Marwynn Holdings, Inc.: Form 10-Q for the period ended Jan 31, 2025

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. As discussed in the section titled “Special Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations, intentions, or projections, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under Part II - Item 1A Risk Factors of this Report, and under the “Risk Factors” section of our Registration Statement on Form S-1 (File No.: 333-284245), originally filed with the Securities and Exchange Commission (the “SEC”) on January 13, 2025, as amended. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties, and assumptions about us that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings. References to “we”, “us”, “our,” or the “Company” are to Marwynn Holdings, Inc. and its wholly-owned operating subsidiaries, except where the context requires otherwise.

Business Overview and Recent Development

Marwynn Holdings, Inc. (“Marwynn” or the “Company”) was incorporated in the state of Nevada, United States of America (“USA”) on February 27, 2024. The Company is a holding company with no material operations of its own, Marwynn conducts substantially all its operations through its wholly-owned subsidiaries FuAn Enterprise, Inc (“FuAn”) and Grand Forest Cabinetry Inc (“Grand Forest”).

FuAn was incorporated in the state of California on April 18, 2016. FuAn is a food and non-alcoholic beverage supply chain company that specializes in connecting businesses between different regions, particularly between Asia and the U.S. FuAn’s comprehensive supply chain services include the sourcing of Asian food, snacks, and non-alcoholic beverages, and distributing branded goods to mainstream markets, grocery stores and wholesale/warehouse clubs in the U.S. In addition, FuAn provides supply chain consulting, and market expansion support for businesses. With a focus on sourcing Asian foods and non-alcoholic beverages, FuAn aims at becoming a leading importer and distributor of premium Asian foods and non-alcoholic beverages to the U.S. markets.

Grand Forest was incorporated in the state of California on February 22, 2021. Grand Forest is an indoor home improvement supply chain provider that focus on providing high-quality kitchen cabinets, flooring, and home improvement products sourced from international suppliers. Grand Forest focuses on sourcing high-quality products from reliable overseas suppliers and distributing them to customers across the U.S.

On March 12, 2025, Marwynn entered into an underwriting agreement with American Trust Investment Services, Inc., as representative of the several underwriters (the “Representative”), pursuant to which the Company issued and sold an aggregate of 2,000,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), in the initial public offering (the “Offering”) pursuant to the Company’s Registration Statement on Form S-1 (File No. 333-284245) and a related prospectus supplements dated March 12, 2025, filed with the Securities and Exchange Commission (“Commission”). The Common Stock was sold at an offering price of $4.00 per share (the “Public Offering Price”), generating gross proceeds to the Company of $8,000,000, before deducting underwriting discounts and commissions and other estimated offering expenses.

The Common Stock commenced trading on The Nasdaq Capital Market on March 13, 2025 under the symbol “MWYN.” The closing of the Offering took place on March 14, 2025. The Company has been using the net proceeds from the Offering towards supply chain enhancements, business expansion, sales and distribution growth, talent development and retention, working capital, and other general corporate purposes.

On April 4, 2025, the Representative purchased 50,000 additional shares of the Company’s common stock, par value $0.001 per share, at a price of $4.00 per share (the “Over-Allotment Shares”). As a result, the Company has raised gross proceeds of approximately $200,000, in addition to the IPO gross proceeds of $8,000,000, or combined gross proceeds in this IPO of $8,200,000, before underwriting discounts and commissions and offering expenses.

Business Trends and Uncertainties

During the first quarter of 2025, the United States has introduced trade policy actions that have increased import tariffs across a wide range of countries at various rates, including on product imports from almost all countries and individualized higher tariffs on certain other countries, such as China. Some of these tariff announcements have since been followed by announcements of limited exemptions and temporary pauses. Our business relies heavily on international supply chains and imported products, including food, non-alcoholic beverages, kitchen cabinets, flooring, and other home improvement goods. This dependence exposes us to risks associated with shifting global trade policies, tariffs, and geopolitical tensions, particularly in the Asia-Pacific region, and could negatively impact affect our business in multiple ways, including increased costs of our products. These tariffs have introduced additional volatility into our procurement and logistics operations and may increase our cost of goods sold, particularly for our food and cabinetry product lines, which are more reliant on imports from affected regions.

We have temporarily paused certain imports from China and are actively pursuing alternative sourcing strategies, including domestic suppliers and international partners in lower-risk regions. In addition, trade-related disruptions—such as shipping delays, port congestion, or container shortages—can create further uncertainty and may require expedited shipping or last-minute procurement efforts at elevated cost. While these changes are intended to mitigate future exposure, they may result in near-term transitional costs, logistical inefficiencies, and supplier onboarding challenges. Diversifying our supply base can also increase production and transportation costs and introduce operational complexity. We are actively working with Costco and other retailers to introduce new products that are less sensitive to the tariff tensions between the U.S. and China. However, there can be no assurance that these efforts will be successful or that such measures will fully offset the challenges posed by current trade policies.

We are closely monitoring the fluid nature of proposed tariffs and any impact they may have on our operations and will continue to monitor macroeconomic conditions and evaluate the financial and operational impact of ongoing trade policy shifts. These risks could intensify depending on future developments and we are actively incorporating these considerations into our future operation planning, including assessing pricing actions, cost-control measures, and long-term sourcing strategies.

If tariffs escalate or global inflationary trends persist, our customers may face greater economic strain, which could in turn affect demand for our products. We remain focused on maintaining operational flexibility and adapting our supply chain to navigate these uncertainties and support long-term business performance. See “Risk Factors” under Part II, Item 1A, beginning on page 49 of this Report, for additional information.

Key Factors that Affect Our Results of Operations

Operating cost increase after initial public offering

Following our initial public offering, we will be subject to increased operating costs related to our listing on The Nasdaq Capital Market and we are subject to increased costs related to our compliance with Securities Act and Exchange Act periodic reporting annual audit expenses, the legal service expenses, and related consulting services expenses.

Competition

The supply chain industry is highly competitive, with a wide range of players offering various services such as logistics, transportation, warehousing, and distribution. Competitors range from large multinational corporations to small and medium-sized enterprises, each with their own strengths and capabilities. Supply chain disruptions often occur due to natural disasters or geopolitical events. We see talent shortage and skills gap in supply chain management. We also face regulatory compliance and trade restrictions. Security and data privacy are also concerns in global trade as well as fluctuations in exchange rates and raw material prices.

Competition for sale of food and beverages varies and includes market demand, supplier relationships, logistics and distribution, regulatory compliance and expanding into new markets. Satisfying diverse consumer preferences and staying ahead of trends are imperative.

The home remodeling business is highly competitive, fragmented, and evolving. As a result, competition for customers for our products and services from a variety of retailers, suppliers, service providers, and distributors and manufacturers that sell products directly to their respective customer bases. These competitors range from suppliers like us, to multi-channel, to exclusively online retailers. The internet facilitates competitive entry and increases the level of competition we face for customer experience, price transparency, quality, product availability and assortment, and delivery options.

International Trade Policies

Current uncertainties about increases in tariffs of imported products from countries may have an adverse effect on our operations. In April 2025, the U.S. government increased import tariffs across a wide range of countries at various rates, including on product imports from almost all countries and individualized higher tariffs on certain countries. Based on the tariffs enacted and currently in effect, we anticipate incurring incremental tariff costs, additional costs that we may incur on products shipped to our customers, and costs as a result of pauses on certain of our product imports, in particular products from China. We expect to offset the impact of the enacted tariffs on our revenues with supply chain adjustments, sources of supply or manufacturing locations, and additional cost savings actions. We are actively working with Costco and our other customers to introduce new products that are less sensitive to the tariff tensions between the U.S. and China. However, if other additional tariffs are adopted, we would incur additional tariff costs that could be material. We are actively evaluating the potential impacts of these proposed tariffs, as well as our ability to mitigate their related impacts, this may affect our revenue and cost of revenues.

Three Months Ended January 31, 2025 compared to Three Months Ended January 31, 2024

Selected Income Statement Items

Revenues

We derive our revenues from (i) sale of food and beverages, (ii) sale of indoor home improvement products, and (iii) consulting services. The following table presents our revenue by product and service types and as percentage of our total revenues for the periods presented.

Sales of food and beverages

Sales of food and beverages accounted for 21.44% and 34.42% of total sales for the three months ended January 31, 2025 and 2024, respectively. Sales of food and beverages decreased by $404,967 from $984,927 for the three months ended January 31, 2024 to $579,960 for the three months ended January 31, 2025. The decrease in our sales was primarily due to significantly reduced purchase orders from Costco, one of our largest customers, particularly in demand for White Rabbit ice cream. We are in the process of a product rotation and update for White Rabbit brand products with Costco and are waiting for Costco’s approval before we can relaunch the sale of the White Rabbit brand product. The timing and outcome of this relaunch are subject to uncertainty, including the potential impact of U.S. tariffs on goods imported from China. We are also working with Costco and other retailers to introduce new products that are less sensitive to the tariff tensions between the U.S. and China. We are also working with Costco on bringing more new products to their stores.

Sales of home remodeling products

Sales of home remodeling products accounted for 76.94% and 65.58% of total sales for the three months ended January 31, 2025 and 2024, respectively. Sales of home remodeling products increased by $204,399, or 10.89% from $1,876,652 for the three months ended January 31, 2024 to $2,081,051 for the three months ended January 31, 2025. The increase in our sales was mainly due to the addition of new products and increased sales orders for cabinets as a result of our efforts to expand our wholesale business. For the three months ended January 31, 2025, we had sales orders of approximately 1,397 pieces, an increase of 271 sales orders or 24.07%, compared with 1,126 sales orders in the three months ended January 31, 2024.

Consulting services

Consulting services accounted for 1.62% and nil of total revenues for the three months ended January 31, 2025 and 2024, respectively. Revenue from consulting services increased by $43,749, or 100.00% from nil for the three months ended January 31, 2024 to $43,749 for the three months ended January 31, 2025. We started our consulting services business in March 2024 through providing supply chain and brand management services proposals and solutions to customers to help them optimize their inventory management and product distribution strategy, to reduce delivery times, shipping costs and diversify distribution channels.

Costs of Revenues

Cost of revenues consists of merchandise costs, as well as freight, duty, storge and other costs to transport inventory to the Company’s warehouse. Cost of revenues also includes costs for shrinkage, damaged product disposals, packaging and distribution of the products to customers.

We derive our costs from (i) sale of food and beverages, (ii) sale of indoor home improvement products, and (iii) consulting services. The following table presents our costs of revenues as percentage of its corresponding revenue for the periods presented.

Cost of revenues from sale of food and beverages decreased by $189,938, or 36.66% from $518,119 for the three months ended January 31, 2024, to $328,181 for the three months ended January 31, 2025. Our cost of revenues from sale of food and beverages primarily include inventory costs, storage and freight costs. The decrease in our cost of revenues for sale of food and beverages was mainly due to decreased sales volume resulting from decreased purchase orders from Costco, we did not have any orders from Costco for the three months ended January 31, 2025 while we had 11 orders from Costco for the three months ended January 31, 2024. We also had reduced storage fees and freight costs. The average purchase price for White Rabbit ice cream was $17.61 per case for the three months ended January 31, 2024.

Cost of revenues for sale of indoor home improvement products increased by $232,522, or 23.84%, from $975,383 for the three months ended January 31, 2024, to $1,207,905 for the three months ended January 31, 2025. Our cost of revenues from sale of indoor home improvement products primarily includes inventory costs, storage, freight costs, damaged product disposals and packaging. The increase in our cost of revenue for sale of indoor home improvement products was mainly due to the increase in our sales despite having decreased inventory purchase price and freight costs. Average purchase price for cabinets was $100 — $110 each for the three months ended January 31, 2025 compared with $110 — $120 each for the three months ended January 31, 2024. Average purchase price for flooring was $32 per box for the three months ended January 31, 2025 compared with $38 per box for the three months ended January 31, 2024. Average purchase price for marble and quartz was approximately $20 less per piece in the three months ended January 31, 2025 compared with January 31, 2024.

Cost of revenues for consulting services increased by $50,899, or 100.00%, from nil for the three months ended January 31, 2024, to $50,899 for the three months ended January 31, 2025. Our cost of revenues from consulting services was immaterial and primarily consisted of labor costs. The increase in our cost of sales for consulting services was mainly due to increased labor costs associated with our consulting services.

Selling, General and Administrative Expenses

Selling expenses mainly consist of advertising costs, promotion expenses, commission expenses, shipping and delivery expenses, showroom maintenance expenses, and payroll and related expenses for personnel engaged in selling and marketing activities. We expect our selling and marketing expenses as a percentage of total sales to modestly increase in the foreseeable future to achieve high-quality growth.

General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses; facilities and equipment expenses such as depreciation and amortization expense, rents, professional fees and utilities costs. We expect our general and administrative expenses as a percentage of total sales to decrease in the foreseeable future as we continue to enhance overall cost control to improve operating margin.

Results of Operations

Comparison of the three months ended January 31, 2025 and 2024

The following table summarizes our consolidated results of operations and as percentage of our total revenues for the period presented.

Revenues

Sales for the three months ended January 31, 2025 and 2024 were $2,704,760 and $2,861,579, respectively, a decrease of $156,819 or 5.48%. The decrease of sales in 2025 was primarily attributed to decreased sale of food imports and distribution by $404,967 which was partly offset by increased home remodeling products by $204,399 and increased consulting services by $43,749.

We imported and distributed new products with total revenue of $579,960 during the three months ended January 31, 2025. We are working with a few large food distributers and vendors in Asia to bring more authentic premium Asia foods to the U.S.

We sold 7,390 cabinets with average selling price of $162.28 each during the three months ended January 31, 2025 compared with 6,382 cabinets with average selling price of $177.65 each during the three months ended January 31, 2024. We sold 954 boxes of flooring with average selling price of $44.33 per box during the three months ended January 31, 2025 compared with 1,380 boxes of flooring with average selling price of $50.56 per box during the three months ended January 31, 2024. We sold 1,912 pieces of engineered marble or quartz with average selling price of $192.39 per piece during the three months ended January 31, 2025 compared with 1,047 pieces of quartz with average selling price of $226.21 per piece during the three months ended January 31, 2024. Our average selling price decreased significantly during the three months ended January 31, 2025, which was a result of our strategic change of our operations by focusing to develop wholesale customers starting from fiscal year 2024. Selling price to wholesale customers was significantly lower than the selling price to retail customers but the sales quantity for each order was usually larger.

Cost of revenues

The following table presents our costs of revenues by products and services provided as a percentage of total cost of revenues for the periods presented.

Cost of revenues for the three months ended January 31, 2025, and 2024 was $1,586,985 and $1,493,502, respectively, an increase of $93,483 or 6.26%. The increase of cost of revenues in 2025 was primarily attributed to increased cost from home remodeling products by $232,522 or 23.84% and increased cost from consulting services by $50,899 or 100.00%, which was partly offset by decreased cost for sale of food and beverages by $189,938 or 36.66%, resulting from decreased sales. Cost of revenues for sale of food and beverages as a percentage of total revenues was 12.13% and 18.11%, respectively, for the three months ended January 31, 2025 and 2024. Cost of revenues for home remodeling products as a percentage of total revenues was 44.66% and 34.09%, respectively, for the three months ended January 31, 2025 and 2024. Cost of revenues associated with our consulting services was immaterial and primarily consisted of labor costs. Cost of revenues for consulting services as a percentage of total revenues was 1.88% and nil, respectively, for the three months ended January 31, 2025 and 2024.

Gross profit and gross margin

The following table presents our gross profit and gross margin by product and services provided as percentage of total revenues for the periods presented.

The gross profit for the three months ended January 31, 2025 and 2024 was $1,117,775 and $1,368,077 respectively, a decrease of $250,302 or 18.30%. The blended gross profit margin was 41.33% for 2025 compared 47.81% for 2024. Gross profit for sale of food and beverages decreased by 46.06% in 2025 due to decreased sales to Costco. Gross profit for sale of indoor home improvement products decreased by 3.12% in 2025 due to our expansion of wholesale business, for which we offered more discounts to our wholesale customers. Gross profit for consulting services decreased by 100.00% in 2025 due to increased labor cost.

Selling expenses

Our selling expenses were 164,879 for the three months ended January 31, 2025, as compared to $158,527 for the three months ended January 31, 2024, representing an increase of $6,352, or 4.01%. The increase in the selling expenses was mainly due to 1) increased payroll expenses by $51,313 or 55.34% due to increased employees; and 2) increased shipping expenses by $3,435 or 29.62% as compared to the same period of 2024; the increase in selling expenses was partly offset by 1) decreased sales commission expenses by $36,834 or 100.00% as compared to the same period in 2024; 2) decreased advertising and marketing expenses by $12,251 or 73.14%. Selling expenses accounted for 6.10% and 5.54% of our total revenues for the three months ended January 31, 2025 and 2024, respectively.

General and administrative expenses

Our general and administrative expenses were $950,847 for the three months ended January 31, 2025, as compared to $810,473 for the three months ended January 31, 2024, reflecting an increase of $140,374 or 17.32%. The increase in general and administrative expenses included increased payroll expense, professional fee, rent expenses, depreciation and amortization, office expenses, and travel expenses, which was partly offset by decreased testing fee, insurance expense, due and subscription, subcontract labor expense and other expense.

The payroll expense increased by $188,016 or 108.06% as compared to the same period in 2024, the increase was mainly from increased number of employees and increased hourly rate as adjusted to reflect general inflation. Professional fee increased by $20,934 or 47.86% as compared to the same period in 2024, resulting from audit, accounting and consulting related costs. The increase in general and administrative costs was partly offset by decreased insurance costs by $31,284 or 61.77% as compared to the same period in 2024 and decreased testing fee by $33,465 or 100% as compared to the same period in 2024.

General and administrative expenses accounted for 35.15% and 28.32% of our total revenues for the three months ended January 31, 2025 and 2024, respectively.

Other income (expense), net

Other income was $472 for the three months ended January 31, 2025, compared to other expenses of $4,088 for the three months ended January 31, 2024. For the three months ended January 31, 2025, other income mainly consisted of other income of $2,227, which was partly offset by interest expense of $1,755. For the three months ended January 31, 2024, other expenses mainly consisted of interest expense of $6,251, which was partly offset with other income of $2,163.

Income tax provision

Income tax benefit were $20,897 for the three months ended January 31, 2025, representing a decrease of $135,942 or 118.16% from income tax expense of $115,045 for the three months ended January 31, 2024, due to decreased taxable income of Grand Forest. Marwynn, FuAn and Grand Forest file separate income tax return.

Net income

As a result of the above, we had a net income of $23,418 for the three months ended January 31, 2025, compared to net income $279,944 for the three months ended January 31, 2024, a decrease of net income of $256,526 or 91.63%, which was mainly resulting from decreased gross profit and increased audit, accounting and consulting fee and payroll costs.

Nine Months Ended January 31, 2025 compared to Nine Months Ended January 31, 2024

Revenues

We derive our revenues from (i) sale of food and beverages, (ii) sale of home remodeling, and (iii) consulting services. The following table presents our revenue by product and service types and as percentage of our total revenues for the periods presented.

Sales of food and beverages

Sales of food and beverages accounted for 7.62% and 26.71% of total sales for the nine months ended January 31, 2025 and 2024, respectively. Sales of food and beverages decreased by $1,659,631 or 72.65% from $2,284,477 for the nine months ended January 31, 2024 to $624,846 for the nine months ended January 31,2025. The decrease in our sales was primarily due to significantly reduced purchase orders from Costco, one of our largest customers, particularly in demand for White Rabbit ice cream. We are in the process of a product rotation and update for White Rabbit brand products with Costco and are waiting for Costco’s approval before we can relaunch the sale of the White Rabbit brand product. The timing and outcome of this relaunch are subject to uncertainty, including the potential impact of U.S. tariffs on goods imported from China. We are also working with Costco and other retailers to introduce new products that are less sensitive to the tariff tensions between the U.S. and China. We are also working with Costco on bringing more new products to their stores.

Sales of home remodeling products

Sales of home remodeling products accounted for 90.72% and 73.29% of total sales for the nine months ended January 31, 2025 and 2024, respectively. Sales of home remodeling products increased by $1,168,281, or 18.63% from $6,269,699 for the nine months ended January 31, 2024 to $7,437,980 for the nine months ended January 31, 2025. The increase in our sales was mainly due to the addition of new products and increased sales orders for cabinets as a result of our efforts to expand our wholesale business. For the nine months ended January 31, 2025, we had sales orders of approximately 4,670 pieces, an increase of 1,248 sales orders or 36.47%, compared with 3,422 sales orders in the nine months ended January 31, 2024.

Consulting services

Sales from consulting services accounted for 1.66% and nil of total revenues for the nine months ended January 31, 2025 and 2024, respectively. Revenue from consulting services increased by $135,737, or 100.00% from nil for the nine months ended January 31, 2024 to $135,737 for the nine months ended January 31, 2025. The increase in our sales was mainly due to the increased sales. We started our consulting services business in March 2024 through providing supply chain and brand management services proposals and solutions to customers to help them optimize their inventory management and product distribution strategy, to reduce delivery times, shipping costs and diversify distribution channels.

Costs of Revenues

We derive our costs from (i) sale of food and beverages, (ii) sale of indoor home improvement products, and (iii) consulting services. The following table presents our costs of revenues as percentage of its corresponding revenue for the periods presented.

Cost of revenues from sale of food and beverages decreased by $871,181, or 71.23% from $1,223,095 for the nine months ended January 31, 2024, to $351,914 for the nine months ended January 31, 2025. Our cost of revenues from sale of food and beverages primarily includes inventory costs, storage and freight costs. The decrease in our cost of revenues for sale of food and beverages was mainly due to decreased sales volume resulting from decreased purchase orders from Costco, we did not have any orders from Costco for the nine months ended January 31, 2025 while we had 35 orders from Costco for the nine months ended January 31, 2024. We also had reduced storage fees and freight costs. The average purchase price for White Rabbit ice cream was $17.61 per case for the nine months ended January 31, 2024.

Cost of revenues for sale of indoor home improvement products increased by $450,839, or 12.72%, from $3,544,411 for the nine months ended January 31, 2024, to $3,995,250 for the nine months ended January 31, 2025. Our cost of revenues from sale of indoor home improvement products primarily includes inventory costs, storage, freight costs, damaged product disposals and packaging. The increase in our cost of sales for sale of indoor home improvement products was mainly due to the increase in our sales despite having decreased inventory purchase price and freight costs. Average purchase price for cabinets was $100 — $110 each for the nine months ended January 31, 2025 compared with $110 — $120 each for the nine months ended January 31, 2024. Average purchase price for flooring was $32 per box for the nine months ended January 31, 2025 compared with $38 per box for the nine months ended January 31, 2024. Average purchase price for marble and quartz was approximately $20 less per piece in the nine months ended January 31, 2025 compared with January 31, 2024.

Cost of revenues associated with our consulting services was immaterial and primarily consisted of labor costs.

Results of Operations

Comparison of the nine months ended January 31, 2025 and 2024

The following table summarizes our consolidated results of operations and as percentage of our total revenues for the period presented.

39

Revenues

Sales for the nine months ended January 31, 2025 and 2024 were $8,198,563 and $8,554,176, respectively, a decrease of $355,613 or 4.16%. The decrease of sales in 2025 was primarily attributed to decreased sale of food imports and distribution by $1,659,631 which was partly offset by increased home remodeling products by $1,168,281 and increased consulting services by $135,737.

We imported and distributed new products with total revenue of $624,846 during the nine months ended January 31, 2025. We are working with a few large food distributers and vendors in Asia to bring more authentic premium Asia foods to the U.S.

We sold 25,682 cabinets with average selling price of $162.26 each during the nine months ended January 31, 2025 compared with 19,368 cabinets with average selling price of $181.46 each during the nine months ended January 31, 2024. We sold 4,093 boxes of flooring with average selling price of $46.68 per box during the nine months ended January 31, 2025 compared with 5,075 boxes of flooring with average selling price of $47.91 per box during the nine months ended January 31, 2024. We sold 6,324 pieces of engineered marble or quartz with average selling price of $195.81 per piece during the nine months ended January 31, 2025 compared with 4,208 pieces of quartz with average selling price of $225.51 per piece during the nine months ended January 31, 2024. Our average selling price decreased significantly during the nine months ended January 31, 2025, which was a result of our strategic change of our operations by focusing to develop wholesale customers starting from fiscal year 2024. Selling price to wholesale customers was significantly lower than the selling price to retail customers but the sales quantity for each order was usually larger.

Cost of revenues

The following table presents our costs of revenues by products and services provided as percentage of total cost of revenues for the periods presented.

Cost of revenues for the nine months ended January 31, 2025, and 2024 was $4,423,611 and $4,767,506, respectively, a decrease of $343,895 or 7.21%. The decrease in cost of revenues in 2025 was primarily attributed to decreased cost from sale sale of food and beverages by $871,181, or 71.23%, resulting from decreased sales, which was partly offset by increased cost from home remodeling products by $450,839 or 12.72% and increased cost from consulting services by $76,447 or 100.00%. Cost of revenues for sale of food and beverages as a percentage of total revenues was 4.29% and 14.30%, respectively, for the nine months ended January 31, 2025 and 2024. Cost of revenues for home remodeling products as a percentage of total revenues was 48.73% and 41.43%, respectively, for the nine months ended January 31, 2025 and 2024. Cost of revenues for consulting services as a percentage of total revenues was 0.93% and nil, respectively, for the nine months ended January 31, 2025 and 2024.

Gross profit and gross margin

The following table presents our gross profit and gross margin by product and services provided as percentage of total revenues for the periods presented.

The gross profit for the nine months ended January 31, 2025 and 2024 was $3,774,952 and $3,786,670 respectively, an decrease of $11,718 or 0.31%. The blended gross profit margin was 46.04% for 2025 compared 44.27% for 2024. Gross profit for sale of food and beverages decreased by 74.29% in 2025 due to decreased sales to Costco. Gross profit for sale of indoor home improvement products increased by 26.33% in 2025 due to our expansion of wholesale business, for which we offered more discounts to our wholesale customers. Gross profit for consulting services increased by 100.00% in 2025 due to an increase of sales.

Selling expenses

Our selling expenses were 482,538 for the nine months ended January 31, 2025, as compared to $576,341 for the nine months ended January 31, 2024, representing a decrease of $93,803, or 16.28%. The decrease in the selling expenses was mainly due to 1) decreased shipping expenses by $18,694 or 52.88% as compared to the same period in 2024 resulting from significantly decreased sales to Costco; 2) decreased sales commission expenses by $199,417 or 99.46%; and 3) decreased advertising and marketing expense by $30,240 or 55.79%; the decrease in selling expenses was partly offset by increased payroll expenses by $151,301 or 53.68% due to increased employees. Selling expenses accounted for 5.89% and 6.74% of our total revenues for the nine months ended January 31, 2025 and 2024, respectively.

General and administrative expenses

Our general and administrative expenses were $3,555,609 for the nine months ended January 31, 2025, as compared to $2,293,132 for the nine months ended January 31, 2024, reflecting an increase of $1,262,477 or 55.05%. The increase in general and administrative expenses included increased payroll expense, professional fee, rent expenses, depreciation and amortization , and meal and entertainment expenses which was partly offset by decreased insurance expense, subcontract labor and testing fee.

The payroll expense increased by $559,031or 87.49% as compared to the same period in 2024, the increase was mainly from increased number of employees and increased hourly rate as adjusted to reflect general inflation. Professional fee increased by $499,108 or 473.51% as compared to the same period in 2024, resulting from audit, accounting and consulting related costs. Rent expense increased by $181,284 or 18.71% as compared to the same period in 2024, which was mainly due to the initiation of the Company’s new office and warehouse lease in 2024. Meal and entertainment expenses increased by $32,409 or 195.35% as compared to the same period of 2024 for establishing and enhancing customer relations. Depreciation and amortization expense increased by $34,740 or 35.05%, as compared to the same period of 2024, which was mainly due to the purchase of fixed asset and acquisition of intangible assets. The increase in general and administrative expenses was partly offset by decreased testing fee by $41,175 or 100.00% as compared to the same period of last year.

General and administrative expenses accounted for 43.37% and 26.81% of our total revenues for the nine months ended January 31, 2025 and 2024, respectively.

Other income (expense), net

Other expenses was $30,352 for the nine months ended January 31, 2025, compared to other expenses of $11,375 for the nine months ended January 31, 2024. For the nine months ended January 31, 2025, other expenses mainly consisted of interest expense of $32,219, and other expenses of $3,624, which was partly offset with other income of $5,591. For the nine months ended January 31, 2024, other expenses mainly consisted of interest expense of $15,502 and other expense of $1,678, which was partly offset with other income of $5,805.

Income tax provision

Income tax expenses were $126,035 for the nine months ended January 31, 2025, representing a decrease of $129,937 or 50.76% from $255,972 for the nine months ended January 31, 2024, due to decreased taxable income of Grand Forest. Marwynn, FuAn and Grand Forest file separate income tax returns.

Net income (loss)

As a result of the above, we had a net loss of $419,482 for the nine months ended January 31, 2025, compared to net income $649,850 for the nine months ended January 31, 2024, a decrease of net income of $1,069,332 or 164.55%, which was mainly resulting from decreased revenue and increased audit, accounting and consulting fee, rent expense and payroll costs.

Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate adequate amounts of cash to meet current and future needs. We have funded our working capital, operations and other capital requirements in the past primarily by equity financing, borrowing from related parties, cash flow from operations, and bank loans.

In assessing our liquidity, we monitor and analyze our cash on-hand, our ability to generate sufficient revenue sources, the collection of our accounts receivable, our ability to obtain additional financial support in the future, and our operating and capital expenditure commitments. As reflected in our unaudited condensed consolidated financial statements, we had cash balance of approximately $0.23 million as of January 31, 2025. We also had accounts receivable balance of approximately $1.06 million as of January 31, 2025, among which approximately $0.3 million or 26.26% has been collected as of the date of this report.

As of January 31, 2025, we also recorded a total of approximately $0.15 million loans payable (including approximately $0.1 million short-term loan, $14,012 short-term auto loan and $35,929 long-term auto loan). We expect that we will be able to continue borrowing under our existing facilities based on past experience, our good credit history, and well-established relationship with the lenders.

As of January 31, 2025, we had due to related parties balance of approximately $0.95 million. The balance of due to related parties was comprised of advances from our related parties and was used for working capital during our normal course of business. This due to related parties was memorialized pursuant to unsecured promissory notes between Grand Forest and the holders. The unsecured promissory notes are payable on demand on or after August 1, 2025, and carry no interest. In the absence of any demand, the entire principal shall be due on July 31, 2029.

Our working capital amounted to approximately $1.2 million as of January 31, 2025.

Currently, we are working to improve our liquidity and capital sources primarily through cash flows from operation, debt financing, and financial support from our principal stockholder. In order to fully implement our business plan and sustain continued growth, we may also seek equity financing from outside investors. Based on the current operating plan, management believes that the above-mentioned measures collectively will provide sufficient liquidity for our Company to meet its future liquidity and capital requirements for at least 12 months from the issuance date of the consolidated financial statements.

However, as reflected in the accompanying unaudited condensed consolidated financial statements, the Company had net loss of approximately $0.42 million for the nine months ended January 31, 2025 and cash outflow from operating activities of approximately $0.28 million for the nine months ended January 31, 2025. The management plans to increase its revenue of FuAn by diversifying its markets from major mass market channels to ethnic supermarkets chains. In addition, FuAn has already finished the setup process to become a vendor to some major food distributors. The Company expects to increase sales through its distribution channels in the next quarter. FuAn has already engaged with regional buyers at Costco on new items and is awaiting Costco’s final approval, which the Company expects to happen in the coming months. The Company plans to increase Grand Forest’s revenue by providing more customized products to current customers. Also, the Company plans to expand the market for its products to southern California. The Company is discussing with Los Angeles, California-based distributors about the potential opportunity of setting up a Los Angeles regional office. The Company believes the expanded sales force will strengthen the relationship of its long-time customers based in southern California and help to increase overall sales. The Company had unsecured promissory notes with several stockholders with a total balance of $ 0.95 million as of January 31, 2025. These unsecured promissory notes are payable on demand on or after August 1, 2025, and carry no interest. In the absence of any demand, the entire principal should be due on July 31, 2029. Management also intends to raise additional funds by way of a private or public offering, or by obtaining loans from banks or others.

The Company has historically funded its working capital needs primarily from operations. The working capital requirements are affected by the efficiency of operations and depend on the Company’s ability to increase its revenue. The Company believes that its cash on hand and operating cash flows will be sufficient to fund its operations over at least the next 12 months from the date of issuance of these unaudited condensed financial statements. However, the Company may need additional cash resources in the future if the Company experiences changed business conditions or other developments and may also need additional cash resources in the future if the Company wishes to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If it is determined that the cash requirements exceed the Company’s amounts of cash on hand, the Company may seek to issue debt or equity securities or obtain a credit facility.

The following table summarizes our cash flows for the nine months ended January 31,2025 and 2024, respectively.

Net cash provided by (used in) operating activities

Net cash outflow from operating activities increased by $1,064,122 for the nine months ended January 31, 2025 comparing with the nine month ended January 31, 2024, mainly resulting from a) decreased net income by $1,069,332 with add-back of non-cash adjustments to net loss by $215,555, b) increased cash outflow on inventory by $473,447, c) increased cash outflow on prepaid expenses and other current assets by $439,400, d) increased cash outflow on deferred IPO costs by $697,750, e) increased cash outflow on operating lease liabilities by $241,748, f) increased cash outflow on tax payable by $433,330, which was partly offset by g) increased cash inflow on accounts receivable by $769,835, h) increased cash inflow from account payable by $1,200,275, i) increased cash inflow on deferred revenue by $50,888 and j) decreased cash outflow from accrued expenses and other current liabilities by $54,332.

Net cash used in investing activities

Net cash used in investing activities was $56,772 for the nine months ended January 31, 2025, compared to $393,655 in 2024. For the nine months ended January 31, 2025, we purchased fixed assets for $56,772. For the nine months ended January 31, 2024, we purchased fixed assets for $143,655 and intangible assets for $250,000.

Net cash provided by financing activities

Net cash used in financing activities was $795,462 for the nine months ended January 31, 2025, compared to net cash provided in financing activities of $111 for the nine months ended January 31, 2024. The net cash used in financing activities in 2025 mainly consisted of repayment of bank loan of $500,000 and repayment to related parties of $309,539, which was partly offset by increase of new auto loan of $14,077. The net cash used in financing activities in 2024 was mainly consisted of repayment to related parties of $486,674, repayment of auto loan of $13,215 and proceeds from bank loan of $500,000.

Debts

Loan from third party

On June 9, 2020, KZS entered into a loan agreement with KZ Kitchen Cabinet & Stone, Inc., an unrelated party whereby KZS borrowed $100,000, with an annual interest rate of 4.75% payable monthly, and the loan principal to be repaid at maturity on June 9, 2025. Upon a breach of the agreement, interest will accrue at a compound rate of 10% per annum and KZ Kitchen Cabinet & Stone, Inc., may declare the unpaid principal balance together with all accrued but unpaid interest thereon and all other sums owed to it under the agreement, immediately due and payable.

Following the Reorganization, this loan became an obligation of the Company.

Commitments and Contractual Obligations

The Company’s contractual obligations as of January 31, 2025, are as follows:

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of January 31, 2025 and April 30, 2024.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenue and expenses, to disclose contingent assets and liabilities on the date of the consolidated financial statements, and to disclose the reported amounts of revenue and expenses incurred during the financial reporting period. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe that the critical accounting policies as disclosed in this report reflect the more significant judgments and estimates used in preparation of our consolidated financial statements. Further, as an emerging growth company, we elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for emerging growth companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements and contained in our subsequent filings with the SEC may not be comparable to other public companies.

The following critical accounting policies rely upon assumptions and estimates and were used in the preparation of our consolidated financial statements:

Critical Accounting Estimates

The preparation of the Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. These estimates and judgments include, but are not limited to, revenue recognition, sales return allowance, the allowance for bad debt, valuation allowance of deferred tax assets, income taxes, the useful lives of long-lived assets and assumptions used in assessing impairment of long-lived assets. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Although actual amounts may differ from the estimated amounts, such differences are not likely to be material.

Critical Accounting Policies

Accounts Receivable, Net

On May 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2016-13 Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (Accounting Standards Codification (“ASC”) 326). This standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. CECL requires an estimate of credit losses for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and generally applies to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities, and some off-balance sheet credit exposures such as unfunded commitments to extend credit. Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses. In addition, CECL made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities if management does not intend to sell and does not believe that it is more likely than not they will be required to sell.

The Company adopted ASC 326 and all related subsequent amendments thereto effective May 1, 2023, using the modified retrospective approach for all financial assets measured at amortized cost and off-balance sheet credit exposures. The was no transition adjustment of the adoption of CECL.

Accounts receivable represent the amounts that the Company has an unconditional right to consideration, which are stated at the historical carrying amount net of allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including historical losses, the age of the receivable balance, the customer’s historical payment patterns, its current credit-worthiness and financial condition, and current market conditions and economic trends. Accounts are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of January 31, 2025, and April 30, 2024, the Company had allowance for credit losses of $32,339 and $24,698, respectively.

Inventories

Inventories consist of merchandise held for sale and are stated at the lower of cost or net realizable value. When evidence exists that the net realizable value of inventory is lower than its cost, the difference is recorded in cost of sales in the consolidated statement of income in the period in which it occurs. For indoor home improvement products, inventory costs primarily include merchandise costs and freight in costs. No assembly labor and overhead costs are allocated to indoor home improvement products because these costs are immaterial. Grand Forest and KZS determines inventory costs using the moving weighted average cost method. FuAn determined inventory costs using First-in-First-out method (“FIFO”). The Company records reserves for estimated losses related to shrinkage and other amounts that are otherwise not expected to be fully recoverable. The Company assesses the need for valuation allowances for slow-moving, excess and obsolete inventories by estimating the net recoverable value of such goods based upon inventory category, inventory age, specifically identified items and overall economic conditions. There was no inventory allowance as of January 31, 2025 and April 30, 2024.

Revenue Recognition

In accordance with ASC 606, “Revenue from Contracts with Customers,” revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to receive in exchange for these goods or services. The Company recognizes revenues following the five-step model prescribed under ASU No. 2014-09: (i) identifies contract(s) with a customer; (ii) identifies the performance obligations in the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes revenues when (or as) it satisfies the performance obligation.

The Company derives its revenues primarily from two business segments to provide (i) food and beverage supply chain and brand management services, and (ii) indoor home improvement products to dealers and retail customers and sales of indoor home improvement products to customers.

Revenue from food and beverage sales

FuAn sources authentic premium Asian foods from various suppliers and then distributes to customers (mainly supermarket and grocery stores) in the U.S. The Company accounts for revenue from sales of authentic premium Asian foods on a gross basis as the Company is responsible for fulfilling the promise to provide the desired authentic premium Asian foods products to customers and is subject to inventory risk before the product ownership and risk are transferred and has the discretion in establishing prices. All FuAn’s contracts are fixed price contracts and have one single performance obligation as the promise is to transfer the individual goods to customers.

The sales transaction price is indicated in each purchase order with a Deduct from Invoice (“DFI”) discount which automatically reduces per unit cost on invoice, and payment terms are primarily set as “net 30.” The Company elects to account for shipping and handling as fulfillment activities, and not as a separate performance obligation. The Company’s revenue from sales of authentic premium Asian food products is recognized at a point in time when title and risk of loss passes and the customer accepts the goods, which generally occurs at delivery. Revenue from the sale of food products is reported net of sales returns and allowance.

Revenue from sales of indoor home improvement products

Revenues from the sale of indoor home improvement products and accessories by Grand Forest and KZS at their stores, is recognized at a point in time when control of merchandise is transferred to the customer. Merchandise can either be picked up in the store or delivered to the customer. For merchandise picked up in the store, control is transferred at the time of the sale to the customer. For merchandise delivered to the customer, control is transferred either when delivery has been completed, or when the Company has a present right to payment which, for certain merchandise, occurs upon conveyance of the merchandise to the carrier for delivery. Grand Forest and KZS’ payment terms are primarily at the point of sale for merchandise sales. The majority of our customers purchase bulk boards without requesting assembly service. Occasionally, we offer assembly service to certain customers as a value-added service solely for marketing purposes to attract customers to place the orders with us. We do not separately charge the customers for assembly services. Sales of indoor home improvement products and related assembly services are not distinct in the context of the contract with the customers, because they are inputs to deliver the combined output of delivering the products to the customers. Therefore, sales of indoor home improvement products and assembly services are identified as a single performance obligation. Grand Forest and KZS elected to account for shipping and handling as fulfillment activities, and not as a separate performance obligation. The Company accounts for revenue from sales of indoor home improvement products on a gross basis as the Company is responsible for fulfilling the promise to provide the desired indoor home improvement products to customers, and is subject to inventory risk before the product ownership and risk are transferred and has discretion in establishing prices. All of the Company’s contracts are fixed price contracts and have one single performance obligation as the promise is to transfer the individual goods to customers. Revenue from the sale of merchandise is reported net of sales returns and allowance. Grand Forest and KZS estimate future returns based on historical return and current trend of product sales.

Consulting services revenue

Consulting services revenue primarily consists of service income from providing supply chain and brand management services proposals and solutions to customers to help them optimize their inventory management and product distribution strategy, to reduce delivery times, shipping costs and diversify distribution channels. The Company’s contracts with customers for supply chain and brand management services are fixed-price contracts. The Company also believes that it serves as a principal in this type of transaction because it has the latitude in establishing prices with customers, and is responsible for bearing the related costs to complete the designated services. It normally takes a few months up to one year to complete the designated services. Revenue is recognized over the service period.

Sales Returns and Allowances

For food and beverage and indoor home improvement product sales, the Company accrues estimated sales returns based on past experience and current trend of product sales. The allowance for sales returns as of January 31, 2025 and April 30, 2024 amounted to $205,988, respectively.

Income Tax

The Company uses the asset and liability method of accounting for income taxes in accordance with FASB ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current period and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets also include the prior years’ net operating losses carried forward. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

The Company follows FASB ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC Topic 740 also provides guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures.

The Company utilizes a two-step approach to recognizing and measuring uncertain income tax positions (tax contingencies). The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not the position will be sustained on audit, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating our tax positions and estimating its tax benefits, which may require periodic adjustments and which may not accurately forecast actual outcomes. The Company includes interest and penalties related to its tax contingencies in income tax expense.

Recently Issued Accounting Pronouncements

The Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging growth company and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.

In October 2023, the FASB issued ASU No. 2023-06, “Disclosure Improvements — Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” The ASU amends the disclosure or presentation requirements related to various subtopics in the FASB ASC. The ASU was issued in response to the SEC’s August 2018 final amendments in Release No. 33-10532, Disclosure Update and Simplification that updated and simplified disclosure requirements that the SEC believed were duplicative, overlapping, or outdated. The guidance in ASU 2023-06 is intended to align GAAP requirements with those of the SEC and to facilitate the application of GAAP for all entities. The amendments introduced by ASU 2023-06 are effective if the SEC removes the related disclosure or presentation requirement from its existing regulations by June 30, 2027. If, by June 30, 2027, the SEC has not removed the applicable requirements from its existing regulations, the pending content of the associated amendment will be removed from the ASC and will not become effective for any entities. Early adoption is permitted. The adoption of ASU 2023-06 is not expected to have a material impact on the Company’s consolidated financial statements or related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s management does not believe the adoption of ASU 2023-09 will have a material impact on its financial statements and disclosures.

The Company’s management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.

The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Act of 1934. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be included in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, relating to the Company, including our consolidated subsidiaries, and was made known to them by others within those entities, particularly during the period when this report was being prepared. Based upon that evaluation, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has concluded that, due to the material weakness described below, as of January 31, 2025, our disclosure controls and procedures were not effective.

We identified a material weakness in our internal control over financial reporting relating to:

• ineffective oversight of the Company’s internal control over financial reporting relating to our tax review control for complex transactions; and
• the lack of proficient personnel trained in US GAAP.

We are implementing measures designed to improve our internal control over financial reporting to remediate material weaknesses, including the following:

• We are in the process of enhancing our tax review control related to unusual transactions that we may encounter; and
• The Company plans to enhance the staffing and competency level within the accounting and finance department.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s principal executive officer and principal financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurances with respect to financial statement preparation and presentation. Additionally, projections of any evaluation of effectiveness 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 or procedures may deteriorate.

Change in Internal Control over Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting during the three months ended January 31, 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

An investment in our common stock involves a high degree of risk. You should carefully consider the risks set forth in the section captioned “Risk Factors” in our Registration Statement on Form S-1 originally filed with the SEC on January 13, 2025, as amended, before making an investment decision. If any of the risks actually occur, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. You should read the section captioned “Special Note Regarding Forward-Looking Statements” above for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this report. The risks described in the Registration Statement are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition or future results. Except as set forth below, there have been no material changes to our previously reported risk factors.

The U.S. government is currently imposing increased tariffs on certain products imported into the U.S., including products imported from China, which may have an adverse impact on our future operating results.

We sell our products based on the cost of such products plus a percent markup. The U.S. government has imposed and continues to propose increased tariffs on certain products imported into the U.S., including products imported from China. During the first quarter of 2025, the U.S. government has introduced additional trade policy actions that have increased import tariffs across a wide range of countries at various rates. These tariff changes and subsequent retaliatory actions have the potential to increase product costs for us. Some of our imported products and imported products purchased from domestic brokers are subject to these increased tariffs and accordingly, our purchase costs have increased and may increase further. As a result of such developments, we have currently paused all imports from China and are actively seeking alternative sourcing arrangements domestically and in other countries where tariff exposure may be lower. We may also determine to increase our sales prices in order to pass these increased costs to our customers. In the event we determine to take such action, our customers may reduce their orders from us, which could negatively affect our profitability and operating results. If we are unable to diversity our supply chain and reduce China sourcing, we remain subject to substantial potential exposure to tariffs, which would have significant impacts on our cost structure and product margins.

In addition, any changes in tariffs or additional restrictions on various products may be announced with little or no advance notice. The adoption and expansion of tariffs or other trade restrictions, increasing trade tensions, or other changes in governmental policies related to tariffs, trade agreements, products or policies, are difficult to anticipate or predict, which makes it difficult for us to operate optimally. If we are unable to navigate further changes in U.S. or international trade policy, it could have a material adverse impact on our business and results of operations. We are closely monitoring potential changes in international trade policy and assessing the potential impact of these and other trade policy changes on our business operations and financial performance.

Our business is exposed to risks inherent in international operations. Changes in trade policy, including tariffs and global supply chain disruptions, could increase our costs and adversely affect our operations.

Our supply chain operations rely heavily on international suppliers, primarily located in Asia, to source materials, components, and finished products for our food, non-alcoholic beverage, and home improvement sectors. A significant portion of our food and cabinetry offerings are sourced or manufactured outside the United States, including in China, Vietnam, and other Asian countries. As a result, our cost structure and sourcing strategy are inherently exposed to geopolitical instability, macroeconomic fluctuations, and shifting trade policies.

Recent actions by the U.S. presidential administration, including the imposition of significant tariffs on imports from countries such as China, Mexico, Vietnam, and Canada, have heightened uncertainty in the global trade environment. These tariffs—along with potential retaliatory measures by other countries—may increase inflationary pressure and raise the costs of goods and shipping for our imported products. While several tariff announcements have been followed by announcements of limited exemptions and temporary pauses, these actions are unprecedented, have caused substantial uncertainty and volatility in financial markets and may result in further retaliatory measures. We have currently paused our imports from China in response to these developments and are actively seeking alternative sourcing arrangements domestically and in other countries where tariff exposure may be lower. However, diversifying our supplier base may result in increased procurement and logistics costs and added operational complexity.

The full extent and duration of these tariff programs remain uncertain and depend on numerous factors, including future U.S. trade negotiations, political developments, responses from foreign governments, and the potential granting of exemptions or exclusions. Even in regions not currently subject to tariffs, ongoing trade instability may prompt suppliers to raise prices, prioritize other markets, or modify production and delivery timelines. These dynamics could result in higher input and shipping costs, delays in product availability, or the need to engage new suppliers on less favorable terms.

In addition to direct cost increases, a volatile global trade environment increases the likelihood of supply chain disruption. Trade barriers, political conflict, and uncertainty surrounding tariffs can lead to logistics challenges such as shipping delays, port congestion, container shortages, and other transportation bottlenecks. These disruptions may hinder our ability to maintain adequate inventory levels or meet customer demand on a timely basis.

We do not currently hedge against commodity price or input cost volatility. Consequently, sustained increases in the cost of imported food products, cabinetry materials, or packaging could compress our gross margins if we are unable to offset these increases through pricing adjustments or operational efficiencies. Our efforts to mitigate these impacts through selective price increases or cost-saving initiatives may not succeed and could result in lower sales volumes or reduced profitability.

There is no guarantee that we could quickly secure replacement suppliers or routes that are as cost-effective or reliable as our current ones. Consequently, prolonged trade tensions or supply chain disturbances could significantly increase our operating costs and lead to inventory shortfalls, which may require us to adjust pricing or absorb margin impacts. Any failure to manage these international trade and supply chain risks could materially and adversely affect our business, financial condition, and results of operations.