10-Q: Acro Biomedical Faces Going Concern Doubt Amid Zero Revenue

Sentiment:

Quarterly Report 22 July 2025 7:55 PM

📋All filings for Acro Biomedical Co, LTD

Acro Biomedical Co., Ltd. reported no revenue and a critically low cash balance for Q1 2024, raising substantial doubt about its ability to continue operations.

Delay expectedThe Form 10-Q for the quarter ended March 31, 2024, was filed on July 22, 2025, indicating a significant delay in SEC reporting requirements.

Capital raiseThe company proposes to fund operations through equity financing arrangements, but currently has no agreements or understandings for such funding.Acknowledges that raising funds in the equity market may be difficult due to its common stock being on the OTC Market Group's Expert Market, which lacks proprietary broker-dealer quotes and restricts public viewing.Warns that if equity funds are raised, stockholders may suffer significant dilution.Indicates a potential reliance on loans from stockholders or related parties for future funding.

Worse than expectedNo revenue was generated for the quarter, extending a period of no sales since December 31, 2022.The cash balance remains critically low at $151, indicating severe liquidity constraints.The working capital deficiency increased to $(297,629), reflecting a deteriorating short-term financial position.The accumulated deficit continued to grow, reaching $(32,626,750).The company explicitly states 'substantial doubt about the Company’s ability to continue as a going concern'.

Summary

Reported no revenue for the three months ended March 31, 2024, and has not generated any sales since December 31, 2022.
Net loss significantly decreased to $(11,252) for Q1 2024, compared to $(4,004,354) in Q1 2023, primarily due to the cessation of research and development expenses and stock-based compensation.
Cash balance stood at a minimal $151 as of March 31, 2024, down from $376 at December 31, 2023.
Working capital deficiency worsened to $(297,629) at March 31, 2024, from $(286,949) at December 31, 2023.
Accumulated deficit increased to $(32,626,750) as of March 31, 2024.
The company's common stock is listed on the OTC Market Group's Expert Market, restricting public viewing of quotations and limiting liquidity.
Management identified material weaknesses in internal controls over financial reporting and ineffective disclosure controls due to a lack of segregation of duties and qualified accounting personnel.

Sentiment

Score: 1

Explanation: The company is in a critical financial state with no revenue, minimal cash, a growing accumulated deficit, and explicit 'going concern' doubt. Its stock is illiquid on the Expert Market, and internal controls are ineffective. The overall outlook is extremely negative, indicating a high risk of business failure.

Positives

Net loss significantly reduced to $(11,252) in Q1 2024 from $(4,004,354) in Q1 2023, primarily due to the expiration of consultant contracts and full amortization of deferred stock compensation, leading to zero R&D expenses.

Negatives

No revenue generated for the quarter ended March 31, 2024, or since December 31, 2022.
Cash balance is critically low at $151, indicating severe liquidity issues.
Working capital deficiency increased to $(297,629), reflecting a deteriorating financial position.
Accumulated deficit continues to grow, reaching $(32,626,750).
Company relies heavily on advances from a minority stockholder and an officer for funding.
Research and development efforts for a cordyceps-infused chicken feed did not result in a marketable product.
Common stock trades on the OTC Market Group's Expert Market, severely limiting capital raising and market liquidity.

Risks

Substantial doubt exists about the company's ability to continue as a going concern due to minimal cash, no revenue, operating losses, and negative cash flow.
Inability to raise necessary financing through debt or equity securities, exacerbated by the common stock's Expert Market listing.
Reliance on advances from a minority stockholder, with no assurance of continued funding.
Failure of past research and development efforts to generate marketable products, with no assurance of future product development or revenue generation.
Political instability in Hong Kong and the aftereffects of China's COVID-19 policies may continue to affect sales.
Inflationary pressures, supply chain disruptions, and potential increased tariffs could materially impair business operations.
Ineffective disclosure controls and material weaknesses in internal controls over financial reporting due to lack of segregation of duties and qualified accounting personnel.

Future Outlook

The company proposes to fund operations through product sales and equity financing, but currently has no product orders or financing agreements. It anticipates incurring marketing and other expenses without assurance of significant revenue or cash flow. The company may rely on loans from stockholders or related parties and may use equity-based compensation, though the Expert Market listing makes this challenging. There is no assurance that the company will be able to develop or market products or generate revenue in the future.

Management Comments

"Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially..."
"We cannot assure you that we can or will develop any products or generate revenue or profits in the future."
"We do not have the funds or the revenue stream for us to hire any consultants or employees."
"Our primary source of funds for the years ended December 31, 2023 and 2022 and the three months ended March 31, 2024 has been advances from a minority stockholder. This stockholder has continued to be our principal source of funds. We cannot assure you that he will continue to provide funding for us."
"Our chief executive officer and our chief financial officer, who are the same person, concluded that, due to the inadequacy of our internal controls over financial reporting, our sole employee being our chief executive and financial officer and our limited internal audit function, our disclosure controls were not effective as of March 31, 2024."

Industry Context

The company operates in the traditional Chinese medicine sector, focusing on cordyceps-related products. Its business has been significantly impacted by external factors such as China's Zero COVID policy and political instability in Hong Kong, which affected its customer base. The company also expects to be affected by broader industry trends like inflation and supply chain disruptions, though it has not made sales or inventory purchases recently to fully evaluate these effects.

Comparison to Industry Standards

The filing does not provide specific comparable companies, projects, or results to benchmark against industry standards. Given the company's current state of no revenue, minimal cash, and substantial doubt about its going concern, it significantly underperforms any established industry benchmarks for operational viability and financial health.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Disclosure Controls Evaluation	Disclosure controls and procedures were deemed not effective as of March 31, 2024, due to inadequate internal controls, the sole employee serving as CEO and CFO, and a limited internal audit function.	2024-03-31	Significantly impairs the company's ability to ensure material information is recorded, processed, summarized, and reported timely and accurately.
Internal Control Weaknesses	Material weaknesses in internal controls over financial reporting persist due to the absence of segregation of duties, lack of qualified accounting personnel, and excessive reliance on third-party consultants. The CEO/CFO, who is the sole employee and director, lacks an accounting background and serves part-time.	2024-03-31	Makes it unlikely that effective internal controls over financial reporting can be implemented in the near future, increasing financial reporting risk.

Related Party Transactions

A minority stockholder advanced $13,288 for company expenses during the three months ended March 31, 2024.
As of March 31, 2024, the company owed $100,984 to a minority stockholder and $1,100 to its chief executive officer for non-interest-bearing advances, due on demand.
Imputed interest expense on related party advances was $954 for the three months ended March 31, 2024.
A minority stockholder paid the security deposit and monthly rent for the company's storage facility lease in Hong Kong.

Stakeholder Impact

Shareholders face significant dilution risk if equity is raised, and the common stock's listing on the Expert Market severely limits liquidity and market access.
Creditors, primarily related parties, bear the risk of non-repayment given the company's dire financial condition and going concern doubt.
The sole employee (CEO/CFO) works part-time without compensation, indicating an unstable and unsustainable management structure.
Customers are not currently impacted as the company has no sales or orders.

Next Steps

Seek to raise funds through equity financing arrangements, despite current market limitations.
Potentially rely on loans from stockholders or related parties for operational funding.
Consider issuing equity-based compensation to attract employees and consultants, though this is challenged by the Expert Market listing.
Attempt to develop and market products, with no assurance of success or revenue generation.

Key Dates

Date	Description
2014-09-24	Company incorporated as Killer Waves Hawaii, Inc.
2017-01-30	Corporate name changed to Acro Biomedical Co., Ltd.
2021-05-01	Entered into two-year service agreements with R&D consultants (approximate date).
2021-08-01	Entered into two-year service agreements with R&D consultants (approximate date).
2022-12-31	Last date company had sales.
2023-05-01	Expiration of consultant agreement (approximate date).
2023-08-01	Expiration of consultant agreement (approximate date).
2023-11-01	Entered into a two-year lease agreement for a storage facility in Hong Kong.
2024-03-31	End of the quarterly reporting period.
2025-07-23	Number of shares outstanding reported as of this date (60,042,000 shares).
2025-07-22	Date of filing for the Form 10-Q.
2025-12-31	Lease agreement for Hong Kong storage facility expires (approximate date).

Recommendation

strong sell

The company is in severe financial distress, characterized by zero revenue, critically low cash, a substantial accumulated deficit, and an explicit 'going concern' warning. Its stock trades on the illiquid OTC Expert Market, making capital raises and investor exits extremely difficult. Internal controls are ineffective, and past R&D efforts have failed. The reliance on related party funding is unsustainable. These factors collectively indicate a high probability of business failure and significant capital loss for investors.

Keywords

Acro Biomedical, 10-Q, Quarterly Report, Cordyceps, Biomedical, Financial Results, Going Concern, OTC Expert Market, SEC Filing, Financial Health

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