20-F: UMeWorld Shifts to Functional Nutrition, Faces Going Concern

UMeWorld Inc. completed its redomiciliation to Delaware, shifting its core business to functional nutrition with DAGola oil, despite significant historical losses and a going concern warning.

Summary

• UMeWorld Limited redomiciled from the British Virgin Islands to Delaware on October 2, 2025, and changed its name to UMeWorld Inc.
• The company's business focus has shifted from digital media and education to functional nutrition, primarily with its DAGola cooking oil brand, and is evaluating biofuel and Sustainable Aviation Fuel (SAF) initiatives.
• A net loss of $258,176 was incurred for the fiscal year ended September 30, 2025, an increase from $224,465 in 2024.
• As of September 30, 2025, the company reported an accumulated deficit of $31,929,644 and a working capital deficiency of $323,911.
• Auditors included an explanatory paragraph in their report, raising substantial doubt about the company's ability to continue as a going concern.
• A Strategic Cooperation Agreement was entered into with Guangzhou Yonghua Special Medical Nutrition Technology Co., Ltd. on August 11, 2025, for enzymatic technology related to DAG oil and biofuel production, granting UMeWorld exclusive commercialization rights outside the PRC, subject to a $1 million annual sales threshold.
• The Cellugizer sports-supplement product line was discontinued in fiscal 2025, resulting in a $29,493 inventory write-off.
• Material weaknesses in internal control over financial reporting were identified, including insufficient oversight, lack of U.S. GAAP expertise, and inadequate controls over transactions.
• Dagola Hong Kong Limited and Guangzhou Duokanglong Special Medical Nutrition Technology Co., Ltd. were established for Asia-Pacific expansion and subsequently transferred from CEO Michael Lee to UMeWorld Inc. for nominal consideration on October 16, 2025.

Sentiment

Score: 2

Explanation: The company faces severe financial distress with recurring and increasing net losses, a significant accumulated deficit, and a working capital deficiency, leading to a going concern warning from its auditors. While it has a new strategic direction and a cooperation agreement, its current revenue is negligible, and it relies heavily on uncertain future capital raises and market acceptance of new products in highly competitive sectors. Material weaknesses in internal controls add to the negative sentiment.

Positives

• The company successfully completed its redomiciliation to Delaware on October 2, 2025, which may streamline future U.S. operations and governance.
• A Strategic Cooperation Agreement with Guangzhou Yonghua provides exclusive commercialization rights for enzymatic technology outside China (subject to a $1 million annual sales threshold), offering a foundation for the DAGola brand and potential biofuel initiatives.
• The DAGola functional oil product line is supported by clinical studies indicating metabolic benefits such as lower triglyceride and uric acid levels, and support for weight management.
• The evaluation of biofuel and Sustainable Aviation Fuel (SAF) feedstock initiatives aligns with growing global demand for sustainable energy solutions.
• Cash and cash equivalents increased to $154,353 in 2025 from $121,809 in 2024.
• Net cash provided by financing activities increased to $146,490 in 2025 from $94,446 in 2024, indicating continued ability to raise capital.

Negatives

• The company has incurred significant historical operating losses, resulting in an accumulated deficit of $31,929,644 as of September 30, 2025.
• A working capital deficiency of $323,911 as of September 30, 2025, indicates short-term liquidity challenges.
• Auditors issued a going concern warning, highlighting substantial doubt about the company's ability to continue operations without additional financing and revenue generation.
• Net loss increased by 15% to $258,176 in fiscal 2025 from $224,465 in fiscal 2024.
• Gross loss significantly worsened to $(6,655) in 2025 from $(634) in 2024, indicating higher costs relative to revenue.
• Revenue, while increasing, remains extremely low at $2,222 in 2025, insufficient to sustain operations.
• A $29,493 inventory write-off was recorded in fiscal 2025 due to the discontinuation of the Cellugizer product line.
• Material weaknesses in internal control over financial reporting were identified, including insufficient oversight, lack of U.S. GAAP expertise, and inadequate controls over transactions, increasing risks of fraud or misstatements.
• The company relies on a single strategic partner (Guangzhou Yonghua) for core enzymatic technology and manufacturing, posing supply chain and intellectual property risks.
• No product liability insurance is currently maintained, exposing the company to significant financial risk from potential claims.
• Ordinary shares are classified as 'penny stock' under SEC rules, which may severely limit market liquidity and investor interest.
• Concentrated ownership by a small number of shareholders may limit the ability of other shareholders to influence corporate decisions.
• The company does not expect to pay dividends in the foreseeable future.

Risks

• Significant historical losses, a working capital deficiency, and potential for continued losses raise substantial doubt about the company's ability to continue as a going concern.
• Substantial additional financing is required to sustain operations and fund Asia-Pacific expansion, and the ability to secure this capital is uncertain.
• Redomiciliation to Delaware subjects the company to new legal requirements, and the ongoing FINRA review process may result in delays or additional costs.
• Ongoing corporate actions related to redomiciliation could result in a temporary trading suspension or delay in effectuating corporate changes.
• Unforeseen liabilities of the former BVI parent entity could adversely affect the continuing Delaware corporation upon its expected dissolution.
• The holding company structure and reliance on foreign subsidiaries for future revenue generation present operational and financial risks, including restrictions on fund transfers and regulatory changes in China and Hong Kong.
• Redomiciliation to the U.S. and expansion into the PRC will result in a complex and increased global tax compliance burden.
• Material weaknesses in internal control over financial reporting may be exacerbated by the foreign subsidiary structure and rapid operational changes, increasing the risk of fraud, errors, or material misstatements.
• Future success is highly dependent on the market acceptance and sales performance of the DAGola product in a highly competitive functional-nutrition market.
• Evaluation and development of biofuel and Sustainable Aviation Fuel (SAF) feedstock initiatives are highly speculative and may never materialize into a viable business, potentially diverting significant capital and management attention.
• Reliance on a strategic partnership for DAG enzymatic technology and manufacturing exposes the company to risks beyond its control, such as partner failure, financial difficulties, or agreement termination.
• Reliance on the enzymatic technology licensed through the strategic partner exposes the company to risks of intellectual property disputes or unauthorized disclosure of trade secrets, particularly given the IP laws in the PRC.
• Re-establishing operations in the PRC exposes the company to regulatory, economic, and political risks specific to China and Hong Kong, including food safety laws, geopolitical tensions, and currency fluctuations.
• The company faces inherent product-liability and regulatory compliance risks related to selling functional food products and does not currently carry product liability insurance.
• Ordinary shares are classified as penny stock under SEC rules, which may severely limit market liquidity and make it difficult for investors to buy or sell shares.
• The market price of ordinary shares has been and may continue to be volatile due to various internal and external factors.
• The company may lose its foreign private issuer status in the future, which could increase compliance costs and regulatory burden.
• Inability to retain key employees or recruit additional qualified personnel could adversely affect business, operations, and growth prospects.
• Compliance with U.S. securities laws, Sarbanes-Oxley, and evolving corporate governance requirements is costly and time-consuming.
• Concentrated ownership of ordinary shares may limit the ability of other shareholders to influence corporate decisions.
• The company does not expect to pay dividends in the foreseeable future, meaning any return on investment depends on share price appreciation.

Future Outlook

The company expects to incur significant costs for expanding its DAGola brand in the United States and Asia-Pacific, supporting operations in Hong Kong and mainland China, and for production, logistics, and regulatory compliance. Future growth, particularly for the DAGola product line and the continued development of biofuel and Sustainable Aviation Fuel (SAF) feedstock initiatives, relies heavily on the ability to access external capital. Revenues are expected to be driven primarily by DAGola Inc. through the sale of DAG-based cooking oils and related nutritional products, with plans to expand distribution through e-commerce, specialty retailers, and regional distributors. In the longer term, subject to the successful advancement of Project Verdant beyond its current planning stage, the company aims to generate additional revenue streams from industrial biofuel applications. Operating losses are expected to continue for the foreseeable future.

Management Comments

• Our mission is to help customers lead healthier lives through science-backed functional nutrition.
• Management determined that the remaining Cellugizer inventory was no longer recoverable following the strategic decision to focus exclusively on the DAGola brand.
• We expect financial performance to continue to be influenced by the pace of revenue growth, marketing efficiency, supply-chain management, and our ability to broaden distribution channels for DAGola.
• Management will continue to evaluate and implement additional remediation measures as necessary to improve the effectiveness of our internal control over financial reporting.

Industry Context

UMeWorld Inc. is strategically positioning itself within two large and growing markets: functional foods and edible oils, and renewable fuels and Sustainable Aviation Fuel (SAF). In the wellness sector, there is increasing consumer focus on metabolic health, weight management, and cardiovascular risk factors, driving demand for science-backed functional nutrition. DAGola aims to compete in this segment by offering clinically validated metabolic benefits, differentiating itself from conventional edible oils. In the energy sector, global policymakers are implementing mandates and incentives to accelerate the adoption of low-carbon fuels, particularly SAF, which currently faces a structural undersupply. Project Verdant, if developed, intends to address this opportunity by converting waste oils into higher-value renewable-fuel intermediates using an enzymatic process designed for lower carbon intensity and improved feedstock flexibility.

Comparison to Industry Standards

• The company competes with established multinational food and consumer-goods companies in functional nutrition and edible oils, many of which possess greater financial resources, extensive marketing budgets, and entrenched distribution networks.
• DAG oil, the basis for DAGola, was originally developed by a Japanese multinational company and gained popularity in Japan before being voluntarily withdrawn due to concerns regarding glycidyl esters; UMeWorld's strategic partner has implemented technology improvements to address these concerns.
• Clinical research indicates DAG oil must contain at least approximately 27% DAG to confer measurable health benefits, and at least 40% DAG in China to support related labeling claims, providing a benchmark for product formulation.
• In renewable fuels, should Project Verdant advance, the company would compete with established producers of biodiesel and SAF, as well as technology developers, many operating at greater scale with access to lower-cost capital and established assets.
• The company's intended competitive advantage in renewable fuels is based on its enzymatic conversion process, designed for lower temperatures, diverse waste-based feedstocks, and higher-purity outputs with lower carbon intensity compared to many traditional processes.

Corporate Governance

Legal Proceedings

• The company is currently not a party to, and is not aware of any threat of, any legal, arbitral, or administrative proceedings that are likely to have a material and adverse effect on its business, financial condition, or results of operations.

Related Party Transactions

• Michael Lee (CEO) provided management services of $100,000 in fiscal 2025, $80,000 in 2024, and $80,000 in 2023. He also paid $51,874 in expenses on the company's behalf in 2025 and received $153,510 in cash repayments. The balance due to him as of September 30, 2025, was $154,647.
• Winfield, Yongbiao Ding (CFO) received 300,000 restricted shares at $0.20 per share on May 24, 2024, upon exercising options.
• Ford Moore (Director) received 500,000 restricted shares at $0.15 per share on April 1, 2024, upon exercising options. The balance due to him as of September 30, 2025, was $49,000.
• Dave Milroy (Director) received 300,000 restricted shares at $0.15 per share on April 1, 2024, upon exercising options.
• First Scion Investments Limited (shareholder >5%) had a balance due of $75,722 as of September 30, 2025.
• On October 16, 2025 (subsequent event), ownership of Dagola Hong Kong Limited and its wholly-owned China subsidiary, Guangzhou Duokanglong Special Medical Nutrition Technology Co., Ltd., was formally transferred from Michael Lee to UMeWorld Inc. for nominal consideration of US$1.

Stakeholder Impact

• Shareholders face significant dilution risk from anticipated future equity financings, potential temporary trading suspension due to FINRA review, and market price volatility. The 'penny stock' classification limits liquidity, and concentrated ownership may limit influence. No dividends are expected in the foreseeable future.
• Employees (primarily the CEO, as other functions are outsourced) are directly impacted by the company's financial stability and strategic direction. The outsourced structure limits direct impact on a broader employee base.
• Customers may benefit from new functional nutrition products (DAGola) and expanded distribution, but face potential risks related to product liability and regulatory compliance, which could affect product availability or trust.
• Suppliers and vendors, particularly Guangzhou Yonghua (strategic partner), are critical to the company's operations. Concentration of vendors for cost of sales indicates reliance on a few key relationships.
• Creditors face higher risk due to the company's going concern warning, recurring losses, and working capital deficiency. Reliance on shareholder advances suggests a challenging credit environment.

Next Steps

• Obtain additional sources of capital and financing to sustain operations and fund expansion.
• Generate sufficient revenues from functional nutrition and related businesses.
• Expand the DAGola brand in the United States and Asia-Pacific markets.
• Support operations in Hong Kong and mainland China through newly established subsidiaries.
• Continue efforts in production, logistics, and regulatory compliance for DAGola products.
• Evaluate and develop early-stage biofuel and Sustainable Aviation Fuel (SAF) feedstock initiatives, including a potential 50,000-metric-ton-per-year biodiesel pilot plant in Malaysia planned for 2026.
• Develop and implement formal written accounting and financial reporting policies and procedures consistent with U.S. GAAP and SEC reporting requirements.
• Establish a monthly financial closing process on an accrual basis to ensure timely and accurate recording of transactions.
• Enhance the design, documentation, and implementation of transaction-level controls over revenue, expenses, and cash management.
• Strengthen segregation of duties by reallocating responsibilities and utilizing outsourced accounting and finance expertise.
• Improve access control procedures and strengthen IT control activities.
• UMeWorld Limited (BVI) is expected to be legally dissolved upon the completion of all remaining administrative and regulatory matters related to the redomiciliation.
• Develop and implement a comprehensive cybersecurity framework as financial resources become available.

Key Dates

Recommendation

The company is in a precarious financial position, evidenced by recurring and increasing net losses, a significant accumulated deficit, and a working capital deficiency, leading to a going concern warning from its auditors. While the strategic shift to functional nutrition and biofuel initiatives presents potential long-term opportunities, the current commercial operations generate negligible revenue and are insufficient to sustain the business. The company relies heavily on uncertain future capital raises, which will likely dilute existing shareholders. Furthermore, identified material weaknesses in internal controls, the 'penny stock' classification limiting liquidity, and inherent risks associated with new product development and international expansion in highly competitive markets, all point to a high-risk investment with a very low probability of near-term recovery or profitability.

Keywords

UMeWorld, DAGola, functional nutrition, diacylglycerol oil, DAG oil, biofuel, Sustainable Aviation Fuel, SAF, SEC filing, 20-F, redomiciliation, Delaware, China market, health and wellness, enzymatic technology, corporate governance, internal controls, penny stock, financial losses, going concern