●] shall not, without the prior written consent of the Board, become an employee of, or otherwise be concerned or interested in any business or entity that engages in the same business in which the Company and its subsidiaries and affiliates (collectively, the “Group”) engage (any such business or entity, a “Competitor”), provided that nothing in this clause shall preclude the [●] from holding any shares or other securities of any Competitor that is listed on any securities exchange or recognized securities market anywhere if such shares or securities represent less than 5% of the competitors outstanding shares and securities. The [●] shall notify the Company in writing of [his/her] interest in such shares or securities in a timely manner and with such details and particulars as the Company may reasonably require. |
| 4. | NO BREACH OF CONTRACT |
The [●] hereby represents to the Company that: (i) the execution and delivery of this Agreement by the [●] and the performance by the [●] of the [●]’s duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any other agreement or policy to which the [●] is a party or otherwise bound, except for agreements entered into by and between the [●] and any member of the Group pursuant to applicable law, if any; (ii) that the [●] has no information (including, without limitation, confidential information and trade secrets) relating to any other person or entity which would prevent, or be violated by, the [●] entering into this Agreement or carrying out his duties hereunder; (iii) that the [●] is not bound by any confidentiality, trade secret or similar agreement (other than this) with any other person or entity except for other member(s) of the Group, as the case may be.
| 5. | RENUMERATION AND BENEFITS |
| (a) | Remuneration. A monthly fee equal to the amount of US$[●], payable in accordance with the Company’s regular payroll practices, [plus ordinary shares of the Company per year, subject to the [●]’s continuous service as a [●]] (the “Remuneration”). Such Remuneration is subject to annual review and adjustment by the Board. The [●] shall be responsible for [his/her] own individual income tax payment on the Remuneration in jurisdictions where the [●] resides. |
| (b) | Bonus. The [●] shall be eligible for Bonuses determined by the Board. |
| (c) | Equity Incentives. To the extent the Company adopts a share incentive plan, the [●] will be eligible to participate in such plan pursuant to the terms and conditions thereof as determined by the Board. |
| (d) | Benefits. The [●] is eligible for participation in any standard employee benefit plan of the Company that currently exists or may be adopted by the Company in the future, including, but not limited to, any retirement plan, life insurance plan, health insurance plan and travel/holiday plan. |
| (e) | Reimbursements. The [●] shall be entitled to reimbursement by the Company for all reasonable ordinary and necessary travel and other expenses incurred by the [●] in the performance of [his/her] duties under this Agreement; provided that [he/she] properly accounts for such expenses in accordance with the Company’s policies and procedures. |
| 6. | TERMINATION OF THE AGREEMENT |
| (a) | By the Company. |
| (i) | For Cause. [The Company may terminate the Service for cause, at any time, without notice or remuneration (unless notice or remuneration is specifically required by applicable law, in which case notice or remuneration will be provided in accordance with applicable law), if: |
(1) the [●] is convicted or pleads guilty to a felony or to an act of fraud, misappropriation or embezzlement,
(2) the [●] has been grossly negligent or acted dishonestly to the detriment of the Company,
(3) the [●] has engaged in actions amounting to willful misconduct or failed to perform [his/her] duties hereunder and such failure continues after the [●] is afforded a reasonable opportunity to cure such failure; or
(4) the [●] violates Section 7 or 8 of this Agreement Upon termination for cause, the [●] shall be entitled to the amount of base salary earned and not paid prior to termination. However, the [●] will not be entitled to receive payment of any severance benefits or other amounts by reason of the termination, and the [●]’s right to all other benefits will terminate, except as required by any applicable law.]
| (ii) | For death and disability. The Company may also terminate the Service, at any time, without notice or remuneration (unless notice or remuneration is specifically required by applicable law, in which case notice or remuneration will be provided in accordance with applicable law), if: |
(1) the [●] has died, or
(2) the [●] has a disability which shall mean a physical or mental impairment which, as reasonably determined by the Board, renders the [●] unable to perform the essential functions of [his/her] Service with the Company, with or without reasonable accommodation, for more than 120 days in any 12-month period, unless a longer period is required by applicable law, in which case that longer period would apply.
Upon termination for death or disability, the [●] shall be entitled to the amount of base salary earned and not paid prior to termination. However, the [●] will not be entitled to receive payment of any severance benefits or other amounts by reason of the termination, and the [●]’s right to all other benefits will terminate, except as required by any applicable law.
| (iii) | Without Cause. The Company may terminate the Service without cause, at any time, upon one-month prior written notice. Upon termination without cause, the Company shall provide the following severance payments and benefits to the [●]: (1) a lump sum cash payment equal to 6 months of the [●]’s base salary as of the date of such termination; (2) a lump sum cash payment equal to a pro-rata amount of [his/her] target annual bonus for the year immediately preceding the termination, if any; (3) payment of premiums for continued health benefits under the Company’s health plans for 12 months following the termination, if any; and (4) immediate vesting of 100% of the then-unvested portion of any outstanding equity awards held by the [●]. |
Upon termination without, the [●] shall be entitled to the amount of base salary earned and not paid prior to termination.
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| (iv) | Change of Control Transaction. If the Company or its successor terminates the Service upon a merger, consolidation, or transfer or sale of all or substantially all of the assets of the Company with or to any other individual(s) or entity (the “Change of Control Transaction”), the [●] shall be entitled to the following severance payments and benefits upon such termination: |
(1) a lump sum cash payment equal to [6 months] of the [●]’s base salary at a rate equal to the greater of [his/her] annual salary in effect immediately prior to the termination, or [his/her] then current annual salary as of the date of such termination;
(2) a lump sum cash payment equal to a pro-rata amount of [his/her] target annual bonus for the year immediately preceding the termination;
(3) payment of premiums for continued health benefits under the Company’s health plans for [12 months] following the termination; and
(4) immediate vesting of 100% of the then-unvested portion of any outstanding equity awards held by the [●].
| (b) | By the [●]. The [●] may terminate the Service at any time with a one-month prior written notice to the Company, if (1) there is a material reduction in the [●]’s authority, duties and responsibilities, or (2) there is a material reduction in the [●]’s annual salary. Upon the [●]’s termination of the Service due to either of the above reasons, the Company shall provide remuneration to the [●] equivalent to [6 months] of the [●]’s base salary that [he/she] is entitled to immediately prior to such termination. In addition, the [●] may resign prior to the expiration of the Agreement if such resignation is approved by the Board or an alternative arrangement with respect to the Service is agreed to by the Board. |
| (c) | Notice of Termination. Any termination of the [●]’s Service under this Agreement shall be communicated by written notice of termination from the terminating party to the other party. The notice of termination shall indicate the specific provision(s) of this Agreement relied upon in effecting the termination. |
| 7. | CONFIDENTIALITY AND NON-DISCLOSURE |
| (a) | Confidentiality and Non-disclosure. The Company and the [●] each acknowledge that, in order for the intentions and purposes of this Agreement to be accomplished, the [●] hereby agrees at all times during the Term and after [his/her] termination, to hold in the strictest confidence, and not to use, except for the benefit of the Company, or to disclose to any person, corporation or other entity without prior written consent of the Company, any Confidential Information. The [●] understands that “Confidential Information” means any proprietary or confidential information of the Company, its affiliates, or their respective clients, customers or partners, including, without limitation, technical data, trade secrets, research and development information, product plans, services, customer lists and customers, supplier lists and suppliers, software developments, inventions, processes, formulas, technology, designs, hardware configuration information, personnel information, marketing, finances, information about the suppliers, joint ventures, franchisees, distributors and other persons with whom the Company does business, information regarding the skills and compensation of other employees of the Company or other business information disclosed to the [●] by or obtained by the [●] from the Company, its affiliates, or their respective clients, customers or partners, either directly or indirectly, in writing, orally or otherwise, if specifically indicated to be confidential or reasonably expected to be confidential. Notwithstanding the foregoing, Confidential Information shall not include information that is generally available and known to the public through no fault of the [●]. |
| (b) | Company Property. The [●] understands that all documents (including computer records, facsimile and e-mail) and materials created, received or transmitted in connection with [his/her] work or using the facilities of the Company are property of the Company and subject to inspection by the Company at any time. Upon termination or at any other time when requested by the Company, the [●] will promptly deliver to the Company all documents and materials of any nature pertaining to [his/her] work with the Company and will provide written certification of [his/her] compliance with this Agreement. Under no circumstances will the [●] have, following [his/her] termination, in [his/her] possession any property of the Company, or any documents or materials or copies thereof containing any Confidential Information. |
| (c) | Employer Information. The [●] agrees that [he/she] has not and will not, during the Term, improperly use or disclose any proprietary information or trade secrets of any current or former employers or other persons or entities with which the [●] has an agreement or duty to keep in confidence information acquired by [●], if any. The [●] will indemnify the Company and hold it harmless from and against all claims, liabilities, damages and expenses, including reasonable attorneys’ fees and costs of suit, arising out of or in connection with any violation of the foregoing. |
| (d) | Third Party Information. The [●] recognizes that the Company may have received, and in the future may receive, from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The [●] agrees that the [●] owes the Company and such third parties, during the Term and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person or firm and to use it in a manner consistent with, and for the limited purposes permitted by, the Company’s agreement with such third party. |
This Section 7 shall survive the termination of this Agreement for any reason. In the event the [●] breaches this Section 7, the Company shall have right to seek remedies permissible under applicable law.
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| 8. | [●] COVENANTS |
| (a) | Non-Competition and Non-Solicitation. Subject to applicable law, the [●] agrees that during the term of the Service and for a period of [two (2) years] following the termination of the Service for whatever reason: |
| (i) | The [●] will not solicit, canvass or approach clients, customers or contacts of the Company or other persons or entities introduced to the [●] in the [●]’s capacity as a representative of the Company for the purposes of doing business with such persons or entities which will harm the business relationship between the Company and such persons and/or entities; |
| (ii) | The [●] will not solicit, canvass or approach, or endeavor to solicit, canvass or approach any person who has business communication with the Company or its affiliates to terminate such communication, or who has negotiation with the Company or its affiliates on business cooperation to terminate such negotiation; |
| (iii) | The [●] will not solicit, canvass or persuade or endeavor to solicit, canvass or persuade in any way, or intend to or actually disturb the Company’s business in any way or endeavor to do the foresaid activities in order that (1) any current client or supplier of the Company or its affiliates becomes a client or supplier of an entity or individual competing with the Company or any of its affiliates; or (2) any current client or supplier of the Company or its affiliates terminates the cooperation with the Company or its affiliates; and |
| (iv) | The [●] will not seek, directly or indirectly, by the offer of alternative employment or other inducement whatsoever, to solicit the services of any employee of the Company employed as at or after the date of such termination, or in the year preceding such termination; |
The provisions contained in Section 8(a) are considered reasonable by the [●] and the Company. In the event that any such provisions should be found to be void under applicable laws but would be valid if some part thereof was deleted or the period or area of application reduced, such provisions shall apply with such modification as may be necessary to make them valid and effective.
| (b) | Disparaging Statements. At all times during and after the period in which the [●] is a member of the Board and at all times thereafter, the [●] shall not either verbally, in writing, electronically or otherwise: (i) make any derogatory or disparaging statements about the Company, any of its affiliates, any of their respective officers, directors, shareholder(s), employees and agents, or any of the Company’s current or past customers or employees, or (ii) make any public statement or perform or do any other act prejudicial or injurious to the reputation or goodwill of the Company or any of its affiliates or otherwise interfere with the business of the Company or any of its affiliates; provided, however, that nothing in this paragraph shall preclude the [●] from complying with all obligations imposed by law or legal compulsion, and provided, further, however, that nothing in this paragraph shall be deemed applicable to any testimony given by the [●] in any legal or administrative proceedings. |
This Section 8 shall survive the termination of this Agreement for any reason. In the event the [●] breaches this Section 8, the Company shall have right to seek remedies permissible under applicable law.
| 9. | WITHHOLDING TAXES |
Notwithstanding anything else herein to the contrary, the Company may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due or payable under or pursuant to this Agreement such national, provincial, local or any other income, employment, or other taxes as may be required to be withheld pursuant to any applicable law or regulation.
| 10. | INDEMNIFICATION |
The Company agrees to indemnify the [●] for [his/her] activities as a [●] of the Company to the fullest extent permitted by law, and to cover the [●] under any directors and officers liability insurance obtained by the Company. Further, the Company and the [●] agree to enter into an indemnification agreement substantially in the form of agreement entered into by the Company and its [other Board members].
| 11. | ASSIGNMENT |
This Agreement is personal in its nature and neither of the parties hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder; provided, however, that in the event of a Change of Control Transaction, this Agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants, duties, and obligations of the Company hereunder.
| 12. | SEVERABILITY |
If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable.
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| 13. | ENTIRE AGREEMENT |
This Agreement constitutes the entire agreement and understanding between the [●] and the Company regarding the terms of the Service and supersedes all prior or contemporaneous oral or written agreements concerning such subject matter, including any prior agreements between the [●] and a member of the Group. The [●] acknowledges that [he/she] has not entered into this Agreement in reliance upon any representation, warranty or undertaking which is not set forth in this Agreement. Any amendment to this Agreement must be in writing and signed by the [●] and the Company.
| 14. | GOVERNING LAW; JURISDICTION |
This Agreement shall be governed by and construed in accordance with the laws of the United States (“U.S.”). All actions and proceedings arising out of or relating to this Agreement shall be heard and determined in any U.S. court and the parties hereto hereby consent to the jurisdiction of such courts in any such action or proceeding; provided, however, that neither party shall commence any such action or proceeding unless prior thereto the parties have in good faith attempted to resolve the claim, dispute or cause of action which is the subject of such action or proceeding through mediation by an independent third party.
| 15. | AMENDMENT |
This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.
| 16. | WAIVER |
Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
| 17. | NOTICES |
All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and made if (i) delivered by hand, (ii) otherwise delivered against receipt therefor, or (iii) sent by a recognized courier with next-day or second-day delivery to the last known address of the other party.
| 18. | COUNTERPARTS |
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.
Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.
| 19. | NO INTERPRETATION AGAINST DRAFTER |
Each party recognizes that this Agreement is a legally binding contract and acknowledges that it, [he/she] has had the opportunity to consult with legal counsel of choice. In any construction of the terms of this Agreement, the same shall not be construed against either party on the basis of that party being the drafter of such terms.
[Remainder of this page has been left intentionally blank]
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
| COMPANY: | ||
| Quanome Technologies, Inc. | ||
| By: | ||
| Name: | [●] | |
| Title: | [●] | |
| [●]: | ||
| By: | ||
| Name: | ||
[Signature Page to Employment Agreement]
Exhibit 21.1
Active Direct and Indirect Subsidiaries
of
Quanome Technologies, Inc.
(100% owned except where indicated)
|
Name of Subsidiary |
Jurisdiction of Incorporation | |
| Smart Reserve Holding LTD | Cayman Islands | |
| Smart Reserve Inc | Cayman Islands | |
| Quantum Nexus Technologies Ltd. | Cayman Islands | |
| XDT, Inc. | Delaware | |
| XDT US HoldCo,LLC | Delaware | |
| XDT Infrastructure I, LLC | Delaware | |
| XDT Infrastructure II, LLC | Delaware | |
| Sichuan Hupan Jincheng Enterprise Management Co., Ltd | People’s Republic of China | |
| Hupan Pharmaceutical (Hubei) Co., Ltd. | People’s Republic of China |
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
RULE 13a-14(a) OR 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Yang Li, certify that:
| 1. | I have reviewed this Form 10-K of Quanome Technologies, Inc. (the “Registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
| 4. | The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the Registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financing 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 to 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. |
| 5. | The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control 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. |
| Date: September 25, 2026 | By: | /s/ Yang Li |
| Yang Li | ||
| Chief Executive Officer |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO
RULE 13a-14(a) OR 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Long Yi, certify that:
| 1. | I have reviewed this Form 10-K of Quanome Technologies, Inc. (the “Registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
| 4. | The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act 13a-15(e) and 15d – 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the Registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financing 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 to 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. |
| 5. | The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control 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. |
| Date: September 25, 2026 | By: | /s/ Long Yi |
| Long Yi | ||
| Chief Financial Officer |
Exhibit 32.1
CERTIFICATE PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report (the “Report”) on the Form 10-K of Quanome Technologies, Inc. (the “Company”) for the fiscal year ended June 30, 2026, as filed with the Securities and Exchange Commission on the date hereof, I, Yang Li, Chief Executive Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and |
| 2. | The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: September 25, 2026 | By: | /s/ Yang Li |
| Yang Li | ||
| Chief Executive Officer |
Exhibit 32.2
CERTIFICATE PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report (the “Report”) on the Form 10-K of Quanome Technologies, Inc. (the “Company”) for the fiscal year ended June 30, 2026, as filed with the Securities and Exchange Commission on the date hereof, I, Long Yi, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and |
| 2. | The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: September 25, 2026 | By: | /s/ Long Yi |
| Long Yi | ||
| Chief Financial Officer |