Core Viewpoint - Chanson International Holding reported moderate revenue growth in fiscal year 2024, driven primarily by strong performance in its bakery product segment in China, despite challenges in the macroeconomic environment [2][4]. Financial Performance - Total revenue increased by 5.7% to $18.2 million in fiscal year 2024, up from $17.3 million in fiscal year 2023 [4][6]. - Revenue from China Stores rose by 12.8% to $16.1 million, with bakery products contributing significantly to this growth [7]. - Revenue from bakery products in China increased by 18.0% to $14.8 million, attributed to the opening of 15 new bakery stores [7]. - Revenue from United States Stores decreased by 29.1% to $2.1 million, primarily due to declines in beverage products and eat-in services [12]. Profitability Metrics - Gross profit decreased to $7.2 million in fiscal year 2024 from $8.1 million in fiscal year 2023, with a gross margin of 39.5% compared to 47.2% in the previous year [6][8]. - Net income rose significantly to $0.76 million from $0.03 million in fiscal year 2023, with earnings per share increasing to $0.05 from $0.003 [10][14]. Operating Expenses - Operating expenses decreased to $7.7 million in fiscal year 2024 from $8.8 million in fiscal year 2023, reflecting cost management efforts [9][13]. Cash Flow and Balance Sheet - Cash and cash equivalents increased to $12.1 million as of December 31, 2024, compared to $1.5 million at the end of 2023 [15]. - Net cash provided by operating activities was $3.5 million in fiscal year 2024, a turnaround from net cash used in the previous year [16]. Strategic Initiatives - The company has diversified its product offerings by introducing freshly brewed coffee, responding to evolving consumer trends [3]. - Strategic initiatives, including targeted promotions for price-sensitive consumers, have contributed to resilient revenue growth and market share expansion [3].

Revenue and Financial Performance - UFG's revenue accounted for 62%, 54%, and 39% of total revenue for the years ended December 31, 2024, 2023, and 2022, respectively[39]. - For the year ended December 31, 2024, consolidated total revenue reached $18,227,537, an increase from $17,252,662 in 2023, representing a growth of approximately 5.6%[66]. - The cost of revenue for 2024 was $11,033,219, compared to $9,105,337 in 2023, indicating an increase of about 21.1%[66]. - Net income for 2024 was reported at $756,285, a significant recovery from a net loss of $629,740 in 2023[66]. - Income from VIEs for 2024 amounted to $2,060,482, up from $1,765,358 in 2023, reflecting a growth of approximately 16.7%[66]. - Comprehensive income for 2024 was $472,096, a recovery from a comprehensive loss of $97,190 in 2023[66]. - The company has not distributed any earnings or settled amounts owed under the VIE Agreements as of the date of the annual report[55]. VIE Structure and Agreements - Xinjiang United Family controls 52 VIEs through VIE Agreements, consolidating their financial results under U.S. GAAP[38]. - The VIE structure provides contractual exposure to foreign investment in China-based companies, presenting unique risks to investors[27]. - The VIE Agreements allow the company to consolidate the financial results of the VIEs in its financial statements under U.S. GAAP[53]. - The Exclusive Service Agreement allows Xinjiang United Family to collect a service fee equal to the net profit after tax of each UFG Entity[40]. - The term of the Exclusive Service Agreement is 10 years, with automatic renewal unless terminated by Xinjiang United Family[41]. - Under the Call Option Agreement, Xinjiang United Family has the exclusive option to require the UFG Operator to transfer all or part of its assets in the UFG Entity at any time[46]. - The company’s ability to pay dividends in the future will depend on receiving funds from its PRC subsidiary and VIEs in accordance with the VIE Agreements[61]. Risks and Regulatory Environment - The company is subject to risks related to the VIE structure, including potential changes in PRC laws that could affect the validity and enforcement of the VIE Agreements[54]. - The PRC government has implemented measures that could affect the company's operations, including potential changes in tax regulations and capital investment controls[91]. - The amended PRC Company Law, effective July 1, 2024, introduces stricter capital contribution requirements, which may impact the company's financial obligations[93]. - The company's reliance on transfer pricing arrangements with UFG may lead to adverse tax consequences if deemed non-compliant by PRC tax authorities[81]. - The Chinese government has significant oversight and discretion over the operations of the company's PRC subsidiary and VIEs, which may lead to material changes in operations or the value of Class A Ordinary Shares[97]. - Future government actions could limit the company's ability to offer securities to investors, potentially leading to a significant decline in the value of such securities[101]. Operational Challenges - The company has expanded its store network significantly, with multiple locations under the UFG brand[31]. - The operating entities compete in a highly competitive market, with pressure from both existing and new competitors affecting pricing and market share[152]. - The COVID-19 pandemic has adversely impacted the company's financial condition and operations due to government-imposed restrictions and store closures[154]. - The PRC Stores and the U.S. Stores experienced significant operational disruptions due to COVID-19, with all PRC Stores and the central factory closed from October 5, 2022, to November 30, 2022[155]. - The operating entities rely on a limited number of third-party producers, and disruptions in their operations could delay product delivery and harm financial results[166]. Financial Position and Cash Flow - Total assets as of December 31, 2024, were $41,775,834, compared to $23,603,182 in 2023, showing a substantial increase of about 76.8%[68]. - Total liabilities for 2024 were $23,350,388, a decrease from $25,669,681 in 2023, indicating a reduction of approximately 9.0%[68]. - Cash and cash equivalents as of December 31, 2024, totaled $12,102,763, compared to $17,653,086 in 2023, reflecting a decrease of about 31.4%[68]. - The company reported a net cash used in operating activities of $(1,345,862) for the year ended December 31, 2022, highlighting a trend of cash outflows[70]. - The company relies on dividend payments from its PRC subsidiary to meet cash and financing requirements, with current regulations allowing dividends only from accumulated profits[142]. Corporate Governance and Shareholder Structure - Mr. Gang Li, the Chairman, holds approximately 93.80% of the voting rights due to the dual-class structure, owning 2,700,000 Class A Ordinary Shares (12.48%) and 5,670,000 Class B Ordinary Shares (100%)[218]. - The company is classified as a "controlled company" under Nasdaq rules, which may allow it to follow exemptions from certain corporate governance requirements[220]. - The dual-class structure may lead to negative commentary from shareholder advisory firms, potentially affecting the value of Class A Ordinary Shares[219]. - Future issuances of Class B Ordinary Shares may dilute the holdings of Class A Ordinary Shareholders, adversely affecting their market price[218]. Compliance and Legal Risks - The company has identified a material weakness in internal control over financial reporting, which could affect the accuracy of financial statements and investor confidence[216]. - The company may face securities litigation due to market volatility, which could divert resources and adversely affect its business[226]. - The company faces uncertainties regarding indirect transfers of equity interests in PRC resident enterprises by non-PRC holding companies, which may lead to tax obligations[137]. - The company cannot assure timely completion of necessary registrations or government approvals for future loans or capital contributions to its PRC subsidiary, potentially affecting liquidity and business expansion[130].

Core Viewpoint - Chanson International Holding has received a notification from Nasdaq indicating that it no longer meets the minimum bid price requirement for continued listing, with a compliance period until September 8, 2025, to regain compliance [1][2]. Company Overview - Chanson International Holding, founded in 2009, operates bakery, seasonal, and beverage products through its chain stores in China and the United States, with headquarters in Urumqi, China [4]. - The company manages 46 stores in China and three stores in New York City, offering both packaged and made-in-store bakery products along with extensive beverage options [4]. Compliance and Listing Status - The notification from Nasdaq does not immediately affect the trading of Chanson's Class A ordinary shares, and the company has a 180-day compliance period to meet the listing requirements [2]. - If compliance is not achieved within this period, Chanson may be eligible for an additional 180 days, provided it meets other listing standards and intends to cure the deficiency, potentially through a reverse stock split [2][3]. - The company is currently evaluating options to regain compliance and is committed to making reasonable efforts to meet Nasdaq's continued listing requirements [3].

Financial Performance - Revenue for the six months ended June 30, 2024, was $7,542,682, a decrease of 14.4% compared to $8,811,287 for the same period in 2023[8] - Gross profit for the same period was $3,127,275, down 27.8% from $4,332,571 in 2023[8] - Net income for the six months ended June 30, 2024, was $23,412, compared to $284,760 in 2023, reflecting a significant decline[8] - For the six months ended June 30, 2024, net revenue was $4,246,441, a decrease of 6.9% compared to $4,562,762 for the same period in 2023[39] - Net income for the six months ended June 30, 2024, was $552,045, down 54.5% from $1,213,299 in the prior year[39] - Total income before provision for income taxes for the six months ended June 30, 2024, was $88,277, a decrease from $287,640 in 2023[162] Assets and Liabilities - Total assets as of June 30, 2024, increased to $38,723,717 from $38,434,296 as of December 31, 2023[6] - Total liabilities rose to $26,669,742 as of June 30, 2024, compared to $26,419,940 at the end of 2023[6] - As of June 30, 2024, total assets amounted to $15,685,520, an increase of 17.0% from $13,403,468 as of December 31, 2023[41] - Current liabilities increased to $9,092,890 as of June 30, 2024, compared to $7,730,323 as of December 31, 2023, reflecting a rise of 17.6%[41] - The Company had total assets of $21,951,991 as of June 30, 2024, down from $25,479,568 as of December 31, 2023[189] Cash Flow and Liquidity - Cash and cash equivalents increased to $4,107,830 from $1,481,302, indicating improved liquidity[5] - Cash provided by operating activities increased to $806,144 for the period ending June 30, 2024, compared to $610,154 for the same period in 2023, reflecting a growth of about 32.2%[17] - Total cash and cash equivalents increased by $2.6 million to $4.1 million as of June 30, 2024, compared to $1.5 million as of December 31, 2023[110] - The company has not experienced any losses in its cash accounts and believes the risk of bank failure is remote[100] Operating Expenses and Cost Management - Operating expenses decreased to $3,687,404 for the six months ended June 30, 2024, down from $4,218,711 in 2023, showing cost management efforts[8] - The company incurred total operating lease expenses of $1,708,117 for the six months ended June 30, 2024, compared to $1,734,513 for the same period in 2023, a decrease of 1.5%[131] Shareholder and Equity Information - The balance of Class A ordinary shares as of June 30, 2024, was $6,755,319, compared to $6,450,000 as of June 30, 2023, showing an increase of approximately 4.7%[15] - The Company has 44,000,000 authorized Class A Ordinary Shares, with 6,755,319 shares issued and outstanding as of June 30, 2024[178] Taxation and Compliance - The company's subsidiary in the PRC was subject to a 25% income tax rate for the six months ended June 30, 2024, compared to a reduced rate of 5% for the same period in 2023[160] - The company did not generate any assessable profits in Hong Kong for the six months ended June 30, 2024, and thus made no provision for Hong Kong profits tax[157] - The company's deferred tax assets were fully offset by a valuation allowance of $3,182,120 as of June 30, 2024, indicating uncertainty in future earnings[169] Future Outlook and Strategic Initiatives - The company continues to focus on product development and market expansion strategies to enhance future growth prospects[8] - Management anticipates revenue and net income to increase in the second half of fiscal year 2024 compared to the same period last year[111] - The company expects to open five additional stores in the PRC in fiscal year 2024[111] Other Financial Metrics - The company recorded interest income of $44,877 for the six months ended June 30, 2024, compared to $21,452 for the same period in 2023, an increase of 109.5%[123] - Investment income from long-term debt investment was $359,014 for the six months ended June 30, 2024, compared to $171,616 for the same period in 2023, an increase of 109.5%[142]

Core Viewpoint - Chanson International Holding reported a decline in revenue for the first half of fiscal year 2024, but maintained gross margins above 40% through cost control and operational efficiency measures. The company remains optimistic about its long-term growth strategy, focusing on expansion in both the United States and China [2][3]. Financial Summary - Total revenue for the first half of fiscal year 2024 was $7.5 million, a decrease of 14.4% from $8.8 million in the same period last year [3][4]. - Gross profit was $3.1 million, down 27.8% from $4.3 million year-over-year, with a gross margin of 41.5%, down from 49.2% [3][8]. - Net income was $0.02 million, compared to $0.3 million for the same period last year, resulting in basic and diluted earnings per share of $0.002, down from $0.027 [3][10][11]. Revenue Breakdown China Stores - Revenue from China Stores was $6.5 million, a decrease of 7.3% from $7.0 million last year, primarily due to lower sales of bakery products and other items [5]. - Bakery product revenue was $5.9 million, down 7.3% from $6.4 million, attributed to reduced consumer spending and economic pressures [5]. - Revenue from seasonal products decreased by 16.4% to $0.36 million, while beverage product revenue increased by 14.8% to $0.22 million, driven by a focus on coffee beverages [5]. United States Stores - Revenue from U.S. Stores was $1.0 million, a significant decrease of 42.2% from $1.8 million last year, mainly due to lower beverage sales and eat-in services [6]. - Bakery product revenue remained stable at $0.24 million, with a slight increase of 2.6% from $0.23 million, while beverage product revenue fell by 37.2% to $0.6 million [6][7]. Operating Expenses - Total operating expenses were $3.7 million, down from $4.2 million year-over-year. Selling expenses decreased by 8.7% to $2.2 million, while general and administrative expenses fell by 17.9% to $1.5 million [9]. Cash Flow and Balance Sheet - As of June 30, 2024, the company had cash reserves of $4.1 million, up from $1.5 million at the end of 2023 [11]. - Net cash provided by operating activities was $0.8 million, compared to $0.6 million for the same period last year [12]. - The company reported net cash provided by investing activities of $1.4 million, a significant improvement from net cash used of $11.3 million last year [12].

Core Viewpoint - Chanson International Holding has successfully closed a public offering of 8,980,251 Class A ordinary shares and common warrants, raising gross proceeds of $7.274 million to fund new store openings in China and the U.S. [1][2] Group 1: Offering Details - The offering consisted of 8,980,251 Class A ordinary shares and 8,980,251 common warrants, priced at $0.81 per share and warrant [1] - The common warrants have an exercise price of $0.972 per share [1] - The offering was facilitated by Joseph Stone Capital, LLC as the exclusive placement agent [2] Group 2: Use of Proceeds - The net proceeds from the offering will be utilized for opening new stores in both China and the United States [2] Group 3: Company Overview - Chanson International Holding, founded in 2009, operates bakery, seasonal, and beverage products through its chain stores in China and the U.S. [4] - The company is headquartered in Urumqi, China, and operates 46 stores in China and three in New York City [4] - Chanson focuses on providing healthy, nutritious, and ready-to-eat food, utilizing advanced facilities and in-depth industry research [4]

Core Viewpoint - Chanson International Holding is conducting a public offering of Class A ordinary shares and common warrants to raise approximately $7.274 million for expanding its store presence in China and the U.S. [1][2] Group 1: Offering Details - The offering consists of 8,980,251 Class A ordinary shares and 8,980,251 common warrants, priced at $0.81 per share and warrant [1] - The common warrants have an exercise price of $0.972 per share [1] - The offering is expected to close on or about September 17, 2024, pending customary closing conditions [2] Group 2: Use of Proceeds - The net proceeds from the offering will be utilized for opening new stores in China and the U.S. [2] Group 3: Company Background - Chanson International Holding, founded in 2009, provides bakery, seasonal, and beverage products through its chain stores in China and the U.S. [5] - The company operates 46 stores in China and three stores in New York City, also selling products on digital platforms [5] - Chanson focuses on healthy, nutritious, and ready-to-eat food, supported by advanced facilities and a dedicated product development team [5]

Revenue Performance - Total revenue for the year ended December 31, 2023, was $17,252,662, representing a 29.9% increase from $13,272,075 in 2022[283]. - Total revenue increased by $3,980,587, or 30.0%, from $13,272,075 in 2022 to $17,252,662 in 2023, driven primarily by revenue growth in PRC Stores[469]. - Revenue from China increased by $4,822,949, or 50.8%, from $9,491,208 in 2022 to $14,314,157 in 2023, primarily driven by bakery products[3]. - Revenue from bakery products in China rose by $3,826,909, or 44.0%, from $8,705,218 in 2022 to $12,532,127 in 2023, as business operations fully recovered from the COVID-19 pandemic[3]. - Revenue from other products in China increased by $996,040, or 126.7%, from $785,990 in 2022 to $1,782,030 in 2023, due to higher sales of seasonal and beverage products[3]. - Revenue from the United States decreased by $842,362, or 22.3%, from $3,780,867 in 2022 to $2,938,505 in 2023, mainly due to competition and store closures[6]. - Revenue from U.S. bakery products fell by $167,861, or 27.4%, from $612,819 in 2022 to $444,958 in 2023, impacted by increased competition[6]. - Revenue from U.S. beverage products decreased by $346,696, or 16.9%, from $2,047,670 in 2022 to $1,700,974 in 2023, affected by new product launches from competitors[6]. - Revenue from U.S. eat-in services declined by $327,805, or 29.3%, from $1,120,378 in 2022 to $792,573 in 2023, primarily due to the closure of Chanson Greenwich[6]. - The PRC Stores accounted for 82.9% of total revenue in 2023, while the U.S. Stores contributed 17.1%[283]. Product Offerings - The PRC Stores had over 707 types of bakery and seasonal products available, including 145 new products introduced in 2023[283]. - The U.S. Stores offered 108 types of eat-in menu items and bakery products, with 20 new products launched in 2023[283]. - Revenue from bakery products constituted 87.6% of the PRC Stores' revenue in 2023, while seasonal products and beverage products accounted for 9.1% and 3.3%, respectively[284]. - The U.S. Stores generated 27.0% of their revenue from eat-in services in 2023, with beverage products making up 57.9%[285]. - The PRC Stores currently offer over 707 types of bakery products and more than 40 types of beverage products, with bestselling items including little puffs, chocolate cakes, and Americano[303]. Market Expansion and Strategy - The company plans to expand into new markets by opening new stores and enhancing its presence in Xinjiang and New York City[298]. - The company aims to improve in-store customer experience through renovations and standardized employee training[299]. - The company intends to increase brand awareness through marketing efforts, social media presence, and e-commerce sales[301]. - The partnership with Aranka Media Enterprise since 2019 aims to improve brand growth and customer relationships through enhanced media strategy[344]. Customer Engagement and Membership - The PRC Stores had approximately 582,000 members as of December 31, 2023, with sales to members accounting for 51.47% of total sales[312]. - The PRC Stores offer a member day discount of 12% off original prices each week to stimulate sales[341]. - The PRC Stores and U.S. Stores conduct periodic customer satisfaction surveys to gather insights on product quality and customer needs[335]. Financial Performance - Gross profit for 2023 was $8,147,325, up from $6,102,671 in 2022, reflecting improved sales performance[468]. - Total operating expenses rose to $8,757,826 in 2023, compared to $7,540,696 in 2022, primarily due to increased selling and administrative expenses[468]. - The company reported a net income of $33,588 in 2023, a significant improvement from a net loss of $1,288,205 in 2022[468]. - Operating income for 2023 was a loss of $610,501, an improvement from a loss of $1,438,025 in 2022, indicating better expense management[468]. - SG&A expenses are expected to continue increasing as the company invests in new store openings, product launches, and market penetration efforts[465]. Supply Chain and Production - The PRC Stores contract third-party producers for seasonal products, with production based on previous sales records and capacity[305]. - Top suppliers of the PRC Stores in 2023 included Urumqi Yuxin Jiayuan Commerce and Trade Co., Ltd., which constituted 11.93% of total raw materials[329]. - Top suppliers for U.S. Stores in 2023 included Baldor Specialty Foods (28%), Southern Glazers of NY Metro (12%), and The Chefs' Warehouse (13%) of total raw materials[331]. - The central factory has an annual production capacity worth RMB150 million (approximately $21 million) on a raw cost basis[346]. - The investment budget for the central factory is approximately RMB17.8 million (approximately $2.5 million), with RMB14.7 million (approximately $2.1 million) already spent as of December 31, 2023[346]. Employee Management - The PRC Stores and U.S. Stores have a total of 410 employees as of December 31, 2023, with 356 in the PRC and 54 in the U.S.[366]. - The PRC Stores maintain an in-house R&D team of six employees, focusing on product quality and customer trends[354]. - The PRC Stores and U.S. Stores expect to invest resources to retain more qualified employees in their R&D team[354]. - The company has not fully deposited social insurance fees for all employees as required by relevant regulations[442]. - The company has not yet paid housing funds for all employees, which is mandated to be at least 5% of the monthly average salary[443]. Regulatory Compliance - The U.S. Stores are subject to extensive federal, state, and local government regulations, which could impact operations if licenses are not obtained or retained[444]. - The U.S. Stores must comply with zoning, land use, and environmental regulations, which could delay construction and increase development costs[446]. - The U.S. Stores are required to comply with the U.S. Fair Labor Standards Act, which could increase labor costs due to minimum wage changes[448]. - Environmental laws may impose significant fines and liabilities for non-compliance, potentially affecting the business and financial condition of the U.S. Stores[450]. Legal and Taxation - An income tax rate of 10% applies to dividends declared to non-PRC resident investors, which may be reduced to 5% under certain conditions[438]. - Xinjiang United Family and its branch offices currently pay VAT at a rate of 13% for manufacturing and selling bakery products, down from 16% prior to April 2019[433]. - Three of the UFG Entities are paying VAT at a reduced rate of 1%, while the rest are exempt from VAT[433]. - The urban maintenance and construction tax is levied at a rate of 7%, educational surcharges at 3%, and local education surcharges at 2% for Xinjiang United Family and its branch offices[437].

Financial Performance - Total revenue for the six months ended June 30, 2023, was $8,811,287, an increase of 3.1% compared to $8,543,803 in the same period of 2022[8] - Gross profit for the same period was $4,332,571, up from $4,147,088, reflecting a gross margin improvement[8] - Net income for the six months ended June 30, 2023, was $284,760, compared to $220,793 in 2022, representing a 29% increase[8] - For the six months ended June 30, 2023, net revenue was $4,562,762, an increase of 21.4% compared to $3,754,826 for the same period in 2022[34] - Net income for the six months ended June 30, 2023, was $1,213,299, up 26.5% from $959,198 in the prior year[34] - The company reported a total comprehensive loss of $21,107 for the six months ended June 30, 2023, compared to a loss of $38,445 in 2022, showing an improvement[8] - The company expects revenue and net income to increase significantly in the second half of fiscal year 2023 compared to the same period last year[82] Assets and Liabilities - Total assets increased to $36,553,766 as of June 30, 2023, from $27,329,186 as of December 31, 2022, marking a growth of 33.8%[4] - Total liabilities decreased to $24,426,976 as of June 30, 2023, from $26,152,137 as of December 31, 2022, a reduction of 6.6%[4] - Shareholders' equity increased significantly to $12,126,790 as of June 30, 2023, from $1,177,049 as of December 31, 2022, reflecting a growth of 935%[4] - Total assets as of June 30, 2023, were $11,523,084, compared to $11,202,614 as of December 31, 2022, reflecting a growth of 2.9%[33] - Current liabilities increased to $6,173,116 as of June 30, 2023, from $5,858,647 at the end of 2022, representing a rise of 5.3%[33] - Total liabilities as of June 30, 2023, were $7,562,033, an increase from $7,307,391 as of December 31, 2022, indicating a growth of 3.5%[33] Cash Flow and Investments - Cash flows from operating activities provided $610,154, compared to a cash outflow of $(359,946) in the prior year, indicating a significant improvement[19] - Cash and cash equivalents decreased to $1,471,984 as of June 30, 2023, from $2,915,470 as of December 31, 2022, a decline of 49.6%[4] - The company reported cash provided by operating activities of $0.6 million for the six months ended June 30, 2023, compared to cash used in operating activities of $0.4 million for the same period last year[81] - The company incurred a net cash used in investing activities of $(11,252,022), primarily due to payments for long-term debt investment of $(6,000,000) and advances of loans to third parties of $(3,900,000)[19] - The company recorded interest income of $21,452 for the six months ended June 30, 2023, from the loan to the third party[93] - The company incurred an investment income of $171,616 from a $6.0 million investment with Worthy Credit, yielding a 12% annual return[111] Shareholder Information - The Company closed its initial public offering on April 3, 2023, raising funds by selling 3,390,000 Class A ordinary shares at $4.00 each[35] - As of June 30, 2023, the company had 12,390,000 shares issued and outstanding, an increase from 9,000,000 shares as of December 31, 2022, following the IPO[133] - The company has a negative working capital of approximately $5.4 million as of June 30, 2023, including deferred revenue of approximately $7.1 million[81] Revenue Recognition and Accounting Policies - The Company follows ASC 606 for revenue recognition, ensuring that revenue reflects the transfer of goods or services to customers as performance obligations are satisfied[52] - The Company recognized deferred revenue of $7,114,127 as of June 30, 2023, compared to $6,958,160 as of December 31, 2022, primarily from customer payments for membership cards and cash vouchers[57] - Revenue recognized from the opening deferred revenue for the six months ended June 30, 2023, was $3,945,400, compared to $3,899,040 for the same period in 2022[57] - Membership card breakage was immaterial for the six months ended June 30, 2023, and 2022, indicating low likelihood of redemption for inactive cards[55] Operational Developments - The company has established a bakery chain in Xinjiang, consisting of five directly-owned stores and 34 individually-owned businesses[23] - Xinjiang United Family has entered into contractual arrangements with 22 UFG entities, gaining exclusive rights to provide consulting services and absorb business risks[26] - The company has undertaken a reorganization in connection with its initial public offering, establishing a new legal structure to enhance operational efficiency[25] - The company opened three stores in PRC and two stores in the U.S. in 2023, with plans to open another ten stores in PRC later in fiscal year 2023[82] Tax and Regulatory Matters - The Company has not incurred any penalties or interest related to income taxes during the six months ended June 30, 2023, and 2022[66] - The company has a 100% valuation allowance for its deferred tax assets due to uncertainty regarding future earnings in U.S. operations[123] - The company expects tax rates for its UFG entities to potentially increase in future assessments based on past performance[118] Miscellaneous - The company incurred total operating lease expenses of $1,734,513 for the six months ended June 30, 2023, compared to $1,524,429 for the same period in 2022[100] - The company recorded an interest expense of $8,364 for a short-term bank loan of RMB3.0 million ($413,474) for the six months ended June 30, 2023[113] - The cumulative net operating loss (NOL) for U.S. operations increased to $13,088,033 as of June 30, 2023, with an additional NOL of $1,180,111 incurred during the six months[122] - The company incurred lease concessions due to COVID-19 amounting to $1,078,753, with $9,783 received during the six months ended June 30, 2023[46] - The company did not provide any financial support to the UFG entities for the six months ended June 30, 2023 and 2022[32] - The company did not experience any impairments of long-lived assets as of June 30, 2023, and December 31, 2022[51] - The company’s operations are influenced by political, economic, and legal environments in both the PRC and the United States, which may affect financial results[73]

Revenue Performance - Total revenue decreased by 9.7% to $13.3 million in fiscal year 2022, down from $14.7 million in fiscal year 2021[3] - Revenue from China stores decreased by 25.8% to $9.5 million in fiscal year 2022, compared to $12.8 million in fiscal year 2021[4] - Revenue from United States stores increased by 99.6% to $3.8 million in fiscal year 2022, up from $1.9 million in fiscal year 2021[6] - Revenue for 2022 was $13,272,075, a decrease of 9.1% from $14,690,295 in 2021[20] Profitability - Net loss for fiscal year 2022 was $1.3 million, compared to net income of $0.5 million in fiscal year 2021[11] - Gross profit decreased by 11.9% to $6.1 million in fiscal year 2022, with a gross margin of 46.0%[8] - Gross profit for 2022 was $6,102,671, down from $6,930,423 in 2021, reflecting a gross margin of 45.9%[20] - Total comprehensive loss for 2022 was $(1,657,910), compared to a comprehensive income of $595,721 in 2021[20] Expenses - Operating expenses were $7.5 million in fiscal year 2022, slightly up from $7.4 million in fiscal year 2021[9] - Total operating expenses increased to $7,540,696 in 2022, up from $7,375,307 in 2021, primarily due to higher selling and administrative expenses[20] Cash Flow - Cash as of December 31, 2022, was $2.9 million, down from $3.9 million as of December 31, 2021[11] - Cash provided by operating activities was $551,348 in 2022, a significant decrease from $1,778,246 in 2021[23] - Cash used in investing activities was $(860,034) in 2022, compared to $(2,030,921) in 2021, indicating reduced capital expenditures[23] - Cash provided by financing activities was $9,929 in 2022, a recovery from $(178,240) in 2021[23] - Cash and cash equivalents at the end of 2022 were $2,915,470, down from $3,896,812 at the end of 2021[23] Shareholder Information - Basic and diluted loss per share in fiscal year 2022 was $0.14, compared to earnings per share of $0.06 in fiscal year 2021[11] - Earnings per share for 2022 was $(0.14), down from $0.06 in 2021[20] - The company completed its initial public offering of 3,390,000 Class A ordinary shares at a price of $4.00 per share on April 3, 2023[12] Future Plans - The company plans to expand its product selection and open more stores across the United States to enhance brand awareness and shareholder value[2]