Quarterly Report for Quarter Ending April 30, 2024 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our unaudited financial statements and the related notes included in this Quarterly Report on Form 10-Q. The discussion below contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements due to various factors, including those described in our filings with the Securities and Exchange Commission ("SEC").

Forward-Looking Statements

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

Unless otherwise indicated, references to "we," "us," "our," or "the Company," mean VitaSpring Biomedical Co., Ltd.

All dollar amounts refer to US dollars unless otherwise indicated.

Overview

We are a development-stage biomedical company focused on cell-based technologies for regenerative and preventative health applications. Our business model historically involved sourcing stem cells and exosome products from a related-party vendor and reselling those products to customers.

During the three months ended April 30, 2024, and 2023, we did not generate any revenue as we restructured our commercial strategy, evaluated supplier and regulatory considerations, and assessed future business direction.

Accordingly, our activities during the current fiscal year have primarily consisted of:

	·	Administrative and corporate compliance activities,
	·	Evaluation of future commercialization strategy,
	·	Maintenance of regulatory positioning,
	·	Management of related party obligations, and
	·	Seeking additional capital to support future operations.

As of April 30, 2024, we have not reinitiated revenue-generating operations.

Results of Operation

The following summary of our results of operations should be read in conjunction with our unaudited financial statements for the period ended April 30, 2024, which are included herein.

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Our operating results for the three months ended April 30, 2024, and 2023 and the changes between those periods for the respective items are summarized as follows.

For the three months ended April 30, 2024, compared to the three months ended April 30, 2023

		Three Months ended
		April 30,
		2024				2023				Changes
Revenues		$	-			$	-			$	-
Operating expenses			216,831				304,601				(87,770	)
Loss from operations			(216,831	)			(304,601	)			87,770
Net loss		$	(216,831	)		$	(304,601	)		$	87,770

Revenue

During the three months ended April 30, 2024, and 2023, we did not generate any revenue. During the year 2023, we suspended commercial sales activity while evaluating our operating model and funding alternatives. We are currently focusing on restructuring our product strategy and developing long-term partnerships rather than pursuing short-term sales.

We had a net loss from operations of $216,831 for the three months ended April 30, 2024, and $304,601 for the three months ended April 30, 2023. The decrease in net loss of $87,770 was due to a reduction in operating expenses of $87,770.

Operating Expenses

The operating expenses for the three months ended April 30, 2024, and 2023 were $216,831 and $304,601, respectively. For the three months ended April 30, 2024, and 2023, the operating expenses were primarily attributed to professional fees of $32,026 and $76,173, stock-based compensation of $41,217 and $41,216, lease expenses of $50,103 and $63,980, depreciation expenses of $2,489 and $3,766, payroll expenses of $84,578 and 41,118 and general and administrative expenses of $6,418 and $78,348, respectively.

Net Loss

For three months ended April 30, 2024, and 2023, we had a net loss of $216,831 and $ 304,601, respectively. Net loss decreased by $87,770, or 28.81%, to $216,831 for the three months ended April 30, 2024, compared with net loss of $304,601 in the three months ended April 30, 2023. The decrease in net loss was due to decrease in operating expenses.

Balance Sheet Data

Liquidity and Capital Resources

The following table summarizes our changes in working capital deficiency from April 30, 2024, to January 31, 2024:

		April 30,				January 31,
		2024				2024				Change
Current assets		$	64,307			$	23,627			$	40,680
Current liabilities		$	3,657,091			$	3,487,531			$	169,560
Working capital (deficiency)		$	(3,592,784	)		$	(3,463,904	)		$	(128,880	)

As of April 30, 2024, our current assets were $64,307 and our current liabilities were $3,657,091, which resulted in working capital deficiency of $3,592,784. As of April 30, 2024, and January 31,2024, current assets were comprised of $968 and $13 in cash, $39,725 and $0 in prepaid expenses and $23,614 and $23,614 in deposits, respectively.

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As of April 30, 2024, and January 31,2024, current liabilities were comprised of $ 2,411,000 and $2,411,000 in accounts payable -related party, $279,056 and $339,001 in accounts payable and other payables, $218,714 and $218,714 in income tax payable, $47,248 and $93,334 in operating lease liabilities and $701,073 and $425,482 in advances from related party, respectively.

Our working capital deficiency increased by $128,880, or 3.72%, to $3,592,784 for the three months ended April 30, 2024, compared to working capital deficiency of $3,463,904 as of January 31, 2024. The increase was primarily due to an increase in advances from related party offset by a decrease in accounts payable, operating lease liabilities and an increase in current assets.

The income tax payable balance primarily relates to historical tax liabilities, and no current period income tax expense was recorded due to our net operating loss position and full valuation allowance.

Cash Flow Data

The following table summarizes our cash flows for the three months ended April 30, 2024, and 2023:

		Three Months ended
		April 30,
		2024				2023				Change
Cash used in operating activities		$	(4,023	)		$	(27,940	)		$	23,917
Cash provided by financing activity		$	4,978			$	1,277			$	3,701
Net change in cash		$	955			$	(26,663	)		$	27,618

As of April 30, 2024, we had cash of $968, compared with cash of $13 at January 31, 2024. The increase of approximately $955 was mainly due to cash provided in our financing activities.

We have funded our activities primarily through shareholder advances, which were discretionary and not subject to a written agreement. For the three months ended April 30, 2024, we incurred a net loss of $216,831. We continue to rely on external funding and available cash balances to meet our working-capital needs. Management believes that additional capital will be required to support operations over the next twelve months.

We expect to continue to require additional capital to support operations, research, and regulatory initiatives. Management is exploring potential sources of financing, including private placements of equity or debt securities and strategic partnerships. There is no assurance that additional funding will be available on acceptable terms. If we cannot secure sufficient financing, we may need to delay or scale back parts of our business plan.

We believe our current cash resources will not be sufficient to fund planned operations for the next twelve months without additional capital. The continuation of our business depends on our ability to raise funds and generate future revenue.

Historically, substantially all of our product inventory was sourced from a single, related-party vendor.

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities. Net cash used in operating activities was $4,023 for the three months ended April 30, 2024, which primarily reflects our net loss of $216,831, adjusted for non-cash items and charges in working capital reduced by depreciation of $2,489, non-cash lease expense of $44,245, stock-based compensation of $41,217, advances from related party for operating expenses of $270,613, and increased by a net change in working capital of $145,756.

Net cash used in operating activities was $27,940 for the three months ended April 30, 2023, primarily due to our net loss of $304,601, reduced by depreciation of $3,766, non-cash lease expense of $39,953, stock-based compensation of $41,216, accounts receivable of $150,000, advances from related party for operating expenses of $51,594 and increased by a net change in working capital of $9,868.The accounts receivable collected during the period related primarily to revenue recognized in 2022.

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Cash Flows from Investing Activities

We had no investing activities during the three months ended April 30, 2024, and 2023.

Cash Flows from Financing Activities

Net cash provided by financing activities was $4,978 for the three months ended April 30, 2024, compared to $1,277 for the three months ended April 30, 2023.

During the three months ended April 30, 2024, and 2023, the Company received advances from a related party of $4,978 and $1,277, respectively. We may seek additional equity or debt financing in future periods to support ongoing operations.

We expect to continue to rely on equity financing and, where available, strategic partnerships or grants to meet our capital needs. Our ability to raise additional capital will depend on market conditions, investor interest, and our progress in commercializing our stem-cell and biomedical technologies.

Capital Requirements and Liquidity Outlook

We have incurred losses and negative cash flow from operations. We believe that our current cash resources are not sufficient to fund our operations for the next twelve months without additional financing. To meet our capital needs, we plan to seek additional equity or debt financing and may also pursue strategic partnerships or licensing opportunities. There is no assurance that such financing will be available on favorable terms or at all. If we cannot obtain adequate funding, we may need to delay, scale back, or discontinue some of our business activities.

Going Concern

We evaluate our ability to continue as a going concern in accordance with ASC 205-40, Presentation of Financial Statements - Going Concern. This evaluation requires us to assess whether conditions or events raise substantial doubt about our ability to meet our obligations as they become due during the twelve months following the issuance of these financial statements.

Our financial statements have been prepared assuming we will continue as a going concern. As disclosed in Note 2 to our financial statements, as of April 30, 2024, we had an accumulated deficit of $4,723,412, a working capital deficiency of $3,592,784, and negative operating cash flow of $4,023, which is due to our limited operations. These factors raise substantial doubt about our ability to continue as a going concern within one year from the issuance of these financial statements. Our ability to continue as a going concern depends upon our ability to obtain additional funding, restructuring related-party obligations, and implement a business plan that generates sustainable revenues. There can be no assurance that we will be successful in these efforts.

Off-Balance Sheet Arrangements

As of April 30, 2024, we did not have any off-balance sheet arrangements.

Plan of Operation and Funding

We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.

While existing working capital, together with anticipated financing, is expected to be adequate to fund our operations over the next twelve months, there can be no assurances that it will be adequate. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with a start-up business and (ii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

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Critical Accounting Policies and Estimates

Use of Estimates

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of financial statements requires management to make estimates and assumptions, including, but not limited to, stock-based compensation, lease liabilities, and going concern assessment. Our significant accounting policies are described in Note 4 to the financial statements. We consider the following policies and estimates to be critical because they involve significant judgments and assumptions and could materially affect our financial condition and results of operations. Critical estimates are those estimates that in accordance with U.S. GAAP, involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial statements. Management has determined that our most critical accounting estimates are those relating to fair value of financial instruments.

Significant estimates and assumptions reflected in the financial statements for the quarter ended April 30, 2024, include, but are not limited to:

Allowance for Credit Losses

We evaluate financial assets measured at amortized cost, including accounts receivable, for expected credit losses under ASC 326. The estimate incorporates historical loss experience, current economic conditions, and reasonable and supportable forecasts. Changes in these factors could materially affect the allowance recorded.

Lease Accounting

Under ASC 842, we recognize right-of-use assets and lease liabilities for operating leases. When the implicit rate in a lease is not readily determinable, we estimate an incremental borrowing rate based on available market information and our credit profile. Changes in assumptions regarding discount rates could impact lease liabilities and related expense.

Deferred Tax Assets

We recognize deferred tax assets and liabilities for temporary differences between financial statement carrying amounts and tax bases. We evaluate the realizability of deferred tax assets and record a valuation allowance when it is more likely than not that some or all of the deferred tax assets will not be realized. This assessment requires significant judgment regarding future taxable income.

Stock-Based Compensation

We account for equity-based awards under ASC 718. The fair value of equity awards is measured at the grant date and recognized over the requisite service period. The determination of fair value may require management to make assumptions regarding expected term, volatility, and other valuation inputs, as applicable.

Going Concern Assessment

In accordance with ASC 205-40, we evaluate whether conditions or events raise substantial doubt about our ability to continue as a going concern within one year from the issuance date of the financial statements. This assessment requires management to evaluate liquidity, forecasted cash flows, and the availability of financing or related-party support.

Because these estimates require management judgment, actual results could differ materially from those estimates.

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Income Taxes and Deferred Tax Assets

We account for income taxes using the liability method under ASC 740. Deferred tax assets are recognized for temporary differences between financial statement and tax bases of assets and liabilities. A valuation allowance is established when it is more likely than not that all or part of a deferred tax asset will not be realized. Determining the amount of valuation allowance requires significant judgment in estimating future taxable income, applicable tax strategies, and the expected timing of reversals of temporary differences.

Material Commitments

None.

Purchase of Significant Equipment

We do not intend to purchase any significant equipment during the next twelve months.