10-Q: Antiaging Quantum Living Reports Q3 Loss Amid Revenue Growth, Debt Conversion

Antiaging Quantum Living Inc. reported increased revenue for the nine months ended December 31, 2025, but also a higher net loss for the quarter, alongside a significant debt-to-equity conversion.

Summary

• Net loss for the nine months ended December 31, 2025, was $467,138, an improvement from $540,808 in the prior year.
• Revenue for the nine months ended December 31, 2025, increased by 92.91% to $1,021,894, up from $529,714 in the same period last year.
• Gross profit rose by 49.63% to $763,117 for the nine months ended December 31, 2025, compared to $510,016 in the prior year.
• Gross margin decreased significantly to 74.68% from 96.28% due to a shift in revenue streams towards technical support and maintenance services.
• Operating expenses increased by 9.30% to $1,224,781 for the nine months ended December 31, 2025, primarily due to higher rental and facility costs.
• The company converted $1,284,102 in promissory notes into 4,290,340 shares of Class A common stock at $0.30 per share on November 25, 2025.
• As of December 31, 2025, the company had an accumulated deficit of $1,876,850 and a working capital deficit of $113,526.
• Cash and cash equivalents stood at $936,910 as of December 31, 2025.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a highly speculative filing. While revenue growth is positive, the significant decline in gross margin, increased quarterly net loss, and explicit "going concern" warning, coupled with severe concentration risks and internal control weaknesses, present substantial red flags for investors. The reliance on related-party funding for liquidity further underscores the precarious financial position.

Positives

• Significant revenue growth of 92.91% for the nine months ended December 31, 2025, reaching $1,021,894.
• Gross profit increased by 49.63% to $763,117 for the nine months ended December 31, 2025.
• Net loss for the nine months ended December 31, 2025, decreased to $467,138 from $540,808 in the prior year, indicating improved operational efficiency.
• Conversion of $1,284,102 in promissory notes into equity reduced outstanding debt obligations.
• Cash and cash equivalents increased to $936,910 as of December 31, 2025, from $370,549 as of March 31, 2025.

Negatives

• Net loss for the three months ended December 31, 2025, increased to $272,168 from $129,154 in the prior year.
• Gross margin decreased substantially to 59.92% for the three months ended December 31, 2025, from 96.66% in the prior year, and to 74.68% for the nine months from 96.28%, due to a shift in revenue streams with different cost structures.
• Operating expenses increased by 36.78% for the three months and 9.30% for the nine months ended December 31, 2025, mainly due to higher rental and facility costs.
• The company has an accumulated deficit of $1,876,850 and a working capital deficit of $113,526 as of December 31, 2025.
• Other income decreased significantly by 99.82% for the three months and 84.18% for the nine months ended December 31, 2025, primarily due to a non-recurring renovation subsidy received in the prior year.

Risks

• Substantial doubt about the company's ability to continue as a going concern due to recurring net losses, an accumulated deficit of $1,876,850, a working capital deficit of $113,526, and cash outflow from operating activities.
• Economic dependence on a single customer for 100% of revenue, and a single supplier for its primary service, posing a material adverse effect risk if these relationships are lost.
• Material weaknesses in internal control over financial reporting, specifically a lack of US GAAP knowledge and inadequate segregation of duties.
• The functional currency is Chinese Yuan (RMB), which is not freely convertible into US dollars and may be subject to PRC currency restrictions for dividend distributions.
• Forward-looking statements are subject to risks, uncertainties, and assumptions, and actual results could differ materially and adversely.

Future Outlook

Management plans to alleviate going concern doubts by improving business profitability, generating sufficient cash flow from operations, and obtaining additional working capital funds as loans from the majority shareholder and President. The company intends to acquire businesses involved 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

StockSavvy.ai notes that Antiaging Quantum Living Inc.'s strategic shift towards healthcare management and insurance services, alongside its existing e-commerce and technical support offerings, positions it in a rapidly evolving market. The company's focus on "Dao Ling Doctor" brand enhancement through integrated offerings suggests an attempt to capture market share in the health and wellness sector, particularly in the Asia-Pacific region. The significant revenue growth in technical operation support and maintenance services indicates a successful pivot or expansion in this area, aligning with broader digital transformation trends in healthcare and consumer services. However, the concentration risk with a single customer and supplier is a notable vulnerability in a competitive landscape.

Comparison to Industry Standards

• StockSavvy.ai observes that the company's gross margin of 74.68% for the nine months ended December 31, 2025, while still robust, represents a significant decline from 96.28% in the prior year. This shift is attributed to a change in revenue streams towards technical support and maintenance services, which typically have lower margins than pure software or licensing models. For comparison, established tech-enabled health service providers like Teladoc Health (TDOC) or Amwell (AMWL) often report gross margins in the 60-75% range, suggesting Antiaging Quantum Living's current margin is within a comparable, albeit lower, industry standard for service-heavy models.
• The company's continued net losses and accumulated deficit are concerning, especially when compared to more mature, profitable players in the health tech space. Early-stage growth companies often incur losses, but the "going concern" warning highlights a more severe liquidity challenge.
• The 100% revenue concentration from a single customer is highly unusual and significantly above industry diversification standards. Most publicly traded companies strive for a broad customer base to mitigate revenue risk. For instance, even large enterprise software companies rarely have more than 10-15% of revenue from a single customer. This makes Antiaging Quantum Living Inc. exceptionally vulnerable compared to peers.

Management Changes

Corporate Governance

Legal Proceedings

• No material claims or legal actions arising from the ordinary course of business as of December 31, 2025.

Related Party Transactions

• Due to related parties (primarily Mr. Barry Wan, the President) increased to $980,000 as of December 31, 2025, from $520,000 as of March 31, 2025. These advances are unsecured, non-interest-bearing, and due on demand.
• Promissory notes totaling $1,284,102, previously assigned to Mr. Wan (a related party), were subsequently converted into 4,290,340 shares of Class A common stock on November 25, 2025.
• The company previously borrowed funds from Tairan Baohe Insurance Sales Co., Ltd., an entity in which Mr. Wan's spouse is a shareholder, which was repaid on March 24, 2025.
• The company previously borrowed funds from New Lite Ventures LLC, an entity controlled by Mr. Wan, which was part of the debt converted to equity.

Stakeholder Impact

• Shareholders: Dilution from the conversion of $1,284,102 in debt into 4,290,340 Class A common shares. Potential for further dilution if additional capital is raised through equity. The "going concern" warning poses a significant risk to shareholder value.
• Creditors: The conversion of promissory notes to equity reduced certain debt obligations, which could be seen as positive for remaining creditors by improving the balance sheet, but the overall financial health remains challenged.
• Employees: The company's financial instability and "going concern" warning could create uncertainty regarding job security and future growth opportunities.
• Customers/Suppliers: Concentration risk with a single customer and supplier means that any disruption to these relationships could severely impact the company's operations and ability to fulfill obligations.

Next Steps

• Management plans to improve business profitability.
• Management aims to generate sufficient cash flow from operations.
• Management intends to obtain additional working capital funds from the majority shareholder and President.
• Management is committed to implementing expense control measures.
• Management has begun a review to improve internal controls over financial reporting.
• The company intends to acquire businesses involved in healthcare management and insurance services.

Key Dates

Recommendation

The company faces severe financial distress, evidenced by a "going concern" warning, persistent net losses, and a working capital deficit. While revenue growth is noted, the significant drop in gross margin and increased quarterly net loss, coupled with 100% revenue concentration from a single customer and material weaknesses in internal controls, indicate fundamental operational and governance issues. The reliance on related-party funding for survival and the recent debt-to-equity conversion, while reducing debt, highlight a desperate need for capital. These factors collectively point to a highly speculative and risky investment, making a strong sell recommendation appropriate for seasoned investors.

Keywords

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