10-Q: Made in USA Inc. Q2: Strategic Pivot, Going Concern Doubt

Made in USA Inc. reports Q2 net income amid a strategic pivot to US industrial reshoring, despite ongoing going concern doubts and zero cash reserves.

Summary

• The company, formerly Alixo-Yolloo Corporation, has undergone a change in control and pivoted its business to focus on reshoring industrial capacity to the United States, rebuilding US manufacturing, and ensuring supply chain authenticity using blockchain, AI, and IoT technologies.
• Reported net income of $8,665 for the three months ended August 31, 2025, a significant improvement from a net loss of $(9,456) in the prior year period.
• Revenue for the three months ended August 31, 2025, increased by 131% to $24,460, compared to $10,611 in the prior year.
• For the six months ended August 31, 2025, the company recorded a net loss of $22,861, a slight increase from the $21,768 net loss in the prior year period.
• Revenue for the six months ended August 31, 2025, increased by 146% to $35,936, compared to $14,583 in the prior year.
• Cash reserves were $0 as of August 31, 2025, down from $13,861 as of February 28, 2025.
• Total liabilities decreased substantially from $111,064 as of February 28, 2025, to $1,722 as of August 31, 2025.
• Shareholders' equity increased from $5,400 as of February 28, 2025, to $99,932 as of August 31, 2025.
• The accumulated deficit increased to $56,361 as of August 31, 2025, from $33,500 as of February 28, 2025.
• Management has expressed substantial doubt about the company's ability to continue as a going concern.
• Rassul Sadukbayev, a former director, voluntarily cancelled 3,000,000 restricted shares on June 27, 2025, without compensation, reducing total outstanding shares from 6,695,000 to 3,695,000.
• A related party loan of $117,393 from the former director was fully repaid or converted during the six months ended August 31, 2025, resulting in a zero balance.
• Disclosure controls and procedures were evaluated as not effective as of August 31, 2025.

Sentiment

Score: 4

Explanation: While the company reported quarterly net income and significant revenue growth, the zero cash balance, increased accumulated deficit, and 'going concern' warning are major red flags. The strategic pivot is ambitious but unproven, and ineffective disclosure controls add to the risk. The share cancellation by the former director is a positive for capital structure but does not address immediate operational funding.

Positives

• Reported a net income of $8,665 for the three months ended August 31, 2025, reversing a net loss of $(9,456) in the comparable prior year period.
• Achieved significant revenue growth of 131% for the three months ($24,460 vs $10,611) and 146% for the six months ($35,936 vs $14,583) ended August 31, 2025.
• Total liabilities decreased substantially from $111,064 to $1,722, primarily due to the resolution of the related party loan.
• Shareholders' equity increased significantly from $5,400 to $99,932.
• The related party loan of $117,393 from the former director was fully repaid or converted, eliminating this liability.
• A former director voluntarily cancelled 3,000,000 restricted shares without compensation, reducing the total outstanding share count and potentially benefiting remaining shareholders.
• Investing activities show a shift towards investment in long-term intangible assets, including an AI Mood Matching API Module for $24,000.

Negatives

• The company has zero cash reserves as of August 31, 2025, down from $13,861 at the end of the previous fiscal year.
• The accumulated deficit increased to $56,361 as of August 31, 2025, from $33,500 as of February 28, 2025.
• Net loss for the six months ended August 31, 2025, increased slightly to $22,861 from $21,768 in the prior year.
• Disclosure controls and procedures were deemed not effective as of August 31, 2025.
• Management has expressed substantial doubt about the company's ability to continue as a going concern.
• Net cash used in operating activities for the six months ended August 31, 2025, was $(34,220), a deterioration from a positive cash flow of $11,676 in the prior year period, contrary to management's statement of improvement.
• Operating expenses for the six months ended August 31, 2025, increased by 62% to $58,797, primarily driven by professional fees and marketing expenses.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to limited revenues since inception, accumulated losses, and zero cash reserves.
• The company's ability to continue operations is dependent upon generating profitable operations or obtaining necessary financing to meet its obligations and repay liabilities.
• There is a limited operating history for the new business model, making it difficult to evaluate future performance.
• The business is subject to risks inherent in establishing a new enterprise, including limited capital resources and potential cost overruns.
• There is no assurance that future financing will be available on acceptable terms, which could prevent the company from continuing, developing, or expanding its operations.
• Equity financing, if pursued, could result in additional dilution to existing shareholders.

Future Outlook

The company intends to specialize in reshoring industrial capacity to the United States, rebuilding US manufacturing, and meeting demand for American-made products. It plans to leverage blockchain, AI, and IoT for certification and authenticity solutions. The company is focusing on acquiring technology and existing business operations overseas to reshore them to the USA, with initial plans to reshore manufacturing to the Southeast United States, specifically the Asheville, North Carolina, area. Negotiations for first acquisitions are underway for 2025-2026.

Management Comments

• Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and/or private placement of common stock.
• Our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management.

Industry Context

The company's strategic pivot aligns with growing global trends towards supply chain resilience, national manufacturing initiatives, and the increasing adoption of advanced technologies like blockchain, AI, and IoT for transparency and verification. This shift positions the company to capitalize on macro trends emphasizing domestic production and verifiable product origins, moving from a niche music identification application to a broader industrial technology and reshoring facilitator. The focus on 'Made in USA' resonates with consumer and governmental preferences for domestically sourced and manufactured goods.

Management Changes

Corporate Governance

Related Party Transactions

• Former director, Rassul Sadukbayev, advanced the company $117,393 from inception to August 31, 2025, with $44,359 advanced during the six months ended August 31, 2025.
• The full amount of the $117,393 related party loan from the former director was repaid or converted during the six months ended August 31, 2025, resulting in a zero balance.
• Rassul Sadukbayev, former director and owner of 5,000,000 restricted shares, voluntarily cancelled 3,000,000 of these shares on June 27, 2025, without any compensation or consideration.

Stakeholder Impact

• Shareholders face potential dilution if the company pursues future equity financing to address its capital needs. However, the voluntary share cancellation by the former director could be seen as positive for remaining shareholders by reducing the total share count and increasing their proportional ownership.
• Creditors benefit from the significant reduction in total liabilities, particularly the full repayment or conversion of the related party loan. However, the zero cash balance raises concerns about immediate liquidity.
• Management and employees are impacted by the significant strategic pivot, which implies a change in operational focus and potential restructuring or new hiring. The 'going concern' doubt creates uncertainty regarding the company's long-term viability.
• Customers and suppliers could be attracted by the company's new focus on reshoring and supply chain authenticity, aligning with a growing demand for American-made and verifiable products.

Next Steps

• Negotiating the first acquisitions for 2025-2026 as part of the new reshoring strategy.
• Planning to reshore manufacturing operations to the Southeast United States, specifically the Asheville, North Carolina, area.
• Management intends to finance operating costs over the next twelve months through existing cash on hand (currently $0), loans from directors, and/or private placement of common stock.

Key Dates

Recommendation

The company is undergoing a significant strategic pivot with promising long-term potential in reshoring and supply chain technology, evidenced by strong quarterly revenue growth and a return to net income for the quarter. However, the zero cash balance, persistent going concern doubt, and ineffective disclosure controls present considerable short-term risks and operational challenges. The voluntary share cancellation and related party loan resolution are favorable for the capital structure but do not resolve immediate liquidity needs. Investors should hold to monitor the successful execution of the new strategy, improvements in financial stability, and remediation of internal control weaknesses before considering further investment.

Keywords

US manufacturing, reshoring, supply chain authenticity, blockchain, artificial intelligence, AI, internet of things, IoT, technology platform, industrial capacity, American-made products, Alixo, music identification