FSTJ's Q3 Net Income Plunges 44% Despite 19% Revenue Growth

TL;DR

**FSTJ's revenue growth is a mirage; plummeting net income and shrinking margins make this a sell, despite the one-time tax credit.**

AI Summary

First America Resources Corp (FSTJ) reported a net income of $213,761 for the three months ended September 30, 2025, a decrease from $379,918 in the same period of 2024, representing a 43.7% decline. For the nine months ended September 30, 2025, net income was $501,013, slightly down from $510,448 in 2024. Revenue for the three months ended September 30, 2025, increased by 19% to $5,470,273 from $4,582,419 in 2024, driven by continued growth in its electronic waste management and IT asset disposition business. However, gross profit margins decreased from 57% in Q3 2024 to 54% in Q3 2025 due to higher cost of revenues, which rose to $2,533,646 from $1,958,404. Operating expenses also increased significantly, with professional fees surging to $173,490 in Q3 2025 from $25,958 in Q3 2024, and general and administrative expenses rising to $588,804 from $524,102. The company received an Employee Retention Credit totaling $346,000 during the nine months ended September 30, 2025, which significantly boosted other income. FSTJ's total assets decreased to $6,648,090 at September 30, 2025, from $6,873,221 at December 31, 2024, while total liabilities decreased to $7,516,075 from $8,242,219 over the same period.

Why It Matters

This filing reveals a concerning trend for investors: while First America Resources Corp is growing revenue, its profitability is eroding, with net income dropping significantly in Q3 2025. The declining gross margins and surging operating expenses, particularly professional fees, suggest potential inefficiencies or increased compliance costs. For employees, the company's continued revenue growth in electronic waste management could signal job stability, but the overall profitability decline might impact future compensation or expansion plans. Customers of METech Recycling, Inc. might see continued service as the core business expands. In the broader market, FSTJ's struggles highlight the challenges smaller reporting companies face in scaling operations profitably, especially in competitive sectors like ITAD.

Risk Assessment

Risk Level: high — The company's net income for the three months ended September 30, 2025, decreased by 43.7% to $213,761 from $379,918 in the prior year, despite a 19% revenue increase. This indicates significant operational challenges and declining profitability. Furthermore, the gross margin decreased from 57% to 54%, and professional fees surged from $25,958 to $173,490, suggesting escalating costs and potential financial instability.

Analyst Insight

Investors should exercise extreme caution and consider divesting from FSTJ. The significant decline in net income despite revenue growth, coupled with deteriorating gross margins and rising operating expenses, points to fundamental profitability issues. The one-time Employee Retention Credit of $346,000 artificially inflated other income for the nine-month period, masking even deeper operational losses.

Financial Highlights

debt To Equity

N/A

revenue

$5.47M

operating Margin

N/A

total Assets

$6.65M

total Debt

$7.52M

net Income

$213.7K

eps

$0.00

gross Margin

54%

cash Position

$399.9K

revenue Growth

+19%

Revenue Breakdown

Key Numbers

• $5.47M — Revenue (Increased 19% for Q3 2025 compared to Q3 2024)
• $213.7K — Net Income (Decreased 43.7% for Q3 2025 compared to Q3 2024)
• 54% — Gross Margin (Decreased from 57% in Q3 2024 to 54% in Q3 2025)
• $173.5K — Professional Fees (Increased significantly from $25.9K in Q3 2024 to $173.5K in Q3 2025)
• $346K — Employee Retention Credit (One-time income boosting 'other income' for the nine months ended September 30, 2025)
• $867.9K — Total Stockholders' Deficit (Reduced from $1.37M at December 31, 2024, but still a deficit)
• $399.9K — Cash (Decreased from $459K at December 31, 2024)
• $1.46M — Notes Payable, Current Portion (Increased from $1.06M at December 31, 2024)
• 87,964,090 — Shares Outstanding (Consistent at September 30, 2025, and December 31, 2024)
• $0.00 — Income per share - basic and diluted (For the three months ended September 30, 2025 and 2024)

Key Players & Entities

• First America Resources Corporation (company) — reporting entity
• METech Recycling, Inc. (company) — wholly owned subsidiary and accounting acquirer
• First America Metal Corp (company) — related party, second largest shareholder, customer, and vendor
• First American Management Group Corp (company) — largest shareholder
• SEC (regulator) — Securities and Exchange Commission
• $213,761 (dollar_amount) — net income for three months ended September 30, 2025
• $379,918 (dollar_amount) — net income for three months ended September 30, 2024
• $5,470,273 (dollar_amount) — revenue for three months ended September 30, 2025
• $173,490 (dollar_amount) — professional fees for three months ended September 30, 2025
• $346,000 (dollar_amount) — Employee Retention Credit received

FAQ

Risk Factors

• Decreasing Gross Profit Margins [medium — financial]: Gross profit margins declined from 57% in Q3 2024 to 54% in Q3 2025 due to a significant increase in the cost of revenues, which rose from $1.96M to $2.53M. This indicates that the cost of delivering services is growing faster than revenue, potentially impacting profitability if not managed.
• Rising Operating Expenses [medium — financial]: Operating expenses increased by 21% to $2.69M in Q3 2025 from $2.22M in Q3 2024. A substantial portion of this increase is attributed to professional fees, which surged from $26K to $173.5K, primarily due to merger costs. General and administrative expenses also rose by $65K to $589K.
• Increased Debt Levels [medium — financial]: Current portion of notes payable increased from $1.06M to $1.46M, and net notes payable also rose from $528.6K to $666.7K. This indicates an increasing reliance on debt financing, which could heighten financial risk and interest expenses.
• Negative Stockholders' Deficit [low — financial]: The company continues to maintain a stockholders' deficit, which reduced from $1.37M at the end of 2024 to $868K at September 30, 2025. While the deficit is shrinking, it signifies that liabilities exceed assets.
• Dependence on ITAD and E-Waste Business [medium — operational]: The company's revenue growth is heavily reliant on its electronic waste management and IT asset disposition (ITAD) business. Any downturn or increased competition in this specific sector could materially impact overall financial performance.
• R2 Certification and Environmental Compliance [medium — regulatory]: The company operates R2-certified facilities, which implies adherence to specific environmental and data security standards. Failure to maintain these certifications or comply with evolving environmental regulations could lead to penalties or loss of business.
• Declining Cash Position [medium — financial]: Cash reserves decreased from $459K at December 31, 2024, to $399.9K at September 30, 2025. This reduction, coupled with increasing short-term liabilities, could strain liquidity.

Industry Context

First America Resources Corp. operates in the electronic waste management and IT asset disposition (ITAD) sector. This industry is driven by the increasing volume of electronic waste generated globally and the growing corporate need for secure data destruction and responsible disposal. Key trends include a focus on sustainability, circular economy principles, and compliance with evolving environmental regulations. The competitive landscape includes specialized recyclers, IT service providers, and manufacturers offering take-back programs.

Regulatory Implications

The company's R2 certification highlights the importance of adhering to environmental and data security regulations. Non-compliance or changes in these regulations could lead to significant penalties, reputational damage, and operational disruptions. The increasing focus on data privacy also necessitates robust data destruction protocols.

What Investors Should Do

1. Monitor cost of revenues and operating expenses closely.
2. Analyze the sustainability of revenue growth drivers.
3. Evaluate the impact of debt financing on future profitability.
4. Assess the company's path to profitability and positive equity.

Key Dates

• 2025-09-30: End of Q3 2025 — Reporting period for the 10-Q, showing a revenue increase but a significant net income decrease and margin compression.
• 2024-09-30: End of Q3 2024 — Prior year comparison period, showing higher net income and gross margins, but lower revenue.
• 2025-12-31: End of Fiscal Year 2024 — Balance sheet comparison date, showing a decrease in total assets and liabilities, and a reduction in stockholders' deficit.

Glossary

IT Asset Disposition (ITAD)

The process of securely and responsibly managing the lifecycle of IT assets, including data destruction, refurbishment, resale, or recycling. (This is the core business segment driving revenue growth for First America Resources Corp.)

Gross Profit Margin

The percentage of revenue that exceeds the cost of goods sold (or cost of revenues). It indicates the profitability of a company's core operations before accounting for operating expenses. (A decrease in this metric from 57% to 54% signals rising costs relative to revenue, impacting overall profitability.)

Stockholders' Deficit

A situation where a company's total liabilities exceed its total assets, resulting in a negative equity value. (First America Resources Corp. continues to operate with a stockholders' deficit, indicating a negative net worth.)

Employee Retention Credit

A refundable tax credit for businesses that continued to pay employees during the COVID-19 pandemic. (A $346,000 credit boosted 'other income' for the nine-month period, masking some of the operational profitability decline.)

R2-certified

Certification standard for electronics recyclers, ensuring responsible recycling and data security practices. (Indicates the company's commitment to environmental and data protection standards in its e-waste operations.)

Year-Over-Year Comparison

Compared to the prior year's third quarter, First America Resources Corp. saw a significant 19% increase in revenue, reaching $5.47M, driven by its core e-waste and ITAD business. However, this top-line growth was overshadowed by a 43.7% drop in net income to $213.7K, primarily due to a 30% rise in the cost of revenues and a 21% increase in operating expenses. Gross margins compressed from 57% to 54%, and professional fees saw a dramatic surge from $26K to $173.5K, indicating increased operational costs and potential merger-related expenses. The company's balance sheet shows a reduction in total assets and liabilities, but it continues to operate with a substantial stockholders' deficit.

Key Financial Figures

• $5,470,000 — ded September 30, 2025, our revenue was $5,470,000, as compared to $4,582,000, for the thr
• $4,582,000 — revenue was $5,470,000, as compared to $4,582,000, for the three months ended September 3
• $2,534,000 — ended September 30, 2025, and 2024 were $2,534,000 and $1,958,000, respectively, resulting
• $1,958,000 — 30, 2025, and 2024 were $2,534,000 and $1,958,000, respectively, resulting in gross margi
• $2,689,000 — ember 30, 2025, operating expenses were $2,689,000 as compared to $2,219,000 for the same
• $2,219,000 — expenses were $2,689,000 as compared to $2,219,000 for the same period in 2024, an increas
• $470,000 — the same period in 2024, an increase of $470,000 or 21%. General and administrative expe
• $65,000 — nd administrative expenses increased by $65,000 from $524,000 to $589,000, payroll expe
• $524,000 — tive expenses increased by $65,000 from $524,000 to $589,000, payroll expenses increased
• $589,000 — s increased by $65,000 from $524,000 to $589,000, payroll expenses increased $147,000 fr
• $147,000 — to $589,000, payroll expenses increased $147,000 from $1,217,000 to $1,364,000 and rent
• $1,217,000 — ayroll expenses increased $147,000 from $1,217,000 to $1,364,000 and rent and lease expens
• $1,364,000 — s increased $147,000 from $1,217,000 to $1,364,000 and rent and lease expenses increased b
• $72,000 — nd rent and lease expenses increased by $72,000 from $417,000 to $489,000. These increa
• $417,000 — ease expenses increased by $72,000 from $417,000 to $489,000. These increases were drive

Filing Documents

• fstj_10q.htm (10-Q) — 510KB
• fstj_ex311.htm (EX-31.1) — 12KB
• fstj_ex321.htm (EX-32.1) — 4KB
• 0001477932-25-008371.txt ( ) — 1990KB
• fstj-20250930.xsd (EX-101.SCH) — 23KB
• fstj-20250930_lab.xml (EX-101.LAB) — 131KB
• fstj-20250930_cal.xml (EX-101.CAL) — 33KB
• fstj-20250930_pre.xml (EX-101.PRE) — 99KB
• fstj-20250930_def.xml (EX-101.DEF) — 33KB
• fstj_10q_htm.xml (XML) — 171KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements 4 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 Consolidated Balance Sheets - September 30, 2025 and December 31, 2024 5 Condensed Consolidated Statements of Operations - Three and Nine Months Ended September 30, 2025 and 2024 6 Condensed Consolidated Statements of Stockholders' Deficit - Three and Nine Months Ended September 30, 2025 and 2024 7 Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2025 and 2024 8 Notes to Unaudited Financial Statements 9 4 Table of Contents FIRST AMERICA RESOURCES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2025 AND DECEMBER 31, 2024 September 30, December 31, 2025 2024 Assets Current assets Cash $ 399,894 $ 459,022 Accounts receivable, net 2,532,474 1,520,678 Accounts receivable, related party, First America Metal Corp. 220,401 466,449 Prepaid expenses 4,500 230,460 Total current assets 3,157,269 2,676,609 Long term assets Property and equipment, net 381,941 261,683 Right of use assets 1,857,481 2,733,047 Goodwill 750,000 750,000 Deposits 501,399 451,882 Total long term assets 3,490,821 4,196,612 Total assets $ 6,648,090 $ 6,873,221 Liabilities and Stockholders' Deficit Current liabilities Accounts payable $ 2,204,436 $ 1,037,551 Accounts payable, related party, First America Metal Corp. 1,166,883 2,302,980 Accrued expenses 31,045 252,940 Accrued interest 66,635 54,333 Lease liability, current portion 905,104 1,188,863 Financed insurance policy - 195,302 Notes payable, current portion 1,456,515 1,063,218 Total current liabilities 5,830,618 6,095,187 Lease liability, net of current portion 1,018,780 1,618,435 Notes payable, net of current portion 666,677 528,597 Total liabilities 7,516,075 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 September 30, 2025, and 2024. Re

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 September 30, 2025 and 2024 For the three months ended September 30, 2025, our revenue was $5,470,000, as compared to $4,582,000, for the three months ended September 30, 2024. The increase in revenue of 19% 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 September 30, 2025, and 2024 were $2,534,000 and $1,958,000, respectively, resulting in gross margins of 54% 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 September 30, 2025, operating expenses were $2,689,000 as compared to $2,219,000 for the same period in 2024, an increase of $470,000 or 21%. General and administrative expenses increased by $65,000 from $524,000 to $589,000, payroll expenses increased $147,000 from $1,217,000 to $1,364,000 and rent and lease expenses increased by $72,000 from $417,000 to $489,000. These increases were driven by the expansion in operations and are consistent with the increase in revenues. Professional fees increased from $26,000 during the three months ended September 30, 2024, to $173,000 for the thr

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

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