TFA Therapeutics, Inc 20-F for FY2025
TFA Therapeutics, Inc. (RAJAF)
About this 20-F
TFA Therapeutics, Inc filed this 20-F on May 15, 2026, covering the fiscal year ended December 31, 2025 (FY2025).
Headline figures
Fiscal year ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.25M
- down 0.6% from $1.25M a year earlier
- Net loss
- $154.82K
- compared with a net loss of $226.26K a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
OR
For the fiscal year ended
OR
OR
For the transition period from to
Commission file number:
(Exact name of Registrant as specified in its charter)
(Jurisdiction of incorporation or organization)
+886-2-27489091
(Address of principal executive offices)
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be 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 or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each
of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐
Yes ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
☐
Yes ☒
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.
☒
Indicate by check mark whether the registrant has submitted electronically on its corporate Web site, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |||
| Emerging growth company |
If an emerging growth company that prepares its
financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange
Act.
Indicate by check mark whether the registrant
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.
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| International Financial Reporting Standards as issued | Other ☐ | |||
| by the International Accounting Standards Board ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).
☐
Yes
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
☐ Yes ☐ No
Table of Contents
i
INTRODUCTION
Professional terms in the annual report are defined as follows:
| ● | “Cattle camphor mushroom”, also known as Antrodia Cinnamomum or Taiwanofungus, is a species of fungus, indigenous to Taiwan, which grows on the endemic aromatic tree Cinnamomum kanehirae, causing a brown heart rot. |
| ● | “Cordyceps” is a fungus that lives on certain caterpillars and is usually formed by stipe (defined below) and stroma (defined below) |
| ● | “Cordycepin” shall refer to a compound which is extracted from Cordyceps. |
| ● | “Deep processing” shall refer to the processing of Cordyceps as raw material into finished Chinese medicinal material products or other Cordyceps products that can be consumed by customers. |
| ● | “Hyphae” shall refer to a long, branched filamentous structure in filamentous fungi. It is the structural unit of most fungi, which refers to the description of the state of fungi in the process of spread. |
| ● | “Mycelium” means a large number of hyphae filling with a carrier. | |
| ● | “Ordinary Shares” as of the date hereof refers to the Company’s single class Ordinary Shares of par value $0.0001 per Ordinary Share. | |
| ● | “R.O.C.” or “Taiwan” refers to Taiwan, the Republic of China. |
Cattle camphor mushroom
ii
Our business is conducted by Cordyceps Sunshine Taiwan Branch, our operating branch in Taiwan, using NTD, the currency of Taiwan, R.O.C. Our consolidated financial statements are presented in United States dollars. In this annual report, we refer to assets, obligations, commitments, and liabilities in our consolidated financial statements in United States dollars. These dollar references are based on the exchange rate of NTD to United States dollars, determined as of a specific date or for a specific period. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of United States dollars which may result in an increase or decrease in the amount of our obligations (expressed in dollars) and the value of our assets, including accounts receivable (expressed in dollars).
iii
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements that reflect our current expectations and views of future events, all of which are subject to risks and uncertainties. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by the use of words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may” or other similar expressions in this annual report. These statements are likely to address our growth strategy, financial results and product and development programs. You must carefully consider any such statements and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
| ● | our goals and strategies; |
| ● | our future business development, financial condition and results of operations; |
| ● | introduction of new product and service offerings; |
| ● | expected changes in our revenues, costs or expenditures; |
| ● | our expectations regarding the demand for and market acceptance of our products and services; |
| ● | expected growth of our customers, including consolidated account customers; |
| ● | competition in our industry; |
| ● | government policies and regulations relating to our industry; |
| ● | other factors that may affect our financial condition, liquidity and results of operations; and |
| ● | other risk factors discussed under “Item 3. Key Information - 3.D. Risk Factors.” |
We base our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may, and are likely to, differ materially from what is expressed, implied or forecast by our forward-looking statements. Accordingly, you should be careful about relying on any forward-looking statements. Except as required under the federal securities laws, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this annual report, whether as a result of new information, future events, changes in assumptions, or otherwise.
iv
PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable for annual reports on Form 20-F.
Item 2. Offer Statistics and Expected Timetable
Not applicable for annual reports on Form 20-F.
Item 3. Key Information
3.A. [Reserved]
3.B. Capitalization and Indebtedness
Not applicable for annual reports on Form 20-F.
3.C. Reasons for the Offer and Use of Proceeds
Not applicable for annual reports on Form 20-F.
3.D. Risk Factors
Risk Factor Summary
Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flows, and prospects. These risks are discussed more fully below and include, but are not limited to, risks related to:
Risks Relating to Doing Business in Taiwan
Risks and uncertainties related to doing business in Taiwan, beginning on page 3 of this annual report, include but are not limited to the following:
| ● | We are subject to export regulations in Taiwan, and any adverse regulatory action may materially adversely affect our financial condition and business operations. |
| ● | Instability in international markets or foreign currency fluctuations could adversely affect our results of operations. |
| ● | We depend on single-source suppliers for some of the products we sell. |
| ● | Laws and regulations that could affect the business in which we operate may be enacted, which could result in a delay or cessation of our marketing and sales activities, or the imposition of additional costs that could hinder our ability to achieve and maintain profitable operations. |
| ● | Because we sell and distribute all of our products outside of the U.S., the Company is subject to the risks of doing business internationally, including periodic foreign economic downturns and political instability, which may adversely affect the Company’s revenue and cost of doing business in Taiwan. |
1
Risks Relating to Our Business and Industry
Risks and uncertainties relating to our business and industry, beginning on page 4 of this annual report, include but are not limited to the following:
| ● | Our current business is significantly based on a few products, which currently account for most of our revenues, and we may not be able to generate significant revenue if these products fail. |
| ● | Our sales and reputation may be affected by product liability claims, product recalls, pest contamination risks, or adverse publicity in relation to our products. |
| ● | Our past results may not be indicative of our future performance and evaluating our business and prospects may be difficult. |
| ● | We had only one major supplier who supplied us the raw materials for our products for the fiscal years ended December 31, 2025, 2024, and 2023. |
| ● | We may require substantial additional funding in the future for our ability to continue as a going concern. There is no assurance that additional financing will be available to us. If we were unable to meet our future funding requirements for working capital and for general business purposes, our business results and our financial position would be adversely affected. |
Risks Relating to Our Ordinary Shares
Risks and uncertainties relating to our ordinary shares, beginning on page 7 of this annual report, include but are not limited to the following:
| ● | The highly concentrated ownership and voting power of the Company may impact shareholders’ interests in the Company. |
| ● | We have incurred increased costs as a result of being a public company; we will incur more cost after we cease to qualify as an “emerging growth company.” |
| ● | If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. |
| ● | The market price for the ordinary shares may be volatile. |
2
Risks Relating to Doing Business in Taiwan
We are subject to export regulations in Taiwan, and any adverse regulatory action may materially adversely affect our financial condition and business operations.
We export dietary supplements products outside Taiwan to Hong Kong and mainland China. Our business is subject to export regulations in Taiwan and other jurisdictions where our products are transported to. Any change in import and export laws and regulations in the pertinent jurisdictions may impose administrative and financial burdens to our operations. In addition, any adverse regulatory actions may delay our business transactions, divert our management attention to ordinary operations and therefore materially and adversely affect our financial condition and performance results.
Instability in international markets, or foreign currency fluctuations could adversely affect our results of operations.
We generate a significant amount of our revenue from outside the United States. As a result, we face currency and other risks associated with our international sales. We are exposed to foreign currency exchange rate fluctuations due to transactions denominated primarily in NTD, which may potentially reduce the U.S. dollars we receive for sales denominated in any of these foreign currencies, and/or increase the U.S. dollars we report as expenses in these currencies, thereby affecting our consolidated results of operations. Fluctuations between the currencies in which we do business have caused and will continue to cause foreign currency transaction gains and losses. We cannot predict the effects of currency exchange rate fluctuations upon our future operating results because of the number of currencies involved, the variability of currency exposures, and the volatility of currency exchange rates.
In addition to foreign currency exchange rate fluctuations, there are a number of additional risks associated with our international operations, including those related to:
| ● | The imposition of or increase in import or export duties, surtaxes, tariffs, or customs duties; | |
| ● | The imposition of import or export quotas or other trade restrictions; | |
| ● | Foreign tax laws and potential increased costs associated with overlapping tax structures; | |
| ● | Compliance with various U.S. and foreign laws, including the Foreign Corrupt Practices Act, and import/export laws; | |
| ● | Longer accounts receivable cycles in certain foreign countries, whether due to cultural, economic, or other factors; | |
| ● | Changes in regulatory requirements in international markets in which we operate; and | |
| ● | Economic and political instability in international markets, including concerns over excessive levels of sovereign debt and budget deficits in countries where we market our products that could result in an inability to pay or timely pay outstanding payables. |
We depend on single-source suppliers for some of the products we sell.
Some of our products are currently provided by only one vendor or a single-source supplier. In addition, we do not have long-term contracts with our third-party suppliers of some of the products we sell, and we do not carry a significant inventory of most of our products. Establishing additional or replacement suppliers for these products could take a substantial amount of time.
If we must switch to replacement suppliers, we will face delays, and the delivery of our products could be interrupted for an extended period. Our dependence upon others for the manufacture of our products may adversely affect our future profit margins.
3
Laws and regulations that could affect the business in which we operate may be enacted, which could result in a delay or cessation of our marketing and sales activities, or the imposition of additional costs that could hinder our ability to achieve and maintain profitable operations.
Current laws and regulations with respect to our business, and additional laws and regulations that may be enacted in the future, could impose new and/or unexpected operational considerations or constraints upon us. Complying with existing laws or regulations may require significant time and resource allocation. We must remain cognizant of the legislative and regulatory landscape in the countries in which we operate. Compliance with these regulations, when applicable, increases the research and development and production costs, and could make our proposed products and services less attractive to potential customers.
Because we sell and distribute all of our products outside of the U.S., the Company is subject to the risks of doing business internationally, including periodic foreign economic downturns and political instability, which may adversely affect the Company’s revenue and cost of doing business in Taiwan.
We sell and distribute all of our products outside the U.S. U.S. or Asian economic downturns may affect our results of operations in the future. Additionally, other facts relating to the operations of the Company’s business outside of the U.S. may have a material adverse effect on the Company’s business, financial condition and results of operations, including:
| ● | international economic and political changes; |
| ● | the imposition of governmental controls or changes in government regulations, including tax laws, regulations, tariffs and treaties; |
| ● | changes in, or impositions of, legislative or regulatory requirements regarding the nutraceutical industry; |
| ● | compliance with U.S. and international laws involving international operations, including the Foreign Corrupt Practices Act and export control laws; |
| ● | restrictions on transfers of funds and assets between jurisdictions; and |
| ● | China-Taiwan geo-political instability and China-U.S. political instability. |
As the Company continues to operate its business globally, its success will depend, in part, on its ability to anticipate and effectively manage these risks. The impact of any one or more of these factors could materially and adversely affect the Company’s business, financial condition and results of operations.
Risks Relating to Our Business and Industry
Our current business is significantly based on a few products, which currently account for most of our revenues, and we may not be able to generate significant revenue if these products fail.
Most of our sales for the fiscal years ended December 31, 2025, 2024 and 2023 came from a few products, the Cattle camphor mushroom and the Cordyceps, and our business may suffer a material adverse impact if our manufacture and sale of the Cattle camphor mushroom is disrupted due to supply chain disruption, extreme weather conditions, change in demand, heightened regulatory requirements. If we experience difficulties or obstacles in the manufacture and sale of the Cattle camphor mushroom, we may not be able to generate significant revenues or any revenue at all, our business may fail, and you may lose all or part of your investment in our company.
We may not be able to grow and harvest sufficient Cattle camphor mushroom to satisfy our production requirements.
Our Cattle camphor mushroom business and financial results significantly depend on maintaining a consistent and cost-effective supply of Cattle camphor mushroom. While we have implemented measures to mitigate risks, the availability, size and quality of Cattle camphor mushroom for the production of our products are subject to risks inherent to growing, such as size, quality, and yield fluctuation caused by technical problems of growing, pest and disease problems, and other factors beyond our control. Although our cattle camphor carriers can be reused, and we can independently manage nutrient solutions and strains, unforeseen disruptions or damage could still impact our supply. We may not be able to find in a timely manner any third party suppliers who could provide us with sufficient materials to meet our production needs if we are not able to grow and harvest sufficient Cattle camphor mushroom. Any interruptions to or decline in the amount or quality of our Cattle camphor mushroom supply could materially disrupt our production and adversely affect our business and financial condition and financial prospects.
4
The regulations on Cattle camphor mushroom in Taiwan may be changed in the future.
Cattle camphor mushroom falls under the category of food products in Taiwan, which is governed by the Food Safety and Hygiene Management Act. According to this act, specific labeling requirements for product packaging include: (i) a warning message in Chinese stating, “For infants, pregnant women, and breastfeeding mothers, please consult a physician or medical professional before consuming this product,” and (ii) clear indication on the packaging of the parts of the Cattle camphor mushroom used as raw materials, whether they are the fruiting body or mycelium, and their cultivation method. We are not required to obtain special licenses from the Taiwan government to distribute Cattle camphor mushroom.
Notwithstanding the above, it is uncertain when and whether the Company will be required to obtain license from the Taiwan government to distribute Cattle camphor mushroom in the future, and even when such license is obtained, whether it will be denied or rescinded. Although the Company is currently not required to obtain license from any of the Taiwan government and has not received any denial to distribute our products, our operations could be adversely affected, directly or indirectly, by future laws and regulations.
Our sales and reputation may be affected by product liability claims, product recalls, pests contamination risks, or adverse publicity in relation to our products.
The sale of products for human consumption involves an inherent risk of injury to consumers. We face risks associated with product liability claims, litigation, or product recalls, if our products cause injury, or become adulterated or misbranded. Our products are subject to product tampering, and to contamination risks, such as mold, bacteria, insects, and other pests, and off-flavor contamination during the various stages of the procurement, production, transportation and storage processes. If any of our products were to be tampered with, or become tainted in any of these respects and we were unable to detect this, our products could be subject to product liability claims or product recalls. We cannot predict what impact such product liability claims or resulting negative publicity would have on our business or on our brand image. The successful assertion of product liability claims against us could result in potentially significant monetary damages, diversion of management resources and require us to make significant payments and incur substantial legal expenses.
We do not have product liability insurance and have not made provisions for potential product liability claims. Therefore, we may not have adequate resources to satisfy a judgment if a successful claim is brought against us. Even if a product liability claim is not successfully pursued to judgment by a claimant, we may still incur substantial legal expenses defending against such a claim. Finally, serious product quality concerns could result in governmental action against us, which, among other things, could result in the suspension of production or distribution of our products, loss of certain licenses, or other governmental penalties. In addition, product liability claims could have a material adverse effect on the demand for our products and on our business goodwill and reputation.
We compete in an industry that is brand-conscious, and unless we are able to establish and maintain brand name recognition our sales may be negatively impacted.
Our business is substantially dependent upon awareness and market acceptance of our products and brand by our targeted consumers. Although we believe that we have made progress towards establishing market recognition for our brand “Kasaer” in the Cattle camphor mushroom products industry, it is too early to determine whether our products and brand will achieve and maintain satisfactory levels of acceptance by our customers.
Expansion of our business may put pressure on our management and operational infrastructure may impede our ability to meet any potential increased demand for our products and possibly hurting our future operating results.
Our business plan is to grow our operations to meet anticipated growth in demand for our products. Growth in our business may place a significant strain on our personnel, management, financial systems and other resources. The evolution of our business also presents numerous risks and challenges, including:
| ● | our ability to successfully and rapidly expand sales to potential new distributors in response to potentially increasing demand; |
| ● | the costs associated with such growth, which are difficult to quantify, but could be significant; and |
| ● | rapid technological change. |
To accommodate any such growth and compete effectively, we may need to obtain additional funding to improve information systems, procedures and controls and expand, train, motivate and manage our employees, and such funding may not be available in sufficient quantities, if at all. If we are not able to manage these activities and implement these strategies successfully to expand to meet any increased demand, our operating results could suffer.
5
Our past results may not be indicative of our future performance and evaluating our business and prospects may be difficult.
We have a limited operating history. We may not be able to sign long-term agreements with customers, and our past operating results may not provide a meaningful basis for evaluating our business, financial performance and prospects.
We depend heavily on key personnel, and turnover of key employees and management could harm our business.
Our future business and results of operations depend in significant part upon the continued contributions of our key technical and management personnel. The expertise of management and technical innovation of the company give it a strong competitive advantage. We do not maintain key person insurance on the individuals. The loss of any of the key employees’ services or any of our other management poses a risk to our business. We may not be able to attract or retain qualified management on acceptable terms in the future due to the intense competition for qualified personnel in our industry and as a result, our business could be adversely affected.
We consider our major customers in each period to be those that accounted for more than 10% of our revenue in such period. We had one major customer, who accounted for 43.81% of our revenue for the fiscal year ended December 31, 2025, among which one related party customer accounted for 14.08% of the revenue. We had one major customer, who accounted for 29.81% of our revenue for the fiscal year ended December 31, 2024, among which one related party customer accounted for 4.22% of the revenue. We had one major customer, who accounted for 14.37% of our revenue for the fiscal year ended December 31, 2023, among which one related party customer accounted for 14.37% of the revenue.
There can be no assurance that we will maintain or improve the relationships with customers who do not have long-term contracts with us. If we cannot maintain long-term relationships with our major customers or replace major customers from period to period with equivalent customers, the loss of such sales would have an adverse effect on our business, financial condition and results of operations.
We may require substantial additional funding in the future for our ability to continue as a going concern. There is no assurance that additional financing will be available to us. If we were unable to meet our future funding requirements for working capital and for general business purposes, our business results and our financial position would be adversely affected.
The financial statements have been prepared “assuming that we will continue as a going concern,” which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
The following factors among others raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.
| ● | The Company has not yet established an ongoing source of revenues and cash flows sufficient to cover the operating costs and allow it to continue as a going concern. |
| ● | The Company generated net loss of $154,822, net loss of $226,258, and net income of $751,609 for the years ended December 31, 2025, 2024, and 2023, respectively. |
| ● | As of December 31, 2025, the Company had an accumulated deficit of $854,046. |
| ● | The Company incurred operating cash outflow of $35,845 and generated operating cash inflows of $312,006 and $359,724 for the years ended December 31, 2025, 2024, and 2023, respectively. |
| ● | The Company had negative working capital of $4,194,320 and $4,385,043 as of December 31, 2025 and 2024, respectively. |
In order to continue as a going concern, we will need, among other things, additional capital resources. Our plan is to obtain capital from management to meet our minimal operating expenses and seek third party equity and/or debt financing. However, management cannot provide any assurances that we will be successful in accomplishing any of our plans. There is no assurance that additional financing will be available to us. If we were unable to meet our future funding requirements for working capital and for general business purposes, we could experience operating losses and limit our marketing efforts as well as decrease or eliminate capital expenditures. If so, our operating results, our business results and our financial position would be adversely affected.
6
We had only one major supplier who supplied the raw materials for our products for the fiscal year ended December 31, 2025, 2024 and 2023.
We consider our major suppliers in each period to be those that accounted for more than 10% of our purchase in such period. We had one major third-party supplier, who accounted for 100.00% of our supply for the fiscal years ended December 31, 2025, 2024 and 2023.
Our current sales and distribution arrangements, including payment terms, are determined on a case-by-case basis. Our sales policy treats related parties and third parties alike. As of today, we do not have long-term supply contracts with any of our suppliers. In case of disputes, the sales department will consider the requirements of the customers, combine our sales policies, and determine the resolutions which will be finally approved by the management. As of today, we have not had any disputes with the distributors and retailers. However, there can be no assurance that we will maintain or improve the relationship with the supplier. If we cannot maintain a long-term relationship with that supplier or replace such supplier from period to period with equivalent suppliers, there could be an adverse effect on our business, financial condition and results of operations.
Our inability to protect our intellectual property may prevent us from successfully marketing our products and competing effectively.
Failure to protect our intellectual property could harm our brands and our reputation, and adversely affect our ability to compete effectively. Further, enforcing or defending our intellectual property rights could result in the expenditure of significant financial and managerial resources. We produce, market and sell our products using the brand “Kasaer”. We regard our intellectual property, particularly our trademark to be of considerable value and importance to our business and our success. There can be no assurance that the steps taken by us to protect the proprietary rights will be adequate or that third parties will not infringe or misappropriate our rights. In addition, there can be no assurance that other parties will not assert infringement claims against us, and we may have to pursue litigation against other parties to assert our rights. Any such claim or litigation could be costly, and we may lack the resources required to defend against such claims. In addition, any event that would jeopardize our proprietary rights or any claims of infringement by third parties could have a material adverse effect on our ability to market or sell our brands, and profitably exploit our products.
We do not carry any business interruption insurance or third-party liability insurance for our production facilities.
Operation of our facilities involves many risks, including equipment failures, natural disasters, industrial accidents, power outages, labor disturbances and other business interruptions. Furthermore, if any of our products are faulty, then we may become subject to product liability claims or we may have to engage in a product recall. We do not carry any business interruption insurance, product recall or third-party liability insurance for our production facilities or with respect to our products to cover claims pertaining to personal injury or property or environmental damage arising from defects in our products, product recalls, accidents on our property or damage relating to our operations. As a result, we may be required to pay for financial and other losses, damages and liabilities, including those caused by natural disasters and other events beyond our control, out of our own funds, which could have a material adverse effect on our business, financial condition and results of operations.
Risks Relating to Our Ordinary Shares
The highly concentrated ownership and voting power of the Company may impact shareholders’ interests in the Company.
As of the date of this annual report, Mr. Szu Hao Huang and Mr. Yenhung Liu, through Dalan Vincent Holdings Limited, indirectly owned approximately 59.3% of our ordinary shares and the voting power of the Company. It is anticipated that Mr. Szu Hao Huang and Mr. Yenhung Liu will continue to own a majority of ordinary shares of the Company and, correspondingly, will have the majority of the voting power of the Company. As such, you may not be able to influence the strategies, management or policies of the Company as you could at a company where the equity ownership is widely distributed.
7
We have incurred increased costs as a result of being a public company, we will incur more cost after we cease to qualify as an “emerging growth company.”
We have become a public company and incurred significant legal, accounting and other expenses that we do not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC, imposes various requirements on the corporate governance practices of public companies. As an “emerging growth company” pursuant to the JOBS Act, we may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costlier. After we are no longer an “emerging growth company,” we expect to incur significant additional expenses and devote substantial management effort toward ensuring compliance with increased disclosure requirements.
Our ordinary shares may be considered a “penny stock” which is subject to restrictions on marketability, so you may not be able to sell your shares.
The SEC has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to specific exemptions. Although there has not been a public market for our ordinary shares and such a public market may never develop, our ordinary shares may have a market price of less than $5.00 per share and therefore will be designated as a “penny stock” according to SEC rules. This designation requires any broker or dealer selling these securities to disclose some information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell the ordinary shares and may affect the ability of investors to sell their ordinary shares. These regulations may likely have the effect of limiting the trading activity of our ordinary shares and reducing the liquidity of an investment in our ordinary shares. In addition, investors may find it difficult to obtain accurate quotations of the ordinary shares and may experience a lack of buyers to purchase our ordinary shares or a lack of market makers to support the stock price.
If our ordinary shares become tradable in the secondary market, we will be subject to the penny stock rules adopted by the SEC that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our ordinary shares, which in all likelihood would make it difficult for our shareholders to sell their shares.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the subsequent testing by our independent registered public accounting firm, if and when required, may reveal additional deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our consolidated financial statements or identify other areas for further attention or improvement. If in the future we identify new material weaknesses in our internal control over financial reporting, including at some of our acquired companies, if we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if and when applicable, our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our ordinary shares could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are then listed, the SEC, or other regulatory authorities, which could require additional financial and management resources. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our ordinary shares.
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The market price for the ordinary shares may be volatile.
The market price for the ordinary shares may be volatile and subject to wide fluctuations in response to factors including the following:
| ● | actual or anticipated fluctuations in our quarterly operating results; |
| ● | changes in financial estimates by securities research analysts; |
| ● | addition or departure of key personnel; |
| ● | fluctuations of exchange rates between NTD and U.S. dollar or other foreign currencies; |
| ● | potential litigation or administrative investigations; |
| ● | sales of ordinary shares in large volumes by the Selling Shareholders; and |
| ● | release of transfer restrictions on the outstanding ordinary shares or sales of additional ordinary shares. |
In addition, the securities market has from time-to-time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our ordinary shares.
We may need additional capital, and the sale of additional ordinary shares or other equity securities could result in additional dilution to the shareholders and the incurrence of indebtedness could increase our debt obligations.
We can give no assurance that our current cash and cash equivalents and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs for the foreseeable future. We may require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If our resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity securities or obtain a credit facility. The sale of additional equity and equity-linked securities could result in additional dilution to our shareholders. We currently plan to satisfy our cash requirements for the next 12 months through earning from our subsidiaries and borrowings from our related parties or companies affiliated with our related parties. We believe we can satisfy our cash requirements so long as it is able to obtain financing from these affiliated parties. The related parties and affiliates are as follows: (1) Mr. Szu Hao Huang, Director and CEO of the Company, (2) Mr. Yenhung Liu, Director of the Company, and (3) Gasar Biotechnology Co., Ltd, a company which legal representative is Mr. Szu Hao Huang.
The incurrence of indebtedness would cause increased debt service obligations and result in operating and financing covenants that could restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all, particularly in the aftermath of global economic crisis.
Future sales or issuances, or perceived future sales or issuances, of substantial amounts of our ordinary shares could adversely affect the price of the ordinary shares.
Sales, or perceived potential sales, by our existing shareholders might make it more difficult for us to issue new equity or equity-related securities in the future at a time and place we deem appropriate. The ordinary shares that have been registered with the SEC are eligible for immediate resale in the public market without restrictions, and the remaining ordinary shares may also be sold in the public market in the future subject to the restrictions contained in Rule 144 and Rule 701 under the Securities Act. If any existing shareholders sell a substantial amount of ordinary shares in the future, the prevailing market price for the ordinary shares could be adversely affected.
Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our shareholders have limited protections against interested director transactions, conflicts of interest and similar matters.
The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York Stock Exchange and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, requires the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and securities markets and apply to securities which are listed on those exchanges. Because we are not presently required to comply with many of the corporate governance provisions, we have not yet adopted these measures.
We do not currently have independent audit or compensation committees. As a result, our director has the ability, among other things, to determine the level of compensation. Until we comply with such corporate governance measures, the absence of such standards of corporate governance may leave our shareholders without protections against interested director transactions, conflicts of interest and similar matters, and investors may be reluctant to provide us with funds necessary to expand our operations.
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The Company’s ordinary shares represent equity interests and are subordinate to the existing and future indebtedness.
Our ordinary shares represent equity interests in our Company and, as such, rank junior to any indebtedness of our Company, as well as to the rights of any preferred shares that may be issued in the future. In the future, we may incur substantial amounts of debt and other obligations that will rank senior to our ordinary shares or to which our ordinary shares will be structurally subordinated.
Item 4. Information on the Company
A. History and Development of the Company
Corporate History and Corporate Structure
Cordyceps Sunshine Biotech Holdings Co., Ltd. (“Cordyceps Sunshine Cayman”) was incorporated on May 4, 2020 under the laws of the Cayman Islands. On June 5, 2020, Cordyceps Sunshine Cayman established a wholly owned subsidiary, Cordyceps Sunshine Biotech Co., Ltd (“Cordyceps Sunshine HK”) in Hong Kong. On June 5, 2020, Cordyceps Sunshine HK established a wholly owned subsidiary, Chengdu Skyherb Biotechnology Co., Ltd (“Chengdu Skyherb” or “Cordyceps Sunshine WFOE”) in the People’s Republic of China. On November 3, 2021, Cordyceps Sunshine Cayman established a branch (“Cordyceps Sunshine Taiwan Branch”) in Taiwan, Republic of China. The Company specialize in cultivating and sales of Cattle camphor mushroom. Taiwanofungus Biotech Co. Ltd. was incorporated on August 17, 2023 under the laws of Hong Kong and is currently not actively engaging in any business.
September Transaction
On September 28, 2023, the Company entered into a share purchase agreement (the “Agreement”) with Mr. Xusheng Niu (“Mr. Niu”), Cordyceps Sunshine HK, and Chengdu Skyherb, a wholly-owned subsidiary of Cordyceps Sunshine HK. Pursuant to the Agreement, the Company agreed to sell, and Mr. Niu agreed to purchase, 100% equity interest in the Cordyceps Sunshine HK, in exchange for cancelling the debt (the “Transaction”) in a total amount of $1,152,328.50 (RMB8,411,156.95) (the “Debt”). The Debt resulted from several loan agreements entered into by the Company and Mr. Niu since June 29, 2020. Pursuant to those loan agreements, Mr. Niu borrowed and made payments to fund the Company. Upon the closing of the Transaction, Mr. Niu agreed to release the Company from the obligation to repay the Debt, which shall be deemed paid in full.
As a result of the September Transaction, the Company spin off its then subsidiaries, Cordyceps Sunshine HK and Chengdu Skyherb. The following diagram illustrates our current corporate structure:
Incorporated on May 4, 2020, Cordyceps Sunshine Cayman is an exempted company incorporated under the laws of the Cayman Islands with limited liability. Under our Memorandum and Article of Association, we are authorized to issue 500,000,000 ordinary shares of a single class, par value $0.0001 per ordinary share. In August 2021, we sold through a Regulation S offering a total of 11,120,000 ordinary shares to 65 shareholders, at a price of $0.02 per share for an aggregate purchase price of $222,400. Cordyceps Sunshine Cayman is currently not engaging in any active business and merely acting as a holding company.
Cordyceps Sunshine Biotech Holdings Co., Ltd. Taiwan Branch (“Cordyceps Sunshine Taiwan”) was incorporated on November 3, 2021, under the laws of Taiwan, with 100% of the equity interest held by Cordyceps Sunshine Cayman.
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Corporate Information
Our principal executive office is located at 6th Fl., No. 15, Lane 548, Ruiguang Road, Neihu District, Taipei City, Taiwan, and our phone number is +886-2-27489091. We maintain a corporate website at https://www.cskasaer.com/. The information contained in, or accessible from, our website or any other website does not constitute a part of this annual report.
B. Business Overview
Cordyceps Sunshine Biotech Holdings Co., Ltd. (“Cordyceps Sunshine Cayman”) was incorporated on May 4, 2020 under the laws of the Cayman Islands. On June 5, 2020, Cordyceps Sunshine Cayman established a wholly owned subsidiary, Cordyceps Sunshine Biotech Co., Ltd (“Cordyceps Sunshine HK”) in Hong Kong. On June 5, 2020, Cordyceps Sunshine HK established a wholly owned subsidiary, Chengdu Skyherb Biotechnology Co., Ltd (“Chengdu Skyherb” or “Cordyceps Sunshine WFOE”) in the People’s Republic of China. On November 3, 2021, Cordyceps Sunshine Cayman established a branch (“Cordyceps Sunshine Taiwan Branch”) in Taiwan, Republic of China. Taiwanofungus Biotech Co. Ltd. was incorporated on August 17, 2023 under the laws of Hong Kong and is currently not actively engaging in any business.
On September 28, 2023, the Company entered into a share purchase agreement (the “Agreement”) with Mr. Xusheng Niu (“Mr. Niu”), Cordyceps Sunshine HK, and Chengdu Skyherb, a wholly-owned subsidiary of Cordyceps Sunshine HK. Pursuant to the Agreement, the Company agreed to sell, and Mr. Niu agreed to purchase, 100% equity interest in the Cordyceps Sunshine HK. As a result of the September Transaction, the Company spin off its then subsidiaries, Cordyceps Sunshine HK and Chengdu Skyherb, and thus the Cordyceps business has been ceased.
The Company specializes in cultivating Chinese rare medicinal herb, Cattle camphor mushroom raw material and sell of its finished products.
Cattle camphor mushroom, also known as Antrodia Cinnamomum or Taiwanofungus, is referred to as Taiwanofungus on product packaging for easier recognition.
For the year ended December 31, 2025, we generated revenue of $1,245,348 entirely from the sale of Cattle camphor mushroom products.
Current Product Line
Taiwanofungus Oral Pill
Taiwanofungus Oral pill is a pill-form dietary supplement. The pill’s primary ingredient is an extract from the fruiting body of Taiwanofungus, known as Antcins. Taiwanofungus Oral Pill is designed to potentially enhance the energy levels of those who consume them.
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Taiwanofungus Oral Pill has not been approved for sale as a drug or food in Taiwan or elsewhere but has passed the Taiwan Standard Global Services testing with respect to certain harmful particles. Taiwanofungus Oral Pills is proven to be safe because it has shown that it does not cause any side effects or negative effects due to its long-term use, is not inclined to trigger addiction, form habits or cause allergic reactions, or cause rejections by the consumer’s organs.
Taiwanofungus Oral Pills is administered by taking 3-5 pills orally daily underneath the tongue for 3-5 minutes allowing the saliva to dissolve the pills. It is recommended to take it on an empty stomach for better absorption. Taiwanofungus should be taken at least one hour apart from both Chinese and Western medicine. Also, it is advised not to consume Taiwanofungus within 30 minutes after drinking tea to avoid reducing its effectiveness.
Taiwanofungus Double A Oral shot
Taiwanofungus Double A Oral shot is a liquid form dietary supplement. The key ingredients of the drink include extracts from Taiwanofungus fruiting bodies and Indian gooseberries. Taiwanofungus Double A Oral shots may boost energy level of its consumers.
Taiwanofungus Double A Oral shot has not been approved for sale as a drug or food in Taiwan or elsewhere but has passed the Taiwan Standard Global Services testing with respect to certain harmful particles. Taiwanofungus Double A Oral shot is proven to be safe because it has shown that it does not cause any side effects or negative effects due to its long-term use, is not inclined to trigger addiction, form habits or cause allergic reactions, or cause rejections by the consumer’s organs.
Taiwanofungus Double A Oral shot is administered by taking 1 bottle orally daily. It is recommended to take it on an empty stomach for better absorption. Taiwanofungus should be taken at least one hour apart from both Chinese and Western medicine. Also, it is advised not to consume Taiwanofungus within 30 minutes after drinking tea to avoid reducing its effectiveness.
TAIWANOFUNGUS x SALVIA MILTIORRHIZA ORAL Shot
TAIWANOFUNGUS x SALVIA MILTIORRHIZA ORAL Shot is a liquid form dietary supplement. The key ingredients of the drink include extract of Taiwanofungus fruiting body and Red Sage Tanshinone. TAIWANOFUNGUS x SALVIA MILTIORRHIZA ORAL Shot may boost energy level of its consumers.
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TAIWANOFUNGUS x SALVIA MILTIORRHIZA ORAL Shot has not been approved for sale as a drug or food in Taiwan or elsewhere but has passed the Taiwan Standard Global Services testing with respect to certain harmful particles. TAIWANOFUNGUS x SALVIA MILTIORRHIZA ORAL Shot is proven to be safe because it has shown that it does not cause any side effects or negative effects due to its long-term use, is not inclined to trigger addiction, form habits or cause allergic reactions, or cause rejections by the consumer’s organs.
TAIWANOFUNGUS x SALVIA MILTIORRHIZA ORAL Shot is administered by taking 1 bottle orally daily. It is recommended to take it on an empty stomach for better absorption. Taiwanofungus should be taken at least one hour apart from both Chinese and Western medicine. Also, it is advised not to consume Taiwanofungus within 30 minutes after drinking tea to avoid reducing its effectiveness.
Collagen Max Drink
Collagen Max Drink is a liquid form dietary supplement. The key ingredients include 5000mg of collagen, 80mg of Sodium hyaluronate, 25mg of Proteoglycan, 18mg of Ceramide, and 100mg of Taiwanofungus extract. Collagen Max Drink may boost energy level of its consumers. Collagen Max Drink has not been proven to be used as a drug to treat any diseases.
Collagen Max Drink is administered by taking 1 packet orally daily.
Collagen Max Drink is proven to be safe because it has shown that it does not cause any side effects or negative effects due to its long-term use, is not inclined to trigger addiction, form habits or cause allergic reactions, or cause rejections by the consumer’s organs.
Barbie Coco
Barbie Coco is a chocolate product crafted with key ingredients such as Taiwanofungus fruiting body extract, monk fruit extract, and Chocamine® cocoa powder. Its sweetness is derived from Mogroside V, which provides sweetness and has been identified as an excellent alternative to sugar, making it a suitable choice for individuals with dietary restrictions, such as those managing diabetes.
Cattle camphor mushroom is the fungus that grows on the Cinnamomum kanehirae trees. It is a unique and precious medicinal mushroom found only in Taiwan, has a culinary history in Taiwanese culture spanning over a century.
In 2002, the Taiwanese government launched the “Two Trillion and Twin Star Development Program,” aimed at injecting funding to support specific industries in Taiwan. This initiative targeted sectors including semiconductors, display panels, digital content, and biotechnology and pharmaceuticals. Cattle camphor mushroom was identified as a pivotal research focus within the biotechnology and pharmaceutical category during that period.
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However, due to the endangered status of the Cinnamomum kanehirae tree, it has been listed under Taiwan’s regulatory framework. This listing has imposed restrictions on the development of the Cattle camphor mushroom industry, making it difficult to expand and gain international recognition, resulting in slightly lower visibility in the market of Chinese rare medicinal herb.
During 2025, we introduced three additional products that incorporate Cattle camphor mushroom (Antrodia cinnamomea, also referred to as Taiwanofungus) or related botanical ingredients: KASAER LUO-SHUEI Plum Wine, KASAER ProMen Prostate Support Capsules and Dr.A PetCare MouthFresh. These products are intended to broaden the application of our Taiwanofungus extract technology across beverage, adult wellness and pet wellness categories.
KASAER LUO-SHUEI Plum Wine
KASAER LUO-SHUEI Plum Wine is a premium plum wine product made with 15-year-old Taiwanese aged plum wine and infused with Antrodia cinnamomea and amla (Phyllanthus emblica) extracts. The product is formulated to provide a layered fruit flavor profile and a smooth, bittersweet finish, and may be served chilled, over ice or mixed with soda water. We position this product for adult consumers and social occasions.
KASAER ProMen Prostate Support Capsules
KASAER ProMen Prostate Support Capsules is a dietary supplement for men that combines Antrodia cinnamomea, lotus seed, amla (Phyllanthus emblica) and pumpkin seed extracts. The product is formulated with Antrodia Acid A at 1,500 parts per million (PPM) and is marketed for general men’s wellness and proactive prostate health maintenance. Each bottle contains 30 capsules, and the recommended intake is one capsule daily for general wellness or two capsules daily for more intensive support, subject to applicable product labeling and consumer guidance.
Dr.A PetCare MouthFresh (Chicken & Tuna Duo/Medley)
Dr.A PetCare MouthFresh (Chicken & Tuna Duo/Medley) is an oral-care purée product for pets that combines Antrodia cinnamomea extract with Taiwanese-sourced ingredients, including chicken, eggs and tuna. The product is formulated for pet oral freshness and care and is marketed to pet owners seeking a clean-label pet wellness product. The recipe does not include chemical gums, emulsifiers, artificial flavorings or preservatives. Each stick contains 10 grams of product, and each box contains 10 sticks.
The foregoing product descriptions reflect our product positioning and intended use. Except as otherwise disclosed, these products are not marketed as drugs or products intended to diagnose, treat, cure or prevent any disease, and they are subject to applicable food, beverage, dietary supplement, pet product, labeling, advertising and consumer protection requirements in the jurisdictions in which they are offered.
Cultivating Process
Currently, some of the raw materials for our Cattle camphor mushroom products are cultivated and nurtured by us and then entrusted to our supplier, Sin-Ding TW Co. Ltd. ("Sin-Ding"), for OEM production, while the remainder are still manufactured directly by Sin-Ding. We procure the products directly from Sin-Ding and distribute them to companies, pharmacies, and individual customers.
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Background of the traditional method of cultivating Cattle camphor mushroom
Currently, the primary method for cultivating Cattle camphor mushroom in the market involves utilizing chopped and preserved logs from Cinnamomum camphora trees for cultivation in a regulated environment. The harvested Cattle camphor mushroom from the preserved logs closely resemble wild Cattle camphor mushroom in terms of their active ingredients and appearance. However, since Cinnamomum camphora trees are endangered conservation plants and grow slowly, they have been legislatively regulated by the Taiwanese government to prevent logging. Under various constraints, the cost of obtaining Cinnamomum camphora tree logs has become extremely high, exceeding what the academic and industrial sectors can afford. Consequently, this has impacted the supply of Cattle camphor mushroom raw materials in the market, leading to an unmet demand.
Our revolutionary change to the current cultivating situation
Our patented cultivation technology can replace the traditional method of cultivating Cattle camphor mushroom on Cinnamomum camphora tree logs. Our harvested Cattle camphor mushroom exhibits potency comparable to that of wild-grown Cattle camphor mushroom. Our cultivation technology reduced cultivation costs, increased production capacity, and the ability to be reused, thus possessing the capability to fill the market demand gap.
Cultivation materials and environmental conditions
| ● | Porous carrier: Manufactured from porcelain clay, forming a porous elongated cubic body with tiny micropores distributed on both the exterior and interior surfaces, used for absorbing cultivation nutrient solution. |
| ● | Fungi cultivating box: A device for cultivating Cattle camphor mushroom mycelium, consisting of a box body, a box lid, a fixing device, a binding device, and a cultivation porous carrier placed inside the box. |
| ● | Liquid culture medium/nutrient solution: Utilized for cultivating Cattle camphor mushroom, comprising nutrients such as extracts of Cattle camphor mushroom leaves and branches, glucose and sucrose as carbon sources, and yeast extract as a nitrogen source, mixed in certain proportions to form the Cattle camphor mushroom cultivation nutrient solution. |
| ● | Cover membrane: After the cultivation porous carrier is soaked and dried with nutrient solution, a membrane-forming treatment is conducted using a mixture of food additives, Cattle camphor mushroom extract, and sugars to form a thin film outside the nutrient layer, isolating it from external contact. Composition of the membrane-forming nutrient solution: Food additive polyethylene glycol heated to a liquid state accounting for 50%, a mixture of Cattle camphor mushroom powder and mycelial extract accounting for 25%, and a mixture of glucose and sucrose accounting for 5:1. |
| ● | Antrodia cinnamom strains: The nutrient solution is placed in a sterile culture dish in a sterile room, and then Antrodia cinnamom strains are inoculated into the culture dish. The culture dish is maintained in an environment at 12~26°C for 1~3 months to obtain Antrodia cinnamom strains. |
| ● | Production Environment: The workshop area and physical space of the production site should be adapted to the production capacity, facilitating equipment installation, cleaning and disinfection, material storage, and personnel operations. Establish a sound hygiene management system, strengthen health and hygiene management of production personnel, maintain high cleanliness of the production workshop, and properly handle waste disposal. |
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Cultivation process of Cattle camphor mushroom:
| ● | Soak the cultivation porous carrier in liquid culture medium and dry it at 35~45°C to solidify the cultivation nutrient solution into a nutrient layer, forming around the surface and micropores of the porous carrier. |
| ● | Apply a membrane-forming nutrient solution coating onto the nutrient layer of the porous carrier, allowing the coating to cool and form a membrane around the surface and micropores of the porous carrier. |
| ● | Sterilize the prepared carrier and membrane with gamma radiation. |
| ● | Fix the sterilized porous carrier inside the fungi cultivating box, maintaining a certain distance between the porous carrier and the inner wall of the cultivation box. |
| ● | Inject sterile water into the space at the bottom of the porous carrier and the box, ensuring it meets the requirements of Grade III water standards specified in GB/T6682, with the water level not reaching the bottom of the porous carrier. |
| ● | Sterilize the prepared cultivating box with gamma radiation. |
| ● | Inoculate Cattle camphor mushroom onto the surface and micropores of the porous carrier. |
| ● | Seal the cultivating box after inoculation and place it in a cultivation chamber with the internal temperature maintained at 25~28°C and humidity at 60%~80%. Condensed water vapor on the box lid drips onto the porous carrier, simulating the natural growth environment of Cattle camphor mushroom in the wild. |
| ● | During cultivation, regularly replenish the cultivation nutrient solution to the porous carrier using a syringe to provide necessary nutrients for growth. |
| ● | After approximately 3 months, Cattle camphor mushroom mycelium grows on the nutrient layer of the porous carrier and the membrane. Due to the higher nutrient concentration in the micropores, mycelium also grows along the surface of the carrier. |
| ● | After approximately 8 months, Cattle camphor mushroom fruiting bodies begin to form around the surface of the porous carrier. |
| ● | Continue to cultivate the harvested Cattle camphor mushroom fruiting bodies in a sealed environment with constant temperature and humidity. Gravity and growth habits cause water and nutrients to flow downward, with water vapor condensing on the lid and dripping onto the fruiting bodies. The composition of the nutrient layer and membrane promotes growth, resulting in fruiting bodies containing triterpenoid active ingredients reaching wild levels. |
Harvest period
| ● | Cattle camphor mushroom undergoes a growth period from inoculation to approximately 12 to 18 months, during which it transitions from an initial white color to yellow, red, and finally deep red. Once the thickness reaches 2cm or more, it is ready for harvesting. |
| ● | After the initial harvest, subsequent harvests can be conducted annually or biennially. The longer the duration between harvests, the larger the fruiting bodies of Cattle camphor mushroom tend to be. Depending on the harvesting schedule, Cattle camphor mushroom is typically classified as one-year-old, two-year-old, three-year-old, five-year-old, or multi-year-old. |
Storage
| ● | Dry Cattle camphor mushroom should be stored in a cool, dry place away from light to prevent damage. It should be protected from pests and rodents, and during the summer, it should be stored in a refrigerated environment. |
| ● | Freshly harvested and packaged Cattle camphor mushroom should be stored at or below 0℃. |
| ● | It should not be stored together with items that are toxic, harmful, have strong odors, or are susceptible to mold and insect infestation. |
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We have entered into an agreement with Sin-Ding TW Co. Ltd. and acquired cultivation mediums which includes the Porous carrier with the Antrodia cinnamom strains, the liquid culture medium, and cultivating box for growing Cattle camphor mushroom. As of the date of this annual report, we have harvested the Cattle camphor mushroom from the 10,000 cultivation mediums purchased from Sin-Ding. As a result, we have successfully cultivated and nurtured our own raw materials. We are also collaborating with Sin-Ding for OEM production of our products.
Sales and Marketing
Our current marketing channels include online e-commerce platforms in Taiwan, physical chain stores, collaboration with major retail brands in Hong Kong, and partnerships with large retail channels in China. Our physical chain stores include Taipei Zhongxiao Store, Taipei Dihua Store, and Kaohsiung Sanfeng Store in Taiwan. We plan to expand our product offerings with diversified Cattle camphor mushroom specialty items and establish an online presence in Hong Kong, China, Japan, and the United States through e-commerce platforms. Additionally, we aim to deepen collaboration with raw material agents, health food manufacturers, and biotech pharmaceutical companies to further penetrate the market and broaden our reach.
Discontinued Business
On September 28, 2023, the Company spun off its then subsidiaries, Cordyceps Sunshine HK and Chengdu Skyherb, and thus the Cordyceps business has ceased.
Sales and Marketing
We derived all our revenue from product sales of $1,245,348, $1,253,484, and $728,426 for the years ended December 31, 2025, 2024, and 2023, respectively.
The Company sold Cattle camphor mushroom products to Gasar Biotechnology Co., Ltd, a related party of the Company, in the amounts of $175,405, $52,943, and $126,856 for the years ended December 31, 2025, 2024, and 2023, respectively.
As a result, for the years ended December 31, 2025, 2024, and 2023, we derived 14.08%, 4.22%, and 14.37%, respectively, of sales from related parties.
Going Concern Matter
The financial statements have been prepared “assuming that we will continue as a going concern,” which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
The following factors among others raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.
| ● | The Company has not yet established an ongoing source of revenues and cash flows sufficient to cover the operating costs and allow it to continue as a going concern. |
| ● | The Company generated net loss of $154,822, net loss of $226,258, and net income of $751,609 for the years ended December 31, 2025, 2024, and 2023, respectively. |
| ● | As of December 31, 2025, the Company had an accumulated deficit of $854,046. |
| ● | The Company incurred operating cash outflow of $35,845 and generated operating cash inflows of $312,006 and $359,724 for the years ended December 31, 2025, 2024, and 2023, respectively. |
| ● | The Company had negative working capital of $4,194,320 and $4,385,043 as of December 31, 2025 and 2024, respectively. |
In order to continue as a going concern, we will need, among other things, additional capital resources. Our plan is to obtain capital from management to meet our minimal operating expenses and seek third party equity and/or debt financing. However, management cannot provide any assurances that we will be successful in accomplishing any of our plans. There is no assurance that additional financing will be available to us. If we were unable to meet our future funding requirements for working capital and for general business purposes, we could experience operating losses and limit our marketing efforts as well as decrease or eliminate capital expenditures. If so, our operating results, our business results and our financial position would be adversely affected. For more information, see “Item 3. Key Information - D. - Risk Factors - Risks relating to our business and industry - We may require substantial additional funding in the future for our ability to continue as a going concern. There is no assurance that additional financing will be available to us. If we were unable to meet our future funding requirements for working capital and for general business purposes, our business results and our financial position would be adversely affected.”
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Industry
The Cattle camphor mushroom, a unique and prized medicinal fungus indigenous to Taiwan, boasts a culinary legacy deeply rooted in Taiwanese culture for over a century.
In 2002, the Taiwanese government introduced a subsidy initiative aimed at bolstering key industries, with a particular focus on funding research related to the Cattle camphor mushroom within the biotechnology sector.
The significance of the Cattle camphor mushroom industry in Taiwan parallels that of Korean ginseng and Chinese Cordyceps. However, the endangered status of the Cinnamomum kanehirae tree, essential for the mushroom’s growth, has led to its inclusion in Taiwan’s regulatory framework. Consequently, restrictions on its development have hindered its expansion and global recognition, resulting in relatively lower visibility compared to Korean ginseng and Chinese Cordyceps. In Taiwan, academic research on Cattle camphor mushroom is extensive and rich, as evidenced by the National Digital Library of Theses and Dissertations. Similarly, the United States’ PubMed database and China’s CNIPA database contain numerous research papers and patents related to Cattle camphor mushroom.
The demand for Cattle camphor mushroom has experienced remarkable growth, driven by various factors. With increasing globalization and the spread of traditional Chinese medicine practices, awareness of the medicinal benefits of Cattle camphor mushroom has expanded globally. As a revered component of traditional Chinese medicine, heightened exposure to these practices has spurred demand for Cattle camphor mushroom products.
This surge in demand has led to challenges such as overharvesting of wild stocks and subsequent shortages in supply. While the primary markets for Cattle camphor mushroom are in Taiwan and other Asian regions, emerging interest from international markets, including the United States, Europe, and Australia, is contributing to its growing demand worldwide.
According to industry reports by Chinese Association of Traditional Chinese Medicine, Analysis of the Cattle camphor mushroom Industry in 2023, the market demand within China is 2812.13 tons in 2023 and is expected to reach 4341.34 tons by 2027, with an annual growth rate of range from 9-12%. Despite this growth, there remains a considerable gap between supply and demand, highlighting the substantial market opportunity for Cattle camphor mushroom products.
Suppliers and Customers
Suppliers
The following table sets forth information as to the suppliers that accounted for 10% or more of the Company’s purchase for the periods presented.
| For the year ended | For the year ended | For the year ended | ||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Amount | % | Amount | % | Amount | % | |||||||||||||||||||
| Supplier A | $ | 469,644 | 100.00 | % | $ | 347,004 | 100.00 | % | $ | 116,146 | 100.00 | % | ||||||||||||
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Customers
The following table sets forth information as to the customers that accounted for 10% or more of the Company’s revenue for the periods presented.
| For the year ended | For the year ended | For the year ended | ||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Amount | % | Amount | % | Amount | % | |||||||||||||||||||
| Customer A - related party | $ | 175,405 | 14.08 | % | $ | 52,943 | 4.22 | % | $ | 126,856 | 14.37 | % | ||||||||||||
| Customer B - third party | 545,549 | 43.81 | % | 373,715 | 29.81 | % | 61,154 | 6.93 | % | |||||||||||||||
C. Organizational structure.
The following is a list of our subsidiaries as of the date of this annual report.
| Subsidiaries | Place of Incorporation | |
| Cordyceps Sunshine Biotech Holdings Co., Ltd. Taiwan Branch | Taiwan | |
| Taiwanofungus Biotech Co. Ltd. | Hong Kong |
Taiwanofungus Biotech Co. Ltd. was incorporated on August 17, 2023 under the laws of Hong Kong and is currently not actively engaging in any business.
The following diagram illustrates the corporate structure of Cordyceps Sunshine Biotech Holdings Co., Ltd. as of the date of this annual report:
D. Property, Plant and Equipment
Facilities
Cordyceps Sunshine Taiwan Branch currently has three leased properties:
Leased Properties
| No. | Property Location | Material Lease Term | Functions | |||
| 1 | 6th Fl., No. 15, Lane 548, Ruiguang Road, Neihu District, Taipei City, Taiwan |
Cordyceps Sunshine Taiwan Branch leases this property for the use of our executive office under a lease that expires on August 31, 2026. The monthly rent is NTD146,000 (approximately USD4,684). | Office | |||
| 2 | 1st Fl., 2nd Fl., No. 276, Section 1, Dihua Street, Datong District, Taipei City, Taiwan |
Cordyceps Sunshine Taiwan Branch leases this property for the use of our Retail store under a lease that expires on April 30, 2026. The monthly rent is NTD70,000 (approximately USD2,246). | Retail store | |||
| 3 |
No. 118, Sanfeng Central St., Sanmin Dist., Kaohsiung City, Taiwan |
Cordyceps Sunshine Taiwan Branch leases this property for the use of our retail store under a lease that expires on April 30, 2026. From May 1, 2023 to April 30, 2024, the monthly rent is NTD35,000 (approximately USD1,123). From May 1, 2024 to April 30, 2026, the rent is paid quarterly at NTD102,000 every three months (approximately USD3,272). | Retail store |
19
Intellectual Property
Trademarks
Company has obtained the trademark(s) as below.
| No. | Trademark | Registration Code |
Registered Country |
Registered Date |
Category | Owner | ||||||
| 1 |  |
02164806 | ROC | September 4, 2021 | Class 5 | Cordyceps Sunshine Biotech Holdings Co., Ltd. | ||||||
| 2 | |
02166572 | ROC | September 4, 2021 | Class 35 | Cordyceps Sunshine Biotech Holdings Co., Ltd. |
Class 5: medical and nutritional products; traditional Chinese medicine; herbal medicine; weight loss medicine; human medicine; protein nutritional supplements; plant fiber nutritional supplements; antioxidant nutritional supplements; vitamin and mineral supplements; fiber dietary supplements; general nutritional supplements; medical dietary products, drinks, and foods; plant extract supplements; herbal tea supplements; meal replacement supplements; by-products of food processing for medical use; enzyme supplements; and herbal nutritional supplements.
Class 35: Retail and wholesale distribution of medicines; retail and wholesale distribution of Western medicine; retail and wholesale distribution of traditional Chinese medicine; retail and wholesale distribution of nutritional supplements; retail and wholesale distribution of beverages; import and export agency services; quoting prices for various products from domestic and foreign manufacturers; bidding for various products from domestic and foreign manufacturers; marketing of various products from domestic and foreign manufacturers; providing consulting services for business franchising and chain store management.
Patents
Cordyceps Sunshine Taiwan Branch is licensed by Yen Hung Liu, one of our founders and directors, to use the following six patents.
| No. | Patent Name | Patent Code | Registered Country |
Expiration Date | Category | |||||
| 1 | Porous Carrier for Cultivating Antrodia Cinnamomea | M591990 | Taiwan | December 16, 2029 | Utility Models | |||||
| 2 | Fungal Cultivation Box | M611401 | Taiwan | January 5, 2031 | Utility Models | |||||
| 3 | Carrier for Use as a Culture Medium | M617740 | Taiwan | May 3, 2031 | Utility Models | |||||
| 4 | Method for Cultivating Antrodia Cinnamomea and Porous Carrier for Cultivating Antrodia Cinnamomea | I735106 | Taiwan | December 16, 2039 | Inventions | |||||
| 5 | Method for Cultivating Antrodia Cinnamomea and Porous Carrier for Cultivating Antrodia Cinnamomea | ZL 2020 1 0042692.1 | PRC | January 14, 2040 | Inventions | |||||
| 6 | Method for Cultivating Antrodia Cinnamomea and Porous Carrier for Cultivating Antrodia Cinnamomea | 7430356 | Japan | October 26, 2040 | Inventions |
On February 5, 2024, Cordyceps Sunshine Taiwan Branch entered into an exclusive licensing agreement with Mr. Yen Hung Liu, pursuant to which Mr. Liu agreed to grant Cordyceps Sunshine Taiwan Branch exclusive rights to use the six cultivation technologies that Mr. Liu developed as listed above. According to this licensing agreement, Cordyceps Sunshine Taiwan Branch is allowed to use these technologies globally beginning on February 5, 2024 until the expiration date of each patent.
These four cultivation technologies reflect the four important processes of cultivation of Cattle camphor mushroom, which runs through the whole production process of cultivation of Cattle camphor mushroom.
20
Legal Proceedings
We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business. As of the date hereof, neither we nor any of our subsidiaries is a party to any pending legal proceedings, nor are we aware of any such proceedings threatened against us or our subsidiaries.
Seasonality
We believe our operation and sales of Cordyceps and Cattle camphor mushroom do not experience seasonality.
Insurance
We do not have any business liability, interruption or litigation insurance coverage for our operations in Taiwan. Therefore, we are subject to business and product liability exposure. See “Item 3. Key Information - D. - Risk Factors - Risks Relating to Our Business and Industry - Our sales and reputation may be affected by product liability claims, litigation, product recalls, or adverse publicity in relation to our products.”
Regulations
Regulation in Taiwan
Regulation on Cattle camphor mushroom
In Taiwan, Cattle camphor mushroom falls under the category of food products. These products are governed by the Act Governing Food Safety and Sanitation. According to this act, specific labeling requirements for product packaging include: (i) a warning message in Chinese stating, “For infants, pregnant women, and breastfeeding mothers, please consult a physician or medical professional before consuming this product,” and (ii) clear indication on the packaging of the parts of the Cattle camphor mushroom used as raw materials, whether they are the fruiting body or mycelium, and their cultivation method.
Regulation on Consumer Protection
The current primary regulation protecting consumers’ rights in Taiwan is Consumer Protection Act (the “CP Act”), with a view to better regulate the conduct of business operators and enforce consumer protection. The Industry Competent Authority at various levels of the administration is responsible for the enforcement and supervision on any consumer protection related matters with Consumer Protection Officer in place.
Pursuant to the CP Act, business operators providing goods and services shall prioritize consumer rights, particularly with regard to consumers’ health and safety, provide sufficient instruction on the goods and services offered, maintain fairness of the trade and take any other necessary precautions to protect consumers’ rights. In addition, business operators who design, produce and manufacture goods or provide services shall guarantee that the goods or services offered should meet the safety criteria which is reasonably expected from the technological and professional perspective at the time of launching such goods or offering services in the market. In case of intentionally wrongdoings of the business operators, punitive damages up to three times of the actual damage may be imposed against such business operators.
Regulation on Food Sanitation Management
The current primary regulation governing food sanitation in Taiwan is the Act Governing Food Safety and Sanitation (the “AGFSS”). The Department of Health at various levels of the administration is responsible for the management and supervision on any food sanitation related matters.
Under this AGFSS, any business operators of food or food additives must obtain and maintain the proper licenses from relevant government authorities before they could manufacture, process, deploy, package, transform, store, sell, import and export food or food additives. The licenses generally have a valid duration from one year to five years. After receiving the application, the relevant government agency issues the licenses, and the application for extension must be filed for approval within three months before expiration. The AGFSS t also set forth specific rules demanding the compliance with good hygienic practices and safety control system of food or food additives by the business operators.
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Regulation on Company Administration
The current primary regulation governing companies in Taiwan is the Company Act, by Legislative Yuan, which provided the fundamental framework for regulating companies. The Ministry of Economic Affairs at various levels of the administration is responsible for the management and supervision on any companies related matters.
Under the Company Act, a company refers to any profit-driven juridical association, organized, registered and established in accordance with this Company Act. Under the Company Act, companies have been divided into four categories: unlimited liability company, limited liability company, joint liability company and company limited by shares.
Under the Company Act, a company cannot be established unless properly registered with Ministry of Economic Affairs, and prior to such registration, no business or other legal act can be conducted in the name of a company. In addition, the capital amount of a company must be fully contributed by its shareholders of their own fund at the time of its establishment, rather than paid by installment or through external financing. Furthermore, the capital contribution must be audited and certified by accountants.
A limited liability company is a company organized by more than one shareholder, where the shareholders are only liable to the extent of their contributed capital to the company. Director(s) of a limited liability company is responsible for the management and operation of the company and subject to duty of care and duty of loyalty while executing his business judgment with respect to the operation of the company.
Regulation on Foreign Exchange
Foreign exchange regulation in Taiwan is primarily governed by the Foreign Exchange Regulation Act (the “FECA”). Under the FECA, foreign exchange refers to foreign currency, bills and marketable securities. The authority managing the administration of foreign exchange is Ministry of Finance of Republic of China, while the authority managing the practical operation of foreign exchange business is Central Bank of Republic of China. The FECA also specifies the allocated power of Ministry of Finance and Central Bank, respectively. To the extent that any foreign exchange receipts, payments or transactions reaches the threshold of $15,939 (NT$500,000) or equivalent in foreign currency, it must be reported to the Central Bank or its designated authorities. Upon incurrence of any of the following events, the Executive Yuan of Republic of China may determine and announce that for a period of time, to close the foreign exchange market, suspend or restrict all or partial foreign exchange payment, order a mandatory sale or deposit of all or partial foreign exchange into a designed bank, or dispose in any other manner as it deems necessary:
| - | When the domestic or foreign economic disorder might endanger the stability of the domestic economy; or |
| - | When the Republic of China’s balance of payments suffers a severe deficit. |
Regulation on Foreign Investment
The current principal regulation governing foreign investment is Statute For Investment By Foreign Nationals (the “SIFN”). Under the SIFN, investment refers to any activities involving (1) holding shares issued by Taiwan company, or contributing to the capital of Taiwan company; (2) establishing a branch office, a proprietary business or a partnership in the territory of the Taiwan; or (3) providing loan(s) to the invested business referred to in the preceding two Paragraphs for a period exceeding one year. The authority in charge of foreign investment is Ministry of Economic Affairs of Republic of China. The industries in Taiwan are categorized into permitted, restricted and prohibited foreign investment areas. Investors may apply for settlement of exchange in accordance with the annual yield of their investment or the allocation of surplus.
With respect to foreign investment in the food industry, unless such investment is made from the People’s Republic of China, there’s no restriction under Investment Regulation. Since the Company falls into the food industry, the Company and prospective investors in this offering will not be affected by Investment Regulation.
22
Eminent domain
When the investment made by an investor constitutes less than 45% of the total amount of capital of the investee enterprise, and the investee enterprise has been expropriated or acquired by the government for the purpose of national defense, reasonable government compensation shall be paid to the investors. However, if the capital contribution made by the investor constitutes equal to or more than 45% of the total amount of capital of the investee enterprise and continues remaining above 45% for two decades since its establishment, then the government may not exercise its eminent domain power over such investee enterprise.
Regulations on Tax
The current principal regulations governing tax in Taiwan include the following:
| - | Income Tax Act; |
| - | The Implementation Rules of Income Tax Act; |
| - | Value-Added and Non-Value-Added Business Tax Act; and |
| - | The Implementation Rules of Value-Added And Non-Value-Added Business Tax Act. |
Under the Income Tax Act, there are two kinds of income tax, individual income tax and profit-seeking enterprise income tax, respectively.
For any individual having income from sources in the Taiwan, the individual income tax shall be levied in accordance with this Act on his income derived from sources in the Taiwan.; Unless otherwise provided in this Act, in the case of an individual who is a nonresident in the Taiwan but who has derived income from sources in the Taiwan, income tax payable by him on all such income shall be withheld and paid at the respective sources.
The enterprise with head office located in Taiwan shall pay profit-seeking income tax on its global income both within and outside Taiwan; while the enterprises with head office outside Taiwan shall only pay profit-seeking income tax on its business income sourced from within Taiwan. With respect to enterprise operating for profit, the exemption threshold is NT$120,000 ($3,825). Any income beyond such exemption threshold is subject to 20% tax rate on its taxable income.
Sale of goods or service, import of goods in Taiwan shall be subject to Value-Added or Non-Value-Added Business Tax. Rate of business tax. The rate of business tax, except as otherwise prescribed by Value-added and Non-value-added Business Tax Act, ranges from 5% to 10% with the current tax rate being implemented is 5% as determined by the Executive Yuan of Taiwan.
Item 4A. Unresolved Staff Comments
None.
23
Item 5. Operating and Financial Review and Prospects
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information - 3.D. Risk Factors” and elsewhere in this annual report.
5.A. Operating Results.
We focus on the cultivating and sales of Cattle camphor mushroom products. The results of operations are shown as follows.
| For the years ended December 31, | 2025 VS 2024 | 2024 VS 2023 | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | Amount | % | Amount | % | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Revenue - third parties | 1,069,943 | 1,200,541 | 755,677 | (130,598 | ) | -10.88 | % | 444,864 | 58.87 | % | ||||||||||||||||||
| Revenue - related parties | 175,405 | 52,943 | 126,856 | 122,462 | 231.31 | % | (73,913 | ) | -58.27 | % | ||||||||||||||||||
| Total revenue | 1,245,348 | 1,253,484 | 882,533 | (8,136 | ) | -0.65 | % | 370,951 | 42.03 | % | ||||||||||||||||||
| Operating costs - third parties | 484,607 | 347,004 | 116,146 | 137,603 | 39.65 | % | 230,858 | 198.77 | % | |||||||||||||||||||
| Total operating costs | 484,607 | 347,004 | 116,146 | 137,603 | 39.65 | % | 230,858 | 198.77 | % | |||||||||||||||||||
| Gross profit | 760,741 | 906,480 | 766,387 | (145,739 | ) | -16.08 | % | (140,093 | ) | -18.28 | % | |||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||
| General and administrative | 901,869 | 1,090,393 | 538,554 | (188,524 | ) | -17.29 | % | 551,839 | 102.47 | % | ||||||||||||||||||
| (Loss) income from operations | (141,128 | ) | (183,913 | ) | 227,833 | 42,785 | -23.26 | % | (411,746 | ) | -180.72 | % | ||||||||||||||||
| Non-operating income (expense) | ||||||||||||||||||||||||||||
| Interest income (expenses), net | (19,179 | ) | (17,055 | ) | (39,770 | ) | (2,124 | ) | 12.45 | % | 22,715 | -57.12 | % | |||||||||||||||
| Gain on disposal of assets | - | 4,328 | - | (4,328 | ) | -100.00 | % | 4,328 | N/A | |||||||||||||||||||
| Other income | 5,485 | 5,339 | 2,752 | 146 | 2.73 | % | 2,587 | 94.00 | % | |||||||||||||||||||
| Total non-operating income, net | (13,694 | ) | (7,388 | ) | (37,018 | ) | (6,306 | ) | 85.35 | % | 29,630 | -80.04 | % | |||||||||||||||
| (Loss) income before income taxes | (154,822 | ) | (191,301 | ) | 190,815 | 36,479 | -19.07 | % | (382,116 | ) | -200.25 | % | ||||||||||||||||
| Income tax expense | - | 34,957 | 21,530 | (34,957 | ) | -100.00 | % | 13,427 | 62.36 | % | ||||||||||||||||||
| Net (loss) income from continuing operations | (154,822 | ) | (226,258 | ) | 169,285 | 71,436 | -31.57 | % | (395,543 | ) | -233.66 | % | ||||||||||||||||
| Discontinued Operation | ||||||||||||||||||||||||||||
| Loss from discontinued operation, net of income tax | - | - | (282,761 | ) | - | N/A | 282,761 | -100.00 | % | |||||||||||||||||||
| Gain from sale of discontinued operation, net of income tax | - | - | 865,085 | - | -100.00 | % | (865,085 | ) | -100.00 | % | ||||||||||||||||||
| Gain from discontinued operation, net of income tax | - | - | 582,324 | - | -100.00 | % | (582,324 | ) | -100.00 | % | ||||||||||||||||||
| Net (Loss) Income | (154,822 | ) | (226,258 | ) | 751,609 | 71,436 | -31.57 | % | (977,867 | ) | -130.10 | % | ||||||||||||||||
24
Third-party revenue amounted to $1,069,943 and $1,200,541 for 2025 and 2024, all related to sales of Cattle camphor mushroom products.
The Company sold Cattle camphor mushroom products to Gasar Biotechnology Co., Ltd, a related party of the Company, in the amounts of $175,405 and $52,943 for the years ended December 31, 2025 and 2024, respectively, resulting in an increase of $122,462 or 231.31%. The Company sold Cattle camphor mushroom products to Gasar Biotechnology Co., Ltd, a related party of the Company, in the amounts of $126,856 for the year ended December 31, 2023; related party sales decreased by $73,913 or 58.27% for the year ended December 31, 2024.
The Company expanded and developed many third-party companies or individual customers, as third party sales accounted for 85.92%, 95.78%, and 85.63% of the total sales for the years ended December 31, 2025, 2024, and 2023, respectively.
Operating costs
Total operating costs of $484,607, $347,004, and $116,146 for the years of 2025, 2024, and 2023, respectively. Cost of revenue represents the goods purchasing cost. The cost of revenue increased by $137,603 or 39.65% and $230,858 or 198.77% for the years ended December 31, 2025 and 2024, respectively. In 2025, the Company lowered selling prices to promote Cattle camphor mushroom products, and the resulting increase in sales volume led to a corresponding rise in related costs. In contrast, the increase in 2024 was primarily due to a significant rise in third-party sales revenue.
Gross profit
Our gross profit was $760,741 or 61.09%, $906,480 or 72.32%, and $766,387 or 86.84% for the years ended December 31, 2025, 2024, and 2023, respectively.
Operating expenses
General and administrative expenses decreased from $1,090,393 for the year of 2024 to $901,869 for the year of 2025, representing a decrease of $188,524 or 17.29%. Due to business promotion in 2025, there was an increase in exhibition activities, booth setup, and staff hours. However, operating expenses decreased as a result of a reduction in professional service fees compared to 2024 and the reclassification of fixed asset depreciation to inventory upon product harvest.
General and administrative expenses increased from $538,554 for the year of 2023 to $1,090,393 for the year of 2024, representing an increase of an increase of $551,839 or 102.47%. The increase was due to the addition of retail store sales and an increase in fixed asset depreciation in 2024, which led to higher personnel costs and related operating expenses. In addition, professional service fees also increased as a result of the expanded scale of operations.
Net income (loss)
For the year ended December 31, 2025, the Company’s continuing operations shifted from a net loss of $226,258 in 2024 to a net loss of $154,822, representing a decrease in loss of $71,436 or 31.57%. Although operating costs and operating expenses increased due to business promotion, overall operating expenses decreased as a result of the reclassification of fixed asset depreciation to inventory upon product harvest.
25
For the year ended December 31, 2024, the Company’s continuing operations shifted from a net profit of $169,285 in 2023 to a net loss of $226,258, representing a decrease of $395,543 or 233.66%. Although revenue began to increase in 2023, the return to a net loss in 2024 was primarily due to higher depreciation expenses resulting from the purchase of cultivation facilities and increased operating expenses incurred during the early stage of business expansion.
Factors Affecting Our Results of Operations
Loss of key personnel. Our revenue was derived from our competitive advantages in our products. We rely heavily on the expertise and leadership of our senior management to maintain our core competence. The loss of the service of any of our key personnel could adversely affect our business.
Macro-economic conditions. Our business, financial condition and results of operations may be materially adversely affected by a challenging economic climate, including adverse changes in interest rates, volatile commodity markets and inflation, contraction in the availability of credit in the market and reductions in consumer spending. A macroeconomic downturn, which decreases the disposal personal income and reduces the need for luxury goods, may contribute to decreased sales of our Cordyceps products. Conversely, the economic growth may result in more sales of our Cordyceps products.
Depreciation. Our depreciation expenses are mainly driven by the net value of cultivation facilities and other equipment. Depreciation of property, plant and equipment is calculated based on cost, less their estimated residual value, if any, using the straight-line method over estimated useful life from 3 years to 10 years. Any change of the depreciation accounting policy or impairment of our property may affect our operating results.
Prevailing salary levels. Our cost of revenues is impacted by prevailing salary levels. Although we have not been subject to significant wage inflation in Taiwan, a significant increase in the market rate for wages could harm our operating results and our operating margin. Our ability to attract, retain, and expand our senior management and our professional and technical staff is an important factor in determining our future success. The market for qualified scientists and researchers is competitive. From time to time, it may be difficult to attract and retain qualified individuals with the required expertise at a fair wage. An increase in compensation of our scientists and researchers may increase our operating cost.
5.B. Liquidity and Capital Resources.
Other than our growing experience and skills in Cattle camphor mushroom products and the growing demand for our products and services for the domestic and oversea markets, both of which we believe may increase our liquidity if they continue, we are not aware of any trends or any demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way.
For 2026, we expect our main growth will be from our products sales in Taiwan. The demand for our products and services appears to be strengthening, from which we expect to generate more positive cash flow.
Our long-term future capital requirements will depend on many factors, including our level of revenue, the timing and extent of our spending to support the maintenance and growth of our operations, the expansion of our sales and the continued market acceptance of our products and services.
26
Working Capital Summary
| December 31, 2025 | December 31, 2024 | |||||||
| Current assets | $ | 997,742 | $ | 601,602 | ||||
| Current liabilities | 5,192,062 | 4,986,645 | ||||||
| Working capital | $ | (4,194,320 | ) | $ | (4,385,043 | ) | ||
| Total deficit | $ | (534,551 | ) | $ | (375,543 | ) | ||
As of December 31, 2025, we had $997,742 in current assets, $5,192,062 in current liabilities, and a working capital deficit of $4,194,320. In addition, we had total shareholders’ deficit of $534,551 as of December 31, 2025.
As of December 31, 2024, we had $601,602 in current assets, $4,986,645 in current liabilities, and a working capital deficit of $4,385,043. In addition, we had total shareholders’ deficit of $375,543 as of December 31, 2024.
Both 2025 and 2024 had negative working capital, mainly because of a cultivation facilities purchase agreement signed in 2023. The agreement required batch deliveries in 2023 and 2024, which led to a substantial rise in payables. Since these payables were not fully paid off by 2025, working capital stayed negative.
Cash flows
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Net cash provided by (used in) operating activities from continuing operations | $ | (35,845 | ) | $ | 312,006 | $ | 321,833 | |||||
| Net cash provided by operating activities from discontinued operations | - | - | 37,891 | |||||||||
| Net cash used in investing activities from continuing operations | - | (305,637 | ) | (319,487 | ) | |||||||
| Net cash used in investing activities from discontinued operations | - | - | (333 | ) | ||||||||
| Net cash provided by financing activities from continuing operations | - | - | 14,643 | |||||||||
| Net cash used in financing activities from discontinued operations | - | - | (46,851 | ) | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | 1,760 | 7,811 | (692 | ) | ||||||||
| Net increase (decrease) in cash and cash equivalents | $ | (34,085 | ) | $ | 14,180 | $ | 7,004 | |||||
Operating activities:
For the year ended December 31, 2025, we had net cash used in operating activities of $35,845. This resulted primarily from $135,243 in depreciation, $74,017 in amortization, $91,310 in operating lease expense, a $320,821 decrease in consumptive biological assets, a $77,007 increase in accounts payable, and a $51,526 increase in accrued expenses, partially offset by a $358,549 increase in inventories, a $134,541 increase in other assets, a $59,962 increase in other payable, and $91,539 in operating lease liabilities.
Although we incurred a net loss for the year ended December 31, 2024, we had net cash flow of $312,006 provided by operating activities for the year ended December 31, 2024, which mainly resulted from our property depreciation of $407,265, operating lease expense in the amount of $90,609, an increase of $104,608 in accounts payable, an increase of $193,434 in due to related parties, and an increase of $89,329 in other payable, offset by an increase in consumptive biological assets $124,572 and an increase in prepaid taxes of $103,847.
27
We had net cash flow of $359,724 provided by operating activities for the year ended December 31, 2023. which mainly resulted from our net income of $169,285, property depreciation of $56,757, operating lease expense in the amount of $81,203, an increase of $182,849 in accounts payable, and the cash flow provided by discontinued operation of $37,891, offset by an increase in consumptive biological assets of $192,634 due to the increase in sales and payment for operating lease liability of $80,540.
Investing activities:
For the year ended December 31, 2025, there were no cash flows arising from investing activities.
We had net cash flow of $305,637 used in investing activities for the year ended December 31, 2024, primarily attributable to the cash outflow of $349,237 for purchasing property and equipment and proceeds from disposal of fixed asset of $43,600.
We had net cash flow of $319,820 used in investment activities for the year ended December 31, 2023, primarily due to the cash outflow of $319,487 for purchasing property and equipment and the cash used in discontinued operation of $333.
Financing activities:
For the years ended December 31, 2025 and 2024, there were no cash flows arising from financing activities.
We had a negative cash flow from financing activity of $32,208 during the year ended December 31, 2023. Which proceeds from related party of $14,643, offset by cash used in discontinued operations of $46,851.
The Company currently plans to satisfy its cash requirements for the next 12 months through earning and borrowings from its related parties or companies affiliated with its related parties and believes it can satisfy its cash requirements so long as it is able to obtain financing from these affiliated parties. The Company expects that money earned and borrowed will be used during the next 12 months to satisfy the Company’s operating costs, professional fees and for general corporate purposes. There is no written funding agreement between the Company and its related parties.
Off-Balance Sheet Commitments and Arrangements
As of December 31, 2025, 2024, and 2023, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.
Contractual Obligations and Commitments
As of December 31, 2025, 2024, and 2023, we did not have any contractual obligations.
5.E. Critical Accounting Policies.
Our significant accounting policies are described in the notes to our financial statements for the years ended December 31, 2025, 2024, and 2023, and are included elsewhere in this annual statement.
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Item 6. Directors, Senior Management and Employees
6.A. Directors and Senior Management
The following table provides information regarding our executive officer and director as of the date hereof:
| Name | Age | Position(s) | ||
| Szu Hao Huang | 46 | Director, CEO and CFO | ||
| Yenhung Liu | 54 | Director |
The following is a brief biography of our director and executive officer:
Szu Hao Huang
Mr. Huang has served as our Director, CEO and CFO since May 2020. From May 2018 to May 2020, he was the Vice President of Overseas Business Department of Zhonghe Sunshine Asset Management Co., Ltd., during this period he was responsible for overseas market business development. From January 2015 to January 2018, Mr. Huang served as the CEO of Mega Sun Bio-medical Co., Ltd., where he was in charge of corporate governance and business operations. During this time, he led the company to expand its business overseas and led the research and development of the main product “Negative Hydrogen Smart Water Purification System,” which has obtained the patent in Germany, Japan, China and Taiwan, and was awarded seven invention awards in 2015 and 2016 from four major invention exhibitions in the world. From November 2013 to November 2014, Mr. Huang served as the general manager of the well-known Taiwanese beverage brand “Tiger Yazi” Aerobic Life Co., Ltd. for 30 years, where he was mainly responsible for operation management and business marketing. During the time, he successfully improved the company’s operating strategy and increased the company’s performance by 300%. Mr. Huang acquired his bachelor’s degree in civil engineering from Tungnan University in 1999 in Taiwan.
Yenhung Liu
Mr. Yenhung Liu has been our Director since July 2022. From June 2020 to July 2022, he was the Chief Technology Officer of Chengdu Skyherb. From July 2017 to June 2020, he served as the Technical advisor of Taiwan Metcon Co., Ltd. From May 2014 to July 2017, he was the General Manager of Eric Biotechnology Co., Ltd and was mainly responsible for the research and development of new technology in biochemical products. Prior to that, he served as the Manager of Yongxu Biotechnology Co., Ltd and was responsible for the R & D and production of herbal products imported from India. He earned his Bachelor degree in Electronics Engineering from the St John’s University of Taipei, Taiwan in 1993.
Family Relationships
None of the director or executive officer has a family relationship as defined in Item 401 of Regulation S-K.
6.B. Compensation
Employment Agreement and Offer Letter
On May 6, 2020, we entered into an employment agreement with Szu Hao Huang, our CEO, CFO and director. The agreement provides a term from May 6, 2020 to December 31, 2025 and did not provide for compensation. Pursuant to the employment agreement, Szu Hao Huang will not receive any compensation.
On July 1, 2022, Yenhung Liu, a director, has received and signed the offer letter provided by us. The term shall continue until his successor is duly elected and qualified. The Board may terminate the position as a director for any or no reason. The position shall be up for re-appointment every year by the board of directors of the Company. The offer letter did not provide compensation.
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Compensation of Director and Executive Officer
For the fiscal year ended December 31, 2025, 2024, and 2023, we paid $34,644, $33,634 and $25,502 as compensation to our CEO, CFO and Directors.
Clawback Policy adopted by the Board
On November 30, 2023, the Board adopted an Executive Compensation Recovery Policy (the “Clawback Policy”) providing for the recovery of certain incentive-based compensation from current and former executive officers of the Company in the event the Company is required to restate any of its financial statements filed with the SEC under the Exchange Act in order to correct an error that is material to the previously-issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. Adoption of the Clawback Policy was mandated by new Nasdaq listing standards introduced pursuant to Exchange Act Rule 10D-1. The Clawback Policy is in addition to Section 304 of the Sarbanes-Oxley Act of 2002 which permits the SEC to order the disgorgement of bonuses and incentive-based compensation earned by a registrant issuer’s chief executive officer and chief financial officer in the year following the filing of any financial statement that the issuer is required to restate because of misconduct, and the reimbursement of those funds to the issuer. A copy of the Clawback Policy has been filed herewith as Exhibit 97.1.
6.C. Board Practices
Board Committees
We currently have two directors, Szu Hao Huang and Yenhung Liu, therefore we have not established any committees, including an audit committee, a compensation committee, a nominating committee or any committee performing a similar function. The functions of those committees are being undertaken by the directors.
Terms of Directors and Officers
Directors hold office until the next annual meeting of the Board or until his successors have been duly elected and qualified. Officer is elected by the Board and his term of office is, except to the extent governed by employment contract, at the discretion of the Board.
Involvement in Certain Legal Proceedings
To the best of our knowledge, our directors or executive officer has not, during the past ten years:
| ● | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| ● | had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which such person was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; |
| ● | been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, by any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; |
| ● | been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
| ● | been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
| ● | been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self- regulatory organization (as defined in Section 3(a) (26) of the Exchange Act), any registered entity (as defined in Section 1(a) (29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Code of Conduct and Ethics
We have adopted a code of business conduct and ethics that applies to our directors, officer and all employees.
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6.D. Employees
As of the date of this annual report, we have 16 full time employees on our payroll, among which 2 are in general administration, 2 are in accounting, 2 are in operation management, and 10 are in sales and marketing.
Our employees are not represented by a labor organization or covered by a collective bargaining agreement. We believe that we maintain a good working relationship with our employees, and we have not experienced any major labor disputes.
6.E. Share Ownership
The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our ordinary shares as of the date of this annual report, and as adjusted to reflect the sale of the ordinary shares offered in this offering for
| ● | each director and executive officer who beneficially owns our ordinary shares; and |
| ● | each person known to us to own beneficially more than 5.0% of our ordinary shares. |
Beneficial ownership includes voting or investment power with respect to the securities. Except as indicated below, the persons named in the table have sole voting and investment power with respect to all ordinary shares shown as beneficially owned by them. Percentage of beneficial ownership of each listed person prior to this offering is based on 111,120,000 ordinary shares issued and outstanding as of the date of this annual report.
Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of 5% or more of our ordinary shares. Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power with respect to securities. In computing the number of ordinary shares beneficially owned by a person listed below and the percentage ownership of such person, ordinary shares’ underlying options, warrants or convertible securities held by each such person that are exercisable or convertible within 60 days of the date of this annual report are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. Except as otherwise indicated in the footnotes to this table, all persons listed have sole voting and investment power for all ordinary shares shown as beneficially owned by them. As of the date of this annual report, we have a total of 92 shareholders of record, 4 of which hold beneficial ownership of 5% or more, and none of which is located in the United States.
| Amount and Nature of Beneficial Ownership | Percentage of Outstanding Shares | |||||||
| Number | Percent | |||||||
| Director and Executive Officer: | ||||||||
| Szu Hao Huang(1) | 65,847,400 | 59.3 | % | |||||
| Yenhung Liu(1) | 0 | 0 | % | |||||
| 5% Shareholder: | ||||||||
| Dalan Vincent Holdings Limited(1) | 65,847,400 | 59.3 | % | |||||
| AJRD Holdings Limited(2) | 19,999,000 | 18 | % | |||||
| Silver Spring Asia Holdings Limited(3) | 7,000,000 | 6.3 | % | |||||
| (1) | Dalan Vincent Holdings Limited is a company incorporated in the British Virgin Islands. Szu Hao Huang owns 50% of the equity interest in Dalan Vincent Holdings Limited. Yen Hung Liu holds 50% of the equity interest in Dalan Vincent Holdings Limited. According to the acting-in-concert agreement between Szu Hao Huang and Yen Hung Liu dated September 30, 2021, Mr. Huang has the power to direct the voting and disposition of the ordinary shares held by Dalan Vincent Holdings Limited. |
| (2) | Shih Han Huang beneficially owns 19,999,000 ordinary shares indirectly through AJRD Holdings Limited, a company incorporated under the laws of the British Virgin Islands and of which Ms. Huang has voting and dispositive control. |
| (3) | Hsiao Ling Lee beneficially owns 7,000,000 ordinary shares indirectly through Silver Spring Asia Holdings Limited, a company incorporated under the laws of the British Virgin Islands and of which Ms. Lee has voting and dispositive control. |
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Item 7. Major Shareholders and Related Party Transactions
7.A. Major Shareholders
Please refer to “Item 6. Directors, Senior Management and Employees - 6.E. Share Ownership.”
7.B. Related Party Transactions
Terms of Directors and Officers
See “Item 6. Directors, Senior Management and Employees-6.C. Board Practices-Terms of Directors and Officers.”
Employment Agreements and Indemnification Agreements
See “Item 6. Directors, Senior Management and Employees-6.B. Compensation-Employment Agreements.”
Other Related Party Transactions
The Company had transactions with the following related parties:
| Name of Related Party | Nature of Relationship | |
| Mr. Szu Hao Huang | Director, Chief Executive Officer (“CEO”) | |
| Mr. Yenhung Liu | Director of the Company | |
| Chengdu Zhonghe sunshine Biotechnology Co., Ltd (“Chengdu Zhonghe”) | A company whose legal representative is Mr. Yenhung Liu | |
| Gasar Biotechnology Co., Ltd | A company managed by Mr. Szu Hao Huang | |
| Dalan Vincent Holdings Limited | A company managed by Mr. Szu Hao Huang |
| (1) | Due to related parties |
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Mr. Szu Hao Huang | $ | 140,140 | $ | 119,889 | ||||
| Dalan Vincent Holdings Limited | 99,975 | 99,975 | ||||||
| Total | $ | 240,115 | $ | 219,864 | ||||
The amounts of due to related parties described above were for working capital purposes, payable on demand, and bear no interest.
| (2) | Sales to related parties |
| Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Gasar Biotechnology Co., Ltd. | $ | 175,405 | $ | 52,943 | $ | 126,856 | ||||||
Item 8. Financial Information
A. Consolidated Statements and Other Financial Information
Please refer to “Item 18. Financial Statements.”
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Legal and Administrative Proceedings
We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business. As of the date hereof, neither we nor any of our subsidiaries is a party to any pending legal proceedings, nor are we aware of any such proceedings threatened against us or our subsidiaries.
Dividend Policy
We have not declared or paid any dividends on our ordinary shares since our inception, and have no current plans to pay dividends on our ordinary shares. The declaration and payment of future dividends to holders of our ordinary shares will be at the discretion of our director and will depend upon many factors, including our financial condition, earnings, legal requirements, restrictions in our debt agreements and other factors deemed relevant by our director. In addition, as a holding company, our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of the laws of their respective jurisdictions of organization, agreements of our subsidiaries, or covenants of future indebtedness that we or they may incur. We do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our ordinary shares for return on your investment.
8.B. Significant Changes
Except as otherwise disclosed in this report, we have not experienced any significant changes since the date of our audited consolidated financial statements included herein.
Item 9. The Offer and Listing
9.A. Offer and listing details
Not applicable for annual reports on Form 20-F.
9.B. Plan of distribution
Not applicable for annual reports on Form 20-F.
9.C. Markets
None.
9.D. Selling shareholders
Not applicable for annual reports on Form 20-F.
9.E. Dilution
Not applicable for annual reports on Form 20-F.
9.F. Expenses of the issue
Not applicable for annual reports on Form 20-F.
Item 10. Additional Information
10.A. Share capital
Not applicable for annual reports on Form 20-F.
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10.B. Memorandum and articles of association
General
We are authorized by our Memorandum and Articles of Association to issue an aggregate of 500,000,000 ordinary shares, par value $0.0001 per share, of which 111,120,000 were issued and outstanding as of the date of this annual report.
This annual report contains only a summary of the terms of the ordinary shares the Selling Shareholders are offering and is subject to, and qualified in its entirety by reference to, the terms and provisions of our Memorandum and Articles of Association. They do not purport to be complete. You should refer to, and read this summary together with, our Memorandum and Articles of Association to review all of the terms of our ordinary shares that may be important to you. Reference is made to our memorandum and articles of association, a copy of which is filed as an exhibit to the annual report (and which is referred to in this section as, respectively, the “memorandum” and the “articles”).
Ordinary Share
Shareholders’ voting rights
Any action required or permitted to be taken by the shareholders must be taken at a duly called meeting of the shareholders entitled to vote on such action. At each meeting of shareholders, each shareholder who is present in person or by proxy (or, in the case of a shareholder being a corporation, by its duly authorized representative) will have one vote for each ordinary share. An action that may be taken by the shareholders at a meeting may also be taken by a resolution of shareholders consented to in writing.
Election of directors
The Company may by ordinary resolution appoint any person to be a Director. Delaware law permits cumulative voting for the election of directors only if expressly authorized in the certificate of incorporation. The laws of the Cayman Islands do not specifically prohibit or restrict the creation of cumulative voting rights for the election of directors. Cumulative voting is not a concept that is accepted as a common practice in the Cayman Islands, and we have made no provisions in our Memorandum and Articles of Association to allow cumulative voting for elections of directors. A Director shall hold office until such time as he is removed from office by the Company.
Meetings of shareholders
Our directors may convene a meeting of shareholders at any time and in any manner and place the director considers necessary or desirable. The director convening a meeting must not give less than seven days’ notice of the meeting to those shareholders whose names appear as shareholders in the register of shareholders on the date of the notice and who are entitled to vote at the meeting, and to the other directors. The Directors shall convene a meeting of shareholders upon the written requisition of any shareholders entitled to attend and vote at general meeting of the Company who hold not less than 10 percent of the paid up voting share capital of the Company.
No business shall be transacted at any general meeting unless a quorum is present at the time when the meeting proceeds to business. A quorum shall consist of one or more shareholders present in person or by proxy holding at least a majority of the paid up voting share capital of the Company. If the Company has only one shareholder, that only shareholder present in person or by proxy shall be a quorum for all purposes. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be dissolved. In any other case it shall stand adjourned to the same day in the next week, at the same time and place or to such other day and at such other time and place as the Directors may decide, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the shareholder or shareholders present and entitled to vote shall be a quorum.
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Meetings of directors
Our business and affairs are managed by our board of directors, who will make decisions by voting on resolutions of directors. Our directors are free to meet at such times and in such manner and places within or outside the Cayman Islands as the directors determine to be necessary or desirable. A Director may at any time summon a meeting of the Directors. The quorum necessary for the transaction of the business may be fixed by the Directors, and unless so fixed, if there be more than two Directors shall be two, and if there be two or less Directors shall be one. A Director represented by proxy or by an alternate Director at any meeting shall be deemed to be present for the purposes of determining whether or not a quorum is present. An action that may be taken by the directors at a meeting may also be taken by a resolution of directors consented to
in writing by a majority of the directors.
Pre-emptive rights
There are no pre-emptive rights applicable to the issue by us of new ordinary shares under either Cayman Islands law or our Memorandum and Articles of Association.
Transfer of Ordinary Shares
Subject to the restrictions in our Memorandum and Articles of Association and applicable securities laws, any of our shareholders may transfer all or any ordinary shares by written instrument of transfer signed by the transferor. The transferor shall be deemed to remain a holder of the share until the name of the transferee is entered in the Register of Members. The Directors may in their absolute discretion to decline to register any transfer of any share, whether or not it is a fully paid share, without assigning any reason for so doing. If the Directors refuse to register a transfer, they shall within 2 months of the date on which the transfer was lodged with the Company send to the transferor and transferee notice of the refusal.
Liquidation
If the Company shall be wound up, and the assets available for distribution among the shareholders as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the shareholders in proportion to the capital paid-up, or which ought to have been paid-up, at the commencement of the winding up on the shares held by them respectively. If on a winding up the assets available for distribution among the shareholders shall be more than sufficient to repay the whole of the capital paid-up at the commencement of the winding up, the excess shall be distributed among the shareholders in proportion to the capital paid up at the commencement of the winding up on the shares held by them respectively.
Calls on ordinary shares and forfeiture of ordinary shares
Our directors may from time to time make calls upon shareholders for any amounts unpaid on their ordinary shares in a notice served to such shareholders at least 14 days prior to the specified date of payment. When such a notice has been issued and its requirements have not been complied with, the directors may, at any time before the tender of payment, forfeit and cancel the ordinary shares to which the notice relates.
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Issuance of ordinary shares
Our directors may authorize the issuance of shares at such times, to such persons, for such consideration and on such terms as they may determine by a resolution of the directors, subject to the Companies Act (As Revised) of the Cayman Islands, our Memorandum and Articles of Association and any applicable requirements imposed from time to time by the SEC, the FINRA, any stock exchange or the over-the-counter market on which our securities are listed.
Inspection of books and records
Holders of our ordinary shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records (apart from our memorandum and articles of association, special resolutions and the register of mortgages and charges). See “Where You Can Find More Information.”
Rights of non-resident or foreign shareholders
There are no limitations imposed by our Memorandum and Articles of Association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our Memorandum and Articles of Association governing the ownership threshold above which shareholder ownership must be disclosed.
10.C. Material contracts
Other than those described in this annual report, we have not entered into any material agreements other than in the ordinary course of business.
10.D. Exchange controls
The Cayman Islands currently has no exchange control regulations or currency restrictions.
Foreign exchange regulation in Taiwan is primarily governed by the Foreign Exchange Regulation Act (the “FECA”). Under the FECA, foreign exchange refers to foreign currency, bills and marketable securities. The authority managing the administration of foreign exchange is Ministry of Finance of Republic of China, while the authority managing the practical operation of foreign exchange business is Central Bank of Republic of China. The FECA also specifies the allocated power of Ministry of Finance and Central Bank, respectively. To the extent that any foreign exchange receipts, payments or transactions reaches the threshold of $15,939 (NT$500,000) or equivalent in foreign currency, it must be reported to the Central Bank or its designated authorities. Upon incurrence of any of the following events, the Executive Yuan of Republic of China may determine and announce that for a period of time, to close the foreign exchange market, suspend or restrict all or partial foreign exchange payment, order a mandatory sale or deposit of all or partial foreign exchange into a designed bank, or dispose in any other manner as it deems necessary:
| - | When the domestic or foreign economic disorder might endanger the stability of the domestic economy; or |
| - | When the Republic of China’s balance of payments suffers a severe deficit. |
10.E. Taxation
Cayman Islands Taxation
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands, except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the Cayman Islands. The Cayman Islands is a party to a double tax arrangement entered with the United Kingdom in 2010, but otherwise is not party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.
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As an exempted company incorporated in the Cayman Islands, the Company is required to pay an annual government fee (“Government Fee”), which is determined on a sliding scale by reference to the level of its authorized share capital. The Government Fee is payable at the end of January in every year and is based on the level of the authorized share capital at the time when the fee is due.
Payments of dividends and capital in respect of our Ordinary Shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our Ordinary Shares, nor will gains derived from the disposal of our Ordinary Shares be subject to Cayman Islands income or corporation tax.
No stamp duty is payable in the Cayman Islands in respect of the issue of the shares or on an instrument of transfer in respect of a share of a Cayman company except those which hold interests in land in the Cayman Islands and except where the relevant document or instrument is executed in or brought to the Cayman Islands, or produced before a Cayman Islands court.
Taiwan Taxation
The current principal regulations governing tax in Taiwan include the following:
| - | Income Tax Act; |
| - | The Implementation Rules of Income Tax Act; |
| - | Value-Added and Non-Value-Added Business Tax Act; and |
| - | The Implementation Rules of Value-Added And Non-Value-Added Business Tax Act,. |
Under the Income Tax Act, there are two kinds of income tax, individual income tax and profit-seeking enterprise income tax, respectively.
For any individual having income from sources in the Taiwan, the individual income tax shall be levied in accordance with this Act on his income derived from sources in the Taiwan.; Unless otherwise provided in this Act, in the case of an individual who is a nonresident in the Taiwan but who has derived income from sources in the Taiwan, income tax payable by him on all such income shall be withheld and paid at the respective sources.
The enterprise with head office located in Taiwan shall pay profit-seeking income tax on its global income both within and outside Taiwan; while the enterprises with head office outside Taiwan shall only pay profit-seeking income tax on its business income sourced from within Taiwan. With respect to enterprise operating for profit, the exemption threshold is NT$120,000 ($3,825). Any income beyond such exemption threshold is subject to 20% tax rate on its taxable income.
Sale of goods or service, import of goods in Taiwan shall be subject to Value-Added or Non-Value-Added Business Tax. Rate of business tax. The rate of business tax, except as otherwise prescribed by Value-added and Non-value-added Business Tax Act, ranges from 5% to 10% with the current tax rate being implemented is 5% as determined by the Executive Yuan of Taiwan.
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United States Federal Income Tax Considerations
The following discussion is a summary of United States federal income tax considerations relating to the ownership and disposition of our Ordinary Shares by a U.S. holder (as defined below) that holds our Ordinary Shares as “capital assets” (generally, property held for investment) under the United States Internal Revenue Code of 1986, as amended (the “Code”). This discussion is based upon existing United States federal income tax law, which is subject to differing interpretations and may be changed, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service (the “IRS”) with respect to any United States federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary position. This discussion does not address all aspects of United States federal income taxation that may be important to particular investors in light of their individual circumstances, including investors subject to special tax rules (for example, banks or other financial institutions, insurance companies, broker-dealers, pension plans, cooperatives, traders in securities that have elected the mark-to-market method of accounting for their securities, partnerships and their partners, regulated investment companies, real estate investment trusts, and tax-exempt organizations (including private foundations)), holders who are not U.S. holders, holders who own (directly, indirectly, or constructively) 10% or more of our voting stock, holders who will hold their Ordinary Shares as part of a straddle, hedge, conversion, constructive sale, or other integrated transaction for United States federal income tax purposes, or investors that have a functional currency other than the United States dollar, all of whom may be subject to tax rules that differ significantly from those summarized below. In addition, this discussion does not discuss any non-United States, alternative minimum tax, state, or local tax considerations, or the Medicare tax on net investment income. Each U.S. holder is urged to consult its tax advisors regarding the United States federal, state, local, and non-United States income and other tax considerations with respect to the ownership and disposition of our Ordinary Shares.
General
For purposes of this discussion, a “U.S. holder” is a beneficial owner of our Ordinary Shares that is, for United States federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for United States federal income tax purposes) created in, or organized under the laws of, the United States or any state thereof or the District of Columbia, (iii) an estate the income of which is subject to United States federal income taxation regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise elected to be treated as a United States person under applicable United States Treasury regulations.
If a partnership (or other entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of our Ordinary Shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding our Ordinary Shares and partners in such partnerships are urged to consult their tax advisors as to the particular United States federal income tax consequences of an investment in our Ordinary Shares.
Passive Foreign Investment Company Considerations
A non-United States corporation, such as our company, will be a “passive foreign investment company,” or “PFIC,” for United States federal income tax purposes, if, in any particular taxable year, either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the average quarterly value of its assets (as determined on the basis of fair market value) during such year produce or are held for the production of passive income. For this purpose, cash is categorized as a passive asset and the company’s unbooked intangibles associated with active business activities may generally be classified as active assets. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock.
Based upon our income and assets and the value of our Ordinary Shares, we do not believe that we were a PFIC for the taxable years ended December 31, 2025 and 2024, and do not anticipate becoming a PFIC in the foreseeable future.
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Although we do not believe that we were a PFIC for the taxable year ended December 31, 2025 and 2024 and do not anticipate becoming a PFIC in the foreseeable future, the determination of whether we are or will become a PFIC will depend in part upon the value of our goodwill and other unbooked intangibles (which will depend upon the market value of our Ordinary Shares from time-to-time, which may be volatile). In estimating the value of our goodwill and other unbooked intangibles, we have taken into account our market capitalization. Among other matters, if our market capitalization is less than anticipated or subsequently declines, we may be or become a PFIC for the current or future taxable years. It is also possible that the IRS may challenge our classification or valuation of our goodwill and other unbooked intangibles, which may result in our company being or becoming a PFIC for the current or one or more future taxable years.
The determination of whether we will be or become a PFIC will also depend, in part, on the composition of our income and assets, which may be affected by how, and how quickly, we use our liquid assets and the cash raised in our initial public offering. If we determine not to deploy significant amounts of cash for active purposes, our risk of being classified as a PFIC may substantially increase. Because our PFIC status for any taxable year is a factual determination that can be made only after the close of a taxable year, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year. If we are a PFIC for any year during which a U.S. holder held our Ordinary Shares, we generally would continue to be treated as a PFIC for all succeeding years during which such U.S. holder held our Ordinary Shares.
The discussion below under “Dividends” and “Sale or Other Disposition of Ordinary Shares” is written on the basis that we will not be or become a PFIC for United States federal income tax purposes. The United States federal income tax rules that apply if we are a PFIC for the current taxable year or any subsequent taxable year are generally discussed below under “Passive Foreign Investment Company Rules.”
Dividends
Subject to the PFIC rules discussed below, any cash distributions (including the amount of any tax withheld) paid on our Ordinary Shares out of our current or accumulated earnings and profits, as determined under United States federal income tax principles, will generally be includible in the gross income of a U.S. holder as dividend income on the day actually or constructively received by the U.S. holder. Because we do not intend to determine our earnings and profits on the basis of United States federal income tax principles, any distribution paid will generally be reported as a “dividend” for United States federal income tax purposes. A non-corporate recipient of dividend income will generally be subject to tax on dividend income from a “qualified foreign corporation” at a reduced United States federal tax rate rather than the marginal tax rates generally applicable to ordinary income provided that certain holding period requirements are met.
A non-United States corporation (other than a corporation that is a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) will generally be considered to be a qualified foreign corporation (a) if it is eligible for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange of information program, or (b) with respect to any dividend it pays on stock which is readily tradable on an established securities market in the United States. In the event we are deemed to be a resident enterprise under the PRC Enterprise Income Tax Law, we may be eligible for the benefits of the United States.
Dividends will generally be treated as income from foreign sources for United States foreign tax credit purposes and will generally constitute passive category income.
Sale or Other Disposition of Ordinary Shares
Subject to the PFIC rules discussed below, a U.S. holder will generally recognize capital gain or loss upon the sale or other disposition of Ordinary Shares in an amount equal to the difference between the amount realized upon the disposition and the U.S. holder’s adjusted tax basis in such ordinary shares. Any capital gain or loss will be long-term if the Ordinary Shares have been held for more than one year and will generally be United States source gain or loss for United States foreign tax credit purposes. Long-term capital gain of non-corporate U.S. holders is generally eligible for a reduced rate of taxation. The deductibility of a capital loss may be subject to limitations.
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Passive Foreign Investment Company Rules
If we are a PFIC for any taxable year during which a U.S. holder holds our Ordinary Shares, and unless the U.S. holder makes a mark-to-market election (as described below), the U.S. holder will generally be subject to special tax rules that have a penalizing effect, regardless of whether we remain a PFIC, for subsequent taxable years, on (i) any excess distribution that we make to the U.S. holder (which generally means any distribution paid during a taxable year to a U.S. holder that is greater than 125% of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. holder’s holding period for the Ordinary Shares), and (ii) any gain realized on the sale or other disposition, including, under certain circumstances, a pledge, of Ordinary Shares. Under the PFIC rules:
| ● | such excess distribution and/or gain will be allocated ratably over the U.S. holder’s holding period for the Ordinary Shares; |
| ● | such amount allocated to the current taxable year and any taxable years in the U.S. holder’s holding period prior to the first taxable year in which we are a PFIC, or pre-PFIC year, will be taxable as ordinary income; |
| ● | such amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for that year; and |
| ● | an interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year. |
If we are a PFIC for any taxable year during which a U.S. holder holds our Ordinary Shares and any of our non-United States subsidiaries is also a PFIC, such U.S. holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. U.S. holders are advised to consult their tax advisors regarding the application of the PFIC rules to any of our subsidiaries.
As an alternative to the foregoing rules, a U.S. holder of “marketable stock” in a PFIC may make a mark-to-market election. Since our Ordinary Shares have been approved for listing on Nasdaq, and provided that the Ordinary Shares will be regularly traded on Nasdaq, a U.S. holder holds Ordinary Shares will be eligible to make a mark-to-market election if we are or were to become a PFIC. If a mark-to-market election is made, the U.S. holder will generally (i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of Ordinary Shares held at the end of the taxable year over the adjusted tax basis of such Ordinary Shares and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the Ordinary Shares over the fair market value of such Ordinary Shares held at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. The U.S. holder’s adjusted tax basis in the Ordinary Shares would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. holder makes an effective mark-to-market election, in each year that we are a PFIC, any gain recognized upon the sale or other disposition of the Ordinary Shares will be treated as ordinary income and loss will be treated as ordinary loss, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. If a U.S. holder makes a mark-to-market election it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the Ordinary Shares are no longer regularly traded on a qualified exchange or the Internal Revenue Service consents to the revocation of the election.
If a U.S. holder makes a mark-to-market election in respect of a PFIC and such corporation ceases to be a PFIC, the U.S. holder will not be required to take into account the mark-to-market gain or loss described above during any period that such corporation is not a PFIC.
Because a mark-to-market election cannot be made for any lower-tier PFICs that a PFIC may own, a U.S. holder who makes a mark-to-market election with respect to our Ordinary Shares may continue to be subject to the general PFIC rules with respect to such U.S. holder’s indirect interest in any of our non-United States subsidiaries if any of them is a PFIC.
We do not intend to provide information necessary for U.S. holders to make qualified electing fund elections, which, if available, would result in tax treatment different from the general tax treatment for PFICs described above.
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As discussed above under “Dividends,” dividends that we pay on our Ordinary Shares will not be eligible for the reduced tax rate that applies to qualified dividend income if we are a PFIC for the taxable year in which the dividend is paid or the preceding taxable year. In addition, if a U.S. holder owns our Ordinary Shares during any taxable year that we are a PFIC, such holder would generally be required to file an annual IRS Form 8621. Each U.S. holder is advised to consult its tax advisors regarding the potential tax consequences to such holder if we are or become a PFIC, including the possibility of making a mark-to-market election.
Information Reporting
Certain U.S. holders may be required to report information to the IRS relating to an interest in “specified foreign financial assets,” including shares issued by a non-United States corporation, for any year in which the aggregate value of all specified foreign financial assets exceeds US$50,000 (or a higher dollar amount prescribed by the IRS), subject to certain exceptions (including an exception for shares held in custodial accounts maintained with a United States financial institution). These rules also impose penalties if a U.S. holder is required to submit such information to the IRS and fails to do so.
In addition, U.S. holders may be subject to information reporting to the IRS with respect to dividends on and proceeds from the sale or other disposition of our Ordinary Shares. Each U.S. holder is advised to consult with its tax advisor regarding the application of the United States information reporting rules to their particular circumstances.
10.F. Dividends and paying agents
Not applicable for annual reports on Form 20-F.
10.G. Statement by experts
Not applicable for annual reports on Form 20-F.
10.H. Documents on display
We are subject to the information requirements of the Exchange Act. In accordance with these requirements, the Company files reports and other information with the SEC. You may read and copy any materials filed with the SEC at the Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site at http://www.sec.gov that contains reports and other information regarding registrants that file electronically with the SEC.
10.I. Subsidiary Information
Not applicable.
10.J. Annual Report to Security Holders
Not applicable.
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Item 11. Quantitative and Qualitative Disclosures About Market Risk
Foreign Exchange Risk
Some of our revenues and expenses are denominated some are in NTD. In our consolidated financial statements, our financial information that uses NTD as the functional currency has been translated into U.S. dollars. 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.
Inflation Risk
We are also exposed to inflation risk. Inflationary factors, such as increases in labor costs, could impair our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and operating expenses.
Item 12. Description of Securities Other than Equity Securities
12.A. Debt Securities
Not applicable.
12.B. Warrants and Rights
Not applicable.
12.C. Other Securities
Not applicable.
12.D. American Depositary Shares
Not applicable.
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PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
We do not have any material defaults in the payment of principal, interest, or any installments under a sinking or purchase fund.
Item 14. Material Modifications to the Rights of Securities Holders and Use of Proceeds
14.A. - 14.D. Material Modifications to the Rights of Security Holders
See “Item 10. Additional Information - B. Memorandum and Articles of Association” for a description of the rights of securities holders.
14.E. Use of Proceeds
Not applicable for annual reports on Form 20-F.
Item 15. Controls and Procedures
(a) 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 in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report, as required by Rule 13a-15(b) under the Exchange Act.
Based upon that evaluation, our management has concluded that, as of December 31, 2025, our disclosure controls and procedures were ineffective as our management has identified a material weakness that has been identified related to our lack of sufficient financial reporting and accounting personnel with appropriate knowledge of the generally accepted accounting principles in the United States (“U.S. GAAP”) and SEC reporting requirements to properly address complex U.S. GAAP accounting issues and to prepare and review our consolidated financial statements and related disclosures to fulfill U.S. GAAP and SEC financial reporting requirements. The other material weakness that has been identified related to our lack of comprehensive accounting policies and procedures manual in accordance with U.S. GAAP.
To remedy the identified material weaknesses, we expect to implement several measures to improve our internal control over financial reporting, including: (i) that we engaged experienced financial consultant who worked closely with our internal finance team to assist us in preparing our financial statements and related disclosures in accordance with U.S. GAAP; (ii) that our Chief Financial Officer received additional training in U.S. GAAP through self-study and webinar courses, and began to periodically review major accounting literature updates provided by a major accounting firm which provide an overview of recent U.S. accounting pronouncements. (iii) conducting regular and continuous U.S. GAAP training programs and webinars for our financial reporting and accounting personnel; (iv) improving financial oversight function for handling complex accounting issues under U.S. GAAP. However, the implementation of these measures may not fully address the deficiencies in our internal control over financial reporting. We are not able to estimate with reasonable certainty the costs that we will need to incur to implement these and other measures designed to improve our internal control over financial reporting.
Pursuant to the JOBS Act, we qualify as an “emerging growth company as we recorded revenues less than US$1.235 billion in our most recent fiscal year, which allows us to take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act, in the assessment of the emerging growth company’s internal control over financial reporting.
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Neither we nor our independent registered public accounting firm undertook a comprehensive assessment of our internal control under the Sarbanes-Oxley Act for purposes of identifying and reporting any weakness in our internal control over financial reporting, which, however, will be required once we become a public company and after we cease to be an “emerging growth company” as such term is defined in the JOBS Act. Had we performed a formal assessment of our internal control over financial reporting or had our independent registered public accounting firm performed an audit of our internal control over financial reporting, additional control deficiencies may have been identified.
(b) Management’s annual report on internal control over financial reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act. Our management evaluated the effectiveness of our internal control over financial reporting, as required by Rule 13a-15(c) of the Exchange Act, based on criteria established in the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that our internal control over financial reporting was not effective as of December 31, 2025 due to a material weakness identified in our internal control over financial reporting as described above.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness of our internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
(c) Attestation report of the registered public accounting firm.
Not applicable.
(d) Changes in internal control over financial reporting.
There have been no changes in our internal controls over financial reporting occurred during the fiscal year ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 16. [Reserved]
Item 16A. Audit Committee Financial Expert
Not applicable.
Item 16B. Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics that applies to the Company’s directors, officers, employees and advisors. The Code of Business Conduct and Ethics is attached as an exhibit to this annual report.
Item 16C. Principal Accountant Fees and Services
YCM CPA INC. was appointed by the Company to serve as its independent registered public accounting firm for fiscal year ended December 31, 2025. KCCW Accountancy Corp. was appointed by the Company to serve as its independent registered public accounting firm for fiscal years ended December 31, 2024 and 2023, and was terminated by the Company on November 10, 2025. Audit services provided by YCM CPA INC. for fiscal year ended December 31, 2025 included the examination of the consolidated financial statements of the Company.
44
Fees Paid to Independent Registered Public Accounting Firm
Auditor Fees
YCM CPA INC. is the independent registered certified public accounting firm to audit the books and accounts of our Company for the fiscal year ended December 31, 2025. KCCW Accountancy Corp. is the independent registered certified public accounting firm to audit the books and accounts of our Company for the fiscal years ended December 31, 2024 and 2023.
| Year Ended December 31, | ||||||||
| Services | 2025 | 2024 | ||||||
| US$ | US$ | |||||||
| Audit Fees (1) - YCM CPA INC. | 60,000 | - | ||||||
| Audit Fees (1) - KCCW Accountancy Corp. | - | 42,500 | ||||||
| Total | 60,000 | 42,500 | ||||||
Note 1: Audit fees include the aggregate fees billed in each of the fiscal years for professional services rendered by our independent registered public accounting firm 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.
Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not applicable.
Item 16F. Change in Registrant’s Certifying Accountant
November 2025 Change of Auditor
On November 10, 2025, the Company notified its independent registered public accounting firm KCCW Accountancy Corp its decision to dismiss KCCW Accountancy Corp as the Company’s auditor. The decision to change the independent registered public accounting firm was approved by the Board of Directors of the Company. During December 2, 2024 and through November 10. 2025, the date of dismissal, (a) there were no disagreements with KCCW Accountancy Corp on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KCCW Accountancy Corp, would have caused it to make reference thereto in its reports on the financial statements for such years and (b) there were no “reportable events” as described in Item 304(a)(1)(v) of Regulation S-K.
On November 15, 2025, the Board of Directors of the Company approved and ratified the appointment of YCM CPA INC. as its new independent registered public accounting firm to audit the Company’s financial statements, effective November 15, 2025. During the two most recent fiscal years ended December 31, 2024 and 2023 and any subsequent interim periods through the date hereof prior to the engagement of YCM CPA INC., neither the Company, nor someone on its behalf, has consulted YCM CPA INC. regarding: (i) either: the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and either a written report was provided to the Company or oral advice was provided that the new independent registered public accounting firm concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement as defined in paragraph 304(a)(1)(iv) of Regulation S-K or a reportable event as described in paragraph 304(a)(1)(v) of Regulation S-K.
December 2024 Change of Auditor
On December 2, 2024, Cordyceps Sunshine Biotech Holdings Co., Ltd. (the “Company”) notified its independent registered public accounting firm, TPS Thayer, LLC its decision to dismiss TPS Thayer, LLC as the Company’s auditor. The decision to change the independent registered public accounting firm was approved by the Board of Directors of the Company. During March 18, 2024 and through December 2, 2024, the date of dismissal, (a) there were no disagreements with TPS Thayer, LLC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of TPS Thayer, LLC, would have caused it to make reference thereto in its reports on the financial statements for such years and (b) there were no “reportable events” as described in Item 304(a)(1)(v) of Regulation S-K.
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On December 2, 2024, the Board of Directors of the Company approved and ratified the appointment of KCCW Accountancy Corp. as its new independent registered public accounting firm to audit the Company’s financial statements. During the two most recent fiscal years ended December 31, 2023 and 2022 and any subsequent interim periods through the date hereof prior to the engagement of KCCW Accountancy Corp., neither the Company, nor someone on its behalf, has consulted KCCW Accountancy Corp. regarding: (i) either: the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and either a written report was provided to the Company or oral advice was provided that the new independent registered public accounting firm concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement as defined in paragraph 304(a)(1)(iv) of Regulation S-K or a reportable event as described in paragraph 304(a)(1)(v) of Regulation S-K.
March 2024 Change of Auditor
On March 18, 2024, Cordyceps Sunshine Biotech Holdings Co., Ltd. (the “Company”) notified its independent registered public accounting firm, KCCW Accountancy Corp. its decision to dismiss KCCW Accountancy Corp. as the Company’s auditor. The decision to change the independent registered public accounting firm was approved by the Board of Directors of the Company. During September 28, 2023 and through March 18, 2024, the date of dismissal, (a) there were no disagreements with KCCW Accountancy Corp. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KCCW Accountancy Corp., would have caused it to make reference thereto in its reports on the financial statements for such years and (b) there were no “reportable events” as described in Item 304(a)(1)(v) of Regulation S-K.
On March 18, 2024, the Board of Directors of the Company approved and ratified the appointment of TPS Thayer, LLC as its new independent registered public accounting firm to audit the Company’s financial statements. During the two most recent fiscal years ended December 31, 2023 and 2022 and any subsequent interim periods through the date hereof prior to the engagement of TPS Thayer, LLC, neither the Company, nor someone on its behalf, has consulted TPS Thayer, LLC regarding: (i) either: the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and either a written report was provided to the Company or oral advice was provided that the new independent registered public accounting firm concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement as defined in paragraph 304(a)(1)(iv) of Regulation S-K or a reportable event as described in paragraph 304(a)(1)(v) of Regulation S-K.
September 2023 Change of Auditor
On September 28, 2023, Cordyceps Sunshine Biotech Holdings Co., Ltd. (the “Company”) notified its independent registered public accounting firm, Keith K Zhen CPA its decision to dismiss Keith K Zhen CPA as the Company’s auditor. The reports of Keith K Zhen CPA on the financial statements of the Company for the fiscal years ended December 31, 2022, 2021 and 2020 and the related statements of operations and comprehensive income (loss), changes in stockholders’ equity (deficit), and cash flows for the fiscal years ended December 31, 2022, 2021 and 2020 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. The decision to change the independent registered public accounting firm was approved by the Board of Directors of the Company. During the Company’s most recent fiscal year ended December 31, 2022 and through September 28, 2023, the date of dismissal, (a) there were no disagreements with Keith K Zhen CPA on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Keith K Zhen CPA, would have caused it to make reference thereto in its reports on the financial statements for such years and (b) there were no “reportable events” as described in Item 304(a)(1)(v) of Regulation S-K.
On September 28, 2023, the Board of Directors of the Company approved and ratified the appointment of KCCW Accountancy Corp. as its new independent registered public accounting firm to audit the Company’s financial statements. During the two most recent fiscal years ended December 31, 2022 and 2021 and any subsequent interim periods through the date hereof prior to the engagement of KCCW Accountancy Corp., neither the Company, nor someone on its behalf, has consulted KCCW Accountancy Corp. regarding: (i) either: the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and either a written report was provided to the Company or oral advice was provided that the new independent registered public accounting firm concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement as defined in paragraph 304(a)(1)(iv) of Regulation S-K or a reportable event as described in paragraph 304(a)(1)(v) of Regulation S-K.
46
Item 16G. Corporate Governance
Not applicable.
Item 16H. Mine Safety Disclosure
Not applicable.
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Item 16J. Insider Trading Policies
We have
Item 16K. Cybersecurity
Cybersecurity risk management is an integral part
of our overall risk management program. Our cybersecurity risk management program is designed to align with industry best practices and
provide a framework for handling cybersecurity threats and incidents, including threats and incidents associated with the use of services
provided by third-party service providers, and facilitate coordination across different departments of our company. This framework includes
steps for regularly conducting data protection impact assessments on information systems, monitoring the information about the security
vulnerabilities of our systems, identifying the source of a cybersecurity threat including whether the cybersecurity threat is associated
with a
In 2025, we did
47
PART III
Item 17. Financial Statements
See “Item 18. Financial Statements.”
Item 18. Financial Statements
Our consolidated financial statements are included at the end of this annual report, beginning with page F-1.
Item 19. Exhibits
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| * | Previously filed |
| ** | Furnished with this annual report on Form 20-F |
| + | Filed herewith |
49
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| Cordyceps Sunshine Biotech Holdings Co., Ltd. | |||
| By: | /s/ Szu Hao Huang | ||
| Name: | Szu Hao Huang | ||
| Title: | Chief Executive Officer | ||
Date: May 15, 2026
50
CORDYCEPS SUNSHINE BIOTECH HOLDINGS CO., LTD AND SUBSIDIARIES
FINANCIAL REPORT
As of and for the years ended December 31, 2025, 2024, and 2023
CORDYCEPS SUNSHINE BIOTECH HOLDINGS CO., LTD AND SUBSIDIARIES
INDEX
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Cordyceps Sunshine Biotech Holdings Co., Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Cordyceps Sunshine Biotech Holdings Co., Ltd. and its subsidiaries (the “Company”) as of December 31, 2025, the related statements of operations and comprehensive loss, shareholders’ deficit, and cash flows for the year then ended, 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 December 31, 2025, and the results of its operations and its cash flows for the years then ended, in conformity with the U.S. generally accepted accounting principles.
Consideration of the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As described in Note 2 to the consolidated financial statements, the Company incurred recurring losses from operations and has an accumulated deficit, which raises substantial doubt about its ability to continue as a going concern. Management’s plans with regard to these matters are described in Note 2. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“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 audit 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 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 audit, 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 audit included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/
We have served as the Company’s auditor since 2025.
PCAOB ID
May 15, 2026
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Cordyceps Sunshine Biotech Holding Co., Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Cordyceps Sunshine Biotech Holding Co., Ltd. (the “Company”) as of December 31, 2024, the related statements of operations and comprehensive loss, changes in stockholders’ deficit, and cash flows for each of the two years ended December 31, 2024, 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 at December 31, 2024, and the results of its operations and its cash flows for each of the two years ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Consideration of the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As described in Note 3 to the financial statements, the Company incurred losses from operations and has an accumulated deficit and significant working capital deficit, which raises substantial doubt about its ability to continue as a going concern. Management’s plans with regard to these matters are described in Note 3. The accompanying 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 financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“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.
F-3
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Valuation of Long-lived Assets for impairment – Cultivation Facilities
As discussed in Note 2 and 8 to the consolidated financial statements, the Company assessed $4.3 million of long-lived assets associated with its cultivation facilities for recoverability. The Company performed a recoverability assessment in which the carrying value was compared to estimated undiscounted cash flows over the remaining useful life of the primary assets. Key assumptions in the analysis include revenue projections, including the estimated quantity of production of taiwanofungus products and the market price.
We identified the valuation of long-lived assets for the cultivation facilities as a critical audit matter because of the significant assumptions management makes in determining the estimate, including revenue and cash flow projections. Auditing management’s assumptions of revenue and cash flow projections involved a high degree of auditor judgment and increased audit effort, and changes in these assumptions could have a significant impact on the Company’s primary assets and potential impairment charge.
Our audit procedures related to the Company’s valuation of long-lived assets associated with the cultivation facilities included the following, among others:
| ● | We obtained an understanding of management’s process for developing the future undiscounted cash flows and the significant assumptions. |
| ● | We evaluated management’s application of the relevant accounting guidance. |
| ● | We tested the reasonableness of the significant assumptions used by management to develop the forecasted results for cultivation facilities and the underlying data supporting the significant assumptions and estimates. |
/s/ KCCW Accountancy Corp.
We have served as the Company’s auditor since 2024.
Diamond Bar, California
June 13, 2025
F-4
CORDYCEPS SUNSHINE BIOTECH HOLDINGS CO., LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. Dollars, except for the number of shares)
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Consumptive biological assets | ||||||||
| Inventories | ||||||||
| Other receivables | ||||||||
| Prepaid taxes | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ deficit | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Income tax payable | ||||||||
| Other payable | ||||||||
| Due to related parties | ||||||||
| Advance receipts | ||||||||
| Other current liabilities | ||||||||
| Operating lease liabilities – current portion | ||||||||
| Long-term loans payable – current portion | ||||||||
| Total current liabilities | ||||||||
| Long-term loans payable | ||||||||
| Operating lease liabilities – noncurrent portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ deficit | ||||||||
| Ordinary shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
CORDYCEPS SUNSHINE BIOTECH HOLDINGS CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in U.S. Dollars, except for the number of shares)
| Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Revenue | ||||||||||||
| Revenue - products sales | $ | $ | $ | |||||||||
| Revenue - training | ||||||||||||
| Revenue - related parties | ||||||||||||
| Total revenue | ||||||||||||
| Cost of revenue - third parties | ||||||||||||
| Total cost of revenue | ||||||||||||
| Gross profit | ||||||||||||
| Operating expenses | ||||||||||||
| General and administrative | ||||||||||||
| Total operating expenses | ||||||||||||
| (Loss) income from operations | ( | ) | ( | ) | ||||||||
| Non-operating income (expense) | ||||||||||||
| Interest income (expense), net | ( | ) | ( | ) | ( | ) | ||||||
| Gain on disposal of fixed assets | ||||||||||||
| Other income | ||||||||||||
| Total non-operating expense, net | ( | ) | ( | ) | ( | ) | ||||||
| (Loss) income before income taxes | ( | ) | ( | ) | ||||||||
| Income tax expense | ||||||||||||
| Net (loss) income from continuing operations | ( | ) | ( | ) | ||||||||
| Discontinued Operation | ||||||||||||
| Loss from discontinued operation, net of income tax | ( | ) | ||||||||||
| Gain from sale of discontinued operation, net of income tax | ||||||||||||
| Gain (loss) from discontinued operation, net of income tax | ||||||||||||
| Net (loss) income | ( | ) | ( | ) | ||||||||
| Foreign currency translation | ( | ) | ||||||||||
| Comprehensive (loss) income | $ | ( | ) | $ | ( | ) | $ | |||||
| Earnings (loss) per common share | ||||||||||||
| Continuing operations - basic and diluted | ( | ) | ( | ) | ||||||||
| Discontinued operations - basic and diluted | ||||||||||||
| Net (loss) income per common share - basic and diluted | $ | ( | ) | $ | ( | ) | $ | |||||
| Weighted average number of common shares outstanding: | ||||||||||||
| Basic and diluted | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
CORDYCEPS SUNSHINE BIOTECH HOLDINGS CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(Expressed in U.S. Dollars, except for the number of shares)
| Ordinary shares | Additional | Accumulated Other | ||||||||||||||||||||||
| Number of | paid-in | Accumulated | Comprehensive | |||||||||||||||||||||
| shares | Amount | capital | Deficit | income (loss) | Total | |||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Foreign currency translation | - | |||||||||||||||||||||||
| Balance, December 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation | - | |||||||||||||||||||||||
| Balance, December 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-7
CORDYCEPS SUNSHINE BIOTECH HOLDINGS CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Cash Flows from Operating Activities | ||||||||||||
| Net (loss) income | $ | ( | ) | ( | ) | |||||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||||||
| Depreciation | ||||||||||||
| Amortization | ||||||||||||
| Operating lease expense | ||||||||||||
| Gain on disposal of assets | ( | ) | ||||||||||
| Non-cash interest expense | ||||||||||||
| Net changes in operating assets and liabilities: | ||||||||||||
| (Increase) decrease in other receivables | ( | ) | ( | ) | ||||||||
| Increase in inventories | ( | ) | ||||||||||
| Decrease (increase) in consumptive biological assets | ( | ) | ( | ) | ||||||||
| Decrease (increase) in prepaid expenses | ( | ) | ||||||||||
| Increase in prepaid taxes | ( | ) | ( | ) | ( | ) | ||||||
| Increase in other current assets | ( | ) | ( | ) | ( | ) | ||||||
| Increase in accounts payable | ||||||||||||
| Increase in accrued expenses | ||||||||||||
| Increase in due to related parties | ||||||||||||
| Increase in advance receipts | ||||||||||||
| (Decrease) increase in other payable | ( | ) | ||||||||||
| (Decrease) increase in income taxes payable | ( | ) | ||||||||||
| Increase in other current liabilities | ||||||||||||
| Repayment for operating lease liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Net cash provided by (used in) operating activities from continuing operations | ( | ) | ||||||||||
| Net cash provided by operating activities from discontinued operations | ||||||||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||||||
| Cash Flows from Investing Activities | ||||||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||||||
| Proceeds from disposal of fixed asset | ||||||||||||
| Net cash used in investing activities from continuing operations | ( | ) | ( | ) | ||||||||
| Net cash used in investing activities from discontinued operations | ( | ) | ||||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||||||
| Cash Flows from Financing Activities | - | - | - | |||||||||
| Proceeds from related parties | ||||||||||||
| Net cash provided by financing activities from continuing operations | ||||||||||||
| Net cash used in financing activities from discontinued operations | ( | ) | ||||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||||||
| Cash and Cash Equivalents | ||||||||||||
| Beginning of period | ||||||||||||
| Ending of period | ||||||||||||
| Less: Cash from discontinued operation | ||||||||||||
| Cash from continuing operation, end of period | $ | $ | $ | |||||||||
| Supplemental Disclosure of Cash Flows | ||||||||||||
| Cash paid during the period for: | ||||||||||||
| Interest | $ | $ | $ | |||||||||
| Income taxes | $ | $ | $ | |||||||||
| Non-cash investing and financing activities: | ||||||||||||
| Recognition of lease assets and liabilities | $ | $ | $ | |||||||||
| Termination of lease assets and liabilities | $ | $ | $ | |||||||||
| Accrued liability for property and equipment | $ | $ | $ | |||||||||
| Sale of subsidiaries in exchange for debt cancellation | $ | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-8
CORDYCEPS SUNSHINE BIOTECH HOLDINGS CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts expressed in U.S. Dollars, unless stated otherwise)
Note 1 - ORGANIZATION
Cordyceps Sunshine Biotech Holdings
Co., Ltd. (“Cordyceps Sunshine Cayman”) was incorporated on
Discontinued Operations:
On September 28, 2023, the Company entered into a share purchase agreement with Mr. Xusheng Niu, Cordyceps Sunshine HK, and Chengdu
Skyherb. Pursuant to the Agreement, the Company agreed to sell, and Mr. Niu agreed to purchase,
The Company realized a gain of $
The following diagram illustrates the corporate structure of the Company after giving effect to the Transaction:
Cordyceps Sunshine Cayman, its Taiwan branch, and its subsidiary, Taiwanofungus HK, are collectively referred to herein as the “Company”, “we” and “us”, unless specific reference is made to an entity.
The Company specializes in cultivating Chinese rare medicinal herb, particularly Cattle camphor mushroom, and processing them into a wide range of finished products for sale.
Cattle camphor mushroom, also known as Antrodia Cinnamomum or Taiwanofungus, is referred to as Taiwanofungus on product packaging for easier recognition.
F-9
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 (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of the Company, its Taiwan branch and its subsidiary, Taiwanofungus HK. All significant intercompany accounts and transactions have been eliminated.
Prior Year Reclassification
Certain items in the financial statements of the comparative period have been reclassified to conform to the financial statements for the current period. The reclassification has no impact on the total assets, liabilities and ending shareholders’ deficit for the financial years ended December 31, 2025 and 2024. Refer to Note 16 for more details.
Foreign Currency Translation
The accompanying consolidated financial statements are presented in the United States Dollar (“USD”), which is the reporting currency of the Company. The functional currency of Cordyceps Sunshine HK is the Hong Kong Dollar (“HKD”). The functional currency of Chengdu Skyherb is the Renminbi (“RMB”). The functional currency of Cordyceps Sunshine Taiwan Branch is the New Taiwan Dollar (“TWD”).
The Company maintains its books and records in its functional currencies. Transactions denominated in currencies other than the functional currencies are translated into the functional currencies at the exchange rates prevailing at the dates of the transactions. At the period end, transactions denominated in currencies other than the functional currencies are translated into the functional currencies at the exchange rates prevailing at the balance sheet date. The resulting exchange differences are recorded in the statements of operations.
The reporting currency of the Company is the United States Dollars (“USD”), and the accompanying consolidated financial statements have been expressed in USD. In accordance with ASC Topic 830- 30, “Translation of Financial Statements”, assets and liabilities of the Company whose functional currency is not USD are translated into USD, using the exchange rate on the balance sheet date. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from the translation of financial statements are recorded as a separate component of accumulated other comprehensive gain (loss) within the statements of changes in shareholders’ deficit.
The exchange rates used for foreign currency translation were as follows:
(1) USD$1 = HKD
| Period Covered | Spot Rate | Average Rate | ||||||
| Nine months ended September 30, 2023 | ||||||||
(2) USD$1 = RMB
| Period Covered | Spot Rates | Average Rate | ||||||
| Nine months ended September 30, 2023 | ||||||||
The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through local authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into USD at the rates used in translation.
F-10
(3) USD$1 = TWD
| Period Covered | Spot Rate | Average Rate | ||||||
| Year ended December 31, 2025 | ||||||||
| Year ended December 31, 2024 | ||||||||
| Year ended December 31, 2023 | ||||||||
Statements of Cash Flows
In accordance with FASB ASC 830-230, “Statement of Cash Flows”, cash flows from the Company’s operations are calculated based upon the functional currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheets.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as operating environment changes. Significant estimates and assumptions by management include, among others, estimated life and impairment of long-lived assets, contingencies, valuation of inventories and income taxes including the valuation allowance for deferred tax assets.
While the Company believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.
Fair Value of Financial Instruments
The Company adopted ASC 820 “Fair Value Measurements,” which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosures requirements for fair value measures. Current assets and current liabilities qualified as financial instruments and management believes their carrying amounts are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their current interest rate is equivalent to interest rates currently available. The three levels are defined as follows:
| Level 1: | Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
F-11
| Level 2: | Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. |
| Level 3: | Inputs to the valuation methodology are unobservable and significant to the fair value. |
As of the balance sheet date, the estimated fair values of the financial instruments approximated their fair values due to the short-term nature of these instruments. For certain of the Company’s financial instruments, including cash and cash equivalents, accounts payable, long-term loan and other payables, the carrying amounts approximate their fair values due to the short maturities.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, and all other highly liquid instruments with original maturities of three months or less.
Accounts Receivable and allowance for Credit Losses
Accounts receivable are stated at the historical carrying amount net
of allowance for expected credit losses. The Company adopted ASU No. 2016-13, “Financial Instruments — Credit
Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” on January 1, 2021 using a modified retrospective
approach. The Company also adopted this guidance to other receivables. To estimate expected credit losses, the Company has identified
the relevant risk characteristics of its customers and the related receivables. The Company considers the past collection experience,
current economic conditions, future economic conditions (external data and macroeconomic factors) and changes in the Company’s customer
collection trends. The allowance for credit losses and corresponding receivables was written off when they are determined to be uncollectible.
In circumstances in which the Company receives payment for accounts receivable that have previously been written off, the Company reverses
the allowance and bad debt. The allowance for doubtful accounts receivable was $
Consumptive Biological Assets
The consumptive biological assets refer to the Taiwanofungus held for sale or Taiwanofungus cultivate medium to be harvested as Taiwanofungus products in the future.
The prepared Taiwanofungus cultivate medium is enclosed in a cultivation carrier at the beginning of the cultivation process. No materials need to be added until the Taiwanofungus grows and matures in the cultivate medium. The inventory cost amounts mainly consist of the Taiwanofungus cultivation medium that was prepared by the suppliers and cost absorbed from the depreciation of cultivation facilities.
The consumptive biological assets, consisting of raw materials, are stated at the lower of cost or net realizable value utilizing the weighted average method.
The determination of net realizable value of long-term Taiwanofungus cultivation costs is based upon quarterly reviews of costs incurred and estimated costs to complete the cultivating process. When costs incurred and the estimate to complete exceed the net realizable value of Taiwanofungus cultivated, a loss provision is recorded.
The Company reviews and identifies impaired inventory quarterly, including excess or obsolete inventory, based on expected production usage and abnormal production cycle. Impaired inventories are charged to cost of revenues in the period the impairment occurs. The allowance for inventory impairment is removed from the accounts when the relevant inventory is sold or disposed.
Inventories
The Company’s inventories primarily consist of Cordyceps-based products, including pills, oral liquids, Cordyceps powder, and other related products. Inventories are stated at the lower of cost or net realizable value. Cost is determined using the weighted-average method.
Costs include all costs of purchase, conversion, and other costs incurred in bringing the inventories to their present location and condition. For finished products, conversion costs include direct labor, manufacturing overhead, including absorbed overhead (depreciation of the cultivation facilities) and any other costs necessary to bring the product to a saleable condition.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. The Company regularly reviews inventories for excess, obsolete, or slow-moving items and records an allowance for inventory write-downs when necessary. Write-downs are recognized in the period they occur. When previously written-down inventories are sold, the write-down is reversed and recognized in cost of revenues.
F-12
Property, Plant and Equipment
Property and equipment primarily consist of cultivation facilities,
office equipment, and furniture. Cultivation facilities, office equipment, and furniture are stated at cost less accumulated depreciation
and any provision required for impairment in value.
Cultivation facilities | ||
| Office equipment and furniture |
Impairment of Long-lived Assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. impairment of long-lived assets was recognized for the years ended December 31, 2025, 2024, and 2023.
Operating Lease
The Company leases are classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.
At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease. The right-of-use asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. impairment for right-of-use lease assets incurred for the years ended December 31, 2025, 2024, and 2023.
Comprehensive Income (Loss)
ASC 220, “Comprehensive Income”
established standards for reporting and display of comprehensive income/loss, its components and accumulated balances. Components of comprehensive
income/loss include net income/loss and foreign currency translation adjustments. The component of accumulated other comprehensive income
(loss) consisted of foreign currency translation adjustments. The accumulated other comprehensive income was $
F-13
Revenue Recognition
The Company adopted ASC 606 upon inception. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
Revenue for the sale of products, primarily includes the sale of Taiwanofungus products. The Company’s sales arrangements do not contain variable consideration. The Company recognizes revenue at a point in time based on management’s evaluation of when performance obligations under the terms of a contract with the customer are satisfied, and control of the products has been transferred to the customer. For the vast majority of the Company’s product sales, the performance obligations and control of the products transfer to the customer when products are delivered and customer acceptance is made.
The Company’s return policy allows for the return of damaged or defective products, and the Company absorbs the shipping fee for the return. The Management believes the return is immaterial because the customers inspect and accept the goods upon delivery or pick up. There were no returns for the years ended December 31, 2025, 2024, and 2023.
Income Taxes
The Company is subject to the Provisional
Regulations on Income Tax of Taiwan. The Company’s operations in producing and selling Taiwanofungus are subject to the
The Company accounts for income taxes under the provision of FASB ASC 740-10, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
Earnings per share
Basic earnings per ordinary share is computed by dividing net earnings attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to ordinary shareholders by the sum of the weighted average number of ordinary share outstanding and of potential ordinary share (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti- dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings per share. For the years ended December 31, 2025, 2024, and 2023, the Company had dilutive stocks.
Concentration of Credit Risk
Financial instruments the Company holds that are subject to concentrations of credit risk are cash, notes receivable and accounts receivable arising from its normal business activities. The Company places its cash with what it believes to be credit-worthy financial institutions. The Company routinely assesses the credit status of its customers and, based upon factors surrounding the credit risks, establishes an allowance, if required, for uncollectible accounts. The company believes its accounts receivable and others receivable credit risk exposure beyond such allowance is limited.
Related Parties Transactions
A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered as a related party transaction when there is a transfer of resources or obligations between related parties. Related parties may be individuals or corporate entities.
F-14
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts of related party transactions due to their related party nature.
Segment Reporting
ASC 280, “Segment Reporting” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s chief operating decision maker organizes segments within the Company for making operating decisions assessing performance and allocating resources. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.
Management determined the Company’s operations constitute a reportable segment in accordance with ASC 280. The Company operates exclusively in one business and industry segment: cultivation and sale of Chinese rare medicinal herb, Taiwanofungus raw material and its finished products.
The Company's chief operating decision maker (CODM) is its , who reviews financial information presented on a consolidated basis. The CODM uses consolidated net income (loss) to assess financial performance and allocate resources.
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The amendments in ASU 2023-07 improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker (CODM). In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. ASU 2023-07 will be effective for annual reporting periods beginning after December 15, 2023, and interim periods within annual reporting periods beginning after December 15, 2024. Early adoption is permitted. The Company adopted the ASU for the fiscal year ended December 31, 2025 on a retrospective basis for all prior periods presented in the financial statements. See Segment Reporting for details.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires disclosures of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. This ASU will be effective for annual reporting periods beginning after December 15, 2024. Early adoption is permitted. ASU 2023-09 will be applied on a prospective basis with the option to apply the standard retrospectively. The Company adopted the ASU for the fiscal year ended December 31, 2025 on a retrospective basis for all prior periods presented in the financial statements. See Note 14 for details.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires entities, in the notes to financial statements, with specified information about certain costs and expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is assessing the impact of adopting this guidance on its consolidated financial statements.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 updates the accounting guidance for internal-use software by eliminating references to software development project stages, thereby requiring companies to start capitalizing software costs when (i) management has authorized and committed to funding the project, and (ii) it is probable the project will be completed and the software will be used as intended. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, with early adoption permitted. Amendments can be applied either (i) prospectively, (ii) through a modified transition approach based on the status projects and whether software costs were capitalized before the date of adoption, or (iii) retrospectively. The Company is currently evaluating the impact of ASU 2025-06 on the Company’s financial condition and results of operations.
In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASC 2025-10”) to provide specific authoritative guidance about the recognition, measurement, and presentation of a grant received by a business entity from a government. The amendments in this guidance require that a government grant received by a business entity should not be recognized until (1) it is probable that a business entity will comply with the conditions attached to the grant and the grant will be received and (2) a business entity meets the recognition guidance for a grant related to an asset or a grant related to income. Adoption of this standard is required using either a modified prospective, modified retrospective, or a retrospective approach. This standard is effective for the Company for both interim and annual reporting for the year ended December 31, 2029. The Company is currently evaluating the impact of ASU 2025-06 on the Company’s financial condition and results of operations.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.
F-15
Note 3 - GOING CONCERN
The financial statements have been prepared assuming that we will continue as a going concern, which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
The Company has not yet established
an ongoing source of revenues and cash flows sufficient to cover the operating costs and allow it to continue as a going concern. The
Company incurred net loss of $
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources by obtaining capital from the senior management, principal stockholders, and private placement sufficient to meet its minimal operating expenses and seeking third party equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4 - DISCONTINUED OPERATIONS
As discussed in Note 1, on September
28, 2023, Cordyceps Sunshine Biotech Holdings Co., Ltd. (the “Company”) entered into a share purchase agreement (the “Agreement”)
with Mr. Xusheng Niu (“Mr. Niu”), Cordyceps Sunshine Biotech Co., Ltd. (Hong Kong), a company incorporated under the laws
of Hong Kong (the “Target”), and Chengdu Skyherb Biotechnology Co., Ltd. (China), a wholly foreign-owned enterprise formed
under the laws of the People’s Republic of China and a wholly-owned subsidiary of the Target. Pursuant to the Agreement, the Company
agreed to sell, and Mr. Niu agreed to purchase,
The carrying amount of the major classes of assets and liabilities of discontinued operation as of December 31, 2023 consist of the following:
| September 30, | ||||
| 2023 | ||||
| Assets of discontinued operation: | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | |||
| Accounts receivable, net | ||||
| Others receivable | ||||
| Advances and prepayments to suppliers | ||||
| Inventory | ||||
| Subtotal current assets from discontinued operation | ||||
| Property, plant and equipment, net | ||||
| Total assets from discontinued operation | $ | |||
| Liabilities of discontinued operation: | ||||
| Current liabilities: | ||||
| Accounts payable | $ | |||
| Accounts payable - related party | ||||
| Accrued expenses | ||||
| Other current liabilities | ||||
| Subtotal current liabilities | ||||
| Total liabilities of discontinued operation | $ | |||
F-16
The summarized operating result of discontinued operations included in the Company’s consolidated statements of operations consist of the following:
| For the nine months ended | ||||
| September 30, | ||||
| 2023 | ||||
| Sales | $ | |||
| Costs of goods sold | ||||
| Gross profit (loss) | ( | ) | ||
| Selling expenses | ||||
| General and administrative expenses | ||||
| Total operating expenses | ||||
| Other income (expenses) | ||||
| Loss before income tax | ( | ) | ||
| Income tax expense | ||||
| Loss from discontinued operation | $ | ( | ) | |
| Gain from disposal, net of tax | ||||
| Total gain (loss) from discontinued operations, net of income taxes | $ | |||
The Company realized a gain of $
Note 5 - CONSUMPTIVE BIOLOGICAL ASSETS
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Consumptive biological assets | $ | $ | ||||||
Consumptive biological assets consist of nutrient solutions for cultivating Taiwanofungus.
Note 6 - INVENTORIES
The following is the breakdown of inventories:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Inventories | $ | $ | ||||||
The inventories primarily consist of Antrodia camphorata whole fruiting body powder and TF15 Antrodia camphorata extract powder, which serve as the basic raw materials for various Taiwanofungus products.
Note 7 - PREPAID TAXES
Prepaid
taxes as of December 31, 2025 and 2024 consist of prepaid value added tax (“VAT”) in the amount of $
F-17
Note 8 - PROPERTY, PLANT AND EQUIPMENT
The following is a summary of property, plant and equipment:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Cultivation facilities | $ | $ | ||||||
| Office equipment and furniture | ||||||||
| Total | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Total property, plant and equipment, net | $ | $ | ||||||
Depreciation expense charged to operations was
$
Note 9 - LEASE
The Company has no finance leases. The Company’s
leases primarily include office and retail store. The Company’s operating leases have remaining lease terms of up to approximately
| December 31, 2025 | December 31, 2024 | |||||||
| ASSETS | ||||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| LIABILITIES | ||||||||
| Operating lease liabilities - current | ||||||||
| Operating lease liabilities - noncurrent | ||||||||
Supplemental Information
The following provides details of the Company’s lease expenses:
| Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Operating lease expenses | $ | $ | $ | |||||||||
Other information related to leases is presented below:
| Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Cash paid for amounts included in the measurement of operating lease liabilities | ||||||||||||
| Operating cash flows from operating leases | $ | $ | $ | |||||||||
| Weighted Average Remaining Lease Term: | ||||||||||||
| Operating leases | ||||||||||||
| Weighted Average Discount Rate: | ||||||||||||
| Operating leases | % | % | % | |||||||||
The minimum future annual payments under non-cancellable leases during the next five years and thereafter, at rates now in force, are as follows:
| Operating leases | ||||
| 2026 | $ | |||
| 2027 | ||||
| Total future minimum lease payments, undiscounted | ||||
| Less: Imputed interest | ( | ) | ||
| Present value of future minimum lease payments | $ | |||
F-18
Note 10 - ACCOUNTS PAYABLE
The Company had accounts payable of $
Accounts payable are payable for the purchase of consumptive biological assets.
Note 11 - OTHER PAYABLE
Other payable consisted of the following as of December 31, 2025 and 2024:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Payable for cultivation facilities purchase | $ | $ | ||||||
| Other | ||||||||
| Total | $ | $ | ||||||
Note 12 - RELATED PARTY TRANSACTIONS
The Company had transactions with the following related parties:
| Name of Related Party | Nature of Relationship | |
| Mr. Szu Hao Huang | ||
| Mr. Yenhung Liu | ||
| Chengdu Zhonghe sunshine Biotechnology Co., Ltd (“Chengdu Zhonghe”) | ||
| Gasar Biotechnology Co., Ltd. | ||
| Dalan Vincent Holdings Limited |
Due to related parties
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Mr. Szu Hao Huang | $ | $ | ||||||
| Dalan Vincent Holdings Limited | ||||||||
| Total | $ | $ | ||||||
The amounts due to related parties described above were for working capital purposes, are payable on demand, and bear no interest.
Sales to related parties
| Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Gasar Biotechnology Co., Ltd. | $ | $ | $ | |||||||||
Note 13 - LONG-TERM LOANS PAYABLE
From June through September 2020, Cordyceps Sunshine
Cayman entered into loan agreements to borrow a total of $
The outstanding balance of these loans, classified
as the current portion, amounted to $
F-19
Note 14 - INCOME TAXES
Cayman Islands
Under the current laws of the Cayman Islands, Cordyceps Sunshine Cayman is not subject to tax on income or capital gains. In addition, payments of dividends by the Company to its shareholders are not subject to withholding tax in the Cayman Islands.
Taiwan, Republic of China
Cordyceps Sunshine Biotech Holdings Co., Ltd.
is incorporated in the Cayman Islands and has established a branch in Taiwan. It is a branch office of a foreign company and is not an
independent legal entity, subject to the provisions of the Value-Added and Non-Value-Added Business Tax Act and Income Tax Act. The applicable
value-added business tax rate is
Hong Kong
The subsidiary incorporated in Hong Kong is subject
to a two-tiered income tax rate on its taxable income generated from operations in Hong Kong effective on April 1, 2018. The first HK$
China, PRC
Chengdu Skyherb was incorporated in
the PRC and are subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income
tax laws. On March 16, 2007, the National People’s Congress enacted a new enterprise income tax law, which took effect on January
1, 2008. The law applies a uniform
The components of the provision for income taxes for the years ended December 31, 2025, 2024, and 2023 consisted of the following:
| For the Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Current: | ||||||||||||
| Taiwan | $ | $ | $ | |||||||||
| Total current | ||||||||||||
| Deferred: | ||||||||||||
| Taiwan | ||||||||||||
| Total deferred | ||||||||||||
| Total income tax expense | $ | $ | $ | |||||||||
F-20
The reconciliations of the statutory income tax rate and the Company’s effective income tax rate are as follows:
| 2025 | 2024 | 2023 | ||||||||||
| Statutory income tax rate | % | ( | )% | % | ||||||||
| Effect on tax rates in different tax jurisdiction | ( | )% | % | % | ||||||||
| Temporary differences | ( | )% | % | ( | )% | |||||||
| Valuation allowance | ( | )% | % | % | ||||||||
| Effective income tax rate | % | % | % | |||||||||
Significant components of the Company’s deferred tax assets at December 31, 2025, 2024 and 2023 are shown below:
| For the Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Deferred tax assets: | ||||||||||||
| Net operating loss carryforwards | $ | $ | $ | |||||||||
| Operating lease liabilities | ||||||||||||
| Accrued expenses | ||||||||||||
| Total deferred tax assets | ||||||||||||
| Less: Valuation allowance | ( | ) | ( | ) | ( | ) | ||||||
| Deferred tax liabilities | ||||||||||||
| Operating lease right-of-use assets | ( | ) | ( | ) | ( | ) | ||||||
| Net deferred tax assets | ||||||||||||
Management believes that it is more
likely than not that certain deferred tax assets will not be realized; accordingly, a valuation allowance of $
As of December 31, 2025, the Company
had Taiwan net operating loss carryforwards of approximately $
Accounting for Uncertainty in Income Taxes
The tax authority of the PRC and Taiwan government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC and Taiwan after those enterprises complete their relevant tax filings. Therefore, the Company’s PRC and Taiwan entities’ tax filings results are subject to examination. It is therefore uncertain as to whether the PRC and Taiwan tax authority may take different views about the Company’s PRC and Taiwan entities’ tax filings, which may lead to additional tax liabilities.
ASC 740 requires recognition and measurement of uncertain income tax positions using a “more-likely than-not” approach. The management evaluated the Company’s tax positions and concluded that no provision for uncertainty in income taxes was necessary as of December 31, 2025, 2024, and 2023.
Note 15 - CONCENTRATIONS, RISKS AND UNCERTAINTIES
Concentration
The Company offers for sale Taiwanofungus products, which depend on limited suppliers. Accordingly, the Company has a concentration risk related to its customers and suppliers. Failure to maintain existing relationships with the customers and suppliers or to establish new relationships in the future could negatively affect the Company’s ability to generate revenue and obtain materials in a timely manner.
F-21
The concentration of customer sales is as follows:
| For the year ended | For the year ended | For the year ended | ||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Amount | % | Amount | % | Amount | % | |||||||||||||||||||
| Customer A - related party | $ | % | $ | % | $ | % | ||||||||||||||||||
| Customer B - third party | % | % | % | |||||||||||||||||||||
The concentration of supplier purchases is as follows:
| For the year ended | For the year ended | For the year ended | ||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Amount | % | Amount | % | Amount | % | |||||||||||||||||||
| Supplier A | $ | % | $ | % | $ | % | ||||||||||||||||||
Credit risk
Assets that potentially subject the Company to significant concentration
of credit risk primarily consist of cash and cash equivalents. The maximum exposure of such assets to credit risk is their carrying amount
as at the balance sheet date. The Company also holds cash and cash equivalents that are deposited in financial institutions
located in Taiwan, and each bank account is insured by the local government authority up to a maximum limit of TWD
The Company’s operations are carried out in Taiwan. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in Taiwan as well as by the general state of the economy of PRC and Taiwan. In addition, the Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation among other factors.
Liquidity risk
The Company is also exposed to liquidity risk which is risk that it is unable to provide sufficient capital resources and liquidity to meet its commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures. When necessary, the Company will turn to other financial institutions and the shareholders to obtain short-term funding to meet the liquidity shortage.
Other risk
The Company’s business, financial condition and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt the Company’s operations.
Note 16 - PRIOR YEAR RECLASSIFICATION
Certain prior year's figures in the Consolidated Statements of Comprehensive
Income have been reclassified to conform to the current year’s presentation for comparative purposes. Specifically, costs totaling
$
Note 17 - SUBSEQUENT EVENTS
The Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through May 15, 2026, the date the financial statements were issued, and determined the Company did not have any material subsequent events.
F-22
Exhibit 12.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO EXCHANGE ACT RULE 13A-14(A)/15D-14(A) AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Szu Hao Huang, Chief Executive Officer of Cordyceps Sunshine Biotech Holdings Co., Ltd. (the “Company”), certify that:
| 1. | I have reviewed this annual report on Form 20-F of the Company; |
| 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 Company as of, and for, the periods presented in this report; |
| 4. | The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Company 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 Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and |
| 5. | The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’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 Company’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 Company’s internal control over financial reporting. |
| Date: May 15, 2026 | |||
| By: | /s/ Szu Hao Huang | ||
| Name: | Szu Hao Huang | ||
| Title: | Chief Executive Officer, Chief Financial Officer, and Director | ||
Exhibit 12.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO EXCHANGE ACT RULE 13A-14(A)/15D-14(A) AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Szu Hao Huang, Chief Financial Officer of Cordyceps Sunshine Biotech Holdings Co., Ltd. (the “Company”), certify that:
| 1. | I have reviewed this annual report on Form 20-F of the Company; |
| 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 Company as of, and for, the periods presented in this report; |
| 4. | The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15I and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Company 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 Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and |
| 5. | The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’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 Company’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 Company’s internal control over financial reporting. |
| Date: May 15, 2026 | |||
| By: | /s/ Szu Hao Huang | ||
| Name: | Szu Hao Huang | ||
| Title: | Chief Executive Officer, Chief Financial Officer, and Director | ||
Exhibit 13.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, Szu Hao Huang, Chief Executive Officer of Cordyceps Sunshine Biotech Holdings Co., Ltd. (the “Company”), hereby 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:
| a. | the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| b. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein. |
| Date: May 15, 2026 | |||
| By: | /s/ Szu Hao Huang | ||
| Name: | Szu Hao Huang | ||
| Title: | Chief Executive Officer, Chief Financial Officer, and Director | ||
Exhibit 13.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, Szu Hao Huang, Chief Financial Officer of Cordyceps Sunshine Biotech Holdings Co., Ltd. (the “Company”), hereby 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:
| a. | the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| b. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein. |
| Date: May 15, 2026 | |||
| By: | /s/ Szu Hao Huang | ||
| Name: | Szu Hao Huang | ||
| Title: | Chief Executive Officer, Chief Financial Officer, and Director | ||