Financial Performance - Total revenues for the year ended June 30, 2025, were $25.33 million, a decrease of 34% compared to $38.53 million in 2024[29] - Gross profit for 2025 was $4.69 million, down from $8.30 million in 2024, reflecting a gross margin decline[29] - Net loss for 2025 was $6.32 million, compared to a net loss of $8.77 million in 2024, indicating a 28% improvement in loss[29] - Operating expenses for 2025 were $10.70 million, down from $15.23 million in 2024, reflecting a decrease of 30%[29] - Cash used in operating activities for 2025 was $(1.72) million, an improvement from $(4.11) million in 2024[32] - The company recorded a bad debt write-off of $68,003, $0, and $3,653 for the fiscal years ended June 30, 2025, 2024, and 2023, respectively[158] - The average accounts receivable turnover period was approximately 124 days, 94 days, and 114 days for the fiscal years ended June 30, 2025, 2024, and 2023, respectively[158] Assets and Liabilities - Total assets decreased to $36.25 million in 2025 from $43.64 million in 2024, a reduction of approximately 17%[26] - Cash and cash equivalents at the end of 2025 were $10.69 million, down from $13.35 million in 2024, representing a decline of 20%[26] - Total current liabilities decreased to $11.15 million in 2025 from $12.13 million in 2024, a reduction of about 8%[26] Regulatory Environment - The CSRC's Overseas Listing Trial Measures require PRC domestic companies to fulfill filing procedures for overseas listings, effective March 31, 2023[43] - Existing issuers listed overseas before March 31, 2023, are not required to complete immediate filing procedures but must file for subsequent matters[45] - Non-compliance with the Overseas Listing Trial Measures may result in fines ranging from RMB1,000,000 ($140,000) to RMB10,000,000 ($1.4 million)[45] - The Provisions on Confidentiality and Archives Administration require strict adherence to confidentiality rules during overseas securities offerings, effective March 31, 2023[47] - The PRC government has significant control over business operations, which may lead to regulatory changes affecting the ability to offer securities[49] - Regulatory actions may impose fines, revoke business licenses, or restrict operations, significantly impacting financial conditions and share value[52] - The evolving legal landscape in China creates uncertainties regarding compliance and enforcement of laws affecting business operations[51] - Companies may face liabilities for improper use of personal information under evolving data protection laws in China[57] - The CSRC may impose sanctions for failure to comply with filing requirements, affecting the company's ability to operate and offer securities[48] - Future regulatory changes could materially impact the company's business operations and ability to attract foreign investments[54] Foreign Investment and Currency Issues - The Negative List issued by the NDRC and MOFCOM restricts foreign investment in certain sectors, impacting companies seeking overseas listings[69] - Revenue generation primarily occurs in Renminbi, which is not freely convertible, potentially limiting the ability to pay dividends due to currency exchange restrictions[77] - A withholding tax rate of up to 10% applies to dividends payable by Chinese companies to non-PRC-resident enterprises, affecting the company's ability to distribute profits[78] - The PRC government imposes controls on the convertibility of Renminbi and may restrict cash transfers out of China, affecting the ability to pay dividends[84] - The RMB has depreciated significantly against the U.S. dollar, impacting the company's financial results and the value of its shares[92] - Limited hedging options are available in China to mitigate exposure to exchange rate fluctuations, which may adversely affect share prices[94] Operational Risks - The company may require substantial additional funding in the future to meet capital requirements for production capacity expansion and to maintain operations[155] - The company is subject to competitive pricing pressure from major customers, which could adversely affect financial condition and operating results[145] - The company relies on third-party suppliers and long supply chains, making it vulnerable to disruptions that could impact product availability and quality[152] - A significant portion of the company's expenses are fixed costs, making operating income sensitive to changes in net sales[154] - The company may experience operational risks due to potential disruptions at production facilities, which could materially affect financial results[161] - The company’s ability to attract and retain skilled workers is critical for its success, and competition for talent may impact labor costs and operational efficiency[171] Economic and Market Conditions - The company has experienced a slowdown in China's economic growth since 2012, which may continue to adversely affect its business and financial condition[162] - Global economic conditions, including geopolitical tensions and health epidemics, may adversely affect demand for the company's products and services[189][192] - The political and economic environment in Vietnam poses risks, including potential high inflation and social unrest, which could adversely impact business operations[201][202] - Changes in Vietnam's legal system and economic conditions may affect the company's operations and financial performance[203] Corporate Governance and Compliance - The concentration of voting power, with one director and family members owning 88.89% of Ordinary Shares, may hinder changes in control and affect market price[187] - The company operates in a controlled environment under Nasdaq rules, which may exempt it from certain corporate governance requirements, potentially impacting shareholder protections[188] - The company may follow home country practices in corporate governance that provide less protection to shareholders compared to Nasdaq standards[222] Future Outlook - The company has set goals to achieve profitability by growing sales, increasing gross margin, and reducing expenses as a percentage of sales[143] - The company’s future financial performance depends on successfully implementing its business strategy, including achieving operating cost savings and expanding into targeted regions[177] - The company does not expect to pay dividends in the foreseeable future, relying instead on price appreciation for returns on investment[219] - The company may require additional cash resources due to changed business conditions or future developments, which could lead to dilution for shareholders if additional equity is sold[175]
Millennium International (MGIH) - 2025 Q4 - Annual Report