Marwynn Holdings, Inc.: Form 10-Q for the period ended Jul 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, in the “Risk Factors” section of our annual report on Form 10-K for the fiscal year ended April 30, 2025 and in the audited consolidated financial statements and notes included therein (collectively, the “2024 Annual Report”), as well as in our unaudited condensed consolidated financial statements and the related notes included in this Report. Pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K promulgated by the SEC, in preparing this discussion and analysis, we have presumed that readers have access to and have read the disclosure under the same heading contained in the 2024 Annual Report. 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.

For our food and non-alcoholic beverage supply chain business, 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.

For our indoor home improvement products, due to the increased tariffs for products imported from Vietnam and other South East Aisa countries, we will actively negotiate with vendors for them absorbing partial burden from increased tariffs, as well as raise the prices of our products to cover increased costs. Increasing costs could slow our growth and negatively affect our financial results and operational metrics.

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” discussed in our 2024 Annual Report, for additional information.

Key Factors that Affect Our Results of Operations

Operating cost increase after initial public offering

As a result of our initial public offering, we are 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. For our food and non-alcoholic beverage supply chain business, 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. 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 July 31, 2025 compared to Three Months Ended July 31, 2024

Revenues

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

Sales of food and beverage

Sales of food and beverage accounted for nil and 1.58% of total sales for the three months ended July 31, 2025 and 2024, respectively. Sales of food and beverage decreased by $44,886 or 100.00% from $44,886 for the three months ended July 31, 2024 to $nil for the three months ended July 31,2025. The decrease in our sales was primarily due to cease of the purchase orders from Costco, particularly in demand for White Rabbit ice creams. We are actively seeking new retailers and working with them 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 indoor home improvement products

Sales of indoor home improvement products accounted for 98.24% and 96.72% of total sales for the three months ended July 31, 2025 and 2024, respectively. Sales of indoor home improvement products decreased by $446,774, or 16.25% from $2,749,483 for the three months ended July 31, 2024 to $2,302,709 for the three months ended July 31, 2025. The decrease in our sales was mainly due to decrease of cabinets’ selling price for promoting and attracting new sales. For the three months ended July 31, 2025, we had approximately 1,715 sales orders, representing an increase of 71 sales orders, or 4.32%, compared with 1,644 sales orders for the three months ended July 31, 2024.

Consulting services

Revenue from consulting services accounted for 1.76% and 1.70% of total revenues for the three months ended July 31, 2025 and 2024, respectively. Revenue from consulting services decreased by $6,989, or 14.49% from $48,239 for the three months ended July 31, 2024 to $41,250 for the three months ended July 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

We derive our costs from (i) sale of food and beverage, (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 beverage decreased by $23,773, or 100.00% from $23,773 for the three months ended July 31, 2024, to $nil for the three months ended July 31, 2025. Our cost of revenues from sale of food and beverage primarily includes inventory costs, storage and freight costs. The decrease in our cost of revenues for sale of food and beverage was mainly due to cease of purchase orders from Costco, we did not have any orders from Costco for the three months ended July 31, 2025 and 2024.We also had reduced storage fees and freight costs.

Cost of revenues for sale of indoor home improvement products decreased by $45,671, or 3.27%, from $1,395,232 for the three months ended July 31, 2024, to $1,349,561 for the three months ended July 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 decrease in our cost of sales for sale of indoor home improvement products was mainly due to the decrease of our sales and the decrease of damaged product disposal.

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

Results of Operations

Comparison of the three months ended July 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 July 31, 2025 and 2024 were $2,343,959 and $2,842,608, respectively, a decrease of $498,649 or 17.54%. The decrease of sales was primarily attributed to decreased sale of food imports and distribution by $44,886, decreased consulting services by $6,989, and decreased indoor home improvement products by $446,774.

We sold 9,119 cabinets with average selling price of $141.52 each during the three months ended July 31, 2025 compared with 11,613 cabinets with average selling price of $151.13 each during the three months ended July 31, 2024. We sold 845 boxes of flooring with average selling price of $50.25 per box during the three months ended July 31, 2025 compared with 1,594 boxes of flooring with average selling price of $50.46 per box during the three months ended July 31, 2024. We sold 2,214 pieces of engineered marble or quartz with average selling price of $197.40 per piece during the three months ended July 31, 2025 compared with 1,925 pieces of quartz with average selling price of $194.83 per piece during the three months ended July 31, 2024. Our average selling price decreased during the three months ended July 31, 2025, which was a result of our strategic change of our operations by focusing to develop wholesale customers as well as to increase our competitiveness.

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.

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Cost of revenues for the three months ended July 31, 2025, and 2024 was $1,349,613 and $1,444,553, respectively, a decrease of $94,940 or 6.57%. The decrease in cost of revenues in the same period of 2025 was primarily attributed to decreased cost from sale of food and beverage by $23,773, or 100.00%, decreased cost from indoor home improvement products by $45,671 or 3.27% and decreased cost from consulting service by $25,496, or 99.80%. Cost of revenues for sale of food and beverage as a percentage of total revenues was 0.00% and 0.84%, respectively, for the three months ended July 31, 2025 and 2024. Cost of revenues for indoor home improvement products as a percentage of total revenues was 57.58% and 49.08%, respectively, for the three months ended July 31, 2025 and 2024. Cost of revenues for consulting services as a percentage of total revenues was 0.002% and 0.90%, respectively, for the three months ended July 31, 2025 and 2024.

Gross profit and gross margin

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

The following table presents our gross margin by products and services provided as a percentage of its corresponding categories.

The gross profit for the three months ended July 31, 2025 and 2024 was $994,346 and $1,398,055, respectively, a decrease of $403,709 or 28.88%. The blended gross profit margin was 42.42% for three months ended July 31, 2025 compared with 49.18% for the same period in 2024. Gross profit for sale of food and beverage decreased by 100.00% for three months ended July 31, 2025 due to no sales to Costco. Gross profit for sale of indoor home improvement products decreased by 29.62% for three months ended July 31, 2025 due to decreased selling price of our cabinet products. Gross profit for consulting services increased by 81.56% for three months ended July 31, 2025 .

Selling expenses

Our selling expenses were $1,436,730 for the three months ended July 31, 2025, as compared to $157,729 for the three months ended July 31, 2024, representing an increase of $1,279,001, or 810.89%. The increase in the selling expenses was mainly due to (1) increased advertising and marketing expenses of $1,265,169, or 8,453.62%. To attract new customers, increase our market share and improve operation efficiency, we entered into several consulting agreements for business development, market expansion, supply chain management, and strategic financial plan and support advisory services, (2) increased payroll expenses of $12,020, or 8.71% due to increased hourly pay rate, and (3) slightly increased shipping expenses of $1,245, or 360.88% as compared to the same period in 2024 resulting from shipping costs incurred for sending product samples for exploring new products for customers; the increase in selling expenses was partly offset by decreased sales commission expenses of $1,077, or 100.00%. Selling expenses accounted for 61.30% and 5.55% of our total revenues for the three months ended July 31, 2025 and 2024, respectively.

General and administrative expenses

Our general and administrative expenses were $2,271,863 for the three months ended July 31, 2025, as compared to $1,470,162 for the three months ended July 31, 2024, reflecting an increase of $801,701 or 54.53%. The increase in general and administrative expenses included decreased payroll expense, rent expenses, due and subscription expenses, meal and entertainment expenses and other expenses associated with general and administrative expenses, which was partly offset by increased professional fee, depreciation and amortization, travel expense, and insurance expense.

The increase in general and administrative expenses was mainly due to increased professional fee by $861,593 or 228.93% as compared to the same period of 2024, resulting from increased audit, accounting and consulting expenses as a result of being a public company, and increased insurance expenses by $32,774, or 216.07% as compared to the same period in 2024, which was mainly due to increased director and officer insurance expenses. The increased general administrative expenses were partly offset by decreased payroll expenses by $25,273 or 6.01% as compared to the same period in 2024, the decrease was mainly from decreased number of employees of FuAn, and decreased meal and entertainment expenses by $40,006 or 97.07% as compared to the same period of 2024 for the purpose of saving the Company’s operating costs.

General and administrative expenses accounted for 96.92% and 51.72% of our total revenues for the three months ended July 31, 2025 and 2024, respectively.

Other income (expense), net

Other expenses were $3,998 for the three months ended July 31, 2025, compared to other expenses of $11,954 for the three months ended July 31, 2024. For the three months ended July 31, 2025, other expenses mainly consisted of interest expense of $1,962, and other expenses of $3,807, which was partly offset with other income of $1,771. For the three months ended July 31, 2024, other expenses mainly consisted of interest expense of $13,762, which was partly offset by other income $1,808.

Income tax provision

Income tax expenses were $1,508 for the three months ended July 31, 2025, representing a decrease of $85,233 or 98.26% from $86,741 income tax expense for the three months ended July 31, 2024, due to decreased taxable income of Grand Forest. Marwynn, FuAn and Grand Forest file separate income tax returns.

Net loss

As a result of the above, we had a net loss of $2,719,753 for the three months ended July 31, 2025, compared to a net loss of $328,531 for the three months ended July 31, 2024, an increase of net loss of $2,391,222 or 727.85%, which was mainly resulting from decreased revenue and increased audit, accounting and consulting fee, and insurance expense.

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 $0.21 million as of July 31, 2025. We also had accounts receivable, net balance of approximately $1.09 million as of July 31, 2025, among which approximately $0.3 million or 28.1% has been collected as of the date of this report.

As of July 31, 2025, we also recorded a total of approximately $0.14 million loans payable (including approximately $0.10 million short-term loan, $9,581 short-term auto loan and $30,897 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 July 31, 2025, we had a balance due to related parties of approximately $0.23 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 $0.95 million as of July 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.

However, as reflected in the accompanying unaudited condensed consolidated financial statements, the Company had net loss of approximately $2.72 million for the three months ended July 31, 2025 and cash outflow from operating activities of approximately $0.10 million for the three months ended July 31, 2025. The management plans to increase its revenue of FuAn by diversifying its markets from major mass market channels to ethnic supermarkets chains. The Company expects to increase sales through FuAn’s distribution channels in the near future. 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 Grand Forest’s 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 $ 0.23 million as of July 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 working capital requirements are affected by the efficiency of operations and depend on the Company’s ability to increase its revenue. 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. Based on above reasons, there is a substantial doubt about the Company’s ability to continue as a going concern for the next 12 months from the issuance of the consolidated financial statements.

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

Net cash used in operating activities

Net cash outflow from operating activities decreased by $891,460 for the three months ended July 31, 2025 comparing with the three months ended July 31, 2024, mainly resulting from (a) increased net loss of $2,391,222 with adding-back of non-cash adjustments to net loss by 49,313, (b) decreased cash outflow on inventory by $428,069, (c) decreased cash outflow on prepaid expenses and other current assets by $3,195,078, (d) decreased payment on deferred IPO costs by $342,372, (e) decreased cash outflow on tax payable by $71,627, (f) decreased cash outflow on accrued expenses and other current liabilities by $7,915, which was partly offset by (g) increased cash outflow on operating lease liabilities by $10,282, (h) increased outstanding accounts receivable by $478,342, (i) increased cash outflow on accounts payable by $117,684, and (j) increased cash outflow on deferred revenue by $201,614.

Net cash used in investing activities

Net cash used in investing activities was $690,000 for the three months ended July 31, 2025, compared to $5,000 for the same period in 2024. The net cash used in investing activities in 2025 mainly consisted of loans made to Bio Essence totaling $690,000, comprising a $500,000 interest-bearing loan and a $190,000 non-interest-bearing advance. For the three months ended July 31, 2024, we purchased fixed assets for $5,000.

Net cash used in financing activities

Net cash used in financing activities was $952,754 for the three months ended July 31, 2025, compared to net cash used in financing activities of $71,469 for the three months ended July 31, 2024. The net cash used in financing activities in 2025 mainly consisted of increased repayment of auto loan by $5,588, increased repayment to related parties by $451,019, and increased note receivable by $690,000, which was partly offset by repayment of loan from shareholder of $193,853. The net cash used in financing activities in 2024 mainly consisted of repayment of auto loan of $5,414, and repayment to related parties of $66,055.

Debts

Loan from a 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. As of this report date, the Company is in the process to extend this loan.

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

Commitments and Contractual Obligations

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

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed 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 unaudited condensed 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 July 31, 2025 and April 30, 2025, the Company had allowance for credit losses of $557,201 and $557,201, respectively.

Inventories, Net

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 July 31, 2025 and April 30, 2025.

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 July 31, 2025 and April 30, 2025 amounted to $205,988 and $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 January 2025, the FASB issued ASU 2025-01 Income Statement-Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40). The FASB issued ASU 2024-03 on November 4, 2024-03 states that the amendments are effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Following the issuance of ASU 2024-03, the FASB was asked to clarify the initial effective date for entities that do not have an annual reporting period that ends on December 31 (referred to as non-calendar year-end entities). Because of how the effective date guidance was written, a non-calendar year-end entity may have concluded that it would be required to initially adopt the disclosure requirements in ASU 2024-03 in an interim reporting period, rather than in annual reporting period. The FASB’s intent in the basis for conclusions of ASU 2024-03 is clear that all public business entities should initially adopt the disclosure requirements in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires the disaggregation of certain expense captions into specified categories in disclosures within the notes to the consolidated financial statements to provide enhanced transparency into the expense captions presented on the face of the statement of income and comprehensive income. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted, and may be applied either prospectively or retrospectively to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements. On January 6, 2025, FASB issued ASU 2025-01 that clarifies for non-calendar year-end entities the interim effective date of Accounting Standards Update No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. Public business entities are required to adopt the guidance in Update 2024-03 in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its related disclosures.

In March 2025, the FASB issued ASU 2025-02—Liabilities (405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 122. The amendments in this Update are effective immediately and on a fully retrospective basis to annual periods beginning after December 15, 2024. The Company is currently evaluating the effect of adoption of this standard to its consolidated 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 unaudited condensed 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

Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer (together, the "Certifying Officers"), or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our Certifying Officers, we carried out 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 Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were effective as of the end of the quarter ended July 31, 2025. Accordingly, management believes that the financial statement contained elsewhere in this Report present fairly in all material respects our financial position, results of operations and cash flows for the period presented.

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 July 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 risk factors set forth in the section captioned “Risk Factors” in our Form 10-K filed with the SEC on August 8, 2025 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.