KPEA 10-K & 10-Q changes, risk factors and insider trading
Kun Peng International Ltd. · OTC · Services-Educational Services · CIK 1502557 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.”
Removed heading “We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to “emerging growth companies” will make our common shares less attractive to investors.”
Largest changes
“Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If we are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities. …”see in full comparison
see in full comparisonThe auditor’s report on the audited consolidated financial statementsAs of as of September 30, 2025, the CompanyincludedincurredincashthisoutflowsAnnualfromReportoperatingincludeactivities of $208,156, aparagraphnet loss of $1,268,913,thatandindicatesnegativethatworkingtheycapitalwereofprepared assuming that we would continue$8,495,197; asa going concern. Asof September 30, 2024, the Company incurred cash inflows from operating activities of $17,880, a net loss of $1,991,747 and negative working capital of $7,997,902;asTheseof September 30, 2023, the Company incurred cash outflows from operating activities of $427,030, a net loss of $2,149,213, and negative working capital of $5,523,743Theseconditions raise substantial doubt about the ability of the Company to continue as a going concern. The ability to continue as a going concern is dependent upon generating profitable operations in the future and/or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. In order to continue as a going concern for the next 12 months, the Company is focusing on promoting and selling its own brand of preventive health care products to wholesalers through Kun Zhi Jian, an online platform launched in October 2022, streamlining its overhead costs, and, as necessary, obtaining financing or capitalcapitalfunding from its stockholders or directors.In addition, in November 2023, the Company launched the Kun Zhi Jian Mini Program through which it offers health screening and monitoring at the Kun Zhi Jian customer service center and promotes and sells health care supplements and products to its customers and members.Management may seek additional funds, primarily through the issuance of equity securities for cash or through loans from our officers and controllingstockholders,stockholders and possibly through bank financing, to operate our business. Management estimates thatthatadditional capital will be necessary to support our operations and growth.
“If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.”see in full comparison
“We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to “emerging growth companies” will make our common shares less attractive to investors.”see in full comparison
“We are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an “emerging growth company,” we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. …”see in full comparison
“Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, our management is required to report upon the effectiveness of our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. …”see in full comparison
Full comparison: every changed paragraph (12)
The
auditor’s report on the audited consolidated financial statementsAs of as of September 30, 2025, the Company includedincurred incash thisoutflows Annualfrom Reportoperating includeactivities of $208,156, a paragraphnet loss of $1,268,913,
thatand indicatesnegative thatworking theycapital wereof prepared assuming that we would continue$8,495,197; as a going concern. As of September 30, 2024, the Company incurred
cash inflows from operating activities of
$17,880, a net loss of $1,991,747
and negative working capital of $7,997,902; asThese of September 30, 2023, the Company
incurred cash outflows from operating activities of $427,030, a net loss of $2,149,213, and negative working capital of $5,523,743These
conditions raise substantial doubt about the
ability of the Company to continue as a going concern. The ability to continue as a going
concern is dependent upon generating
profitable operations in the future and/or obtaining the necessary financing to meet our obligations
and repay our liabilities
arising from normal business operations when they become due. In order to continue as a going concern for the
next 12 months, the
Company is focusing on promoting and selling its own brand of preventive health care products to wholesalers through
Kun Zhi Jian,
an online platform launched in October 2022, streamlining its overhead costs, and, as necessary, obtaining financing or capital
capital funding from its stockholders or directors. In addition, in November 2023, the Company launched the Kun Zhi Jian Mini Program
through which it offers health screening and monitoring at the Kun Zhi Jian customer service center and promotes and sells health care
supplements and products to its customers and members. Management may seek additional funds, primarily through the issuance of equity
securities for cash or through loans from our officers and controlling stockholders,stockholders and possibly through bank financing, to operate our business. Management estimates
that that
additional capital will be necessary to support our operations and growth.
The
Company incurred a net loss of $1,991,747$1,268,913 and $2,149,213,$1,991,747 for the fiscal years ended September
30, 20242025 and 2023,2024, respectively. We have
generated very limited revenue. Our current operations are small with a short history. We
may be unable to achieve our performance targets,
which will impact the Company’s operating results. Our ability to achieve
profitability depends on the competitiveness of our products
and services as well as our ability to control costs and to provide new
products and services to meet the market demands and attract
new customers. Due to the numerous risks and uncertainties associated
with the development of our business, we cannot guarantee that
we will be able to achieve profitability in the short-term or
long-term. The Company focusis focusing on increasing its revenue through the
sale of health care products and equipment service from
card-operated health screening equipmentsequipment on its new online platform, Kun Zhi
Jian and Kun Zhi Jian Mini Program, and promoting its own brand of preventive
health care related products to reduce its costs of goods
sold, streamlining its overhead costs, or
obtaining financing from its stockholders or directors. Management may seek additional funds,
primarily through the issuance of
equity securities for cash and loans from our officers and controlling stockholders, to operate our
business and estimates that
additional capital will be necessary to support our operations and growth.
Our
operating entity and our VIE, King Eagle (China), Kun Peng Tian Yu, and King Eagle VIE, commenced their operations in June 2020, August
2021, and September 2020, respectively. As a result of our limited operating history, our ability to accurately forecast our future operating
results is limited and subject to a number of uncertainties. We have encountered, and will continue to encounter, risks and uncertainties
frequently experienced by growing companies in rapidly changing industries, such as the risks and uncertainties described herein. If
our assumptions regarding these risks and uncertainties (which we use to plan our business) are incorrect or changed due to changes in
our markets, or if we do not address these risks and uncertainties successfully, our operating and financial results could differ materially
from our expectations, and our business could suffer.
The
COVID-19 pandemic resulted in quarantines, travel restrictions, limitations on social or public gatherings, and the temporary closure
of business venues and facilities around the world. Due to restrictions, quarantines, and closures in certain affected areas and government
agencies in the PRC, the approval process of our applications for construction permits for Smart Kiosks was delayed by the local governmental
agencies and our Smart Kiosk project has been abandoned, which impacts our plan of enhancing our face-to-face customer services and increasing
our market share. The Company continues to focus its business on its online platform, King Eagle Mall, and to promote its own brand of
consumer health care and health-related household products on its new online platform, Kun Zhi Jian, which was introduced and implemented
in October 2022, to mitigate the adverse impacts of COVID-19. The Company has also launched the Kun Zhi Jian Mini Program, which consists
of three components: physiotherapy equipment, a customer service center, and a shopping mall.
A
series of contractual agreements,agreements dated May 15, 2021, including the Consulting Service Agreement, the Business Operation Agreement, the
Proxy Agreement,
the Equity Disposal Agreement, and the Equity Pledge Agreement, havewere beeninitially entered into with our VIE. The contractual
agreements were terminated and new contractual agreements were entered into June 10, 2025 (the “New Contractual Agreements”).
We have been advised by our PRC
counsel that the ownership structure of our VIE in China does not violate any applicable and explicit
PRC laws and regulations currently
in effect, and each of the contractual agreements governed by PRC law is valid, binding, and enforceable
in accordance with its terms,
subject to enforceability to applicable laws and the discretion of relevant government authorities in exercising
their authority in connection
with the interpretation and implementation thereof. As a result of the contractual agreements, the Company
is the primary beneficiary
of the VIE for accounting purposes, and the Company has consolidated the results of operations, financial
position, and cash flows of
the VIE in its consolidated financial statements under U.S. GAAP. The contractual arrangements with the VIE
provide us with a “controlling
financial interest” in the VIE by granting us: (i) the power to direct activities of the VIE
that most significantly affect its
economic performance; and (ii) the right to receive economic benefits from the VIE.
We
rely on contractualthe arrangementsNew Contractual Agreements with our VIE to operate our electronic platform in China and other businesses in which foreign
investment investment
is restricted or prohibited. These contractual arrangements may not be as effective as direct ownership in providing us with
control control
over our VIE.
Our
business is dependent on King Eagle VIE and operations in China, and marketing and selling health-related products, and any inability
to obtain products or to market and sell such products could have a material adverse effect on our business, operating resultsresults, and financial
condition.
If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, our management is required to report upon the effectiveness of our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. To comply with these requirements and with the requirements of being a reporting company under the Exchange Act, we intend to implement additional financial and management controls, reporting systems and procedures, and we may hire additional accounting and finance staff. If we are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.
Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If we are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.
We
are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to “emerging
growth companies” will make our common shares less attractive to investors.
We
are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an “emerging growth
company,” we may take advantage of exemptions from various reporting requirements that are applicable to other public companies
that are not “emerging growth companies,” including not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act of 2002, exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and shareholder approval of any golden parachute payments not previously approved. We could be an “emerging growth
company” until September 30, 2024, although circumstances could cause us to lose that status earlier, including if we become a
large accelerated filer or if we have issued an aggregate of $1 billion in non-convertible debt during the preceding 3 years. We cannot
predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common
stock less attractive as a result, there may be a less active trading market for our common stock and the price of our common stock may
be more volatile.
Management's Discussion & Analysis (MD&A)
Removed heading “Recent Developments”
Removed heading “Recent Regulatory Developments in China”
Removed heading “Foreign currency translation adjustment”
Removed heading “Comprehensive loss”
Removed heading “Critical Accounting Policies”
Largest changes
“In addition, on July 10, 2021, the Cyberspace Administration of China (the “CAC”) issued the Measures for Cybersecurity Review, or the Measures, which proposed to authorize the relevant government authorities to conduct cybersecurity review on a range of activities that affect or may affect national security, including listings in foreign countries by companies that possess the personal data of more than one million users. …”see in full comparison
“Historically, deposits in Chinese banks are secure due to state policy to protect depositor interests. However, China promulgated a Bankruptcy Law in August 2006 that came into effect on June 1, 2007, which contains a separate article expressly stating that the State Council may promulgate implementation measures to provide for the bankruptcy of Chinese banks based on the Bankruptcy Law. Under the current Bankruptcy Law, a Chinese bank may file bankruptcy if it deems itself to be insolvent. …”see in full comparison
General and administrative expenses for the years ended September 30, 2025 and 2024 were $1,551,451 and $1,818,877, respectively. The decrease in general and administrative expenses during the year ended September 30,see in full comparison20242025 by$597,495$267,426 wastriggeredchieflybyduedecreases in impairment forto aprepaymentdecrease in office rent and building management of$318,999,$93,515,professionalaservicedecreasefees of $299,840 andin meals and entertainment of$47,210$148,628,offsetandbyaan increasedecrease inEmployeetravel,compensationtransportation, andbenefitgasoline of$56,383.$80,405.TheTheseimpairmentexpenses declined as a result ofgoodwillthewasderegistration$8,412offortwo subsidiaries during the year ended September 30,2024 and2025. The declines were offset by thesignificant decreaseincrease in professional servicefeesfee of$299,840$83,031,resultsthat resulted fromtheincreaseddecreasedlocalneedauditforfee andprofessionalattorney’sservices after the four additional lines of business were established in November 2023.fee.
“The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimate and assumptions that impact the presented amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the presented amounts of revenues and expenses during the period. Actual results may differ from those estimates. …”see in full comparison
“The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the PRC government. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, which could result in greater fluctuation of the RMB against the U.S. dollar. …”see in full comparison
Full comparison: every changed paragraph (152)
King
Eagle Mall is a mobile social e-commerce platform launched in July 2020 that promotes preventive health care products and services. It
adopts the S2B2C business model and integrates many major health care products and services. We focus on health-related products and
services. Kun Zhi Jian and Kun Zhi Jian Mini Program are designed to enable health-related products to be sold by us and by third parties.
King Eagle Mall’s
products are divided into two sectors: self-operated products and selected products which promote preventive
health care. Our team screens
and examines products that are and will be offered both by us and by affiliated merchants. Our major products
include health care products
such as dietary supplements, nutritional health foods, beauty cosmeceuticals, and other categories of health
foods (for instance, milk
powder, dried fruits) for supporting the cardiovascular system and bone joint health. We also offer collagen
peptides, probiotics, and
health foods for improving blood circulation and vein health, as well as household products that can promote
and improve a healthier
lifestyle for our members. We receive customer orders and may arrange fulfillment through our merchants who are
responsible for delivery
or we may fulfill customer orders through our outsourced networks. As of January 10, 2024, September 30, 2023, and September 30, 2022,
King Eagle Mall had approximately 5,669, 5,669, and 15,077 members, respectively. King Eagle Mall’s membership declined during
the year ended September 30, 2023 because the Company focused on promoting and selling products on Kun Zhi Jian, the new online platform,
and some of the members of2025, King Eagle Mall
had switchedapproximately to15,858 Kun Zhi Jian and Kun Zhi Jian Mini Program.members.
Smart
Kiosks
We
introduced the “Smart Kiosk” concept with the support of Guoxin Star Network Co., Ltd. (“Guoxin”) and its subsidiaries
or affiliates, which would have initiated and originally administered the construction of the Smart Kiosks. Integrated with the King
Eagle Mall, the Smart Kiosk was intended to be a physical store which would focus on developing a “small shop economy.”
As
a result of extensive delays in obtaining government approval to construct the Smart Kiosks, in the last quarter of fiscal year 2023,
Guoxin determined that it was unable to obtain the necessary approvals and both parties agreed to abandon the Smart Kiosk project and
to terminate the related agreement between Guoxin and the Company.
Recent
Developments
In
October 2022, we introduced and implemented a newan online platform, Kun Zhi Jian. In its initial phase of operation, we focused on selling
a thermal therapy cabin to wholesalers. Currently, we promote and sell physiotherapy equipment products and our own brand, as well as
other popular brands, of preventive health care related products. In November 2023 we also launched the Kun Zhi Jian Mini Program, which
is composed of three main areas: physiotherapy cabin, a customer service center, and an online shopping mall (Kun Zhi Jian). We coordinate
with local health service providers and leverage their health care expertise and technology to provide health screening and consulting
services to our customers and members at the Kun Zhi Jian customer service center. Based on their health condition, we provide nutritional
consulting services and offer suggestions for our preventive health care products. As of January 10, 2024 and September 30, 2023,2025, our
new online platform had
approximately 2,1298,745 and 1,987 members, respectively.members.
COVID-19
Businesses
and markets in mainland China have reopened and mainland China relaxed its policies and controls relating to COVID-19 in early December
2022. In addition, in July 2023, the PRC government fully opened its border to foreigners without requirements of quarantine or application
for a health code upon arrival in the PRC. The Company continues to focus its business on its online platform, King Eagle Mall, and to
promote its own brand of consumer health care and health-related household products on its new online platform, Kun Zhi Jian, which was
introduced and implemented in October 2022, to mitigate the adverse impacts of COVID-19. In November 2023, the Company also launched
the Kun Zhi Jian Mini Program to expand its customer services and preventive health care.
We
do not expect that the virus and the ensuing respiratory illness will have a material adverse effect on our business or financial results
at this time. However, it is not possible to predict the unanticipated consequences of the COVID-19 virus, which continues to mutate
and remains highly contagious, on our future business performance and liquidity. The Company continues to monitor and assess the evolving
situation closely and evaluate its potential exposure.
Recent
Regulatory Developments in China
Under
current Chinese laws and regulations, the Company believes that the VIE Agreements are not subject to any government approval. The shareholders
of King Eagle (Tianjin) were required to register with SAFE when they established offshore vehicles to hold KP International. Such SAFE
registration was effected on May 14, 2021. These shareholders of King Eagle (Tianjin) were also required to register their equity pledge
arrangement by the Equity Pledge Agreement with King Eagle (China). However, the Company faces uncertainty with respect to future actions
by the PRC government that could significantly affect King Eagle (Tianjin)’s financial performance and the enforceability of the
VIE Agreements.
On
July 6, 2021, the PRC government issued the Opinions on Strictly Cracking Down on Illegal Securities Activities, calling for: (i) tightening
oversight of data security, cross-border data flow and administration of classified information, as well as amendments to relevant regulations
to specify responsibilities of overseas listed Chinese companies with respect to data security and information security; (ii) enhanced
oversight of overseas listed companies as well as overseas equity fundraising and listing by Chinese companies; and (iii) extraterritorial
application of China’s securities laws. As the Opinions on Strictly Cracking Down on Illegal Securities Activities were recently
issued, there is great uncertainty with respect to the interpretation and implementation thereof. We will closely monitor further developments.
In
addition, on July 10, 2021, the Cyberspace Administration of China (the “CAC”) issued the Measures for Cybersecurity Review,
or the Measures, which proposed to authorize the relevant government authorities to conduct cybersecurity review on a range of activities
that affect or may affect national security, including listings in foreign countries by companies that possess the personal data of more
than one million users. On January 4, 2022, the CAC issued the New Measures for Cybersecurity Review (the “New Measures”),
which amended the Measures for Cybersecurity Review (Draft Revisions) released on July 10, 2021. As our VIE has less than one million
customers, we believe that the Measures are not applicable to us in current form. The PRC government is increasingly focused on data
security, recently launching cybersecurity review against a number of mobile apps operated by several US-listed Chinese companies and
prohibiting these apps from registering new users during the review period. There are great uncertainties regarding the interpretation
and enforcement of PRC laws, rules, and regulations regarding data and privacy security. We may be required to change our data and other
business practices and be subject to regulatory investigations, penalties, increased cost of operations, or declines in issuer growth
or engagement as a result of these laws and policies.
Results
of Operations for the fiscal years ended September 30, 20242025 and 20232024
For
the years ended September 30, 20242025 and 2023,2024, revenues amounted to $2,078,741$1,438,127 and $3,917,335,$2,078,741, respectively. We recognize our revenue on
a gross basis, net of sub-charges and value-added tax (“VAT”) on gross sales.
We recognize our revenue on a gross basis, net of sub-charges and value-added tax (“VAT”) on gross sales.
In addition to revenue from retail and wholesale sales, we have developed the following sources of revenue: (i) equipment-based service revenue, generated through providing cards for online medical consultation services and selling prepaid cards to our customers for use with card-operated health screening equipment located at the Kun Zhi Jian Customer Service Center; (ii) technical service revenue, generated through promoting vendors’ products or businesses on our online platform; (iii) commission revenue, generated through the Mini Program by selling health care instruments on behalf of third parties on a commission basis; and (iv) training revenue, generated through offering training programs provided by a local health care service team.
We
recogized the revenue of retail and wholesales upon completion of delivery to the customers. Our retail revenue primarily included:
(i) the sale of consumer health care and health-related household products to our customers via our online platform,
King Eagle Mall, Kun Zhi Jian and Kun Zhi Jian Mini program,
which was launched in July 2020, October 2022 and November 2023 respectively;
(ii) the sales of prepaid cards for medical consultation and usage of card-operated health screening equipments in customer service center
and online.
Our
wholesale revenue was derived from our online platform, Kun Zhi Jian, which was launched in October 2022. Besides selling retail
products, this online platform also focuses on
promoting and selling our own brand of preventive health care related products, such as the thermal therapy cabin, to our
wholesalers.
We
have developed more revenue streams for the year ended September 30, 2024: (i) commission revenue, generating through the Mini Program by selling health care
instruments on behalf of third parties on a commission basis; (ii) equipment service revenue,
generating through providing cards for medical consultation service online and selling prepaid cards to our customers for the use of card-operated
health screening equipment located at the Kun Zhi Jian Customer Service Center; (iii) training revenue, generating through offering training program provided by a local health care service team;
and (iv) technical service
revenue, generating through promoting vendors’ products or businesses on online platform.
We
recognize equipment-based service revenue upon the completion of medical consultation services and consuming the prepaid cards. We recognizedrecognize
commisiontechnical service revenue upon the completion of promoting vendors’ products or businesses on our platform. We recognize commission
revenue upon the completion of delivery of the sales order to the end customer. We recognized the equipment service revenue
upon the completion of medical consultation service and consuming the prepaid cards. We recognizedrecognize training revenue upon the completion of
training sessions by our customers. We recognized technical service revenue upon the completion of promoting vendors’ products or
businesses on our platform.
We generated $640,614, or 30.8%, lower revenue for the year ended September 30, 2025 compared to the same period in 2024 due to the substantially sharp decrease in retail that resulted from economic uncertainty and a downward trend in consumption. We had no wholesale revenue, technical service revenue, commission revenue, or training revenue, resulting from the termination of two subsidiaries of the VIE businesses and related business streams during the year ended September 30, 2025. However, our equipment-based service revenue increased as a result of market promotions on equipment-based services during the year ended September 30, 2025.
Compared
to the year ended September 30, 2023, we generated $1,838,594 or 46.93% lower revenue for the same period in 2024 due to the substantially
sharp decrease in Wholesale.
When our new online platform, Kun Zhi Jian, was launched in October 2022, we refocused on selling dietary supplements, prepaid health
screening cards, and physiotherapy equipment to our retail customers.
Our
cost of revenue for the year ended September 30, 2024 was $612,326, $179,105 or 41.34% increase over our cost of revenue for the year
ended September 30, 2023 of $433,221. This primarily included the purchase of consumer health care and health related household products
from our suppliers and payments of training fees to our third-party trainers.
TheWe
following table presentsdisaggregated our cost of revenue disaggregated by customer type, retail and wholesale, for the years ended September 30,
2024 2025 and 20232024 as follows:
Our cost of revenue for the year ended September 30, 2025 was $479,832, a $125,806, or 20.8%, decrease over our cost of revenue for the year ended September 30, 2024 of $605,638. Our cost of revenue primarily consisted of the purchase of consumer health care and health related household products from our suppliers and payments related to maintaining health screening equipment. For the year ended September 30, 2024, we also had payments of training fees and related reimbursements to our third-party trainers; however, no such costs were incurred during the year ended September 30, 2025 due to the cessation of the related business. We made our retail product sales through our King Eagle Mall, Kun Zhi Jian and our Kun Zhi Jian Mini Program. We also offered equipment-based services through the Kun Zhi Jian Mini Program. We pay an equipment-based service fee that includes a prepaid card activation fee and a technical support fee.
During the year ended September 30, 2025, our cost of revenue decreased in line with the decrease in revenue as a result of the termination of two subsidiaries’ businesses.
During
the year ended September 30, 2024, we made our retail product sales through our King Eagle Mall and Kun Zhi Jian Mini Program. We also
offered equipment service and training through the Kun Zhi Jian Mini Program. We pay an equipment service fee that includes a prepaid
card activation fee and a technical support fee. Our costs of training revenue consist of training fees, accommodations, and transportation
of the third-party trainers.
We
incurred a higher cost of revenue related to our retail revenue and equipment
service revenue for the year ended September 30, 2024 compared to the same period in 2023 because
we generated significantly retail revenue volume and amount from King Eagle Mall and equipment service revenue from selling prepaid
cards during the year ended September 30, 2024 as discussed above.
For the years ended September 30, 2025 and 2024, our overall gross profit and margin was $958,295, or 66.6%, and $1,473,103, or 70.9%, respectively.
For the years ended September 30, 2025 and 2024, the gross profit and margin for our retail business amounted to $372,464, or 74.4%, and $1,048,246, or 76.3%, respectively. The decrease in our gross profit and margin for our retail business for the year ended September 30, 2025 as compared to the year ended September 30, 2024 was primarily due to economic uncertainty and a downward trend in consumption. Additionally, we had no earn gross profit from wholesale revenue, technical service revenue, commission revenue, and training revenue, as a result of the termination of two of King Eagle VIE’s subsidiaries’ businesses and the cessation of the related business streams during the year ended September 30, 2025. For the years ended September 30, 2025 and 2024, the gross profit and margin for our equipment-based services business amounted to $585,831, or 62.5%, and $370,824, or 58.8%, respectively. The increase in our gross profit and margin for our equipment-based services business for the year ended September 30, 2025 as compared to the year ended September 30, 2024 was primarily attributable to the Company’s strategic focus on equipment-based services and the implementation of expanded promotional initiatives.
For the years ended September 30, 2024 and 2023, our gross profit related
to our retail sales amounted to $1,048,246, or 76.3%, and $71,375, or 58.2%. respectively. Our gross profit or margin for the retail business
of King Eagle Mall for the year ended September 30, 2024 was significantly higher than that for the same period in 2023. Our retail revenue
amount increased in the current period as we put up the retail price for our products and lauched Kun Zhi Jia Mini Program in November
2023.
The gross profit and margin for our wholesale business of Kun Zhi Jian
for the year ended September 30, 2024 and 2023 was $1,012, or 46.8%, and $3,412,739, or 89.9%, respectively. When our online platform,
Kun Zhi Jian and Kun Zhi Jian Mini Program, was launched in October 2022 and November 2023, we refocused on selling dietary supplements,
prepaid health screening cards, and physiotherapy equipment to our retail customers. Accordingly, the gross margin of our wholesale business
line shrank during the year ended September 30, 2024.
The
gross margins for our commission, equipment service, technical service, and training for year ended September 30, 2024 were 100%, 58.8%,
100.0%, and 40.8%, respectively. As we introduced these four additional revenue streams in or after November 2023, the gross margins
for these four revenue streams were nil for the same period in 2023.
Our
operating expenses consist of general and administrative expenses and selling expenses. For the years ended September 30, 20242025 and 2024,
2023, our total operating expenses were $3,473,901$2,738,005 and $5,733,003,$3,473,901, respectively. The decrease
reduction in operating expenses for the year ended September 30, 20242025 compared to the yearsame endedperiod Septemberin 30, 20232024 was primarily
due to thea reductionsdecrease inof both selling expenses and $267,426
in general and administrative expenses and a decrease of $468,470 in selling expenses.
General
and administrative expenses for the years ended September 30, 2024 and 2023 were $1,818,877
and $2,416,372, respectively. Our general and administrative expenses for the years ended September 30, 2024 and 2023 were comprised
of the following:
General and administrative expenses for
the years ended September 30, 2025 and 2024 were $1,551,451 and $1,818,877, respectively.
The
decrease in general and administrative expenses during the year ended September 30, 20242025 by $597,495$267,426 was triggeredchiefly bydue decreases in
impairment forto a prepaymentdecrease
in office rent and building management of $318,999,$93,515, professionala servicedecrease fees of $299,840 andin meals and entertainment of $47,210$148,628, offsetand bya an
increasedecrease in Employeetravel, compensation transportation,
and benefitgasoline of $56,383.$80,405. TheThese impairmentexpenses declined as a result of goodwillthe wasderegistration $8,412of fortwo subsidiaries during the year ended September
30, 2024
and2025. The declines were offset by the significant decreaseincrease in professional service feesfee of $299,840$83,031, resultsthat resulted from theincreased decreasedlocal needaudit forfee
and professionalattorney’s services after
the four additional lines of business were established in November 2023.fee.
Our general and administrative expenses for the years ended September 30, 2025 and 2024 were comprised of the following:
Our selling expenses for the years ended September 30, 2025 and 2024, were $1,186,554 and $1,655,024, respectively. The $468,470 decrease was primarily due to a decrease in service agent costs of $394,394 and a decrease in office supplies and meeting of $88,877, which were offset by increases in advertising of $12,033 and depreciation and amortization of $11,294. Service agent costs and expenses for office supplies and meetings declined as a result of the deregistration of two subsidiaries, whereas we bought several pieces of health care equipment for promotional activities to develop our equipment-based business during the year ended September 30, 2025.
Our
selling expenses, which were primarily incurred by our sales and marketing department, for the years ended September 30, 2024 and 2023
were $1,655,024 and $3,316,631, respectively. Compared to the year ended September 30, 2023, our selling expenses for the year ended
September 30, 2024 declined by $1,661,607 , or 50.1%.
The
significant decrease in selling expenses for the year ended September 30, 2024 was primarily driven by a decrease in service agent fees
of $1,259,047 as marketing and promotional service fees to our service agents declined significantly. Additionally, our meals
and entertainment expense decreased by $351,261 as we launched fewer small scale promotional and
marketing activities in the year ended September 30, 2024 in the same period in 2023.
Other
income primarily included bank interest income, government grants,
investment lossequity fromin associatenet losses and foreign exchange gain or loss.
Our other net income for the fiscal years ended September 30, 2025 and 2024 was $510,797 and $11,538, respectively. During the fiscal
years ended September 30, 2025 and 2024, we recognized government grants of nil and $31,925, respectively. Our Company recognized $36,118
and $12,426 equity in net losses for the years ended September 30, 20242025 and 20232024. Besides, we recognized a $147,579 gain on the disposal
wasof $11,538a subsidiary, King Eagle (Hangzhou) as well as $501,575 waiver of debt and $99,676,$132,552 respectively.other Duringexpense by the liquidation of assets and liabilities
during the deregistration for two of the VIE’s
subsidiaries, King Eagle (Huai’an) and Kun Zhi Jian (Huai’an), for the year ended September
30, 2024 and 2023, we recognized government grants of $31,925 and
$98,667 respectively. Our company recognized $12,426 investment loss of associate for the years ended September 30, 2024.2025.
For the years ended September 30, 2025 and 2024, the income tax expense of the Company was $nil and $2,487, respectively. During the year ended September 30, 2024, Kun Zhi Jian (Huai’an) realized income of $64,116 and we recognized an income tax expense in accordance with the PRC’s statutory income tax rate of 25%.
For the year ended September 30, 2024 and the year ended September 30, 2023, the income tax expense of the Company was $2,487 and nil
respectively. The income tax expense, incurred for the year ended September 30, 2024, was attributed to the profit made by Kun Zhi Jian
(Huai’an). Due to the
net loss before income tax, the Company recognized a full valuation recognition against its deferred tax assets, which mainly included
net operating loss carryforwards, as management believes it is more likely than not that the Company will not realize its net operating
loss carryforwards in the near future or before they expire.
As
a result of the factors discussed above, for the fiscal years ended September 30, 20242025 and 20232024, our net loss amounted to $1,991,747 $1,268,913
and $2,149,213,
$1,991,747, respectively.
Foreign
currency translation adjustment
The
functional currency of our operations in the PRC is Chinese Yuan or Renminbi (“RMB”), while the functional currency of
our operation in Hong Kong is Hong Kong Dollars (“HKD”). The financial statements are translated to U.S. dollars using
the period end rates of exchange for assets and liabilities; equity is translated at historical exchange rates; and average rates of
exchange (for the period) are used for revenues and expenses and cash flows. Transaction gains and/or losses that arise from
exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results
of operations as incurred. As a result of foreign currency translation, which is a noncash adjustment, we reported a foreign
currency translation gain of $247,327 and loss of $147,374 for the years ended
September 30, 2024 and 2023, respectively. This non-cash gain had the effect of decreasing our reported comprehensive
loss.
Comprehensive
loss
As
a result of our net loss after income taxes, we had a comprehensive loss for the years ended September 30, 2024 and 2023 of $2,218,663
and $2,001,839, respectively.
As
of September 30, 20242025 and 2023,September 30, 2024, we had cash and cash equivalents balances of $82,184$26,284 and
$457,580, $82,184, respectively.
For
the year ended September 30, 2024, net cash provided by operating activities totaled $17,880. Operating cash inflow was mainly attributable
to an increase in trade payable from related party of $2,297,676, other payable from related party of $3,000,802, other payable and accrual of $80411 and inventory of $93,335, mostly offset
by our net loss of $1,991,747, a decrease in trade payable of $1,802,456 and advances from customers of $1,607,612.
Net
cash used in investing activities totaled $348,998 and was related to purchase of property, plant and equipment of $320,498 and long-term
investment in of $28,500 in cooperative enterprise during the year ended September 30, 2024.
For the year ended September 30, 2024,
net cash used in financing activities totaled $54,769 and primarily related to $125,291 payment of finance lease liabilities, partially
offeset by a $70,522 capital contribution from a shareholder of King Eagle (Tianjin).
The
effect of exchange rate change on cash totaled $10,491 for the year ended September 30, 2024. The resulting change in cash for the period
was a decrease of $375,396.
For
the year ended September 30, 2023,2025, net cash used in operating activities totaled $427,030.$208,156. Operating cash outflow was mainly attributable
to our net loss of $2,149,213,$1,268,913 and a decreasedecline in customeramounts advancesdue to related parties of $763,453,$2,128,515, and payments for operating lease liabilities of $271,259,
offset by a decrease in prepayments to our vendors of $199,130, an increase in trade and other
payables to our vendors of $671,836, accrual in VAT and
indirect taxes of $142,950, and advance from related parties of $1,094,095.$3,588,847.
For the year ended September 30, 2024, net cash provided by operating activities totaled $17,880. Operating cash inflow was mainly attributable to an increase in trade payable from related party of $2,297,676, other payable from related party of $3,000,802, other payable and accrual of $80,411 and inventory of $93,335, mostly offset by our net loss of $1,991,747, a decrease in trade payable of $1,802,456 and advances from customers of $1,607,612.
Net
cash usedprovided inby investing activities totaled $606$13,679 and was primarily related to the acquisitiondisposal of trademarksproperty, plant, and equipment during the year
ended September
30, 2023.2025.
Net cash used in investing activities totaled $348,998 and was related to purchase of property, plant and equipment of $320,498 and long-term investment in associate held for sale of $28,500 during the year ended September 30, 2024.
ForNet
the year ended September 30, 2023, net cash provided by financing activities totaled $644,803$72,467 and primarilywas related to a capital contribution
from shareholders of King$173,310 Eagleand VIE.proceeds from bank borrowings
of $98,718, offset by the payment of finance lease liabilities of $199,561 during the year ended September 30, 2025.
For the year ended September 30, 2024, net cash used in financing activities totaled $54,769 and mainly attribute to payment of finance lease liabilities of $125,291, offset by capital contribution of $70,522.
What changed in the latest 10-Q
Risk Factors
As a smaller reporting company, we are not required to respond to this item.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Largest changes
“The Reverse Split was effective in the marketplace as of June 2, 2026. Pursuant to the Reverse Split, every ten (10) shares of the Company’s issued and outstanding common stock were automatically converted into one (1) share of common stock, thereby decreasing the Company’s issued and outstanding shares of common stock from 400,000,000 shares to approximately 40,000,624 shares, after the rounding up of fractional shares to the next higher whole share. …”see in full comparison
Other incomesee in full comparisonincome(expenses) primarily consisted of bank interestincome,income and expense, equity in net losses, share of loss from investment in associate, gain from investment and others. Our other income for thesixnine months endedMarchJune31,30, 2026 and 2025 was$25,876$25,648 andand $169,044,$559,913, respectively. We recognized a$27,789$28,062 gain on the return of equipment,$38,310$38,686 from gifts received by KPChinaChina,and $19,911$20,107 equity in netlosseslosses, and a $32,089 loss on disposal of fixed assets for thesixnine month period endedMarchJune31,30, 2026. We recognized aa$147,579 gain on the disposal of asubsidiarysubsidiary,andKing Eagle (Hangzhou), a$21,444 loss from$23,504 share ofprofitloss from investment in associate,associateKing Eagle (Hangzhou), as well as $517,865 other income and $82,049 other expense by the liquidation of assets and liabilities during the deregistration process for two subsidiaries, King Eagle (Huai’an) and Kun Zhi Jian (Huai’an), for thesixnine months endedMarchJune31,30, 2025.
Results ofsee in full comparisonoperationsOperations for thesixnine months endedMarchJune31,30,20252026 and20262025
“Other income (expenses) primarily consisted of bank interest income and expense, share of loss from investment in associate, equity in net losses and others. Our other expenses for the three months ended June 30, 2026 was $228 and for the three months ended June 30, 2025, other income was $390,869. …”see in full comparison
“For the three months ended June 30, 2026 and 2025, the gross profit and gross profit margin for our retail business amounted to $5,240 or 22.4%, and $14,380 or 67.7%, respectively, and the gross loss and margin for our equipment-based services business were $10,884, or 135.9% for the three months ended June 30, 2026, whereas for the three months ended June 30, 2025, the gross profit and margin were $9,415, or 10.9%. …”see in full comparison
We generatedsee in full comparison$586,833$76,364 or96.3%,70.8%, lower revenue for the three month period endedMarchJune31,30, 2026 compared to the same period in 2025 due to a sharp decrease in equipment-based services. Our equipment-based service revenue decreased by$440,711$78,554, or96.5%90.7%,andprimarilyretail product sales dropped by $146,122 or 95.7%, as compareddue to thethree months ended March 31, 2025 asa result of thederegistration ofKing Eagle (Huai’an) andKun Zhi Jian (Huai’an) in2025, as well as economic uncertainty2025 andathedownwardCompany’strendcontinued strategic transformation away from the equipment-based service model. Retail product sales increased by $2,190, or 10.3%, primarily due to an increase inconsumption.sales generated through the Company’s existing retail channels during the period.
Full comparison: every changed paragraph (69)
On
January 20, 2026, our Board
of Directors and the holders of approximately 85.4% of our issued and outstanding shares of Commoncommon Stock
stock as of such date executed written
consents approving a one for ten (1-for-10) reverse split of our outstanding shares of Commoncommon Stock
stock, $0.0001 par value, and the related
amendment to the Company’s certificate of incorporation (the “Reverse Split”).
The Reverse Split was effective in the marketplace as of June 2, 2026. Pursuant to the Reverse Split, every ten (10) shares of the Company’s issued and outstanding common stock were automatically converted into one (1) share of common stock, thereby decreasing the Company’s issued and outstanding shares of common stock from 400,000,000 shares to approximately 40,000,624 shares, after the rounding up of fractional shares to the next higher whole share. The Board of Directors and shareholders also approved an amendment to the Company’s Articles of Incorporation to decrease the total authorized shares of the Company’s common stock from 1,000,000,000 to 100,000,000 shares and to increase the par value of the common stock from $0.0001 to $0.001. Those changes were effected through the filing of a Certificate of Change in accordance with Nevada law. A copy of the Certificate of Change was attached as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 1, 2026.
The Company’s common stock began trading on a Reverse Split-adjusted basis on the OTC Market at the opening of trading on June 2, 2026. The Company’s trading symbol remains “KPEA.” The CUSIP number for the Company’s common stock post-Reverse Split is 12672T 207.
As of the date of this Report, the Reverse Split has not been effected
for trading purposes. The Reverse Split has resulted in (i) the reduction of
our total issued and outstanding shares of Common Stock from 400,000,000 shares, with a par value of $0.0001 each, to 40,000,000
shares, with a par value of $0.001 each; and (ii) the reduction of our authorized shares of Common Stock from 1,000,000,000 shares
to 100,000,000 shares.
King
Eagle Mall is a mobile social e-commerce platform launched in July 2020 that promotes preventive health care products and services. It
adopts the S2B2C business model and integrates many major health care products and services. We focus on health-related products and
services. King Eagle Mall’s products are divided into two sectors: self-operated products and selected products which promote preventive
health care. Our team screens and examines products that are and will be offered both by us and by affiliated merchants. Our major products
include health care products such as dietary supplements, nutritional health foods, beauty cosmeceuticals, and other categories of health
foods (for instance, milk powder, dried fruits) for supporting the cardiovascular system and bone joint health. We also offer collagen
peptides, probiotics, and health foods for improving blood circulation and vein health, as well as household products that can promote
and improve a healthier lifestyle for our members. We receive customer orders and may arrange fulfillment through our merchants who are
responsible for delivery or we may fulfill customer orders through our outsourced networks. As of MarchJune 31,30, 2026, King Eagle Mall had
approximately 9,47710,212 members.
In
October 2022, we introduced and implemented an online platform, Kun Zhi Jian. In its initial phase of operation, we focused on selling
a thermal therapy cabin to wholesalers. Currently, we promote and sell physiotherapy equipment products and our own brand, as well as
other popular brands, of preventive health care related products. In November 2023 we also launched the Kun Zhi Jian Mini Program, which
is composed of three main areas: physiotherapy cabin, a customer service center, and an online shopping mall (Kun Zhi Jian). Kun Zhi
Jian and Kun Zhi Jian Mini Program are designed to enable health-related products to be sold by us and by third parties. We coordinate
with local health service providers and leverage their health care expertise and technology to provide health screening and consulting
services to our customers and members at the Kun Zhi Jian customer service center. Based on their health condition, we provide nutritional
consulting services and offer suggestions for our preventive health care products. As of MarchJune 31,30, 2026, our online platform had approximately
9,2407,140 members.
For
more information regarding these contractual arrangements, see Note 3 to our unaudited condensed consolidated financial statements as
of and for the sixnine months ended MarchJune 31,30, 2026 –- “Variable Interest Entities - “VIE” Agreements.” The Termination
Agreement and the New VIE Agreements were filed as Exhibits 99.1 through 99.5 to our Current Report on Form 8-K, which was filed with
the Securities and Exchange Commission on July 3, 2025.
As
between the Company and its subsidiaries, cash will generally be transferred by means of capital contributions and/or interest-free intercompany
loans. Cash to be transferred or settled between the Company and its subsidiaries, on the one hand, and the consolidated VIE and its
subsidiaries, on the other hand, will typically be transferred through payments for fees under our contractual arrangements with the
VIE, expense reimbursements, or intercompany borrowings between the Company or one of its subsidiaries and the consolidated VIE. Any
such loans will be interest-free, unsecured and payable on demand. For more information regarding these contractual arrangements, see
Note 3 to our unaudited condensed consolidated financial statements as of and for the sixnine months ended MarchJune 31,30, 2026 –- “Variable
Interest Entities - “VIE” Agreements.” The enforceability and treatment of the intercompany agreements within our organization,
including intercompany borrowings and the contractual arrangements with our VIE, have not been tested in court. To the extent cash and/or
assets in the business are in the PRC and/or Hong Kong or our PRC and/or Hong Kong entities, such funds and/or assets may not be available
to fund operations or for other use outside of the PRC and/or Hong Kong due to interventions in or the imposition of restrictions and
limitations imposed by the PRC government on the ability of the Company or its subsidiaries to transfer cash and/or assets. There are
no tax consequences for intercompany borrowings or the payment for intercompany services, except for the standard value added taxes and/or
income taxes for the revenues and/or profits generated from such services.
The
proceeds of any transactions within our organization, including with the VIE and its subsidiaries, are eliminated in our consolidated
financial statements. For more details, please refer to the principles of consolidation set forth in the notes to our unaudited condensed
consolidated financial statements as of and for the sixnine months ended MarchJune 31,30, 2026 included in this Report.
As
of the date of this Quarterly Report, there have been no distributions or dividends by any of our direct or indirect subsidiaries to
the Company. The Company has not declared any dividends or made any distributions to its shareholders, and we do not anticipate declaring
a dividend in the foreseeable future. No assets other than cash are transferred within our organization. For more details, please refer
to the principles of consolidation set forth in the notes to our Condensed Consolidated Financial Statements for the three months ended
MarchJune 31,30, 2026 included in this report.
Results
of Operations for the three months ended MarchJune 31,30, 20252026 and 20262025
For
the three months ended March 31, 2026 and 2025, revenues amounted to $22,452 and $609,285 respectively.
For
the three months ended June 30, 2026 and 2025, revenues amounted to $31,438 and $107,802, respectively. The
following table presents
revenues disaggregated by customer type for the three months ended MarchJune 31,30, 2026 and 2025:
We
generated $586,833$76,364 or 96.3%,70.8%, lower revenue for the three month period ended MarchJune 31,30, 2026 compared to the
same period in 2025 due to a
sharp decrease in equipment-based services. Our equipment-based service revenue decreased
by $440,711$78,554, or 96.5%90.7%, andprimarily retail product sales dropped by $146,122 or 95.7%, as compareddue to the three months ended March 31, 2025 as
a result of the deregistration of King Eagle (Huai’an) and Kun Zhi Jian (Huai’an) in 2025, as well as economic
uncertainty2025 and athe downwardCompany’s trendcontinued strategic transformation
away from the equipment-based service model. Retail product sales increased by $2,190, or 10.3%, primarily due to an increase in consumption.sales
generated through the Company’s existing retail channels during the period.
WeOur
disaggregated our cost of revenue for the three months ended MarchJune 31,30, 2026 and 2025 aswas follows:$37,082 and $84,007, respectively.
We disaggregated our cost of revenue by customer type, retail and service revenue, for the three months ended June 30, 2026 and 2025:
Our
cost of revenue for the three months ended MarchJune 31,30, 2026 wasof $80,691,$37,082 constituted a $17,914$46,925 or 18.2%55.9%, decrease overfrom our cost of revenue
revenue for the three months ended MarchJune 31,30, 2025 of $98,605.$84,007. Our cost of revenue primarily consisted of the purchasecosts of purchasing consumer health
health care and health related household products from our suppliers and payments related to maintaining health screening equipment.
We made
our retail product sales through our King Eagle Mall, Kun Zhi Jian and our Kun Zhi Jian Mini Program. We also offered equipment-based
services through the Kun Zhi Jian Mini Program. We pay an equipment-based service fee that includes a prepaid card activation fee and
a technical support fee.
During the three months ended June 30, 2026, our cost of revenue from our retail sales increased in line with our increase in revenue and our cost for equipment-based services decreased as a result of the significant decrease in equipment-based service revenue and the corresponding reduction in equipment-based service activities.
For
the three months ended March
31,June 202630, 2026, our overall gross loss and margin were $58,239,$5,644, or 259.4%,18.0%, whereas for the three months ended March 31,June
30, 2025, our overall gross
profit and margin were $510,680$23,795, or 83.8%.22.1%.
For the three months ended June 30, 2026 and 2025, the gross profit and gross profit margin for our retail business amounted to $5,240 or 22.4%, and $14,380 or 67.7%, respectively, and the gross loss and margin for our equipment-based services business were $10,884, or 135.9% for the three months ended June 30, 2026, whereas for the three months ended June 30, 2025, the gross profit and margin were $9,415, or 10.9%. The decrease in our gross profit and margin was due to the significant decline in equipment-based service revenue while the related costs exceeded the revenue generated, together with a lower gross profit margin from our retail business.
The
decrease in our gross profit
and margin for our retail business for the three months ended MarchJune 31,30, 2026 as compared to the three months
ended MarchJune 31,30, 2025 was
primarily due to deregistrationthe increase in the cost of Kingretail Eaglerevenue (Huai’an)significantly andoutpacing Kunthe Zhi Jian (Huai’an)increase in 2025,retail market instability and weakenedrevenue.
consumer confidence. The gross loss for our equipment-based services for the three months ended MarchJune 31,30, 2026 was $46,468$10,884, mainly due
to the Company’s
strategic transformation from a store-centric retail and equipment-based service model to a physician group-centric
digital healthcare
ecosystem, which led to a corresponding drop in the financial performance of the business.
Our
operating expenses consist of general and administrative expenses and selling expenses. For the three months ended MarchJune 31,30, 2026 and
2025, our total operating expenses were $329,856$288,809 and $825,522,$459,529, respectively. The decrease in operating expenses for the three months ended
endedJune March 31,30, 2026 compared to the same period in 2025 was primarily due to a decrease of $97,813$2,371 in general and administrative expenses and
and a decrease of $397,853$168,349 in selling expenses.
General
and administrative expenses for the three months ended MarchJune 31,30, 2026 and 2025 were $214,801$229,032 and $312,614,$231,403, respectively. OurThe decrease
in general
and administrative expenses forof $2,371 between the threetwo monthsperiods endedwas Marchchiefly 31,due 2026to a decrease in meals and 2025entertainment
expenses wereof comprised$5,756 and a decrease in depreciation and amortization of $5,245, partially offset by an increase in office rent and building
management expenses of $9,748. These expenses decreased primarily as a result of the following:Company’s reduced operating activities and
corresponding cost-control measures.
Our general and administrative expenses for the three months ended June 30, 2026 and 2025 were comprised of the following:
The
decrease in general and administrative expenses during the three months ended March 31, 2026 by $97,813 or 31.3%, was chiefly due to
a decrease in employee compensation and benefits of $29,245, a decrease in office rent and building management of $24,365, and a
decrease in depreciation and amoritization of $21,903, as well as a decrease in traveling fees of $7,864. These expenses declined as
a result of our having three fewer subsidiaries in the three-month period ended March 31, 2026 than in the same period in
2025.
Selling
expenses for the three months ended MarchJune 31,30, 2026 and 2025 were $115,055$59,777 and $512,908,$228,126, respectively. Our selling expenses for the three
months ended MarchJune 31,30, 2026 and 2025 were comprised of the following:
The $168,349 decrease in selling expenses for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily driven by a decrease in in service agent expenses of $131,505. These expenses decreased primarily as a result of the decrease in revenue and the corresponding reduction in service agent activities and personnel-related costs.
The
$397,853 or 77.6% decrease in selling expense was primarily due to decreases in service agent costs of $309,846, employee
compensation and benefits of $22,006, and equipment rental of $46,437. Service agent costs, employee compensation and benefits, and
expenses for office supplies and meetings declined as a result of our having fewer subsidiaries during the period ended March 31,
2026. Equipment rental was recognized as a cost of revenue instead of a selling expense during the period ended March 31,
2026.
Other
income,income net(expenses)
Other income (expenses) primarily consisted of bank interest income and expense, share of loss from investment in associate, equity in net losses and others. Our other expenses for the three months ended June 30, 2026 was $228 and for the three months ended June 30, 2025, other income was $390,869. We recognized a $2,060 share of loss from investment in associate, King Eagle (Hangzhou), as well as $466,322 other income and $73,393 other expense by the liquidation of assets and liabilities during the deregistration process for two subsidiaries, King Eagle (Huai’an) and Kun Zhi Jian (Huai’an), during the three months ended June 30, 2025. We recognized a $196 equity in net losses for the three months ended June 30, 2026.
Other
income primarily included bank interest income, equity in net losses, and others. Our other income for the three months ended March
31, 2026 and 2025 was loss of $5,460 and gain of $121,965, respectively. We recognized a $27,789 gain on the return of equipment and
$11,101 equity in net losses for the three month period ended March 31, 2026. We recognized a $147,579 gain on the disposal of a
subsidiary and a $21,444 loss from share of profit from investment in associate for the three months ended March 31,
2025.
For
both of the three month periods ended MarchJune 31,30, 2026 and 2025, the income tax expense of the Company was nil.$5,430 and nil, respectively. Due to the
net loss before
income tax for the three month periods ended DecemberJune 31,30, 2026 and 2025, the Company recognized a full valuation recognition
against against
its deferred tax assets, which mainly included net operating loss carry forwards, as management believed it is more likely than
not that
the Company will not realize its net operating loss carry forwards in the near future or before they expire.
As
a result of the factors discussed above, we posted a net loss in the amount of $393,555$300,111 for the three months ended MarchJune 31,30, 2026
compared compared
to a net loss in the amount of $192,877$44,865 for the three months ended MarchJune 31,30, 2025.
The
functional currency of our operations in the PRC is the Chinese Yuan or Renminbi (“RMB”), while the functional currency
of our
operation in Hong Kong is the Hong Kong DollarsDollar (“HKD”). The financial statements are translated to U.S. dollars
using the period
end rates of exchange for assets and liabilities; equity is translated at historical exchange rates; and average
rates of exchange (for
the period) are used for revenues and expenses and cash flows. Transaction gains and/or losses that arise
from exchange rate fluctuations
on transactions denominated in a currency other than the functional currency are included in the
results of operations as incurred. As
a result of foreign currency translation, which is a noncash adjustment, we reported a foreign
currency translation loss of $152,335 for the three months ended June 30, 2026 and foreign currency translation loss of $120,536$103,165 for
the three months ended MarchJune 31, 2026 and a foreign currency translation loss of $41,427 for the three months ended March 31,30, 2025.
This non-cashnoncash loss had the effect of decreasingincreasing our reported comprehensive loss for the three
months ended MarchJune 31,30, 2026.2026 and June 30, 2025.
We
recognized a comprehensive loss of $514,091$452,446 and $148,030 for the three months ended MarchJune 31,30, 2026 comparedand to2025, a comprehensive loss of $234,304 the
same period in 2025.respectively.
Results
of operationsOperations for the sixnine months ended MarchJune 31,30, 20252026 and 20262025
For
the sixnine months ended MarchJune 31,30, 2026 and 2025, revenues amounted to $197,276$228,714 and $965,804,$1,073,606, respectively.
The
following tablestable presentpresents revenues disaggregated revenuesby customer type for the sixnine months ended MarchJune 31,30, 2026 and 2025:
We
generated $768,528$844,892 or 79.6%78.7%, lower revenue duringfor the sixnine months ended MarchJune 31,30, 2026 compared to the sixsame monthsperiod endedin March 31,
2025 due to a substantially
substantial decrease in equipment-based services. Our equipment-based service revenuerevenues decreased by $677,058$755,612 or 92.2%
92% and retail
product sales dropped by $91,470$89,280, or 39.6%35.4%, as compared to the sixnine months ended MarchJune 31,30, 2025 as a result of the
deregistration of
King Eagle (Huai’an) and Kun Zhi Jian (Huai’an) in 2025, as well as economic uncertainty and a
downward trend in
consumption.
We
disaggregated our cost of revenue for the sixnine months ended MarchJune 31,30, 2026 and 2025 as follows:
Our
cost of revenue for the sixnine months ended MarchJune 31,30, 2026 was $194,554,$231,636, a $40,266$100,440, or 26.1%30.2% increasedecrease overfrom our cost of revenue for the
nine six
months ended MarchJune 31,30, 2025 of $154,288.$332,076. Our cost of revenue primarily consisted of the purchase of consumer health care and health
related related
household products from our suppliers and payments related to maintaining health screening equipment. We made our retail product
sales sales
through our King Eagle Mall, Kun Zhi Jian,Mall and our Kun Zhi Jian Mini Program. We also offered equipment-based services through the Kun
Zhi Jian
Mini Program. We pay an equipment-based service fee that includes a prepaid card activation fee and a technical support fee.
During the nine months ended June 30, 2026, our cost of revenue decreased primarily due to a decrease in the cost of equipment-based services, partially offset by an increase in the cost of retail sales.
For
the sixnine months ended MarchJune 31,30, 2026 and 2025, our overall gross profitloss and margin waswere $2,722,$2,922, or 1.4%,1.3%, and $811,516,our overall gross profit and
margin were $741,530, or 84.0%,69.1%, respectively.
For
the nine months ended June 30, 2026 and 2025, the gross profit and margin for our retail business amounted to $74,085, or 45.4%, and
$212,372, or 84.2%, respectively. The
decrease in our gross profit and margin for our retail business for the sixnine months ended March 31,June
30, 2026 as compared to the sixnine months
ended MarchJune 31,30, 2025 was primarily due to market instability and weakened consumer confidence.
The gross loss for our equipment-based
services for the sixnine months ended MarchJune 31,30, 2026 werewas $66,123,$77,007 mainly due to the Company’s
strategic transformation from a store-centric retail and equipment-based service model to a physician
group-centric digital healthcare
ecosystem, which
led to a corresponding drop in the financial performance of the business.
Our
operating expenses consist of general and administrative expenses and selling expenses. For the sixnine months ended MarchJune 31,30, 2026 and 2025,
our total operating expenses were $687,730$976,539 and $1,824,444,$2,190,192, respectively. The decrease in operating expenses for the sixnine months ended
MarchJune 31,30, 2026 compared to the same period in 2025 was primarily due to a decrease of $521,682$524,053 in general and administrative expenses
and a decrease of $615,032$689,600 in selling expenses.
General
and administrative expenses for the sixnine months ended MarchJune 31,30, 2026 and 2025 were $443,365$672,397 and $965,047,$1,196,450, respectively. Our general
and and
administrative expenses for the sixnine months ended MarchJune 31,30, 2026 and 2025 were comprised of the following:
The
decrease in general and administrative expenses during the sixnine months
ended MarchJune 31,30, 2026 by $521,682$524,053, or 54.1%43.8% was chiefly due to a
decrease in professional service fees of $238,784,$239,581, a decrease in employee
compensation and benefits of $135,200,$139,520, and a decrease in office
rent and building management of $104,174.$94,426. These expenses declined as a
result of our having three fewer subsidiaries in the six-monthnine month
period ended MarchJune 31,30, 2026 than in the same period in 2025. In addition,
depreciation and amortization dropped by $44,761$50,006 as a result
of fewer subsidiaries in the six-monthnine month period ended MarchJune 31,30, 2026 than in
the same period in 2025.
Our
selling expenses for the sixnine months ended MarchJune 31,30, 2026 and 2025,
were $244,365$304,142 and $859,397,$993,742, respectively. Our selling expenses for included
the six months ended March 31, 2026 and 2025 were comprised of the
following:
Other
income,income net(expenses)
Other
income income(expenses) primarily consisted
of bank interest income,income and expense, equity in net losses, share of loss from investment in
associate, gain from investment and others. Our other income for the sixnine months ended MarchJune 31,30, 2026 and 2025 was $25,876$25,648 and
and $169,044,$559,913, respectively. We recognized a $27,789$28,062 gain on the return of equipment, $38,310$38,686 from gifts
received by KP ChinaChina, and $19,911 $20,107
equity in net losseslosses, and a $32,089 loss on disposal of fixed assets for the sixnine month period ended MarchJune 31,30, 2026. We recognized a
a $147,579 gain on the disposal of a subsidiarysubsidiary, andKing Eagle (Hangzhou), a $21,444 loss from$23,504 share of profitloss from investment in
associate, associateKing Eagle (Hangzhou), as well as $517,865 other income and $82,049 other expense by the liquidation of assets and
liabilities during the deregistration process for two subsidiaries, King Eagle (Huai’an) and Kun Zhi Jian (Huai’an), for
the sixnine months
ended MarchJune 31,30, 2025.
For
the sixnine months ended MarchJune 31,30, 2026 and 2025, the income tax expense of the Company waswere nil.$5,430 and nil, respectively. Due to the net
loss before income tax for
the sixnine month periods ended MarchJune 31,30, 2026 and 2025, the Company recognized a full valuation recognition against
its deferred taxassets, assets,
which mainly included net operating loss carry forwards, as management believed it is more likely than not that
the Company will not
realize its net operating loss carry forwards in the near future or before they expire.
As
a result of the factors discussed above, the Company posted net losses in the amountsamount of $659,132$959,243 and $843,884$888,749 for the sixnine months ended
MarchJune 31,30, 2026 and 2025, respectively.
The
functional currency of our operations in the PRC is the Chinese Yuan or Renminbi (“RMB”), while the functional currency of
our our
operation in Hong Kong is the Hong Kong DollarsDollar (“HKD”). The financial statements are translated to U.S. dollars using
the period
end rates of exchange for assets and liabilities; equity is translated at historical exchange rates; and average rates of
exchange (for
the period) are used for revenues and expenses and cash flows. Transaction gains and/or losses that arise from exchange
rate fluctuations
on transactions denominated in a currency other than the functional currency are included in the results of operations
as incurred. As
a result of foreign currency translation, which is a noncash adjustment, we reported a foreign currency translation loss
of $271,451
and gain of $240,468$423,786 for the sixnine months ended MarchJune 31,30, 2026 and 2025,a respectively.foreign Thiscurrency non-cashtranslation gainincome hadof $137,303 for the effectnine ofmonths increasingended June
our30, reported comprehensive gain.2025.
The
Company recognized comprehensive losses in the amounts of $930,583$1,383,029 and $603,416$751,446 for the sixnine months ended MarchJune 31,30, 2026 and 2025, respectively.
As
of MarchJune 31,30, 2026 and September 30, 2025, we had cash and cash equivalents balances of $19,768$6,606 and $26,284, respectively.
For
the sixnine months ended MarchJune 31,30, 2026, net cash provided by operating activities totaled $33,479.$21,833. Operating cash inflow was mainly
attributable attributable
to increases in amounts due to related parties of $435,171,$407,539, amounta decrease in amounts due from a related party of $155,538,
$250,526, and other payables and accrual
of $97,396,$126,236, offset by our net loss of $659,132.$959,243.
For
the sixnine months ended MarchJune 31,30, 2025, net cash usedprovided inby operating activities totaled $3,710.$69,471. Operating cash outflowinflow was mainly attributable
to our net loss of $843,884$888,749 and a decreasedecline in amounts due to related parties of $2,458,960, partially$2,438,891, offset by an increase in trade
payables of $1,828,116
$1,822,702 and an increase in other payablepayables fromand third partiesaccrual of $1,234,126.$1,152,448.
Net
cash used in investing activities totaled $nil during the sixnine months ended MarchJune 31,30, 2026.
Net
cash used in investing activities totaled $38,590$30,412 and was related to the purchase of property, plant, and equipment during the sixnine months
ended MarchJune 31,30, 2025.
Net
cash used in financing activities totaled $39,867$40,258 and was related to the payment of finance lease liabilities of $35,585,$35,934 and paymentrepayment
of bank borrowings of $4,282$4,324 during the sixnine months ended MarchJune 31,30, 2026.
KPEA insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding KPEA (13F)
None of the 59 investors we track reported a position in their latest 13F.