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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
 9 Months Ended
Jun. 30, 2025
Accounting Policies [Abstract]  
Basis of Preparation

Basis of Preparation

 

The accompanying unaudited consolidated financial statements of CIMG, Inc. and subsidiaries (“the Company”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting and should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2024. Certain information or footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of the Company’s management, these financial statements include all normal and recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods presented. However, the results of operations included in such financial statements may not necessarily be indicative of future or annual results.

 
Principles of Consolidation

Principles of Consolidation

 

The Company prepares its financial statements on the basis of accounting. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts, balances and transactions have been eliminated upon consolidation.

 
Earnings per Share

Earnings per Share

 

Basic earnings per common share is equal to net earnings or loss divided by the weighted average of shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options, warrants and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. As of June 30, 2025 and June 30, 2024, the total number of common stock equivalents was 25,798,750 and 225,225, respectively, and composed of stock options and warrants. Due to the Company’s net loss for the periods presented, all common stock equivalents were anti-dilutive and therefore excluded from the calculation of diluted net loss per share.

 

 
Going Concern and Capital Resources

Going Concern and Capital Resources

 

Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, acquiring operating assets, raising capital and the commercialization and manufacture of its single serve coffee products. As of June 30, 2025, the Company had cash of $35,958 and working capital of $10,571,104.

 

The Company anticipates that it will need to raise additional capital immediately in order to continue to fund its operations. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its initiatives or attain profitable operations. Additionally, management’s strategic plans include expanding into new markets.

 

Management has evaluated the Company’s ability to continue as a going concern under ASC 205-40, Presentation of Financial Statements - Going Concern, and considered its financial condition, projected cash flows, obligations due within 12 months, and sources of liquidity.

 

While we understand that the ability of the Company to continue as a going concern is dependent upon its ability to successfully execute its new business strategy and eventually attain profitable operations, the consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the Company’s consolidated financial statements as of June 30, 2025 have been prepared on a going concern basis.

 
Use of Estimates

Use of Estimates

 

In preparing these consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 
Cash and Cash Equivalents

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.

 
Concentration of Credit Risk

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company places its cash with high quality banking institutions. From time to time, the Company may or may not maintain cash balances at certain institutions in excess of the Federal Deposit Insurance Corporation limit.

 
Accounts Receivable, net

Accounts Receivable, net

 

Trade accounts receivable is periodically evaluated for collectability based on past credit history with customers and their current financial condition. Bad debts expense or write offs of receivables are determined on the basis of loss experience, known and inherent risks in the receivable portfolio and current economic conditions. The Company recorded an allowance for credit loss of $Nil and $3,450,141 as of both June 30, 2025, and September 30, 2024 respectively.

 

   June 30,
2025		   September 30,
2024		 
Accounts receivable  $75,630   $3,450,141 
Less: allowance for credit loss   -    (3,450,141)
Total accounts receivable  $75,630   $- 

 

 
Assets Held for Sale-Current

Assets Held for Sale-Current

 

As of June 30, 2025 and September 30, 2024, assets held for Sale-Current were $Nil and $10,736. This is mainly the equipment planned for sale.

 

   June 30,
2025		   September 30,
2024		 
Assets Held for Sale   -    214,709 
Property and equipment asset impairment   -    (203,973)
Total   -    10,736 

 
Major Customers

Major Customers

 

In the nine months ended June 30, 2025 and 2024, revenue was primarily derived from major customers disclosed below.

 

Nine months ended June 30, 2025:

 

Customer Name  Sales Amount   % of Total Revenue   Accounts Receivable Amount   % of Total Accounts Receivable 
Customer XG  $47,289    56%            -     - 
Customer LXM   13,524    16%   -    - 

 

Nine months ended June 30, 2024:

 

Customer Name  Sales Amount   % of Total Revenue   Accounts Receivable Amount   % of Total Accounts Receivable 
Customer CL  $1,142,865    70%  $138,246    37%

 
Lease

Lease

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to provide guidance on recognizing lease assets and lease liabilities on the consolidated balance sheet and disclosing key information about leasing arrangements, specifically differentiating between different types of leases. The Company implemented ASU No. 2016-02 on October 1, 2019.

 

The Company conducts a quarterly analysis of leases to determine if there are any operating leases that require recognition under ASC 842. The Company has a long-term operating lease for office and manufacturing space in Plano, Texas. The leased property in Plano, Texas, has a remaining lease term through June 2024 and Tenancy terminated. The Company did not apply the recognition requirements of ASC 842 to operating leases with a remaining lease term of 12 months or less.

 

In May 2022, the Company renewed the office and manufacturing space in Vista, California through June 30, 2025, which was scheduled to expire on January 31, 2023. The lease has a monthly base rent of $8,451, plus common area expenses. Along with the extension, we leased an additional 1,796 square feet that has a monthly base rent of $2,514 through June 30, 2025.

 

 

The Company leased a new larger office and manufacturing space in Seoul, Korea beginning November 15, 2021, through November 15, 2023. The lease has a monthly expense of $7,040. Accordingly, we have added ROU Assets and Lease Liabilities related to those leases as of September 30, 2023.

 

Effective September 1, 2024, we have leased a principal office space located at 16097 Poppyseed Cir, Unit 1904, Delray Beach, Florida, 33484, which we lease for $3,500 per month until August 31, 2025.

 

The lease in San On Street, Tuen Mun, Hong Kong has a term of 12 months from December 18, 2024 to December 17, 2025 at a rate of RMB 4,167 ($594) per month. The lease is a short-term lease which has a lease term of 12 months and does not include an option to purchase the underlying asset. The Company did not recognize ROU assets or lease liabilities for short term leases.

 

As of June 30, 2025, the Company’s operating leases had a weighted average remaining lease term of 1 years and a weighted-average discount rate of 5% or 7.5%. Other information related to our operating leases is as follows:

 

ROU Asset – October 1, 2024  $99,746 
ROU Asset added during the period   - 
Amortization during the period   (93,351)
ROU Asset – June 30, 2025  $6,395 
      
Lease Liability – October 1, 2024  $100,962 
Lease Liability added during the period   - 
Amortization during the period   (97,486)
Lease Liability – June 30, 2025  $3,476 
      
Lease Liability – Short-Term  $3,476 
Lease Liability – Long-Term   - 
Lease Liability – Total  $3,476 

 

The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Consolidated Balance Sheet as of June 30, 2025:

 

Amounts due within twelve months of June 30,2025

 

      
2025  $3,541 
2026   

-

 
Total Minimum Lease Payments   3,541 
Less Effect of Discounting   65 
Present Value of Future Minimum Lease Payments   3,476 
Less Current Portion of Operating Lease Liabilities   3,476 

 

For nine months ended June 30, 2025, the Company had the following cash and non-cash activities associated with our leases:

 

Operating cash outflows from operating leases:  $ 105,664  
Financing cash outflows from finance lease:  $ 10,093  

 

 

Business Combinations

 

On March 31, 2025, the Company acquired a 51% controlling interest in Xilin Online (Beijing) E-commerce Co., Ltd (“Beijing Xilin”) for no consideration. The transaction was accounted for as a business combination under ASC 805. The fair value of the identifiable net assets acquired was a net liability position of $39,538.

 

The Company acquired 51% of Beijing Xilin, while Noncontrolling Interest (NCI) represents the remaining 49%. NCI was measured based on its proportionate share of the net liabilities, resulting in a negative NCI of $19,374 recognized within the equity section of the consolidated balance sheet.

 

The Company recognized a loss on acquisition of $20,164, representing its proportionate share (51%) of the net liabilities assumed. This amount was recorded in the consolidated statement of operations under “Loss on acquisition”.

 

On April 22, 2025, the Company acquired a 51% controlling interest in Shanghai Huomao Cultural Development Co., Ltd. (“Huomao”) for no consideration. The transaction was accounted for as a business combination under ASC 805. The fair value of the identifiable net assets acquired was a net liability position of $98.

 

The Company acquired 51% of Huomao, while non-controlling Interest (NCI) represents the remaining 49%. NCI was measured based on its proportionate share of the net liabilities, resulting in a negative NCI of $53 recognized within the equity section of the consolidated balance sheet.

 

The Company recognized a loss on acquisition of $45, representing its proportionate share (51%) of the net liabilities assumed. This amount was recorded in the consolidated statement of operations under “Loss on acquisition”.

 

No goodwill or bargain purchase gain was recognized as the fair value of net assets acquired was negative and no consideration was transferred. The Company concluded that the acquired set of activities constitutes a business under ASC 805-10-20.

 
Foreign Currency Translation

Foreign Currency Translation

 

The financial position and results of operations of each of the Company’s foreign subsidiaries are measured using the foreign subsidiary’s local currency as the functional currency. Revenues and expenses of each such subsidiary have been translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet date. The resulting translation gain and loss adjustments are recorded directly as a separate component of stockholders’ equity, unless there is a sale or complete liquidation of the underlying foreign investment. The foreign currency translation adjustment attributable to CIMG Inc. was recorded in other comprehensive (loss)/income in the amounts of $(178,633) and $34,257 for the nine months ended June 30, 2025 and 2024, respectively.

 

Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency.

 
Revenue Recognition

Revenue Recognition

 

In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (Topic 606) “Revenue from Contracts with Customers.” Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605). The new standard’s core principle is that an entity will recognize revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in the standard are applied in five steps: 1) Identify the contract(s) with a customer; 2) Identify the performance obligations in the contract; 3) Determine the transaction price; 4) Allocate the transaction price to the performance obligations in the contract; and 5) Recognize revenue when (or as) the entity satisfies a performance obligation. We adopted Topic 606 as of October 1, 2018 on a modified retrospective basis. The adoption of Topic 606 did not have a material impact on our consolidated financial statements, including the presentation of revenues in our Consolidated Statements of Operations.

 

Per ASC 606-10-32-2, an entity shall consider the terms of the contract and its customary business practices to determine the transaction price. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.

 

Per ASC 606-10-25-23 An entity shall recognize revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service (that is, an asset) to a customer.

 

 

Per ASC 606-10-55-37 An entity is a principal if it controls the specified good or service before that good or service is transferred to a customer. However, an entity does not necessarily control a specified good if the entity obtains legal title to that good only momentarily before legal title is transferred to a customer. An entity that is a principal may satisfy its performance obligation to provide the specified good or service itself or it may engage another party (for example, a subcontractor) to satisfy some or all of the performance obligation on its behalf.

 

ASC 606-10-55-38 An entity is an agent if the entity’s performance obligation is to arrange for the provision of the specified good or service by another party. An entity that is an agent does not control the specified good or service provided by another party before that good or service is transferred to the customer. When (or as) an entity that is an agent satisfies a performance obligation, the entity recognizes revenue in the amount of any fee or commission to which it expects to be entitled in exchange for arranging for the specified goods or services to be provided by the other party. An entity’s fee or commission might be the net amount of consideration that the entity retains after paying the other party the consideration received in exchange for the goods or services to be provided by that party.

 
Return and Exchange Policy

Return and Exchange Policy

 

All products are thoroughly inspected and securely packaged before they are shipped to ensure buyers receive the best possible product. If for any reason buyers are unsatisfied with the products, they can return them, and the Company will exchange or refund the purchase minus any shipping charges. For wholesale customers, return policies vary based on their specific agreements with customers. Under chargebacks agreements with the customers, the Company agrees to reimburse the seller for a portion of the costs incurred by the seller to advertise and promote certain of the Company’s products. The Company estimates, accrues and recognizes such chargebacks. These amounts are included in the determination of net sales. For nine months ended June 30, 2025 and 2024, the Company has no sales allowances for estimated chargebacks and returns, respectively.

 
Accounts payable and accrued expenses

Accounts payable and accrued expenses

 

As of June 30, 2025 and September 30, 2024, the accounts payable are $482,000 and $1,098,582 respectively.

 

As of June 30, 2025 and September 30, 2024, the accrued expenses are $1,146,598 and $1,141,755 respectively, it mainly includes the accrued expenses of Nuzee single-serving coffee and DRIPKIT products.

 

Accounts payable and accrued expenses as of June 30, 2025 and September 30, 2024 are as follows:

 

  

June 30,

2025

  

September 30,

2024

 
Accounts payable   482,000    1,098,582 
Accrued expenses   1,146,598    1,141,755 
Total   1,628,598    2,240,337 

 
Other current liabilities

Other current liabilities

 

As of June 30, 2025 and September 30, 2024, the other current liabilities are $567,399 and $586,173 respectively. It mainly includes the finance leasing of equipment and the payment for the goods.

 
Cost Recognition

Cost Recognition

 

The Maca Series products are pure plant products that we purchase maca raw materials and entrust to process. Therefore, the raw materials comprise the procurement cost of maca, the packaging cost of goods, the freight cost of goods and so on.

 
Operating expenses

Operating expenses

 

For the nine months ended June 30, 2025, the operating expenses were $3,387,725. This mainly includes personnel costs of $908,134, sales and marketing expenses of $202,847, depreciation and amortization of $23,197, professional services such as lawyers, auditors and consultants of $1,941,625, travel expenses of $77,892, office expenses of $196,351 and other expenses of $37,679.

 

For the nine months ended June 30, 2024, the operating expenses were $4,748,076. It primarily comprised of personnel costs, selling and marketing expenses, depreciation and amortization, insurance expenses, professional services, travel and office expenses, etc. In some cases, the Company bears shipping costs for shipping customer orders, and shipping and handling costs are recorded under operating expenses in the consolidated statement of operations.

 

 
Other income

Other income

 

For the nine months ended June 30, 2025, the other income was $452,142. It is mainly because of the settlement and forgiveness of account payable.

 

For the nine months ended June 30, 2024, the other income was $412,580. It is mainly because of the rental income.

 
Other Expense

Other Expense

 

Other expense of $54,866 and $145,140 for the nine months ended June 30, 2025 and 2024, respectively, primarily includes write off of deferred financing costs and sublease expense.

 
Prepaid expenses and other current assets

Prepaid expenses and other current assets

 

Prepaid expenses and other current assets for the nine months ended June 30, 2025 and September 30, 2024 is as follows:

 

  

June 30,

2025

  

September 30,

2024

 
Prepaid expenses  $88,893   $197,217 
Other current assets   1,160,064    185,431 
Total  $1,248,957   $382,648 

 

The Prepaid expenses and other current assets balance of $1,248,957 as of June 30, 2025 primarily consists of deposit, Barcode fee, a retainer for professional services, employee petty cash advances, and input VAT pending certification for deduction.

 
Inventory, net

Inventory, net

 

Inventories, net, consisting principally of raw materials and finished goods held for production and sale, is stated at the lower cost or net realizable value, cost being determined using the weighted average cost method. The Company reviews inventory levels at least quarterly and records a valuation allowance when appropriate. On June 30, 2025, the carrying value of inventory of $11,882,544.

 

  

June 30,

2025

  

September 30,

2024

 
Raw materials  $11,744,380   $4,490,728 
Finished goods  $138,164    57,307 
Total  $11,882,544   $4,548,035 

 
Property and Equipment, net

Property and Equipment, net

 

Property and equipment are stated at cost, net of accumulated depreciation. Office equipment is depreciated over a 3-year life, furniture over a 7-year life, and other equipment over a 5-year life. Depreciation expense for nine months ended June 30, 2025 and 2024 was $12,832 and $119,607, respectively. Property and equipment as of June 30, 2025 and September 30, 2024 consist of:

 

  

June 30,

2025

  

September 30,

2024

 
Machinery & Equipment  $15,150   $1,465,566 
Vehicles   -    57,431 
Less - Accumulated Depreciation   (12,832)   (1,127,820)
Less-Impairment on Property and Equipment   -    (214,709)
Disposal of property and equipment   -    (178,200)
Net Property and Equipment  $2,318   $2,268 

 

The Company is required to make deposits or prepayments and progress payments on equipment purchases before the Company receives possession and title. As a result, the Company accounts for such payments as Other Assets until it has possession at which time the equipment is recorded as Property and Equipment. There were no such deposits as of June 30, 2025 or September 30, 2024.

 

 
Samples

Samples

 

The Company distributes samples of its products as a component of its marketing program. Costs for samples are expensed at the time the samples are produced and recorded under operating expenses in the consolidated statements of operations.

 
Long-Lived Assets

Long-Lived Assets

 

The Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicated that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and a current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances.

 
Intangible assets

Intangible assets

 

Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. We have identifiable useful life intangible assets related to acquired Dripkit tradename and customer relationships. We evaluate these intangible assets annually for impairment, and when indications of potential impairment exist. The management uses considerable judgment to determine key assumptions, including projected revenue, projected costs, marketing expenses and projected profits, etc. This kind of analysis requires important estimates and judgments, including the estimation of future cash flows, which depends on internal forecasts, the estimation of the long-term growth rate of our business, the estimation of the useful life of the cash flows that will occur, customer churn, and the determination of our weighted average cost of capital. We confirm that for nine months ending June 30, 2025, we recorded impairment losses related to trademarks at $Nil. These impairment losses are included in our statement of operations. After including the above impairments, as of June 30, 2025 and September 30, 2024, the Company’s intangible assets related to trademarks were $57,500 and $80,000 respectively.

 
Income Taxes

Income Taxes

 

In accordance with ASC 740 - Income Taxes, the provision for income taxes is computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

 

 

The Company also follows the guidance related to accounting for income tax uncertainties. In accounting for uncertainty in income taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. No liability for unrecognized tax benefits was recorded as of June 30,2025 and September 30, 2024.

 

United States

 

CIMG Inc. and Wewin are incorporated in the United States and is subject to U.S. federal corporate income tax at a rate of 21%. CIMG Inc. and Wewin had no taxable income for the periods presented; therefore, no provision for income taxes is required.

 

Hong Kong

 

DZR Tech are incorporated in Hong Kong. Under the two-tiered profits tax rates regime in Hong Kong, the first HK$2 million of profits of the qualifying group entity will be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%. DZR Tech had no taxable income for the periods presented; therefore, no provision for income taxes is required.

 

People’s Republic of China

 

Zhongyan and Beijing Xilin are incorporated in P.R. China. Under Enterprise Income Tax Law, the statutory income tax rate is 25%. Zhongyan and Beijing Xilin had no taxable income for the periods presented; therefore, no provision for income taxes is required.

 

  

Nine Months Ended

June 30, 2025

  

Nine Months Ended

June 30, 2024

 
Current income tax expense   -    - 
Deferred income tax expense   -    - 
Total income tax expense   -    - 
           
Loss before income tax  $(2,990,046)   (5,242,739)
Tax benefit at statutory U.S. federal rate (21%)   (627,910)   (1,100,975)
Non-deductible expenses   (4,244)   - 
Foreign rate differential   (72,170)   68,916 
Change in valuation allowance   704,324    1,032,059 
Income tax expense  $-    - 

 

For the nine months ended June 30, 2025 and 2024, the Company incurred losses and generated net operating loss (“NOL”) carry forwards. However, due to uncertainty surrounding the Company’s ability to realize these deferred tax assets, a full valuation allowance was recorded, resulting in no income tax benefit being recognized in the periods presented.

 
Related parties

Related parties

 

A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

 

 
Stock-based Compensation

Stock-based Compensation

 

We account for share-based awards issued to employees in accordance with Accounting Standards Codification (ASC) 718, “Compensation-Stock Compensation”. Accordingly, employee share-based payment compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period, which is normally the vesting period. Share-based compensation to directors is treated in the same manner as share-based compensation to employees, regardless of whether the directors are also employees. In June 2018, the FASB issued ASU 2018-07 which simplifies several aspects of the accounting for non-employee transactions by stipulating that the existing accounting guidance for share-based payments to employees (accounted for under ASC Topic 718, “Compensation-Stock Compensation”) will also apply to non-employee share-based transactions (accounted for under ASC Topic 505, “Equity”). The Company implemented ASU 2018-07 on October 1, 2019 and the impact of the implementation was not material to the financial statements.

 

For nine months ended June 30, 2025, the Company issued 1,000,000 shares of its common stock under the 2024 Equity Incentive Plan.

 
Comprehensive income/loss

Comprehensive income/loss

 

Comprehensive income/loss is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income/loss are required to be reported in a financial statement that is presented with the same prominence as other financial statements. The Company’s current component of other comprehensive income/loss pertains to foreign currency translation adjustments.

 
Segment Information

Segment Information

 

As of and for the nine months ended June 30, 2025, management has changed its internal reporting structure and identified a new chief operating decision maker. As a result, the Company now operates in a single reportable segment for all periods presented, which is the commercialization and development of functional beverages.

 

The comparative segment information for the nine months ended June 30, 2024 has been recast to conform to the current period presentation.

 

  

Nine Months Ended

June 30, 2025

  

Nine Months Ended

June 30, 2024

 
Revenues, net  $84,431   $1,641,955 
Cost of sales   (63,819)   (1,820,140)
Gross profit(loss)   20,612    (178,185)
           
Operating expenses   (3,387,725)   (4,748,076)
Loss from operations   (3,367,113)   (4,926,261)
           
Other income   452,142    412,580 
Loss from equity method investment   -    (3,789)
Other expense   (54,866)   (145,140)
Interest expense, net   -    (1,277)
Loss on acquisition   (20,210)   - 
Net loss from continuing operations   (2,990,047)   (4,663,887)
Losses caused by the termination of business   -    (429,175)
Loss from disposition of discontinued operations   -    (149,677)
Net Loss  $(2,990,047)  $(5,242,739)

 

 

Recent Accounting Pronouncements

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting-Improvements to Reportable Segment Disclosures. The amendments in this Update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments in this Update retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Group adopted ASU 2023-07 in the consolidated financial statements for the year ended December 31, 2024. (see Note Segment Information)

 

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which applies to all entities subject to income taxes. ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. For public business entities, ASU 2023-09 will be effective for annual periods beginning after December 15, 2024. For entities other than public business entities, the requirements will be effective for annual periods beginning after December 15, 2025. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of these accounting standard updates on its consolidated financial statements.

 

All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.

 

Discontinued Operations

 

ASC 205-20-45-10 In the period(s) that a discontinued operation is classified as held for sale and for all prior periods presented, the assets and liabilities of the discontinued operation shall be presented separately in the asset and liability sections, respectively, of the statement of financial position.

 

ASC 205-20-45-3 The statement in which net income of a business entity is reported or the statement of activities of a not-for-profit entity (NFP) for current and prior periods shall report the results of operations of the discontinued operation, including any gain or loss recognized in accordance with paragraph 205-20-45-3C, in the period in which a discontinued operation either has been disposed of or is classified as held for sale.

 

The Company has terminated the sold business in accordance with ASC 205-20-45-10 and ASC 205-20-45-3. Additional information on discontinued operations can be found in Note 6-discontinued operations.

 

Identified Intangibles and Goodwill

 

The Company identified tradename and customer relationships intangible assets. The tradename and customer relationships intangible assets will be amortized on a straight-line basis over their respective estimated useful lives. The goodwill recognized results from such factors as an assembled workforce and management’s industry know-how.

 

 
Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting-Improvements to Reportable Segment Disclosures. The amendments in this Update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments in this Update retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Group adopted ASU 2023-07 in the consolidated financial statements for the year ended December 31, 2024. (see Note Segment Information)

 

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which applies to all entities subject to income taxes. ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. For public business entities, ASU 2023-09 will be effective for annual periods beginning after December 15, 2024. For entities other than public business entities, the requirements will be effective for annual periods beginning after December 15, 2025. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of these accounting standard updates on its consolidated financial statements.

 

All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.

 
Discontinued Operations

Discontinued Operations

 

ASC 205-20-45-10 In the period(s) that a discontinued operation is classified as held for sale and for all prior periods presented, the assets and liabilities of the discontinued operation shall be presented separately in the asset and liability sections, respectively, of the statement of financial position.

 

ASC 205-20-45-3 The statement in which net income of a business entity is reported or the statement of activities of a not-for-profit entity (NFP) for current and prior periods shall report the results of operations of the discontinued operation, including any gain or loss recognized in accordance with paragraph 205-20-45-3C, in the period in which a discontinued operation either has been disposed of or is classified as held for sale.

 

The Company has terminated the sold business in accordance with ASC 205-20-45-10 and ASC 205-20-45-3. Additional information on discontinued operations can be found in Note 6-discontinued operations.

 
Identified Intangibles and Goodwill

Identified Intangibles and Goodwill

 

The Company identified tradename and customer relationships intangible assets. The tradename and customer relationships intangible assets will be amortized on a straight-line basis over their respective estimated useful lives. The goodwill recognized results from such factors as an assembled workforce and management’s industry know-how.