SGLA 10-K & 10-Q changes, risk factors and insider trading

Cross-border sales transactions expose us to tariffs, import/export duties, and other international trade risks that may adversely affect our revenue and profitability.

We engage in cross-border sales transactions that are subject to various international trade risks. Changes in import taxes, tariffs, and customs duties related to the import and export of our products could result in pricing adjustments that adversely affect our  revenues and earnings.  In addition, cross-border transactions expose us to other risks, including changes in foreign trade policies and regulations, currency exchange rate fluctuations, extended transit and customs clearance times, heightened customs inspections, and the potential for lost, damaged, or delayed shipments. Geopolitical developments, trade disputes, or the imposition of new trade barriers by the United States or foreign governments could further disrupt our cross-border operations. Any of these factors could materially and adversely affect our business, financial condition, and results of operations.

Our common stock trades on the OTC Markets, which may limit liquidity and adversely affect the value of our shares.

Our common stock may be subject to “penny stock” regulations, which could discourage broker-dealers from effecting transactions and adversely affect the liquidity of our shares.

A limited trading market and state Blue Sky laws may restrict investors’ ability to resell our shares.

Our common stock is subject to penny stock regulations that may limit trading activity and adversely affect our stock price.

Sales of our common stock under Rule 144 could reduce the price of our stock.

We do not have an audit or compensation committee, which may result in conflicts of interest in board decisions.

We are subject to securities laws compliance requirements, which expose us to potential liabilities, including rescission rights.

*:less than 0.1%

Net revenues totaled $1,422,451 for the year ended June 30, 2026, an increase of $84,151, or 6.3%, as compared to net revenues of $1,338,300 for the year ended June 30, 2025. The change was primarily attributable to foreign exchange translation effects, as the Company’s functional currency, the Malaysian Ringgit, strengthened against the U.S. dollar during the period. Excluding the impact of currency translation, the underlying business remained stable, with both the number of customers and the average value per order broadly consistent with the prior year.

Cost of revenues totaled $2,073,261 for the year ended June 30, 2026, a decrease of $519,863, or 20.1%, as compared to $2,593,124 for the year ended June 30, 2025. The decrease was primarily attributable to lower average raw material input costs.

General and Administrative Expenses

General and administrative expenses totaled $569,782 for the year ended June 30, 2026, an increase of $132,833, or 30.4%, as compared to $436,949 for the year ended June 30, 2025. The increase was primarily attributable to higher professional fees, audit and accounting costs, and administrative expenses associated with the Company’s ongoing merger integration, regulatory compliance, and operational activities during the year ended June 30, 2026.

Net loss totaled $1,393,031 for the year ended June 30, 2026, a decrease of $415,963, or 23.0%, as compared to the net loss of $1,808,994 for the year ended June 30, 2025. The improvement was primarily driven by lower cost of revenues, partially offset by higher general and administrative expenses, an increase in interest expenses.

Going Concern Considerations

We have prepared the accompanying consolidated financial statements assuming that we will continue as a going concern. As reported in the accompanying consolidated financial statements, we incurred a net loss of $1,393,031 during the year ended June 30, 2026, and as of that date, we had an accumulated deficit of $6,093,584 and a total stockholders’ deficit of $2,535,519, with cash used in operating activities of $99,654. These conditions, taken together with our working capital deficit of $4,482,441, raise substantial doubt about our ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

To sustain our ability to support our operating activities, we considered supplementing our sources of funding through the following:

(i) On May 22, 2026, we entered into a subscription agreement (the “Subscription Agreement”) with a third-party investor, pursuant to which an aggregate of 2,000,000 shares of our common stock, par value $0.001 per share, were agreed to be sold at a purchase price of $0.50 per share, for an aggregate purchase price of $1,000,000. As of June 30, 2026, the Company had received $200,000, and it will receive the remaining $800,000 within one year thereafter.

(ii) On August 7, 2026, we entered into stock purchase agreements (the “SPAs”) to acquire all of the equity interests of Invent Fortune Sdn. Bhd. for 36,527,833 shares of our common stock, and 60% of the equity interests of Xing Da Plastics Sdn. Bhd. for 4,800,000 shares, payable in three tranches (20% at closing, and 40% and 40% three and six months thereafter), with 10% of each tranche withheld by the Company as Escrow Shares. The acquisitions are intended to establish an integrated waste management business chain covering the collection of plastic waste at source through to the production of finished recycled products, and the acquired businesses are expected to contribute positive cash contributions and to reduce the Company’s dependency on external funding.

(iii) In addition, we have taken immediate and significant mitigating actions to reduce costs and optimize our cash flow and liquidity.

Management has evaluated the matters described above and the related mitigating plans; however, management has concluded that these conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

For the year ended June 30, 2026, net cash used in operating activities was $99,654. This outflow was primarily attributable to a net loss of $1,393,031; partly offset by: (i) depreciation and amortization of $478,661; (ii) an increase in accounts payable of $386,831, resulting from support provided by our related party; (iii) interest expense of $176,908, which is classified as a financing activity; and (iv)an increase in accrued liabilities and other payables of $139,222.

For the year ended June 30, 2025, net cash used in operating activities was $845,971. This outflow was primarily attributable to a net loss of $1,808,994; partly offset by: (i) depreciation and amortization expenses of $430,371, (ii) decreases in inventories of $369,372, and (iii) a provision for inventories of $119,886.

Net cash used in operating activities decreased by $746,317 from $845,971 in the year ended June 30, 2025 to $99,654 in the year ended June 30, 2026, which was mainly due to: (i) net loss decreased by $415,963, from $1,808,994 in the year ended June 30, 2025 to $1,393,031 in the year ended June 30, 2026; and (ii) increases in accounts payable of $386,831 and accrued liabilities and other payables of $139,222 provided further positive working-capital contributions.

Net cash used in investing activities for the fiscal year ended June 30, 2026 was $230,475, which was solely attributable to the acquisition of property, plant and equipment of $230,475. Net cash used in investing activities for the fiscal year ended June 30, 2025 was $38,180, primarily attributable to the acquisition of property, plant and equipment of $46,158, less proceeds from disposal of property, plant and equipment of $7,978. The year-over-year increase of $192,295 reflects the Company’s continued investment in production capacity during the year ended June 30, 2026.

For the year ended June 30, 2026, net cash provided by financing activities was $550,739, which was primarily attributable to: (i) proceeds from issuance of common stock of $514,700; (ii) proceeds from related parties of $352,829; partially offset by (iii) repayment of short-term borrowings of $170,880; (iv) repayments of bank loan, interest and principal of $119,808; and (v) payment on finance lease liabilities of $26,102.

For the year ended June 30, 2025, net cash provided by financing activities was $1,024,220, which was primarily attributable to: (i) proceeds from related parties of $1,169,854; (ii) proceeds from short-term borrowings of $41,723; partially offset by (iii) repayments of bank loan, interest and principal of $162,910; (iv)payment on finance lease liabilities of $21,068; and (v) payment of interest of $3,379.

The undiscounted future minimum payments under our finance lease liabilities and reconciliation to the finance lease liabilities recognized on the consolidated balance sheet as of June 30, 2026 are as follows:

We prepare our consolidated financial statements in accordance with GAAP, which requires our management to make estimates that affect the reported amounts of assets and liabilities at the dates of the balance sheets, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are other items within our consolidated financial statements that require estimation but are not deemed critical, as defined above. Changes in estimates used in these and other items could have a material impact on our consolidated financial statements.

The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities on the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, we review these estimates and assumptions using the currently available information. Changes in facts and circumstances may cause us to revise our estimates. In accordance with ASC 250, Accounting Changes and Error Corrections, changes in accounting estimates are recognized prospectively in the period in which the change occurs and in future periods. We base our estimates on past experiences and on various other assumptions that we believe are reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. We use estimates when accounting for items and matters including, but not limited to, allowances for expected credit losses, estimates for inventory provisions, useful lives and impairment of long-lived assets, and valuation allowance for deferred tax assets.

We recognize revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied.

We generate revenue primarily from the sales of plastic recycled products. We enter into sales contracts with customers as a principal. The contracts contain only one performance obligation for domestic customers, transferring the plastic recycled products to the customers in exchange for consideration.

We recognize revenue at a point in time when control of the goods is transferred to the customer, which occurs upon delivery. We consider a signed delivery receipt as objective evidence of transfer of control.

The terms of pricing and payment stipulated in the contract are fixed. 30% deposit payable upon signing of Sales Contract, 70% payable upon delivery of the plastic recycled products to the designated location. We recognize revenue at a point in time when control of the products has been transferred to customers. We consider the transfer of control complete when products have been accepted and received by customers. In the normal course of business, our products are sold with no right of return unless the item is defective.

Each contract contains a single performance obligation for the transfer of goods, as the promise is to transfer a series of distinct items that are substantially the same and have the same pattern of transfer. We satisfy this performance obligation and recognize revenue at a point in time when control of the goods is transferred to the customer, which occurs upon delivery. A signed delivery receipt serves as evidence of transfer.

Significant payment terms are as agreed in the contracts, with payment typically due within a short-term credit period. The contracts do not contain a significant financing component, and variable consideration is not significant. We act as the principal in all arrangements. We do not offer obligations for returns, refunds, or warranties beyond standard assurance.

The transaction price is the fixed amount of consideration stated in the sales contract. As the contracts contain a single performance obligation, no allocation is necessary. We recognize costs incurred for packaging and shipping as expenses when incurred.

For the years ended June 30, 2026 and 2025, revenue recognized by us at a point in time was $1,422,451 and $1,338,300, respectively, and revenue from sales of plastic recycle products was $1,422,451 and $1,338,300, respectively.

Contract Liabilities

We receive advance payments from our customers for products to be provided in the future. These payments are recorded as contract liabilities on our consolidated balance sheets.

We recognize contract liabilities when consideration is received from a customer before we satisfy our related performance obligations. For these product contracts, we recognize revenue, and reduce the contract liabilities, at a point in time as control of the goods is transferred to the customer. Revenue recognized by us during the years ended June 30, 2026 and 2025 that was included in the contract liability balance at the beginning of the year was $22,486 and $68,048, respectively.

Income taxes

We account for income taxes using the asset and liability method, whereby we recognize deferred tax assets for deductible temporary differences and deferred tax liabilities for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. We reduce deferred tax assets by a valuation allowance when, in our opinion, it is more likely than not that some portion or all of the deferred tax assets will not be realized before we are able to realize their benefits, or that future deductibility is uncertain.

We recognize tax benefits from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. We measure the tax benefits recognized in our consolidated financial statements from such a position based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate resolution. We adjust deferred tax assets and liabilities for the effects of changes in tax laws and rates on the date of enactment.

Cost of revenues was $1,264,282 for the nine months ended March 31, 2026, reflecting a decrease of $ 353,670, or 22%, from $1,617,952 for the nine months ended March 31, 2025. This decline was primarily driven by a reduction in impurities within our purchased raw materials, and, more significantly, by the prior period inventory write-down of $119,886 being credited to the cost of sales in the current period.

Cash flow provided by financing activities was $291,161 for the nine months ended March 31, 2026 and provided by $491,138 for the nine months ended March 31, 2025, respectively. The decrease in cash from financing activities was primarily driven by lower loan proceeds, reduced financial support from related parties, and common stock issued to third parties.