10-Q: Antiaging Quantum Living Narrows Losses Amid Revenue Surge

Antiaging Quantum Living Inc. reported significantly reduced net losses and strong revenue growth for the six months ended September 30, 2025, driven by its technical support services, despite ongoing going concern issues and reliance on related party funding.

Summary

• Net loss for the six months ended September 30, 2025, decreased by 52.64% to $194,970, compared to $411,654 in the prior year period.
• Revenue for the six months ended September 30, 2025, increased by 81.64% to $681,602, primarily from online platform technical operation support and maintenance services.
• Gross profit for the six months increased by 55.03% to $559,205, though gross margin decreased from 96.13% to 82.04% due to a shift in revenue streams.
• Operating expenses for the six months decreased by 3.08% to $748,630, mainly due to lower employee wages, benefits, and legal/professional fees.
• Cash and cash equivalents increased to $455,446 as of September 30, 2025, from $370,549 as of March 31, 2025.
• The company continues to face a going concern issue due to an accumulated deficit of $1,604,682 and low working capital of $23,279.
• 100% of revenue and accounts receivable for the six months ended September 30, 2025, were derived from a single customer, posing a significant concentration risk.
• Material weaknesses in internal control over financial reporting were identified, specifically a lack of US GAAP knowledge and segregation of duties.

Sentiment

Score: 4

Explanation: While the company shows strong revenue growth and a substantial reduction in net loss, it continues to face significant going concern issues, a substantial accumulated deficit, declining working capital, and critical internal control weaknesses. The positive financial trends are overshadowed by these fundamental structural and operational challenges, and heavy reliance on related party funding.

Positives

• Net loss significantly decreased by 68.85% for the three months ended September 30, 2025, to $(61,598) from $(197,746) in the prior year period.
• Net loss significantly decreased by 52.64% for the six months ended September 30, 2025, to $(194,970) from $(411,654) in the prior year period.
• Revenue increased by 125.30% for the three months ended September 30, 2025, to $390,164 from $173,174 in the prior year period.
• Revenue increased by 81.64% for the six months ended September 30, 2025, to $681,602 from $375,243 in the prior year period, driven by online platform technical operation support and maintenance services.
• Net cash used in operating activities improved, decreasing from $(223,158) in the six months ended September 30, 2024, to $(91,813) in the same period of 2025.
• Operating expenses decreased by 3.08% for the six months ended September 30, 2025, to $748,630 from $772,406 in the prior year period, mainly due to lower employee wages, benefits, and legal/professional fees.
• Cash and cash equivalents increased by $84,897, reaching $455,446 as of September 30, 2025, compared to $370,549 as of March 31, 2025.

Negatives

• The company has an accumulated deficit of $1,604,682 as of September 30, 2025, indicating historical losses.
• Working capital decreased significantly to $23,279 as of September 30, 2025, from $132,689 as of March 31, 2025.
• Gross margin decreased from 91.70% to 83.16% for the three-month period and from 96.13% to 82.04% for the six-month period, attributed to a shift in revenue streams with different cost structures.
• Heavy reliance on related party funding, with 'Due to related parties' increasing to $860,000 and 'Long term notes and loans payable-related party' increasing to $1,698,330 as of September 30, 2025.
• Net cash used in investing activities increased substantially from $(44,820) in the six months ended September 30, 2024, to $(165,341) in the same period of 2025.

Risks

• **Going Concern:** The company has incurred net losses, has an accumulated deficit of $1,604,682, and low working capital of $23,279, raising substantial doubt about its ability to continue as a going concern.
• **Concentration Risk:** 100% of the company's revenue and accounts receivable for the six months ended September 30, 2025, were derived from a single customer, making it economically dependent on this relationship. The loss of this customer could have a material adverse effect on financial condition, results of operations, and cash flows.
• **Internal Control Weaknesses:** Material weaknesses in internal control over financial reporting exist due to a lack of US GAAP knowledge and segregation of duties, which could adversely affect the ability to record, process, summarize, and report financial information.
• **Reliance on Related Party Funding:** The company relies on its majority shareholder and President for additional working capital funds, with no assurance that these plans and arrangements will be sufficient to fund ongoing capital expenditures and other requirements.
• **Foreign Currency Translation:** The company's functional currency is Chinese Yuan (RMB), which is subject to PRC currency restrictions and foreign currency translation adjustments, potentially impacting reported financial results.
• **Competitive and Rapidly Changing Environment:** The company operates in a very competitive and rapidly changing environment, with new risks emerging from time to time that management cannot fully predict or assess the impact of.

Future Outlook

The company aims to improve business profitability and generate sufficient cash flow from operations to meet its needs. It also plans to obtain additional working capital funds from its majority shareholder and President to address going concern issues. The company's new business direction involves acquiring businesses in healthcare management and insurance services.

Management Comments

• "Managements plan to alleviate the substantial doubt about the Companys ability to continue as a going concern include attempting to improve its business profitability, its ability to generate sufficient cash flow from its operations to meet its operating needs on a timely basis, obtain additional working capital funds from the majority shareholder and President of the Company to eliminate inefficiencies in order to meet its anticipated cash requirements."
• "Operations are continuing as usual, and management is committed to implementing expense control measures in the near term to support liquidity."
• "Management does not believe that any of these material weaknesses [in internal controls] materially affected the results and accuracy of its financial statements. However, in view of this discovery of such weaknesses, management has begun a review to improve them."

Industry Context

The company is transitioning its business focus towards healthcare management and insurance services, alongside its existing e-commerce platform development and technical support. The shift in revenue streams from sales of goods to technical support and maintenance services suggests an adaptation to market demands or a strategic pivot towards higher-margin service offerings, though the gross margin percentage has decreased. The establishment of subsidiaries in China and Hong Kong indicates a focus on the Asia-Pacific markets for its "Dao Ling Doctor" brand, aligning with global trends in anti-aging and health management.

Comparison to Industry Standards

• NA

Corporate Governance

Legal Proceedings

• To the best of the company's knowledge, it is not involved in any material claims or legal actions arising from the ordinary course of business as of September 30, 2025.

Related Party Transactions

• Due to related parties (Mr. Barry Wan, President): $860,000 as of September 30, 2025, up from $520,000 as of March 31, 2025. These advances are unsecured, non-interest-bearing, and due on demand.
• Promissory notes payable and loans payable to related parties (Mr. Wan and New Lite Ventures LLC, an entity controlled by Mr. Wan): Totaled $1,698,330 as of September 30, 2025, up from $1,674,801 as of March 31, 2025. These are unsecured and non-interest-bearing, with maturity dates of December 31, 2029, and December 9, 2027.
• On March 31, 2025, Mr. Wan became the holder of previously existing third-party obligations totaling approximately $1.216 million (CNY 2,096,172, CNY 2,800,000, and CNY 3,931,167 notes/loans), which were legally assigned to him under the same terms.
• The company received advances of $340,000 from related parties for working capital during the six months ended September 30, 2025.

Stakeholder Impact

• **Shareholders:** Potential for significant dilution due to the authorized capital increase and future capital raises. The accumulated deficit and going concern risk pose a threat to shareholder value. Reliance on related party funding indicates a lack of independent financing, which could be a concern for minority shareholders.
• **Employees:** The decrease in operating expenses, partly due to lower employee wages and benefits, could impact employee morale or retention.
• **Customers:** The 100% revenue concentration from a single customer creates high dependency and risk for the company, which could indirectly affect service stability if that relationship deteriorates.
• **Creditors:** The company's going concern status and reliance on related party loans for funding may raise concerns for other potential creditors regarding repayment ability.

Next Steps

• Management plans to improve business profitability.
• Management aims to generate sufficient cash flow from operations to meet its operating needs on a timely basis.
• Management intends to obtain additional working capital funds from the majority shareholder and President of the company.
• Management has begun a review to improve internal control weaknesses related to US GAAP knowledge and segregation of duties.
• The company's new business direction involves acquiring businesses in healthcare management and insurance services.

Key Dates

Recommendation

The company shows promising revenue growth and a significant reduction in net losses, indicating operational improvements. However, the severe going concern risk, substantial accumulated deficit, declining working capital, and 100% customer concentration are critical red flags. The reliance on related party funding, while providing short-term liquidity, highlights a lack of sustainable independent financing. The identified material weaknesses in internal controls also warrant caution. An investor should hold to monitor if management's plans to improve profitability and address internal control issues materialize, and if the company can diversify its customer base and secure more independent funding. The current risk profile is too high for a "buy" recommendation, but the operational improvements prevent a "sell."

Keywords

Antiaging Quantum Living, 10-Q, SEC filing, financial results, quarterly report, net loss, revenue growth, technical support services, going concern, related party transactions, internal controls, concentration risk, healthcare management, e-commerce platform, China operations