Quarterly Report for Quarter Ending December 31, 2025 (Form 10-Q)

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

Application of Critical Accounting Policies

The discussion and analysis of the Company's financial condition and results of operations is based upon its condensed consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These items are monitored and analyzed by management for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate.

In connection with the preparation of our financial statements for the three months ended December 31, 2025, there was no accounting estimate made which was (a) subject to a high degree of uncertainty and (b) material to our results.

Results of Operations

Three Months Ended December 31, 2025 Compared to Three Months Ended December 31, 2024

The following table shows key components of the unaudited results of operations during the three months ended December 31, 2025 and 2024:

		For the Three Months Ended
		December 31,
		2025				2024				Change
		(Unaudited)				(Unaudited)				$				%
Total revenue		$	345,265			$	1,775,495			$	(1,430,230	)			(81	)%
Cost of revenue			5,271				28,781				(23,510	)			(82	)%
Gross Profit			339,994				1,746,714				(1,406,720	)			(81	)%
Total operating expenses			619,187				1,144,140				(524,953	)			(46	)%
(Loss) income from operations			(279,193	)			602,574				(881,767	)			(146	)%
Other income, net			4,968				5,421				(453	)			(8	)%
(Loss) income before income taxes			(274,225	)			607,995				(882,220	)			(145	)%
Income tax			20				106,396				(106,376	)			(100	)%
Net (loss) income		$	(274,245	)		$	501,599			$	(775,844	)			(155	)%

During the three months ended December 31, 2025, our total revenue was $345,265, of which $4,103 was attributable to the sale of healthcare services, primarily derived from sales of "Immunological Ozonated Autohemotherapy", "Meridian-regulating and Consciousness-restoring Iatrotechnics", "Assay", "PRP" and other healthcare services. The remaining $341,162 of revenue was attributable to commissions earned by the Company from its service as sales agent for Inner Mongolia Honghai Health Management Co., Ltd. ("Honghai"). In June of 2023, the Company began to engage in the sales agent business and focused on the sales of preventive healthcare solutions administered by Honghai, with whom we have a Sales Agency Agreement. As of December 31, 2025, we operate through five entities: Longduoduo Health Technology, Tianju, Qingguo, Rongbin, Chengheng which are established in Huhhot, Ulanqab, Huhhot, Baotou, Ordos, respectively, which include four of the largest cities in Inner Mongolia, China.

Quarter to quarter revenue fell by 81% as compared with the operating revenue of $1,775,495 for the three months ended December 31, 2024. One important factor influencing revenue in the recent quarter is the impact of the economic environment. The prevailing economic environment, characterized by waning confidence in economic prospects, has compelled consumers to adopt significantly more cautious spending behavior, curtailing discretionary expenditures. Management believes that the government has recently introduced policies to promote economic recovery, but it may take some time for the situation to truly improve. Meanwhile, as we wait for the economy to revive, the Company is implementing plans to improve its operations by adjusting its operational policies.

Cost of revenue relates solely to our service revenue, and mainly consists of our payments to the third-party healthcare service providers who perform healthcare services for our customers. During the three months ended December 31, 2025, our cost of revenue was $5,271, with our gross loss from service revenue was $1,168 (a gross margin of -28%). Healthcare service volume remained limited this quarter, with equipment depreciation of $2,329, our gross margin turned negative. By comparison, our gross profit from service revenue for the three months ended December 31, 2024 was $13,540, representing 32% of service revenue for that quarter.

When our net service revenue in the three months ended December 31, 2025 was combined with commission revenue (for which there is no cost of revenue), we achieved gross profit of $339,994. However, we realized a $279,193 loss from operations for the three months ended December 31, 2025 because the Company incurred significant marketing expense in connection with establishing its brand as a new company. The Company will continue to invest heavily in advertising and promotion expenses in the near future as it continues to establish and expand its brand and products and services.

Our operating expenses consist primarily of advertising and promotion expenses, salaries and benefits, office expenses, professional fees and depreciation. Our operating expenses during the three months ended December 31, 2025 decreased by $524,953, primarily attributable to:

	●	$254,500 in advertising and promotion expenses incurred in the three months ended December 31, 2025, compared to $769,526 recorded in the three months ended December 31, 2024.
	●	$138,302 in salaries and benefits expenses in the three months ended December 31, 2025, compared to $154,344 in the three months ended December 31, 2024.

●

$154,588 in office expenses incurred during the three months ended December 31, 2025, compared to $128,358 recorded during the three months ended December 31, 2024.

●

$20,648 in professional fees in the three months ended December 31, 2025, compared to $26,700 in recorded in the three months ended December 31, 2024. In both cases, the expense was primarily related to the costs incurred by the Company to establish and sustain its status as an SEC-reporting company in the United States.

Our net loss for the three months ended December 31, 2025 was $274,245, compared to a net income of $501,599 for the three months ended December 31, 2024.

Our reporting currency is the U.S. dollar. Our functional currency is the local currency, which is the Renminbi (RMB) for our Chinese subsidiaries, the Hong Kong Dollar (HKD) for our Hong Kong subsidiaries, and the U.S. Dollar (USD) for our BVI subsidiary. Results of operations and cash flow for RMB and HKD are translated at average exchange rates during the period being reported upon, and assets and liabilities are translated at the unified exchange rate as quoted by OANDA on the balance sheet date. Translation adjustments resulting from this process are included in other comprehensive income (loss). For the three months ended December 31, 2025 and 2024, foreign currency translation adjustments of $33,434 and $(62,057), respectively, were recognized in other comprehensive income (loss) within the consolidated statements of operations and comprehensive income (loss).

Six Months Ended December 31, 2025 Compared to Six Months Ended December 31, 2024

The following table shows key components of the unaudited results of operations during the six months ended December 31, 2025 and 2024:

		For the Six Months Ended
		December 31,
		2025				2024				Change
		(Unaudited)				(Unaudited)				$				%
Total revenue		$	1,004,029			$	2,544,567			$	(1,540,538	)			(61	)%
Cost of revenue			11,981				61,057				(49,076	)			(80	)%
Gross Profit			992,048				2,483,510				(1,491,462	)			(60	)%
Total operating expenses			1,355,655				1,943,012				(587,357	)			(30	)%
(Loss) income from operations			(363,607	)			540,498				(904,105	)			(167	)%
Other income, net			45,294				8,173				(37,121	)			(454	)%
(Loss) income before income taxes			(318,313	)			548,671				(866,984	)			(158	)%
Income tax			67,114				106,576				(39,462	)			(37	)%
Net (loss) income		$	(385,427	)		$	442,095			$	(827,522	)			(187	)%

During the six months ended December 31, 2025, our total revenue was $1,004,029, of which $9,709 was attributable to the sale of healthcare services, primarily derived from sales of "Immunological Ozonated Autohemotherapy", "Meridian-regulating and Consciousness-restoring Iatrotechnics", "Assay", "PRP" and other healthcare services. The remaining $994,320 of revenue was attributable to commissions earned by the Company from its service as sales agent for Inner Mongolia Honghai Health Management Co., Ltd. ("Honghai"). In June of 2023, the Company began to engage in the sales agent business and focused on the sales of preventive healthcare solutions administered by Honghai, with whom we have a Sales Agency Agreement. As of December 31, 2025, we operate through five entities: Longduoduo Health Technology, Tianju, Qingguo, Rongbin, Chengheng which are established in Huhhot, Ulanqab, Huhhot, Baotou, Ordos, respectively, which include four of the largest cities in Inner Mongolia, China.

Period to period revenue fell by 61% as compared with the operating revenue of $2,544,567 for the six months ended December 31, 2024. Important factor influencing revenue in the recent quarter is the impact of the economic environment. The prevailing economic environment, characterized by waning confidence in economic prospects, has compelled consumers to adopt significantly more cautious spending behavior, curtailing discretionary expenditures. Management believes that the government has recently introduced policies to promote economic recovery, but it may take some time for the situation to truly improve. Meanwhile, as we wait for the economy to revive, the Company is implementing plans to improve its operations by adjusting its operational policies.

Cost of revenue relates solely to our service revenue, and mainly consists of our payments to the third-party healthcare service providers who perform healthcare services for our customers. During the six months ended December 31, 2025, our cost of revenue was $11,981, with our gross loss from service revenue was $2,272 (a gross margin of -23%). Healthcare service volume remained limited this quarter; with equipment depreciation of $4,773, our gross margin turned negative. By comparison, our gross profit from service revenue for the six months ended December 31, 2024 was $27,859, representing 31% of service revenue for that quarter.

When our net service revenue in the six months ended December 31, 2025 was combined with commission revenue (for which there is no cost of revenue), we achieved gross profit of $992,048. However, we realized a $363,607 loss from operations for the six months ended December 31, 2025 because the Company incurred significant marketing expense in connection with establishing its brand as a new company. The Company will continue to invest heavily in advertising and promotion expenses in the near future as it continues to establish and expand its brand and products and services.

Our operating expenses consist primarily of advertising and promotion expenses, salaries and benefits, office expenses, professional fees and depreciation. Our operating expenses during the six months ended December 31, 2025 decreased by $587,357, primarily attributable to:

	●	$568,981 in advertising and promotion expenses incurred in the six months ended December 31, 2025, compared to $1,078,436 recorded in the six months ended December 31, 2024.
	●	$273,731 in salaries and benefits expenses in the six months ended December 31, 2025, compared to $289,665 in the six months ended December 31, 2024.

●

$299,310 in office expenses incurred during the six months ended December 31, 2025, compared to $336,981 recorded during the six months ended December 31, 2024. The decrease was primarily attributable to a tactical decision by Management to reduce additional administrative services.

●

$113,902 in professional fees in the six months ended December 31, 2025, compared to $131,700 in recorded in the six months ended December 31, 2024. In both cases, the expense was primarily related to the costs incurred by the Company to establish and sustain its status as an SEC-reporting company in the United States.

Our net loss for the six months ended December 31, 2025 was $385,427, compared to a net income of $442,095 for the six months ended December 31, 2024.

Our reporting currency is the U.S. dollar. Our functional currency is the local currency, which is the Renminbi (RMB) for our Chinese subsidiaries, the Hong Kong Dollar (HKD) for our Hong Kong subsidiaries, and the U.S. Dollar (USD) for our BVI subsidiary. Results of operations and cash flow for RMB and HKD are translated at average exchange rates during the period being reported upon, and assets and liabilities are translated at the unified exchange rate as quoted by OANDA on the balance sheet date. Translation adjustments resulting from this process are included in other comprehensive income (loss). For the six months ended December 31, 2025 and 2024, foreign currency translation adjustments of $47,320 and $(15,068), respectively, were recognized in other comprehensive income (loss) within the consolidated statements of operations and comprehensive income (loss).

Liquidity and Capital Resources

As of December 31, 2025, the Company held $1,543,479 in cash and cash equivalents, yet working capital was only $634,590. This divergence primarily reflects our use of customer prepayments to fund operations: of the $684,337 in deferred revenue, most was applied to ongoing expenses, leaving just $151,595 in prepayments on the balance sheet. Going forward, we will strive to achieve a better balance of customer deposits and prepayments; but we will achieve that better balance only when profits from operations and funds from financing are adequate to support the expansion effort that will be necessary for successful operations.

We anticipate that our future liquidity requirements will arise from the need to fund our growth, pay current obligations and future capital expenditures. The primary sources of funding for such requirements are expected to be cash generated from operations and raising additional funds from a public offering and/or debt financing. We expect Zhang Liang, our majority shareholder, to continue to provide support in the future, if needed. However, we can provide no assurances that we will be able to generate sufficient cash flows from operations and/or obtain additional financing on terms satisfactory to us, if at all, to remain a going concern.

Cash Flows

The following unaudited table summarizes our cash flows for the six months ended December 31, 2025 and 2024.

		For the Six Months Ended December 31,
		2025				2024
		(Unaudited)				(Unaudited)				Change
Net cash (used in) provided by operating activities		$	(105,572	)		$	280,261			$	(385,833	)
Net cash used in investing activities			(30,088	)			(56,306	)			26,218
Effect of exchange rate fluctuation on cash and cash equivalents			36,418				(8,964	)			45,382
Net (decrease) increase in cash and cash equivalents			(99,242	)			214,991				(314,233	)
Cash and cash equivalents, beginning of period			1,642,721				1,404,042				238,679
Cash and cash equivalents, end of period		$	1,543,479			$	1,619,033			$	(75,554	)

Net Cash Used in Operating Activities

For the six months ended December 31, 2025, we used $105,572 cash in our operating activities, compared to $280,261 provided by operating activities for the six months ended December 31, 2024. During the six months ended December 31, 2025, cash used in operations was lower than the $385,427 net loss, chiefly because customer deposits for future services rose by $334,494.

Net Cash Used in Investing Activities

Net cash used in investing activities for the six months ended December 31, 2025 was $30,088, compared to $56,306 for the six months ended December 31, 2024. In both periods, the cash was used for the purchase of fixed assets and office decoration.

Trends, Events and Uncertainties

The U.S. government, including the SEC, has made statements and taken actions that have led to changes in relations between the U.S. and China, and will impact companies with connections to the United States or China. Those actions by the U.S. government included imposing several rounds of tariffs affecting certain products manufactured in China and imposing sanctions and restrictions in relation to China. Actions by the SEC included issuing statements indicating that it would make enhanced review of companies with significant China-based operations. It is unknown whether and to what extent new legislation, executive orders, tariffs, laws or regulations will be adopted, or the effect that any such actions would have on U.S.-domiciled companies with significant connections to China, our industry or on us. Any unfavorable government policies on cross-border relations, including increased scrutiny of companies with significant China-based operations, capital controls or tariffs, may affect our ability to raise capital and the market price of our shares. If any new legislation, executive orders, tariffs, laws and/or regulations are implemented, if existing trade agreements are renegotiated, or if the U.S. or Chinese governments take retaliatory actions due to the recent U.S.-China tensions, such changes could have an adverse effect on our business, financial condition and results of operations, our ability to raise capital and the market price of our shares. Changes in United States and China relations and/or regulations may adversely impact our business, our operating results, our ability to raise capital and the market price of our shares.

Other than the factors listed above we do not know of any trends, events or uncertainties that have had or are reasonably expected to have a material impact on our net sales or revenues or income from continuing operations.

Recent Accounting Pronouncements

There were no recent accounting pronouncements that we expect to have a material effect on the Company's financial position or results of operations.