FSTJ Revenue Jumps 30% Amidst Merger Costs, Cash Dips

TL;DR

**FSTJ is growing revenue fast, but watch out for shrinking margins and dwindling cash post-merger – it's a risky bet.**

AI Summary

First America Resources Corp (FSTJ) reported a significant increase in revenue and net income for the three and six months ended June 30, 2025. Revenue for the three months ended June 30, 2025, rose by 30% to $4,823,000 from $3,699,000 in the prior year. Net income for the same three-month period more than doubled to $62,123 from $25,147. For the six months ended June 30, 2025, revenue increased to $8,848,000 from $7,855,000, and net income surged to $287,252 from $130,530. Gross profit for the three months ended June 30, 2025, was $2,479,798, up from $2,104,660, though gross margin decreased from 57% to 51%. Operating expenses increased by 16% to $2,385,000, driven by an $83,000 rise in general and administrative expenses, a $118,000 increase in payroll, and a $92,000 increase in rent and lease expenses, alongside higher professional fees due to merger costs. The company also received a $346,000 Employee Retention Credit during the period. Cash decreased by $308,217 to $150,805 for the six months ended June 30, 2025, primarily due to a $1,173,493 increase in accounts receivable.

Why It Matters

FSTJ's substantial revenue growth of 30% for the quarter and over 12% for the six-month period signals strong operational momentum, particularly following the METech Recycling, Inc. acquisition. However, the declining gross margin from 57% to 51% and a significant decrease in cash by $308,217 to $150,805 could concern investors, indicating potential pressure on profitability and liquidity despite top-line expansion. The increased operating expenses, including professional fees for the merger, suggest integration challenges or higher overheads in a competitive electronic waste management market. Employees might see continued growth opportunities, but customers could face potential price adjustments if margin pressures persist.

Risk Assessment

Risk Level: medium — The company's cash balance significantly decreased by $308,217 to $150,805 for the six months ended June 30, 2025, from $459,022 at December 31, 2024. This is coupled with a substantial increase in accounts receivable by $1,173,493, indicating potential working capital strain and collection risks, despite revenue growth.

Analyst Insight

Investors should monitor FSTJ's cash flow and accounts receivable closely in upcoming quarters to assess liquidity and operational efficiency. While revenue growth is positive, the declining gross margin and increased operating expenses warrant caution; evaluate if the METech acquisition synergies can reverse these trends.

Financial Highlights

debt To Equity

N/A

revenue

$4,822,842

operating Margin

1.97%

total Assets

$6,927,632

total Debt

$8,009,378

net Income

$62,123

eps

N/A

gross Margin

51%

cash Position

$150,805

revenue Growth

+30%

Revenue Breakdown

Key Numbers

• $4.82M — Quarterly Revenue (Increased 30% from $3.70M in Q2 2024)
• $2.48M — Quarterly Gross Profit (Increased from $2.10M in Q2 2024)
• 51% — Quarterly Gross Margin (Decreased from 57% in Q2 2024)
• $62.1K — Quarterly Net Income (Increased from $25.1K in Q2 2024)
• $8.85M — Six-Month Revenue (Increased from $7.85M in H1 2024)
• $287.3K — Six-Month Net Income (Increased from $130.5K in H1 2024)
• $150.8K — Cash Balance (Decreased from $459.0K at Dec 31, 2024)
• $1.17M — Accounts Receivable Increase (Increased from Dec 31, 2024, impacting cash flow)
• $346K — Employee Retention Credit (Received during the six-month period)
• 87,964,090 — Shares Outstanding (Consistent at June 30, 2025 and December 31, 2024)

Key Players & Entities

• First America Resources Corporation (company) — reporting entity
• METech Recycling, Inc. (company) — acquired subsidiary, accounting acquirer
• First America Metal Corp (company) — related party, second largest shareholder, Customer A and Vendor A
• First American Management Group Corp (company) — largest shareholder
• $4,823,000 (dollar_amount) — revenue for three months ended June 30, 2025
• $3,699,000 (dollar_amount) — revenue for three months ended June 30, 2024
• $62,123 (dollar_amount) — net income for three months ended June 30, 2025
• $25,147 (dollar_amount) — net income for three months ended June 30, 2024
• $150,805 (dollar_amount) — cash at June 30, 2025
• $346,000 (dollar_amount) — Employee Retention Credit received

FAQ

Risk Factors

• Accounts Receivable Increase [medium — financial]: Accounts receivable increased by $1,153,167 to $2,655,845 as of June 30, 2025, from $1,520,678 as of December 31, 2024. This significant increase negatively impacted the company's cash position, contributing to a $308,217 decrease in cash for the six months ended June 30, 2025.
• Decreasing Gross Margin [medium — financial]: Gross margin decreased from 57% for the three months ended June 30, 2024, to 51% for the same period in 2025. This indicates that the cost of revenues is growing at a faster rate than revenue, potentially impacting profitability if not managed.
• Rising Operating Expenses [medium — operational]: Operating expenses increased by 16% to $2,385,000 for the three months ended June 30, 2025, compared to $2,061,000 in the prior year. Key drivers include increases in general and administrative expenses ($83,000), payroll ($118,000), and rent/lease expenses ($92,000).
• Increased Debt Levels [medium — financial]: Total current liabilities increased to $6,250,156 as of June 30, 2025, from $6,095,187 as of December 31, 2024. Notes payable, current portion, also rose to $1,540,768 from $1,063,218, indicating increased reliance on short-term debt.
• Merger and Related Costs [low — operational]: Professional fees increased due to merger costs, specifically legal and audit fees. While not quantified separately from other professional fees, these costs are impacting operating expenses and could continue if merger activities persist.
• Negative Cash Flow from Operations [high — financial]: The company's cash balance decreased by $308,217 for the six months ended June 30, 2025, primarily due to a $1,173,493 increase in accounts receivable. This suggests that cash is being tied up in receivables rather than being generated from operations.

Industry Context

First America Resources Corp operates in the electronic waste management and IT asset disposition (ITAD) sector through its subsidiary METech Recycling, Inc. This industry is driven by the increasing volume of electronic waste and the growing demand for secure data destruction and sustainable recycling practices. Companies in this space often need to comply with stringent environmental regulations and maintain certifications like R2 to ensure responsible operations.

Regulatory Implications

The company's operations are subject to environmental regulations related to waste management and recycling. Maintaining R2 certification is crucial for its ITAD business, implying ongoing compliance efforts. The receipt of an Employee Retention Credit suggests interaction with tax and economic relief programs, which may have specific compliance requirements.

What Investors Should Do

1. Monitor accounts receivable trends closely.
2. Analyze the sustainability of gross margin.
3. Evaluate the impact of rising operating expenses.
4. Assess the company's cash management strategy.

Key Dates

• 2025-06-30: End of Second Quarter and First Half of Fiscal Year 2025 — Reporting period for the 10-Q, showing significant revenue growth but also a decrease in cash and gross margin.
• 2025-06-30: Balance Sheet Date — Reflects the company's assets and liabilities, highlighting increased accounts receivable and a reduced cash balance compared to year-end 2024.
• 2024-12-31: End of Fiscal Year 2024 — Baseline for comparison of financial position changes in the first half of 2025.

Glossary

IT asset disposition (ITAD)

The process of managing and disposing of information technology equipment at the end of its lifecycle, often involving data destruction and recycling. (This is the core business of METech Recycling, Inc., a subsidiary of First America Resources Corp.)

R2-certified facilities

Facilities that have been certified under the R2 Standard (Responsible Recycling), an electronics recycling standard that promotes environmental, health, and safety practices. (Indicates the company's adherence to industry-specific environmental and safety standards in its recycling operations.)

Accumulated deficit

The total net losses of a company over its lifetime that have not been offset by net income. (Shows that First America Resources Corp. has historically incurred more losses than profits, as indicated by the negative balance of $(2,926,670) as of June 30, 2025.)

Employee Retention Credit

A refundable tax credit designed to encourage employers to keep employees on their payroll during the COVID-19 pandemic. (The company received a $346,000 credit, which positively impacted its financial results for the period.)

Right of use assets

Assets recognized under lease accounting standards, representing the right to use an underlying asset for the lease term. (These assets, related to leases, decreased from $2,733,047 to $2,152,557, impacting the balance sheet.)

Goodwill

An intangible asset that arises when one company acquires another for a price greater than the fair market value of its net assets. (The company holds $750,000 in goodwill, unchanged from the prior year, likely from past acquisitions.)

Year-Over-Year Comparison

First America Resources Corp. has demonstrated robust revenue growth, with a 30% increase in quarterly revenue and a 13% increase in six-month revenue compared to the prior year. However, this top-line growth is accompanied by a concerning decrease in gross margin from 57% to 51% for the quarter, indicating rising costs. Operating expenses have also climbed by 16%, driven by G&A, payroll, and rent. A significant negative development is the substantial decrease in cash reserves by $308,217, largely due to a $1.17 million surge in accounts receivable, which ties up working capital.

Key Financial Figures

• $4,823,000 — hs ended June 30, 2025, our revenue was $4,823,000, as compared to $3,699,000, for the thr
• $3,699,000 — revenue was $4,823,000, as compared to $3,699,000, for the three months ended June 30, 20
• $2,343,000 — nths ended June 30, 2025, and 2024 were $2,343,000 and $1,595,000, respectively, resulting
• $1,595,000 — 30, 2025, and 2024 were $2,343,000 and $1,595,000, respectively, resulting in gross margi
• $2,385,000 — June 30, 2025, operating expenses were $2,385,000 as compared to $2,061,000 for the same
• $2,061,000 — expenses were $2,385,000 as compared to $2,061,000 for the same period in 2024, an increas
• $324,000 — the same period in 2024, an increase of $324,000 or 16%. General and administrative expe
• $83,000 — nd administrative expenses increased by $83,000 from $462,000 to $545,000, payroll expe
• $462,000 — tive expenses increased by $83,000 from $462,000 to $545,000, payroll expenses increased
• $545,000 — s increased by $83,000 from $462,000 to $545,000, payroll expenses increased $118,000 fr
• $118,000 — to $545,000, payroll expenses increased $118,000 from $1,143,000 to $1,261,000 and rent
• $1,143,000 — ayroll expenses increased $118,000 from $1,143,000 to $1,261,000 and rent and lease expens
• $1,261,000 — s increased $118,000 from $1,143,000 to $1,261,000 and rent and lease expenses increased b
• $92,000 — nd rent and lease expenses increased by $92,000 from $349,000 to $441,000. These increa
• $349,000 — ease expenses increased by $92,000 from $349,000 to $441,000. These increases were drive

Filing Documents

• fstj_10q.htm (10-Q) — 467KB
• fstj_ex311.htm (EX-31.1) — 12KB
• fstj_ex321.htm (EX-32.1) — 4KB
• 0001477932-25-007146.txt ( ) — 1940KB
• fstj-20250630.xsd (EX-101.SCH) — 23KB
• fstj-20250630_lab.xml (EX-101.LAB) — 130KB
• fstj-20250630_cal.xml (EX-101.CAL) — 33KB
• fstj-20250630_pre.xml (EX-101.PRE) — 100KB
• fstj-20250630_def.xml (EX-101.DEF) — 37KB
• fstj_10q_htm.xml (XML) — 149KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements 5 Item 2.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Item 3. Quantitative and Qualitative Disclosure about Market Risk 14 Item 4.

Controls and Procedures

Controls and Procedures 14

- OTHER INFORMATION

PART II - OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 15 Item 1A.

Risk Factors

Risk Factors 15 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15 Item 3. Defaults Upon Senior Securities 15 Item 4. Mine Safety Disclosures 15 Item 5. Other Information 15 Item 6. Exhibits 16 3 Table of Contents

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

- FINANCIAL STATEMENTS

ITEM 1 - FINANCIAL STATEMENTS First America Resources Corporation Condensed Consolidated Financial Statements (Unaudited) Contents Condensed Balance Sheets - June 30, 2025 and December 31, 2024 5 Condensed Statements of Operations - Three and Six Months Ended June 30, 2025 and 2024 6 Condensed Statements of Stockholders' Deficit - Three and Six Months Ended June 30, 2025 and 2024 7 Condensed Statements of Cash Flows - Six Months Ended June 30, 2025 and 2024 8 Notes to Unaudited Financial Statements 9 4 Table of Contents FIRST AMERICA RESOURCES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS JUNE 30, 2025 AND DECEMBER 31, 2024 June 30, December 31, 2025 2024 Assets Current assets Cash $ 150,805 $ 459,022 Accounts receivable, net of allowance for doubtful accounts of $ 260,000 and $ 110,000 , respectively 2,655,845 1,520,678 Accounts receivable, related party, First America Metal Corp. 349,822 466,449 Prepaid expenses 81,820 230,460 Total current assets 3,238,292 2,676,609 Long term assets Property and equipment, net 310,908 261,683 Right of use assets 2,152,557 2,733,047 Goodwill 750,000 750,000 Deposits 475,875 451,882 Total long term assets 3,689,340 4,196,612 Total assets $ 6,927,632 $ 6,873,221 Liabilities and Stockholders' Deficit Current liabilities Accounts payable $ 1,985,679 $ 1,037,551 Accounts payable, related party, First America Metal Corp. 1,519,183 2,302,980 Accrued expenses 31,645 252,940 Accrued interest 49,260 54,333 Lease liability, current portion 1,073,665 1,188,863 Financed insurance policy 49,956 195,302 Notes payable, current portion 1,540,768 1,063,218 Total current liabilities 6,250,156 6,095,187 Lease liability, net of current portion 1,152,323 1,618,435 Notes payable, net of current portion 606,899 528,597 Total liabilities 8,009,378 8,242,219 Commitments and contingencies (Note 3)

Business

Business METech Recycling, Inc., a Delaware corporation incorporated on March 10, 2005, specializes in electronic waste management and IT asset disposition (ITAD). The Company provides certified recycling services, secure data destruction, and IT asset management. With a focus on sustainability, the Company aims to maximize material recovery while ensuring the protection of proprietary technology and customer data. They operate multiple R2-certified facilities across the U.S., offering customized solutions for safe recycling, inventory management, and equipment disposal. The Company emphasizes eco-responsible practices and transparency. Note 2 – Summary of Significant Accounting Policies Basis of Presentation The accompanying interim unaudited condensed consolidated financial statements and footnotes have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results of the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2025. These condensed consolidated financial statements should be read in conjunction with the audited financial statements of METech, and the notes thereto, for the year ended December 31, 2024. 9 Table of Contents FIRST AMERICA RESOURCES CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Basic and Diluted Loss Per Share The Company had no potentially dilutive securities outstanding at June 30, 2025, and 2024. Recentl

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

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations We urge you to read the following discussion in conjunction with our Annual Report for the year ended December 31, 2024, as well as with our financial statements and the notes thereto included elsewhere herein. In addition to historical financial information, the following discussion and analysis may contain forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed elsewhere in this Report. Results of Operations Comparison of Three Months Ended June 30, 2025 and 2024 For the three months ended June 30, 2025, our revenue was $4,823,000, as compared to $3,699,000, for the three months ended June 30, 2024. The increase in revenue of 30% was the result of continued revenue growth. We expect revenues to continue to increase on a year-over-year basis. Cost of revenues for the three months ended June 30, 2025, and 2024 were $2,343,000 and $1,595,000, respectively, resulting in gross margins of 51% and 57%, respectively. The primary components of cost of revenues include freight and material processing, which comprise the majority of the costs. For the three months ended June 30, 2025, operating expenses were $2,385,000 as compared to $2,061,000 for the same period in 2024, an increase of $324,000 or 16%. General and administrative expenses increased by $83,000 from $462,000 to $545,000, payroll expenses increased $118,000 from $1,143,000 to $1,261,000 and rent and lease expenses increased by $92,000 from $349,000 to $441,000. These increases were driven by the expansion in operations and are consistent with the increase in revenues. Professional fees increased from $54,000 during the three months ended June 30, 2024, to $86,000 for the three months ended June 30, 2025.

Quantitative and Qualitative Disclosure about Market Risk

Item 3. Quantitative and Qualitative Disclosure about Market Risk Not applicable.

Controls and Procedures

Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Jian Li, our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of June 30, 2025, pursuant to Exchange Act Rule 13a-15. Such disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based upon that evaluation, our principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures as of June 30, 2025, were effective as of the end of the period covered by this Quarterly Report. Changes in Internal Control Over Financial Reporting There were no changes in our internal controls over financial reporting during the quarter ended June 30, 20

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