# Powerus Corp: Form 10-Q for the period ended Sep 30, 2024

- Company: [Powerus Corp](/companies/pusa.md) (CIK 2009312)
- Form: 10-Q
- Filed: 2024-12-13
- Accepted by EDGAR: Dec 13, 2024, 11:08 ET
- Period: 2024-09-30
- Accession: 0001493152-24-049927
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/2009312/000149315224049927/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/2009312/000149315224049927/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $436.9k | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $2.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | −$279.7k | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | $105.6k | us-gaap:OperatingIncomeLoss |
| Interest expense | 9 months, 2024-01-01 to 2024-09-30 | $21.6k | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | −$71.7k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-01-01 to 2024-09-30 | $66.1k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | −$205.6k | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | $54.7k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.02 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | $0.01 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.02 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | $0.01 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 10,880,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 10,880,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | $145.6k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $126.7k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-09-30 | $502.2k | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $1.2m | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $5.4m | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $3.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-09-30 | $4.1m | us-gaap:Liabilities |
| Long-term debt | at 2024-09-30 | $219.2k | us-gaap:LongTermDebt |
| Short-term borrowings | at 2024-09-30 | $109.1k | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2024-09-30 | $1.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 43,765 characters.

### Introductory Note

*Except as otherwise indicated by the context, references in this Quarterly Report on Form 10-Q (this “Form 10-Q”) to the “Company,” “we,” “us” or “our” are references to the combined business Aureus Greenway Holdings Inc. and its subsidiaries. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) summarizes the significant factors affecting our results of operations, liquidity, capital resources and contractual obligations. The following discussion and analysis should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and related notes included elsewhere herein.*

### General Overview of Operations

We own and operate two public golf country clubs in Florida that we acquired in 2014. Our golf country clubs include two golf-courses with over 13,000 yards of combined fairways, clubhouses boasting food and beverage options, aquatic golf ranges, and pro shops to assist any level of golfers. Our two golf country clubs are situated on over 289 acres of multi-service recreational property.

Each of our golf country clubs is organized into four revenue streams: (i) golf operations, (ii) sales of food and beverage; (iii) sales of merchandise; and (iv) ancillary income.

### Management’s Plans

Over the next twelve months, we plan to continue to promote, market, manage and operate our golf country clubs with the intent to (i) attract and retain customers across a number of demographic groups to further develop customer loyalty and capture a greater share of customers in the greater Orlando Florida region and (ii) increase revenue from managing and operating our golf country clubs.

We believe attracting and retaining customers while increasing customer engagement and loyalty by providing what we believe to be a high quality golfing experience will drive our revenue. Drivers of our revenue growth will require further steps to maintain and build on quality experiences at our golf country clubs. To achieve the foregoing, we intend to focus on:

- Renovating and modernizing our golf country clubs to promote more enjoyable use of our facilities;
- Retaining new regional customers from the growth of the surrounding greater Orlando Florida region through marketing efforts; and
- Expanding our portfolio through regional country club acquisitions.

### Key Factors Affecting our Results of Operations

a. Seasonality and weather

Our businesses are subject to seasonality and typically the first quarter of each year is our busiest season of the year. Then, even during our busy season, our business activities are affected by weather conditions. In 2023, we believe that we experienced very few rainy days during the first quarter making almost every day of the busiest season a suitable day for playing golf.

b. Cost of maintenance due to inflation

Our maintenance contract with our major vendor, SSS Down to Earth, LLC (“DTE”) an independently contracted country club consultancy and golf maintenance company, was only renewed in 2022 and the renewed contractual price did not fully reflect the inflationary environment that subsequently impacted the labor, fertilizer and chemical markets. In order to maintain our golf courses at a quality level that is consistent with our price points, after thorough discussions with the management of DTE, we had agreed to increase our contract price with DTE by a total of $200,000 starting in October 2023. This increase did not fully impact our cost basis in 2023 but will be in 2024. The maintenance cost and contract with DTE may be subject to further increases in 2024 if the inflationary environment continues to impact our maintenance needs.

### Basis of Presentation

The interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The interim financial statements include the accounts of the Company and its wholly-owned subsidiaries. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. All significant inter-company transactions and balances between members of the Group are eliminated upon consolidation.

### Critical Accounting Policies, Judgments and Estimates

We have identified certain accounting policies that are significant to the preparation of our Group’s financial information. Some of our accounting policies involve subjective assumptions and estimates, as well as complex judgements relating to accounting items. In each case, the determination of these items requires management judgements based on information and financial data that may change in future periods. When reviewing our financial statements, you should consider: (i) our selection of accounting policies; and (ii) the results to changes in conditions and assumptions. We set forth below those accounting policies that we believe are of critical importance to us or involve the most significant estimates and judgements used in the preparation of our Group’s financial statements.

### Results of Operations (For the Three and Nine Months Ended September 30, 2024 and 2023)

| Revenue | For the Three Months Ended September 30, 2024 | 2023 | For the Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Golf operations | 295,042 | 300,191 | $1,974,651 | $2,247,862 |
| Sales of food and beverage | 107,707 | 108,846 | 499,792 | 530,012 |
| Sales of merchandise | 15,627 | 19,780 | 91,451 | 107,861 |
| Ancillary revenue | 18,523 | 10,657 | 73,177 | 67,201 |
| **Total revenue** | 436,899 | 439,474 | 2,639,071 | 2,952,936 |
| **Operating costs:** |  |  |  |  |
| Golf operating costs (exclusive of depreciation and salaries and benefits shown separately below) | 323,530 | 264,694 | 1,030,225 | 845,496 |
| Cost of food and beverage sales (exclusive of depreciation and salaries and benefits shown separately below) | 32,722 | 32,789 | 146,762 | 159,111 |
| Cost of merchandise sales (exclusive of depreciation and salaries and benefits shown separately below) | 8,233 | 13,418 | 42,317 | 68,611 |
| Salaries and benefits | 139,420 | 128,883 | 517,063 | 543,979 |
| Depreciation | 50,353 | 44,068 | 150,391 | 129,176 |
| Other general and administration expenses | 162,374 | 240,653 | 646,711 | 587,030 |
| Total operating costs | 716,632 | 724,505 | 2,533,469 | 2,333,403 |
| **(Loss) income from operations** | (279,733) | (285,031) | 105,602 | 619,533 |
| **Other income (expense)** |  |  |  |  |
| Interest expense | (5,104) | (7,571) | (21,586) | (21,823) |
| Other income | 7,517 | 6,257 | 36,784 | 20,477 |
| Total other income (expense), net | 2,413 | (1,314) | 15,198 | (1,346) |
| **(Loss) income before income tax** | (277,320) | (286,345) | 120,800 | 618,187 |
| Income tax (benefits) expenses | (71,708) | (57,129) | 66,129 | (91,141) |
| **Net (Loss) Income** | **(205,612)** | **(229,216)** | **$54,671** | **$709,328** |

### Revenue

Revenues disaggregated by major revenue streams for the three and nine months ended September 30, 2024 and 2023 are disclosed in the table below:

| Golf operations | For the Three Months Ended September 30, 2024 | 2023 | Changes $% |  | For the Nine Months Ended September 30, 2024 | 2023 | Changes $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| – annual membership dues | 80,788 | 39,140 | 41,648 | 106% | $231,168 | $181,688 | $49,480 | 27% |
| – one-time green fees | 214,254 | 261,051 | (46,797) | (18)% | 1,743,483 | 2,066,174 | (322,691) | (16)% |
| Sales of food and beverage | 107,707 | 108,846 | (1,139) | (1)% | 499,792 | 530,012 | (30,220) | (6)% |
| Sales of merchandise | 15,627 | 19,780 | (4,153) | (21)% | 91,451 | 107,861 | (16,410) | (15)% |
| Ancillary revenue | 18,523 | 10,657 | 7,866 | 74% | 73,177 | 67,201 | 5,976 | 9% |
|  | 436,899 | 439,474 | (2,575) | (1)% | $2,639,071 | $2,952,936 | $(313,865) | (11)% |

28

### Comparison for the nine months ended September 30, 2024 and 2023

Our revenue is mainly comprised of golf operations, sales of food and beverage and sales of merchandise. Overall decrease in revenue period over period by $313,865 or 11% was mainly due to the decrease in one-time green fees from golf operations and the associated sales of food and beverage and merchandise.

Revenue from golf operations decreased by $273,211 or 12% from $2,247,862 for the nine months ended September 30, 2023 to $1,974,651 for the nine months ended September 30, 2024, which was mainly driven by the decrease in one-time green fees from golf operations by $322,691 or 16%, slightly net off by the increase in annual membership dues by $49,480 or 27%.

Revenue from annual membership dues slightly increased by $49,480 or 27% mainly due to the increase in demand from customers who paid annual membership dues for the nine months ended September 30, 2024.

One-time green fees from golf operations accounted for 66% and 70% of total revenue for the nine months ended September 30, 2024 and 2023 respectively. Decrease in one-time greens fees by 16% resulted from the decrease in total number of rounds by approximately 18% from approximately 45,000 rounds during the nine months ended September 30, 2023 to approximately 37,000 rounds during the nine months ended September 30, 2024 despite the increase in average price per round by approximately 2% from $46 per round for the nine months ended September 30, 2023 to $47 per round for the nine months ended September 30, 2024. Decrease in number of rounds was mainly due to more rainy days during the nine months ended September 30, 2024.

Decrease in revenue from sales of food and beverage by $30,220 or 6% from $530,012 for the nine months ended September 30, 2023 to $499,792 for the nine months ended September 30, 2024 was contributed by a decrease in quantities sold by 14% from approximately 92,000 pieces of food and beverage for the nine months ended September 30, 2023 to approximately 80,000 pieces of food and beverage for the nine months ended September 30, 2024 and the average unit price remained stable at $6 per unit for both periods. The decrease in quantities sold was in line with decrease in golf operations.

Decrease in revenue from sales of merchandise by $16,410 or 15% from $107,861 for the nine months ended September 30, 2023 to $91,451 for the nine months ended September 30, 2024 was contributed by a decrease in sales of golf balls, men’s wear and headwear by 16% as a result of the decrease in customers playing golf during the nine months ended September 30, 2024 which was mainly due to the decrease in revenue from golf operations as a result of decrease in customers visiting our pro shops.

Ancillary revenue mainly represented the equipment and facilities rental, including the lease of our clubhouse and lease of golf club to our customers. The increase by $5,976 or 9% was mainly due to an increase in demand for rental services for activities and events during the nine months ended September 30, 2024.

### Comparison for the three months ended September 30, 2024 and 2023

Our revenue is mainly comprised of golf operations, sales of food and beverage and sales of merchandise. Overall decrease in revenue period over period by $2,575 or 1% was mainly due to the decrease in one-time green fees from golf operations and being partially offset by an increase in annual membership dues by $41,648 or 106%.

One-time green fees from golf operations accounted for 49% and 59% of total revenue for the three months ended September 30, 2024 and 2023, respectively. Decrease in one-time green fees by 18% resulted from the decrease in total number of rounds by approximately 12% from approximately 7,000 rounds during the three months ended September 30, 2023 to approximately 6,000 rounds during the three months ended September 30, 2024 and the decrease in average price per round by 7% from approximately $37 per round in average for the three months ended September 30, 2023 to approximately $34 per round in average for the three months ended September 30, 2024 which was in turn attract more customers to play golf after experiencing more rainy days during the period by offering lower price per round.

Revenue from annual membership dues increased by $41,648 or 106% mainly due to the increase in demand from customers who paid annual membership dues by enjoying a lower price for annual subscriptions for the three months ended September 30, 2024.

The revenue from sales of food and beverages remained stable at $107,707 and $108,846 for the three months ended September 30, 2024 and 2023, respectively.

Decrease in revenue from sales of merchandise by $4,153 or 21% from $19,780 for the three months ended September 30, 2023 to $15,627 for the three months ended September 30, 2024 was mainly caused by the decrease in sales of golf balls, men’s wear and headwear by 23% as a result of the decrease in customers playing golf during the three months ended September 30, 2024.

Ancillary revenue mainly represented the equipment and facilities rental, including the lease of our clubhouse and lease of golf club to our customers. The increase by $7,866 or 74% was mainly due to the increase in demand for rental services for activities and events during the three months ended September 30, 2024.

### Operating expenses

Operating expenses consisted of the following:

|  | For the Three Months Ended September 30, 2024 | 2023 | Changes% |  | For the Nine Months Ended September 30, 2024 | 2023 | Changes% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Golf operating costs(1) | 323,530 | 264,694 | 58,836 | 22% | $1,030,225 | $845,496 | $184,729 | 22% |
| Cost of food and beverage sales(1) | 32,722 | 32,789 | (67) | (0)% | 146,762 | 159,111 | (12,349) | (8)% |
| Cost of merchandise sales(1) | 8,233 | 13,418 | (5,185) | (39)% | 42,317 | 68,611 | (26,294) | (38)% |
| Salaries and benefits | 139,420 | 128,883 | 10,537 | 8% | 517,063 | 543,979 | (26,916) | (5)% |
| Depreciation | 50,353 | 44,068 | 6,285 | 14% | 150,391 | 129,176 | 21,215 | 16% |
| Other general and administrative expenses | 162,374 | 240,653 | (78,279) | (33)% | 646,711 | 587,030 | 59,681 | 10% |
|  | 716,632 | 724,505 | (7,873) | (1)% | $2,533,469 | $2,333,403 | $200,066 | 9% |

(1) Exclusive of depreciation and salaries and benefits shown separately above.

### Comparison for the nine months ended September 30, 2024 and 2023

The operating expenses of the Company mainly consist of costs related to golf operations, costs related to sales of food and beverage and merchandise, salaries and benefits, depreciation and other miscellaneous administrative expenses. The overall operating expenses increased by $200,066 or 9% from $2,333,403 for the nine months ended September 30, 2023 to $2,533,469 for the nine months ended September 30, 2024, which was primarily due to increases in golf operating costs and other general and administrative expenses and partially offset by the decrease in cost of merchandise sales and salaries and benefits during the current period with details discussed below.

Golf operating expenses consisted of course upkeep expenses including the regular repair and maintenance of the golf courses and landscaping. Golf operating expenses increased by $184,729 or 22% from $845,496 for the nine months ended September 30, 2023 to $1,030,225 for the nine months ended September 30, 2024, which was attributable to the increase in contractual landscaping and repair and maintenance by $158,275 with our largest vendor, Down to Earth, after more frequent rainy days during the nine months ended September 30, 2024 despite the decrease in revenue.

The decrease in cost of food and beverage sales by $12,349 or 8% from $159,111 for the nine months ended September 30, 2023 to $146,762 for the nine months ended September 30, 2024 was in line with the decrease in sales of food and beverage.

Our cost of merchandise sales consisted of mainly the purchase cost of golf balls, men’s and ladies’ wear, gloves and headwear. Decrease in cost of merchandise sales was in line with the decrease in revenue from golf operations.

Our salaries and benefits mainly consisted of the director’s remuneration, the staff costs and welfare of management, operating team, cashier and administrative personnel. The decrease in salaries and benefits by $26,916 or 5% was primarily due to a decrease in director’s remuneration by $70,000 to Mr. C. P. Cheung for his duties as CEO in the daily operations and management of golf operations of the Company and offset by the increase of salaries for other personnel by approximately $40,000 as a result of hiring of a chef with a high salary since the second half year of 2023 and increase in mandatory minimum wage by $1 per hour for the nine months ended September 30, 2024.

Our depreciation is mainly derived from depreciation of the recreational building, golf carts, pump stations and other operating equipment. The increase in depreciation was mainly due to the replacement of a pump station and air-conditioning system with acquisition costs of $181,471, of which $103,436 was paid and recognized as prepayment for acquisition of property and equipment in the prior year.

Other general and administrative expenses mainly consisted of professional fees, repair and maintenance of restaurant machinery and equipment, utilities, liability insurance, personal property tax and real estate tax, credit card charges and other miscellaneous administrative expenses. Increase in other general and administrative expenses by $59,681 or 10% from $587,030 for the nine months ended September 30, 2023 to $646,711 for the nine months ended September 30, 2024 was mainly attributable to the increase of audit and quarterly review fee by $58,500 for listing purposes during the period as compared to the corresponding period in 2023.

### Comparison for the three months ended September 30, 2024 and 2023

The operating expenses of the Company mainly consists of costs related to golf operations, costs related to sales of food and beverage and merchandise, salaries and benefits, depreciation and other miscellaneous administrative expenses. The overall operating expenses decreased by $7,873 or 1% from $724,505 for the three months ended September 30, 2023 to $716,632 for the three months ended September 30, 2024, which was primarily due to the decrease in other general and administrative expenses and offset by the increases in golf operating costs and salaries and benefits during the current period with the details discussed below.

Golf operating expenses consisted of course upkeep expenses including the regular repair and maintenance of the golf courses and landscaping. Increase in golf operating expenses by $58,836 or 22% from $264,694 for the three months ended September 30, 2023 to $323,530 for the three months ended September 30, 2024 was attributable to the increase in the contractual landscaping and repair and maintenance by $50,000 with our largest vendor, DTE, after the more frequent rainy days during the nine months ended September 30, 2024 despite the decrease in revenue.

The cost of food and beverages remained stable at $32,722 and $32,789 for the three months ended September 30, 2024 and 2023, respectively.

Our cost of merchandise sales consisted of mainly the purchase cost of golf balls, men’s and ladies’ wear, gloves and headwear. Decrease in cost of merchandise sales in line with the decrease in sales of merchandise for the three months ended 30 September 2024.

Our salaries and benefits mainly consisted of director’s remuneration, staff costs and welfare of management, operating team, cashier and administrative personnel. The increase in salaries and benefits by $10,537 or 8% was primarily due to the increase in mandatory minimum wage by $1 per hour and the salaries paid to the Chief Financial Officer who had joined the Company since November 2023.

Our depreciation is mainly derived from the recreational building, golf carts, pump stations and other operating equipment. The increase in depreciation was mainly due to the replacement of a pump station and air-conditioning system with acquisition costs of $181,471 in the first quarter of 2024, among which $103,436 was paid and recognized as prepayment for acquisition of property and equipment in the prior year.

Other general and administrative expenses mainly consisted of professional fees, repair and maintenance of restaurant machinery and equipment, utilities, liability insurance, personal property tax and real estate tax, credit card charges and other miscellaneous administrative expenses. Decrease in other general and administrative expenses by $78,279 or 33% from $240,653 for the three months ended September 30, 2023 to $162,374 for the three months ended September 30, 2024 was mainly attributable to the recognition of quarterly review fee of $7,500 for listing purposes during the period as compared to audit fee of $70,000 for the corresponding period in 2023.

### Comparison for the three and nine months ended September 30, 2024 and 2023

### Other (expenses) income

Other (expenses) income mainly includes interest expenses regarding the bank other borrowings incurred, bank interest income and additional service charges from customers who paid by credit cards. The increase in other income by $16,544 for the nine months ended September 30, 2024 and by $3,727 for the three months ended September 30, 2024 was mainly due to the increase in service charges from customers due to more usage of credit cards by the customers and increase in bank interest income.

### Income tax expenses

The Company provides for income tax under ASC 740, “Income Taxes” under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

The Company is incorporated in the State of Nevada and is not subject to tax on income or capital gains under current Nevada law. In addition, upon payments of dividends by these entities to their shareholders, no Nevada withholding tax will be imposed.

The Company’s deferred tax asset and income tax expenses are computed at the federal statutory rate of 21% and state of Florida tax rate of 5.5% to the income tax amount recorded for the three and nine months ended September 30, 2024 and 2023.

The Group evaluated the recoverable amounts of deferred tax assets to the extent that future taxable profits will be available against which the net operating losses and temporary difference can be utilized.

As of September 30, 2024, the Company had $812,121 of net operating losses (“NOLs”) which can be carried forward indefinitely.

The NOLs carry forwards are subject to certain limitations due to the change in control of the Company pursuant to Internal Revenue Code Section 382.

The Company recorded income tax expenses of $66,129 for the nine months ended September 30, 2024 while income tax benefits of $91,141 for the nine months ended September 30, 2023. The Company recorded income tax benefits of $71,708 for the three months ended September 30, 2024 and income tax benefits of $57,129 for the three months ended September 30, 2023. Please refer to Note 12 – Income Tax to the Unaudited Condensed Consolidated Financial Statements for more details.

### Net (loss) income

Our income for the nine months ended September 30, 2024 and 2023 was $54,671 and $709,328, respectively. The decrease in net income by $654,657 or 92% was mainly due to the decrease in our revenue by $313,865 and increase in our operating costs by $200,066 mainly due to additional professional fees for listing purposes during the nine months ended September 30, 2024 and increase in income tax expense due to utilization of NOLs for the nine months ended September 30, 2024.

Our loss for the three months ended September 30, 2024 and 2023 was $205,612 and $229,216, respectively. The decrease of net loss by $23,604 or 10% was mainly due to the decrease in our income tax benefits by $14,579.

### Working Capital (as of September 30, 2024 and December 31, 2023)

The following table summarizes our cash and working capital as of September 30, 2024 and December 31, 2023:

|  | September 30, 2024 | December 31, 2023 | Changes% |  |
| --- | ---: | ---: | ---: | ---: |
| Cash and cash equivalents | $502,161 | $646,294 | $(144,133) | (22)% |
| Accounts receivable – net | 18,740 | 36,299 | (17,559) | (48)% |
| Inventories, net | 55,054 | 55,704 | (650) | (1)% |
| Deferred offering costs | 574,840 | 252,964 | 321,876 | 127% |
| Other current assets | 125 | 125 | - | 0% |
| Total currents assets | $1,150,920 | $991,386 | $159,434 | 16% |
| Accounts payable and accrued liabilities | $333,224 | $495,930 | $(162,706) | (33)% |
| Contract liabilities – deferred revenue | 137,336 | 158,429 | (21,093) | (13)% |
| Bank and other borrowings – current | 109,100 | 135,970 | (26,870) | (20)% |
| Operating lease liabilities – current | 227,597 | 222,275 | 5,322 | 2% |
| Due to related parties | 2,416,320 | 1,651,407 | 764,913 | 46% |
| Total current liabilities | $3,223,577 | $2,664,011 | $559,566 | 21% |
| Working Capital Deficiency | $(2,072,657) | $(1,672,625) | $(400,032) | 24% |

32

### Accounts receivables

Accounts receivable mainly represent amounts due from customers paid by credit cards from provision of golf operations services and sales of merchandise and food and beverages which are recorded net of allowance for expected credit losses. The decrease in accounts receivables from $36,299 as of December 31, 2023 to $18,740 as of September 30, 2024 was mainly due to the less customers who paid by credit cards near the end of September 30, 2024.

### Inventories

Our inventories consist of merchandise goods such as golf balls, gloves, men’s wear and women’s wears, food and beverages. The Company keeps low inventories since the turnaround time is short.

### Deferred offering costs

Deferred offering costs consist of underwriting, legal and other expenses incurred through the balance sheet date that are directly related to the intended initial public offering (“IPO”). Deferred offering costs will be charged to shareholders’ equity netted against the proceeds upon the completion of our proposed initial public offering (“IPO”). Should the IPO prove to be unsuccessful, these deferred offering costs, as well as additional expenses to be incurred, will be charged to statements of income. Such costs will be deferred until the closing of the IPO, at which time the deferred costs will be offset against the offering proceeds and recognized in equity of the Company. The increase of $321,876 was due to additional payment for expenses for listing purpose during the nine months ended September 30, 2024.

### Accounts payable and accrued liabilities

Accounts payable and accrued liabilities represented the payable to the vendors for the course upkeep costs, credit cards charge payables, sales tax payables and property tax payable. Decrease in accounts payable and accrued liabilities balance by $162,706 or 33% from $495,930 as of December 31, 2023 to $333,224 as of September 30, 2024 was mainly due to the decrease in accounts payable by $113,413 as a result of settlement of payables to vendors outweighed the costs incurred to vendors during the nine months ended September 30, 2024.

### Contract liabilities – deferred revenue

Contract liabilities – deferred revenue represented the annual membership dues received in advance before the usage of golf course by customers. The decrease in this balance by $21,093 or 13% was mainly due to revenue recognized during the period outweighed the annual membership dues being received in advance during the three months ended September 30, 2024.

### Bank and Other Borrowings

The Company borrowed loans from various financial institutions for working capital purposes. Our borrowings are as follows as of September 30, 2024 and December 31, 2023:

| Initiation date | Loan No. | Principal Amount | Maturity date | Fixed Interest Rate | September 30, 2024 | December 31, 2023 |
| --- | --- | ---: | --- | ---: | ---: | ---: |
| May 13, 2020 | #1 | $500,000 | April 13,2050 | 3.75% | $- | $488,961 |
| May 17, 2022 | #2 | $25,050 | August 1,2025 | 5.50% | 7,452 | 13,975 |
| September 9, 2022 | #3 | $150,000 | September 9, 2025 | 6.75% | 53,461 | 91,202 |
| August 1, 2023 | #4 | $87,199 | July 1, 2031 | 6.50% | 68,327 | 74,089 |
| November 13, 2023 | #5 | $120,000 | November 13, 2026 | 9.25% | 89,984 | 117,088 |
| Total loans payable |  |  |  |  | 219,224 | 785,315 |
| Current portion |  |  |  |  | (109,100) | (135,970) |
| Long-term portion |  |  |  |  | $110,124 | $649,345 |

The overall decrease in bank and other borrowings was mainly due to the repayment of loans of $566,091 during the nine months ended September 30, 2024.

### Operating lease liabilities

The operating leases liabilities represented the leases for corporate office, golf carts and golf equipment for terms of four to five years. The increase in the operating leases – current was mainly due to new leases of two new golf carts with terms for five years commenced from September 2024 and offset by the repayments lease liabilities during the nine months ended September 30, 2024.

### Amounts due to related parties

Amounts due to related parties consists of the following:

| Name | Relationship | Nature | September 30, 2024 | December 31, 2023 |
| --- | --- | --- | ---: | ---: |
| Mr. S. Cheung | Shareholder of the Company | Interest-free listing expense loans(1) | $965,777 | $520,964 |
| Mr. S. Cheung | Shareholder of the Company | Interest-free shareholder’s loans(2) | 612,272 | 472,272 |
| Mr. C. P. Cheung | Shareholder and Director of the Company | Interest-free shareholder’s loans(2) | 489,917 | 377,817 |
| Mr. C. P. Cheung | Shareholder and Director of the Company | Director’s remunerations(3) | 225,900 | 185,900 |
| Mr. Y. C. Cheung | Shareholder of the Company | Interest-free shareholder’s loans(2) | 122,454 | 94,454 |
|  |  |  | $2,416,320 | $1,651,407 |

Notes:

(1) On September 7, 2023, Mr. S. Cheung, a shareholder of the Company, entered into a loan facility agreement with the Company that Mr. S. Cheung agreed to pay the listing expenses incurred for the initial public offering in Nasdaq on behalf of the Company before listing with a maximum principal amount of $1,000,000. Pursuant to the facility agreement, the loan is interest-free, unsecured and repayable on the earlier of the listing of our common stock on Nasdaq, or December 31, 2024. As of September 30, 2024 and December 31, 2023, the amount of listing expenses paid by Mr. S. Cheung on behalf of the Company was $965,777 and $520,964.

(2) On April 24, 2014, Mr. S. Cheung, Mr. C. P. Cheung and Mr. Y. C. Cheung entered into two shareholders’ loan agreements with Chrome Field I, Inc. and Chrome Field II, Inc., wholly-owned subsidiaries of the Company, respectively. Pursuant to the shareholders’ loan agreements, Mr. S. Cheung, Mr. C. P. Cheung and Mr. Y. C. Cheung agreed to grant shareholders’ loans at principal amounts of $1,307,619.69 and $1,447,739.16 to Chrome Field I, Inc. and Chrome Field II, Inc., respectively, in a proportion of 50%, 40% and 10%, respectively, in connection with the acquisition of Kissimmee Bay and Remington in 2014. Pursuant to the shareholders’ loan agreements, the loans are interest-free, unsecured and to repayable on demand. As of September 30, 2024, amount of outstanding shareholders’ loans owned by the Company to Mr. S. Cheung, Mr. C. P. Cheung and Mr. Y. C. Cheung was $612,272, $489,917 and $122,454, respectively. As of December 31, 2023, amount of outstanding shareholders’ loans owned by the Company to Mr. S. Cheung, Mr. C. P. Cheung and Mr. Y. C. Cheung was $472,272, $377,817 and $94,454, respectively. The increase was mainly due to the shareholders’ loans of $500,000 granted on April 15, 2024 which was offset by the repayments of shareholders’ loans by $220,000.

(3) For the sake of compensating Mr. C. P. Cheung’s duties as CEO in the daily operations and management of golf operations of the Company, director’s remuneration was granted by the Company every year based on the performance of the Company. For the nine months ended September 30, 2024 and 2023, the Company charged $40,000 and $110,000, respectively, as director’s remuneration to Mr. C. P. Cheung and recognized under salaries and benefits on the statement statements of income. The balance is interest-free, unsecured and repayable on demand. As of September 30, 2024 and December 31, 2023, outstanding director’s remuneration was $225,900 and $185,900, respectively.

Mr. S. Cheung, Mr. C. P. Cheung and Mr. Y. C. Cheung signed an undertaking that no demand on repayment from the Company since December 31, 2022 and the balances will be fully settled upon listing of the Group.

### Cash Flows (For the Nine Month Ended September 30, 2024 and 2023)

The following table summarizes our cash flows from operating, investing and financing activities as of the nine months ended September 30, 2024:

|  | For the Nine Months Ended September 30, 2024 | 2023 | Changes |
| --- | ---: | ---: | ---: |
| Cash provided by Operating Activities | $145,601 | $898,420 | $(752,819) |
| Cash used in Investing Activities | $(126,680) | $(183,710) | $57,030 |
| Cash used in Financing Activities | $(163,054) | $(939,709) | $776,655 |
| Net change in cash and cash equivalents | $(144,133) | $(224,999) | $80,866 |

### Cash Flow from Operating Activities

During the nine months ended September 30, 2024, our net cash provided by operating activities was approximately $145,601, primarily arising from net income of $54,671, as adjusted for non-cash items and changes in operating assets and liabilities. Adjustment for non-cash items mainly consisted of depreciation of $150,391 and unpaid director’s remuneration of $40,000. Changes in operating assets and liabilities mainly include (i) a decrease in accounts receivables of $17,559 due to decrease in customers who paid by credit cards near the period end; (ii) a decrease in deferred tax assets of $20,918 due to the utilization of NOLs for the nine months ended September 30, 2024; (iii) a decrease in accounts payable and accrued liabilities of $162,706 due to decrease in accounts payable as a result of settlement of payables to vendors outweighed the costs incurred to vendors; (iv) a decrease in contract liabilities of $21,093 due to revenue recognized in the current period in relation to contract liabilities outweighed the annual membership dues being received in advance during the period; and (iv) increase in deferred tax liabilities of $45,211 due to increase in the temporary difference derived from the accelerated depreciation of property and equipment.

During the nine months ended September 30, 2023, our net cash provided by operating activities was approximately $898,420, which was driven by net income of $709,328, and adjusted for non-cash items and changes in operating assets and liabilities. Adjustment for non-cash items mainly consisted of depreciation of $129,176 and unpaid director’s remuneration of $110,000. Changes in operating assets and liabilities mainly include (i) a decrease in accounts receivables of $25,671 due to decrease in customers who paid by credit cards near the period end; and (ii) an increase in deferred tax assets of $100,940 due to recognition of deferred tax assets of $274,075 during the period for the NOLs and partially offset by the utilization of NOLs of $173,135 during the period.

### Cash Flows from Investing Activities

During the nine months ended September 30, 2024, cash flows used in investing activities were for the purchase of property and equipment of $126,680. It was due to the purchase of pump station and the installation of new air-conditioner system.

During the nine months ended September 30, 2023, cash flows used in investing activities were for the purchase of property and equipment of $183,710, it is mainly due to payments for the pump station and the course improvement.

### Cash Flows from Financing Activities

During the nine months ended September 30, 2024, cash used in financing activities was the result of deferred offering costs of $321,876 and repayments of bank and other borrowings of $566,091 and partially offset by net proceeds from related party loans of $724,913.

During the nine months ended September 30, 2023, cash used in financing activities was the result of net repayments of related party loans of $767,600 and payment of deferred offering costs of $197,500; and partially offset by net proceeds from bank and other borrowings of $25,391.

### Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

### Capital Expenditures

We incurred capital expenditures of $251,389, $207,582, $126,680 and $183,710 for the years ended December 31, 2023 and 2022, and for the nine months ended September 30, 2024 and 2023, respectively, which mainly related to the purchase of pump station, cooler and freezer, air-conditioning system, restaurant equipment and clubhouse improvements.

### Contractual Obligations

### Lease Agreements

Future minimum lease payments under operating leases as of September 30, 2024 were as follows:

| Year ending December 31, |  |
| --- | ---: |
| 2024 (excluding nine months ended September 30, 2024) | $68,672 |
| 2025 | 250,446 |
| 2026 | 205,114 |
| 2027 | 161,880 |
| 2028 | 161,880 |
| Thereafter | 107,920 |
|  | $955,912 |
| Less imputed interest | (95,099) |
| Operating lease liabilities | $860,813 |

### Cash Flow Sufficiency

In order to meet the debt obligations and operating needs of our business, our management expects to satisfy the cash flow needs and through (i) maintaining stable relationships with banks in order to renew the bank borrowings upon maturity or to arrange for additional banking facilities for use when necessary; (ii) closely monitoring the collection status of accounts receivable and actively following up with our customers for settlements; (iii) diversifying and broadening our customer base to avoid reliance on particular customers and to expand our sources of revenue and cash flow; (iv) effectively managing accounts payable and negotiating for longer credit periods from suppliers, when necessary; (v) obtaining financial support from our Controlling Shareholder and investors to meet short-term operating expenses; and (vi) continuing to focusing on improving operational efficiency and cost reductions and enhancing efficiency.

The Company believes that, taking into consideration the present available banking facilities and internal financial resources we have, including the current levels of cash and cash flows from operations, and the measures mentioned above, will be sufficient to meet its anticipated cash needs for at least the next twelve months from the date of this report.

### Quantitative and Qualitative Disclosure About Market Risk

### Credit Risk

The Company’s principal financial assets are cash and cash equivalents and accounts receivables. The Company’s credit risk is primarily concentrated in its cash which is held with institutions with a high credit worthiness. The Company has not experienced losses on their accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

Management believes that the Company is not exposed to any significant credit risk with respect to its cash.

The Company mitigates its credit risk on receivables by actively managing and monitoring its receivables. The Company mitigates credit risk by evaluating the creditworthiness of customers prior to conducting business with them and monitoring its exposure for credit losses with existing customers. Since all accounts receivable as at years ended December 31, 2023 and 2022 and for the nine months ended September 30, 2024 and 2023 are aged within one year and collected all receivables subsequent to year end, minimum credit risk was noted for accounts receivable.

### Vendor concentration risk

As of September 30, 2024 and December 31, 2023 and 2022, the Company owed 81%, 85% and 84% of accounts payable to a key supplier, respectively.

For the nine months ended September 30, 2024 and 2023, one vendor accounted for 32% and 28% of our total operating costs, respectively. No other vendor accounts for more than 10% of our total operating costs for the nine months ended September 30, 2024 and 2023, respectively.

For the years ended December 31, 2023 and 2022, one vendor accounted for 31% and 32% of our total operating costs, respectively. No other vendor accounts for more than 10% of our total operating costs for the years ended December 31, 2023 and 2022, respectively.

For the three months ended September 30, 2024 and 2023, one vendor accounted for 36% and 28% of our total operating costs, respectively. No other vendor accounts for more than 10% of our total operating costs for the three months ended September 30, 2024 and 2023, respectively.

### Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to interest rate risk as its financial liabilities carry interest at fixed rates.

### Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

Typically, the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of twelve months, including through operations and financial support from our stockholders and financial institutions. We are continuing to focus on improving operational efficiency and cost reductions and enhancing efficiency, as well as servicing of financial obligations: this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. Our ability to continue as a going concern is dependent upon obtaining the necessary financing or negotiating the terms of the existing short-term liabilities to meet our current and future liquidity needs.

### Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices. Our market risk exposure is generally limited to those risks that arise in the normal course of business, as we do not engage in speculative, non-operating transactions, nor do we utilize financial instruments or derivative instruments for trading purposes.

## Market risk

As filed, 209 characters.

As a smaller reporting company as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company is not required to provide the information required by this item.

## Controls and procedures

As filed, 1,867 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act at the end of the period covered by this quarterly report.

Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of end of the period covered by this Quarterly Report, our disclosure controls and procedures (as defined in § 240.13a-15(e) or 240.15d-15(e) of Regulation S-K) were effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information (i) is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures and (2) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

We recognize that any controls system, no matter how well designed and operated, can provide only reasonable assurance of achieving its objectives, and our management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

### Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the period covered by this Quarterly Report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

Filed Dec 13, 2024.
Source: SEC EDGAR, the filing index for accession 0001493152-24-049927. Last ingested by Listed: Nov 5, 2026, 20:40 ET. No prices; not investment advice.