10-Q: Acro Biomedical Reports Q3 2025 Loss, Going Concern Doubts Deepen

Acro Biomedical Co., Ltd. reported a significant increase in net loss for Q3 2025, with no revenue generated since late 2022, raising substantial doubt about its ability to continue as a going concern.

Summary

• Reported a net loss of $117,809 for the three months ended September 30, 2025, a significant increase from $10,229 in the same period of 2024.
• For the nine months ended September 30, 2025, the net loss was $143,672, up from $31,624 in the prior year period.
• Generated no revenue for the three and nine months ended September 30, 2025 and 2024, and has not had any sales since December 31, 2022.
• Operating expenses for the nine months ended September 30, 2025, surged to $137,647 from $28,490 in the comparable 2024 period, primarily due to public company expenses and professional fees.
• Cash balance as of September 30, 2025, was minimal at $4,323, though an increase from $476 at December 31, 2024.
• Total liabilities increased to $436,942 at September 30, 2025, from $326,946 at December 31, 2024, largely due to increased amounts owed to related parties.
• The company's accumulated deficit worsened to $(432,619) as of September 30, 2025, from $(294,972) at December 31, 2024.
• Substantial doubt exists about the company's ability to continue as a going concern due to lack of revenue, recurring losses, negative cash flow from operations, and minimal cash.
• The company terminated its Hong Kong storage facility lease agreement on August 30, 2025, receiving a remaining security deposit of $2,285.

Sentiment

Score: 1

Explanation: The company exhibits severe financial distress with no revenue, increasing losses, significant reliance on related party funding, and explicit 'going concern' doubts. Operational and governance weaknesses further compound the negative outlook.

Positives

• Cash balance increased to $4,323 as of September 30, 2025, from $476 at December 31, 2024.
• Accounts payable and accrued expenses decreased to $116,582 as of September 30, 2025, from $154,460 at December 31, 2024.
• The company successfully terminated its Hong Kong storage facility lease agreement on August 30, 2025, and received the remaining security deposit of $2,285.

Negatives

• No revenue generated for the three and nine months ended September 30, 2025 and 2024, and no sales since December 31, 2022.
• Net loss significantly increased to $117,809 for Q3 2025 from $10,229 for Q3 2024.
• Net loss for the nine months ended September 30, 2025, increased to $143,672 from $31,624 for the same period in 2024.
• Operating expenses for the nine months ended September 30, 2025, rose sharply to $137,647 from $28,490 in the prior year.
• Total assets significantly decreased to $4,323 as of September 30, 2025, from $31,974 at December 31, 2024.
• Total liabilities increased to $436,942 as of September 30, 2025, from $326,946 at December 31, 2024.
• The accumulated deficit worsened to $(432,619) as of September 30, 2025, from $(294,972) at December 31, 2024.
• Cash used in operating activities for the nine months ended September 30, 2025, was $(170,925), a substantial increase from $(26,177) in the prior year.
• The company relies heavily on advances from a minority stockholder, with amounts owed increasing to $299,260 as of September 30, 2025, from $124,488 at December 31, 2024.
• Research and development activities for a cordyceps-infused chicken feed (May 2021 August 2023) did not generate a marketable product.
• The company has no full-time employees, and its CEO works part-time without compensation, leading to unreflected costs in financial statements.
• The company's common stock trades on the OTC Market Groups Pink Limited Market, with no market makers, making it difficult for investors to sell.
• Disclosure controls were deemed ineffective as of September 30, 2025, due to inadequate internal controls, lack of segregation of duties, and reliance on a single part-time CEO/CFO without an accounting background.

Risks

• Substantial doubt about the ability to continue as a going concern due to minimal cash, no revenue since December 31, 2022, recurring losses, and negative cash flow from operations.
• Inability to generate revenue from products, potentially leading to business cessation.
• Difficulty raising necessary financing through debt, equity, or loan facilities due to financial condition, lack of sales, and inactive market for common stock.
• Potential for significant dilution for stockholders if equity financing is secured.
• Inability to increase customer base and supply chain.
• Inability to increase gross margins.
• Challenges in hiring and retaining qualified research and development, marketing, and administrative personnel.
• Inability to develop and market products in the United States and other Western markets.
• Failure to comply with government regulations related to the manufacture, distribution, and marketing of products.
• Impact of political instability in Hong Kong on future sales, as past customers were Hong Kong-based and sold into the PRC.
• Inflationary pressures and supply chain disruptions may result in delays in product receipt and increased costs that cannot be passed on to consumers.
• The company's common stock trading on the OTC Market Groups Pink Limited Market (unsolicited only) carries a higher risk of wider spreads, increased volatility, price dislocations, and difficulty for investors to sell.
• Lack of market makers for common stock and the requirement for an initial review by a broker-dealer under SEC Rule 15c2-11 to enable continuous market making.
• Reliance on advances from a minority stockholder, with no assurance of continued funding.
• Risk that marketing and other expenses incurred will not generate significant revenue, cash flow, or net income.
• Potential reluctance of employees or consultants to accept common stock as compensation due to its limited marketability.
• Material weaknesses in internal controls over financial reporting, including absence of segregation of duties, lack of qualified accounting personnel, and excessive reliance on third-party consultants.
• The sole employee serving as CEO, CFO, and sole director, without an accounting background and on a part-time basis, makes effective internal controls unlikely in the near future.

Future Outlook

The company anticipates incurring marketing and other expenses without any assurance that such expenses will generate significant revenue, cash flow from operations, or net income. It may seek to market other products complementary to its current offerings but has not entered into negotiations and cannot assure success. The company also cannot assure that it will be able to develop any products or generate revenue or profits in the future, or that a broker-dealer will make a market in its common stock.

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 from the results and outcomes discussed in or anticipated by the forward-looking statements."
• "We cannot assure you that these factors [COVID-19, Hong Kong political instability] will not affect our ability to generate revenue in the future and, to the extent that any of these factors affect our ability to generate revenue, we may not be able to continue in business."
• "We cannot assure you that we can or will develop any products or generate revenue or profits in the future."
• "We cannot assure you that he [minority stockholder] will continue to provide funding for us."
• "We cannot assure you that we will be able to develop a marketable product or that we will be able to generate significant, if any, revenue."
• "Our disclosure controls were not effective as of September 30, 2025, such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms and (ii) accumulated and communicated to the president and treasurer, as appropriate to allow timely decisions regarding disclosure."
• "The lack of any separation of duties, with the same person, who is our only employee who serves as both chief executive officer and chief financial officer, who is our sole director and who does not have an accounting background and serves on a part-time basis, makes it unlikely that we will be able to implement effective internal controls over financial reporting in the near future."

Industry Context

The company operates in the nutritional products sector, specifically focusing on cordyceps, a traditional Chinese medicine ingredient. Its historical sales were heavily reliant on customers selling into China, making it vulnerable to China's economic policies (e.g., Zero COVID) and political instability in Hong Kong. The broader industry faces inflationary pressures and supply chain disruptions, which the company expects to affect its business, although it has not had sales since late 2022 to directly observe these impacts. The company's lack of revenue, R&D failures, and minimal operational capacity place it far outside typical industry trends of growth and product innovation.

Comparison to Industry Standards

• The company's complete lack of revenue since December 31, 2022, and recurring significant net losses are far below industry standards for a publicly traded company in the nutritional products or biomedical sector.
• Its minimal cash balance of $4,323 and increasing reliance on related party advances for operational funding are indicative of severe financial distress, unlike healthy comparable companies that typically fund operations through sales, established credit lines, or robust capital markets access.
• The failure of its R&D activities to produce a marketable cordyceps-infused chicken feed, after two years of effort, contrasts sharply with successful product development pipelines seen in innovative biomedical or nutraceutical firms.
• The company's status on the OTC Market Groups Pink Limited Market, with no market makers and only unsolicited customer orders, is a significant disadvantage compared to established companies listed on major exchanges (e.g., NASDAQ, NYSE) that benefit from liquidity and broader investor access.
• The identified material weaknesses in internal controls, including a lack of segregation of duties and reliance on a single part-time CEO/CFO without an accounting background, fall significantly short of corporate governance and financial reporting standards expected of any public company, let alone those in the regulated biomedical space.

Management Changes

Corporate Governance

Related Party Transactions

• A minority stockholder advanced $2,250 and paid expenses of $172,522 on behalf of the company during the nine months ended September 30, 2025.
• The company owed $299,260 to this minority stockholder as of September 30, 2025, for non-interest-bearing advances and paid expenses, due on demand.
• The company owed $1,100 to its former chief executive officer (who resigned in August 2025) as of September 30, 2025, for non-interest-bearing advances, due on demand.
• Imputed interest at 4% on related party advances amounted to $6,025 for the nine months ended September 30, 2025.
• Payments for the Hong Kong storage facility lease (HK$17,900/month rent and HK$35,800 security deposit) were paid by a minority stockholder on behalf of the company.

Stakeholder Impact

• Shareholders face substantial dilution risk if equity financing is pursued. Difficulty selling stock due to OTC Pink Limited Market status, lack of market makers, and unsolicited-only trading. Significant losses and going concern doubts erode shareholder value.
• Employees (currently only one part-time, unpaid CEO/CFO) face job insecurity and potential employees or consultants may be reluctant to accept common stock as compensation due to its limited marketability.
• Creditors, primarily related parties (minority stockholder, former CEO), are owed significant, non-interest-bearing, demand-due amounts, indicating high credit risk.
• Customers are non-existent, with no current orders or sales activity since December 31, 2022.
• Suppliers are likely inactive, as there have been no inventory purchases since December 31, 2022.

Next Steps

• Seek to raise funds through equity financing arrangements.
• Potentially market other products complementary to current offerings.
• Potentially continue development of products, though past R&D for cordyceps-infused chicken feed was unsuccessful.
• Address material weaknesses in internal controls over financial reporting.
• An initial review by a broker-dealer under SEC Rule 15c2-11 is required for brokers to publish competing quotes and provide continuous market making for its common stock.

Key Dates

Recommendation

The company has reported no revenue for nearly three years, incurred significant and increasing losses, and explicitly stated "substantial doubt about its ability to continue as a going concern." Its assets are minimal, liabilities are growing, and it is entirely dependent on related party advances with no clear path to profitability or sustainable operations. The stock trades on the OTC Pink Limited Market with no market makers, making it highly illiquid and risky. Furthermore, severe internal control weaknesses and a lack of qualified personnel indicate significant governance issues. These factors collectively point to an extremely high risk of business failure and complete loss of investment, warranting a strong sell recommendation.

Keywords

Cordyceps products, Biomedical, Nutritional products, SEC filing, 10-Q, Going concern, OTC Pink Limited Market, Related party transactions, Financial loss, No revenue, Internal control weaknesses, Hong Kong lease, Biotech, Health supplements