10-K: Antiaging Quantum Living Reports Soaring Revenue Amidst Expanding Global Operations and Persistent Losses

Antiaging Quantum Living Inc. (AAQL) reported a dramatic increase in revenue for the fiscal year ended March 31, 2025, driven by new technical support services, but continues to face substantial net losses and a going concern warning.

Summary

• Antiaging Quantum Living Inc. (AAQL), formerly Achison Inc., was incorporated on December 29, 2014, and has undergone multiple changes in control and business focus.
• The company's primary business has shifted from securities and whisky trading to online advertising via www.dazhong368.com in the New York area, and more recently, to global expansion in healthcare management and insurance services, particularly in Asia-Pacific and China.
• For the fiscal year ended March 31, 2025, revenue surged to $817,898, an increase of 10806.76% from $7,499 in the prior year, primarily due to the launch of online platform technical operation support and maintenance services.
• Despite revenue growth, the company reported a net loss of $720,409 for the year ended March 31, 2025, a 74.45% increase from the $412,971 net loss in the previous year, mainly due to increased operating expenses.
• Operating expenses rose significantly to $1,218,476 in 2025 from $419,745 in 2024, driven by higher rental expenses, employee wages and benefits, and start-up costs.
• Gross profit increased to $428,517 in 2025 from $6,728 in 2024, but the gross margin decreased from 89.7% to 52.4% due to the different cost structure of the new technical support and maintenance services.
• As of March 31, 2025, the company had an accumulated deficit of $1,409,712 and working capital of $132,689, an improvement from a working capital deficit of $647,227 in 2024.
• Cash and cash equivalents stood at $370,549 as of March 31, 2025.
• The company's auditors, J&S Associate PLT, have raised substantial doubt about the company's ability to continue as a going concern due to recurring losses, cash outflow from operations, and accumulated deficit.
• Material weaknesses in internal controls over financial reporting were identified, specifically a lack of US GAAP knowledge and segregation of duties.
• The company's Class A Common Stock has limited trading, is subject to penny stock rules, and has approximately 36 holders.
• 100% of the company's revenue and accounts receivable for the year ended March 31, 2025, were derived from a single customer, posing a significant concentration risk.
• The authorized shares of common stock were significantly increased from 30 million to 6 billion on June 6, 2024, and categorized into five classes (A, B, C, D, E).

Sentiment

Score: 3

Explanation: While revenue growth is exceptionally high, the company faces severe financial challenges including increasing net losses, a substantial accumulated deficit, negative operating cash flow, and a going concern warning from auditors. Significant internal control weaknesses and 100% customer concentration risk further weigh down the sentiment, indicating high operational and financial instability despite strategic expansion efforts.

Positives

• Revenue increased dramatically by 10806.76% to $817,898 for the year ended March 31, 2025, primarily driven by new online platform technical operation support and maintenance services.
• Working capital improved significantly to a surplus of $132,689 as of March 31, 2025, from a deficit of $647,227 in the prior year, largely due to the conversion of short-term debts to long-term notes payable.
• The company successfully expanded its operations into the global market, establishing multiple subsidiaries in the British Virgin Islands, Hong Kong, and China to target Asia-Pacific and Chinese markets for healthcare management and insurance services.
• Received a renovation subsidy of $69,471 in 2025, contributing to other income.
• Cash and cash equivalents increased to $370,549 as of March 31, 2025, from $166,552 in the prior year.

Negatives

• Net loss increased by 74.45% to $720,409 for the year ended March 31, 2025, compared to $412,971 in the prior year.
• Accumulated deficit grew to $1,409,712 as of March 31, 2025, from $689,303 in the prior year.
• Gross margin decreased significantly to 52.4% in 2025 from 89.7% in 2024, indicating a less profitable cost structure for the new revenue streams.
• Operating expenses more than doubled, increasing by 190.29% to $1,218,476 in 2025, primarily due to higher rental expenses, employee wages, benefits, and start-up costs.
• Cash used in operating activities increased to $900,280 in 2025 from $649,413 in 2024, indicating continued negative operational cash flow.
• The company is economically dependent on a single customer, which accounted for 100% of its revenue and accounts receivable for the year ended March 31, 2025, posing a high concentration risk.
• The company's auditors have raised substantial doubt about its ability to continue as a going concern due to recurring losses and negative financial trends.

Risks

• Substantial doubt about the company's ability to continue as a going concern due to recurring operating losses, negative cash flow from operations, and an accumulated deficit.
• High concentration risk: 100% of the company's revenue and accounts receivable for the year ended March 31, 2025, were derived from a single customer, making the company highly vulnerable to the loss of this relationship.
• Material weaknesses in internal controls over financial reporting, specifically a lack of US GAAP knowledge and segregation of duties, which could adversely affect the ability to record, process, summarize, and report financial information accurately.
• The online advertising industry is highly competitive, rapidly evolving, and subject to constant technological change and intense marketing by competitors with greater resources, which could hinder the company's ability to market its services effectively.
• Dependence on key personnel and the ongoing need to attract new management for business operations.
• Uncertainty regarding the effectiveness of cost and marketing efforts in a highly competitive market.
• Risks associated with the acceptance of new products and services in expanding markets.
• Uncertainty regarding the availability of capital or other funding on terms satisfactory to the company, which is crucial given its going concern status.
• The company's Class A common stock is subject to penny stock rules, which may impede the ability of shareholders to sell their shares and could reduce trading activity and price.
• The functional currency is Chinese Yuan (RMB), which is not freely convertible into the US dollar and may be subject to PRC currency restrictions for payments, including dividend distributions from subsidiaries.

Future Outlook

The company plans to continue its existing online advertising operations through www.dazhong368.com, focusing on improving the platform and expanding its customer base among professional individuals and small to medium-sized companies in the New York City area. A key strategy involves offering a 'one-stop service' including customized ID card introductions and content maintenance. Concurrently, the company is actively seeking other profitable business opportunities and has expanded into the global market, specifically targeting the Asia-Pacific and Chinese markets through newly established subsidiaries. These subsidiaries will focus on healthcare management, insurance services, technical development and maintenance, health consulting, network and information security software development, and big data services. Management is committed to implementing expense control measures in the near term to support liquidity and improve business profitability, aiming to generate sufficient cash flow to meet operating needs.

Management Comments

• "Our expectations, beliefs and forward-looking statements are expressed in good faith on the basis of managements views and assumptions as of the time the statements are made, but there can be no assurance that managements expectations, beliefs or projections will result or be achieved or accomplished."
• "The Company expects to generate revenue from the online advertising business and we also seek other profitable business at the same time."
• "The change in control with respect to the Company was effectuated to better reflect its new business direction, with the intention of acquiring businesses involved in healthcare management and insurance services."
• "Operations are continuing as usual, and management is committed to implementing expense control measures in the near term to support liquidity."
• "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 and execute the business plan of the Company in order to meet its operating needs on a timely basis."
• "Management does not believe that any of these material weaknesses 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."
• "Management is in the process of designing and implementing improvements in its internal control over financial reporting and we currently plan to hire an independent third-party consultant to assist in identifying and determining the appropriate accounting procedures and controls to implement."

Industry Context

The company operates in the highly competitive and rapidly evolving online advertising industry, facing established competitors with significantly greater financial, technical, and marketing resources. Its expansion into healthcare management and insurance services, particularly in the Asia-Pacific and Chinese markets, positions it within a growing but also competitive global health and technology sector. The shift from a 'shell company' status to active business operations through subsidiaries indicates a strategic pivot towards more tangible service offerings, aligning with broader trends of digital transformation and cross-border service provision. However, the high revenue concentration from a single customer is a significant deviation from typical industry diversification strategies, indicating a nascent stage in its new business model.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• The company is not involved in any material claims or legal actions arising from the ordinary course of business as of March 31, 2025 and 2024.

Related Party Transactions

• The company's President provides corporate office space at 135-27 38th Ave #388, Flushing, NY 11354, at no cost, with management determining the cost is nominal and not recognizing rent expense.
• As of March 31, 2025, $520,000 was due to Barry Wan (President), an unsecured, non-interest-bearing advance due on demand. This increased from $265,336 as of March 31, 2024.
• As of March 31, 2025, no amount was due to New Lite Ventures LLC (an entity controlled by Mr. Wan), down from $30,000 as of March 31, 2024.
• As of March 31, 2025, no amount was due to Tairan Baohe Insurance Sales Co., Ltd. (an entity where Mr. Wan's spouse is a shareholder), down from $318,507 as of March 31, 2024, as the loan was repaid on March 24, 2025.
• On December 31, 2024, a promissory note agreement for $428,790 with a maturity date of December 31, 2029, was formalized with Mr. Wan.
• On December 31, 2024, a promissory note agreement for CNY 2,800,000 (approximately $383,598) with a maturity date of December 31, 2029, was formalized with Tairan Baohe Insurance Sales Co., Ltd.
• On December 31, 2024, a promissory note agreement for $29,571 with a maturity date of December 31, 2029, was formalized with New Lite Ventures LLC.
• On March 31, 2025, the company entered into Tripartite Debt Assignment Agreements with Mr. Barry Wan and an unrelated third-party original lender, legally assigning $1,216,440 in notes and loans (CNY 2,096,172 note, CNY 2,800,000 loan, and CNY 3,931,167 note) to Mr. Wan, making him the holder of these obligations under the same terms.
• A shareholder loan of $83,300 from former President Mr. Zhang was waived in its entirety on April 10, 2023, and recognized as an equity transaction.

Stakeholder Impact

• **Shareholders:** Face significant dilution risk due to the massive increase in authorized shares. Existing shareholders also bear the risk of continued losses, going concern issues, and potential inability to realize value due to limited trading and penny stock rules. The high concentration risk from a single customer could lead to volatile financial performance.
• **Employees:** Benefit from increased employee wages and benefits as part of the company's business expansion, but the going concern warning and financial instability could pose job security risks.
• **Customers:** The company's focus on improving its online platform and offering 'one-stop service' aims to benefit customers by providing better service and expanded offerings, particularly in the New York area and new Asia-Pacific/China markets. However, the reliance on a single customer for 100% of revenue creates a significant risk if that relationship deteriorates.
• **Suppliers:** Advances to suppliers indicate ongoing business activity, but the company's financial instability and going concern issues could pose payment risks for suppliers.
• **Creditors:** Related party loans and the conversion of third-party debt to related-party debt indicate that the company relies heavily on its majority shareholder for funding, which might be a positive for creditors if the shareholder continues to provide support, but also highlights the company's weak financial position.

Next Steps

• Continue existing online advertising operations through www.dazhong368.com.
• Improve the online platform to expand the customer base.
• Search for other profitable business opportunities to be acquired by the company.
• Implement expense control measures in the near term to support liquidity.
• Attempt to improve business profitability and generate sufficient cash flow from operations.
• Obtain additional working capital funds from the majority shareholder and President.
• Design and implement improvements in internal control over financial reporting.
• Hire an independent third-party consultant to assist in identifying and determining appropriate accounting procedures and controls.

Key Dates

Recommendation

Keywords

Online Advertising, Healthcare Management, Insurance Services, SEC Filing, 10-K, Financial Report, Going Concern, Net Loss, Revenue Growth, Corporate Governance, Internal Controls, Related Party Transactions, China Market, Asia-Pacific Expansion, Penny Stock, AAQL