10-Q: New Momentum Reports Q3 Loss Narrows Amid Subsidiary Disposals

New Momentum Corporation reported a significantly reduced net loss for the nine months ended September 30, 2025, primarily driven by a gain from subsidiary disposals, despite no revenue from its core travel services business.

Summary

• New Momentum Corporation reported a net loss of $4,579 for the nine months ended September 30, 2025, a substantial improvement from a net loss of $68,026 in the same period of 2024.
• For the three months ended September 30, 2025, the company recorded a net income of $29,072, compared to a net loss of $30,460 in the prior year's quarter.
• The company generated no revenue from its core business for both the three and nine months ended September 30, 2025, as ticket sales ceased in September 2023.
• Other income for the nine months ended September 30, 2025, was $52,963, largely due to a $47,832 gain on the disposal of subsidiaries (Beyond Blue Limited and New Momentum Asia Pte. Ltd.).
• Total operating expenses decreased to $57,542 for the nine months ended September 30, 2025, from $93,514 in the prior year, mainly due to reduced accounting fees, depreciation, property management fees, rent, and rates.
• Cash and cash equivalents stood at $4,270 as of September 30, 2025, down from $7,812 at December 31, 2024.
• The company has net current liabilities of $727,334 as of September 30, 2025, and its ability to continue as a going concern is dependent on continued financial support from shareholders and securing additional financing.

Sentiment

Score: 2

Explanation: The company is in a very precarious financial position, with no revenue from its core business, significant net current liabilities, and a stated going concern risk. While the net loss narrowed and a small net income was achieved in the quarter due to subsidiary disposals and reduced expenses, these are not indicative of sustainable operational health. The ineffective disclosure controls further add to the negative sentiment.

Positives

• Net loss significantly narrowed to $4,579 for the nine months ended September 30, 2025, from $68,026 in the prior year.
• Achieved a net income of $29,072 for the three months ended September 30, 2025, compared to a net loss of $30,460 in the same period last year.
• Realized a gain of $47,832 from the disposal of subsidiaries during the nine months ended September 30, 2025.
• Total operating expenses decreased by approximately 38.5% for the nine months ended September 30, 2025, to $57,542 from $93,514.
• Received government subsidies of $5,127 for the nine months ended September 30, 2025.

Negatives

• The company generated no revenue from its core business for the three and nine months ended September 30, 2025, having ceased ticket sales from September 2023.
• Suffered from net current liabilities of $727,334 as of September 30, 2025.
• Cash and cash equivalents decreased to $4,270 as of September 30, 2025, from $7,812 at December 31, 2024.
• The company's ability to continue as a going concern is in substantial doubt, dependent on continued financial support from shareholders and securing additional financing.
• Disclosure controls and procedures were deemed not effective at the reasonable assurance level as of September 30, 2025.
• Significant amounts are due to a director ($529,679) and a shareholder ($33,892), which are unsecured, non-interest bearing, and repayable on demand.

Risks

• Going Concern Uncertainty: The company has generated continuous losses and has net current liabilities, raising substantial doubt about its ability to continue as a going concern without additional financing.
• Economic and Political Risk: Major operations in Hong Kong expose the company to political, economic, and legal environment risks in Hong Kong, as well as global economic climate issues like rising global tensions, rising costs, fuel shortages, and potential global inflation.
• Exchange Rate Risk: Fluctuations in HKD and SGD to US$ exchange rates could impact reported profits and financial condition.
• Dependence on Key Personnel/Shareholder: The company's sole director and majority shareholder, Leung Tin Lung David, exercises control, and the company relies on financial support from its shareholders.
• Lack of Revenue: The company has ceased ticket sales and generated no revenue from its business, indicating a lack of sustainable operations.
• Internal Control Weaknesses: Disclosure controls and procedures were not effective, which could lead to material misstatements or inadequate disclosure.

Future Outlook

The company's ability to continue as a going concern is dependent on continued financial support from its shareholders and securing additional financing for operations and future expansion. There is no assurance that sufficient funds will be secured. Management expects to continue to rely on cash generated through financing from existing shareholders and private placements. The company also continues to monitor global tensions, rising costs, fuel shortages, and potential global economic depression, which could negatively affect its financial position and operations.

Management Comments

• "The ability of the Company to continue as a going concern is dependent on directors support and raising capital to fund our business plan and ultimately to attain profitable operations."
• "We expect to continue to rely on cash generated through financing from our existing shareholders and private placements of our securities, however, to finance our operations and future acquisitions."
• "Management has appointed external consultants to minimize the risk and ascertain compliance with requirements to mitigate the risks [related to ineffective disclosure controls and procedures]."
• "Management does not believe, based upon information available at this time that these matters [legal proceedings] will have a material adverse effect on the Companys financial position, results of operations or cash flows."

Industry Context

The company operates in the online travel services sector with a "Book Now, Pay Later" model via Gagfare.com. However, it has ceased ticket sales since September 2023 and generated no revenue from this business in the current reporting periods. This indicates a significant disconnect from broader industry trends, where online travel agencies typically focus on increasing booking volumes and revenue. The disposal of subsidiaries and reliance on shareholder financing suggest a struggle to maintain competitive operations or adapt to market demands within the travel industry. The mention of global economic climate, rising costs, and fuel shortages highlights external pressures that could further challenge a company already struggling with its core business model.

Comparison to Industry Standards

• NA

Corporate Governance

Legal Proceedings

• The company is not currently subject to any material legal proceedings.

Related Party Transactions

• The company owed its director $529,679 and a shareholder $33,892 as of September 30, 2025. These amounts are unsecured, non-interest bearing, and repayable on demand.
• The company paid allowances of $4,037 to certain shareholders for their service for the nine months ended September 30, 2025.
• The company paid allowances of $4,037 to the director for his service for the nine months ended September 30, 2025.
• The director provided maintenance services to the company's platform free of charge during the period.
• The director has provided free office space to the company from January 1, 2025.

Stakeholder Impact

• Shareholders: Face substantial doubt about the company's ability to continue as a going concern, potential dilution from future capital raises, and reliance on the sole director/majority shareholder for financial support. The value of their investment is at high risk due to lack of revenue and operational sustainability.
• Creditors: Those to whom the company owes money (including the director and a shareholder) face repayment risk given the company's precarious financial state and going concern uncertainty.
• Employees: (If any, not explicitly mentioned but implied by "management") Face job insecurity due to the company's lack of revenue and going concern issues.
• Customers: (Past customers of Gagfare.com) The cessation of ticket sales means the service is no longer available, impacting their ability to use the platform.

Next Steps

• Secure additional financing for operations and future expansion.
• Address the ineffectiveness of disclosure controls and procedures, potentially through external consultants.
• Continue to rely on financial support from existing shareholders and private placements.

Key Dates

Recommendation

The company has ceased its core revenue-generating activity, operates at a significant deficit, and faces substantial doubt about its ability to continue as a going concern. Its cash reserves are minimal, and it relies entirely on related-party financing. The reported net income for the quarter is an anomaly driven by asset disposals, not sustainable operations. Furthermore, the disclosure of ineffective internal controls signals significant governance issues. These factors collectively indicate a company in severe distress with a high probability of failure or significant dilution, making it an extremely high-risk investment with little to no upside potential.

Keywords

Travel technology, Online booking platform, Gagfare, Book Now Pay Later, SEC filing, 10-Q, Financial results, Net loss, Going concern, Subsidiary disposal, Operating expenses, Hong Kong operations, Financial reporting, Corporate governance, Risk management