MGSD's Revenue Soars 124% YOY, But Net Income Plummets to $9

TL;DR

**MGSD's revenue growth is a mirage; the company is burning cash and barely profitable, making it a risky bet.**

AI Summary

Maitong Sunshine Cultural Development Co., Limited (MGSD) reported a significant increase in revenue for the nine months ended June 30, 2025, reaching $1,176,532, up from $525,872 in the prior year, a 123.7% increase. However, the company experienced a net loss of $41,718 for the three months ended June 30, 2025, a sharp decline from a net income of $93,679 in the same period of 2024. For the nine-month period, net income was a mere $9, down from $16,277. Cash and cash equivalents plummeted from $698,307 as of September 30, 2024, to $249,692 as of June 30, 2025, primarily due to $508,348 net cash used in operating activities. Total assets decreased from $752,334 to $441,862, while total liabilities decreased from $760,083 to $377,125. The company issued 500,000 shares of common stock, increasing common stock by $500 and additional paid-in capital by $74,500. A significant risk highlighted is the reliance on a single major supplier, Supplier A, which accounted for 70% of the total cost of revenue for the nine months ended June 30, 2025.

Why It Matters

MGSD's substantial revenue growth for the nine-month period, coupled with a near-zero net income and significant cash burn, signals a critical challenge in profitability and cash management for investors. The company's shift from having major customers in 2024 to a diversified customer base in 2025, while positive for customer concentration risk, is overshadowed by its heavy reliance on a single supplier, Supplier A, for 70% of its cost of revenue. This supplier concentration could expose MGSD to significant operational risks and competitive disadvantages if supply chain disruptions occur or if Supplier A changes terms, impacting the company's ability to compete in the cultural tourism and creative products market.

Risk Assessment

Risk Level: high — The company reported a net loss of $41,718 for the three months ended June 30, 2025, and a net income of only $9 for the nine months ended June 30, 2025, indicating severe profitability issues despite revenue growth. Furthermore, cash and cash equivalents decreased by $448,615, from $698,307 to $249,692, driven by $508,348 in net cash used in operating activities, highlighting significant liquidity concerns.

Analyst Insight

Investors should exercise extreme caution and consider divesting or avoiding MGSD shares given the company's inability to translate significant revenue growth into profit and its substantial cash burn from operations. The high reliance on a single supplier also presents an unmitigated supply chain risk.

Financial Highlights

debt To Equity

N/A

revenue

$1,176,532

operating Margin

N/A

total Assets

$441,862

total Debt

$0

net Income

$9

eps

$0.0000

gross Margin

37.5%

cash Position

$249,692

revenue Growth

+123.7%

Revenue Breakdown

Key Numbers

• $1,176,532 — Revenue for nine months ended June 30, 2025 (Increased 123.7% from $525,872 in 2024)
• $9 — Net income for nine months ended June 30, 2025 (Decreased from $16,277 in 2024)
• $(41,718) — Net loss for three months ended June 30, 2025 (Compared to $93,679 net income in 2024)
• $249,692 — Cash and cash equivalents as of June 30, 2025 (Decreased from $698,307 as of September 30, 2024)
• $(508,348) — Net cash used in operating activities for nine months ended June 30, 2025 (Significant cash burn)
• 70% — Percentage of total cost of revenue from Supplier A (High supplier concentration for nine months ended June 30, 2025)
• 60,500,000 — Shares of common stock outstanding as of June 30, 2025 (Increased from 60,000,000 shares)
• $74,500 — Additional paid-in capital from shares issued (Result of issuing 500,000 shares)

Key Players & Entities

• Maitong Sunshine Cultural Development Co., Limited (company) — registrant
• Ms. Huang Fang (person) — controller of subsidiaries
• Beijing Tongzhilian Cultural Development Co., Limited (company) — operating subsidiary
• Supplier A (company) — major supplier
• SEC (regulator) — filing oversight
• Nevada (regulator) — state of incorporation
• China (regulator) — primary market

FAQ

Risk Factors

• Supplier Concentration [high — operational]: The company is heavily reliant on a single major supplier, Supplier A, which accounted for 70% of the total cost of revenue for the nine months ended June 30, 2025. This concentration poses a significant risk to the company's operations and cost structure.
• Cash Burn and Declining Cash Position [high — financial]: Net cash used in operating activities was $508,348 for the nine months ended June 30, 2025, leading to a substantial decrease in cash and cash equivalents from $698,307 to $249,692. This rapid depletion of cash is a critical concern.
• Deteriorating Profitability [high — financial]: Despite a significant revenue increase, the company reported a net loss of $41,718 for the three months ended June 30, 2025, a sharp contrast to the $93,679 net income in the prior year. For the nine-month period, net income was a mere $9, down from $16,277.
• Decreasing Asset Base [medium — financial]: Total assets have decreased from $752,334 as of September 30, 2024, to $441,862 as of June 30, 2025. This reduction in assets, coupled with the cash burn, indicates a shrinking operational scale or asset liquidation.
• Dependence on Key Personnel/Control [medium — operational]: The company's structure indicates that all subsidiaries have been under the control of Ms. Huang Fang. While this ensures consistent direction, any disruption related to this control could impact operations.
• Reliance on Related Party Transactions [medium — financial]: The company has significant amounts due to related parties ($181,410 as of June 30, 2025). While common in reorganizations, these balances require careful monitoring for potential conflicts of interest or financial strain.

Industry Context

Maitong Sunshine operates in the cultural tourism sector, which includes education tours, family tours, and the sale of cultural products. The company also plans to market arts expositions. This sector is often characterized by fluctuating demand, seasonality, and the need for strong marketing and partnerships to attract visitors and customers.

Regulatory Implications

As a company incorporated in Nevada and operating subsidiaries in China and Hong Kong, MGSD is subject to the regulatory frameworks of these jurisdictions. Compliance with financial reporting standards (U.S. GAAP) and any specific regulations related to cultural tourism and e-commerce in China is crucial.

What Investors Should Do

1. Investigate supplier diversification strategy.
2. Analyze the drivers of the Q2 net loss and nine-month profitability decline.
3. Scrutinize cash flow management and burn rate.
4. Evaluate the impact of the share issuance.

Key Dates

• 2025-06-30: End of Nine-Month Reporting Period — Key financial results for the period, including significant revenue growth but also a net loss for the quarter and a substantial cash burn, were reported.
• 2025-06-30: Issuance of Common Stock — 500,000 shares were issued, increasing common stock and additional paid-in capital, potentially to raise funds or for strategic purposes.
• 2024-09-30: Prior Year End Reporting Date — Provides a baseline for comparison, showing significantly higher cash reserves and total assets compared to the current period.
• 2023-10-26: Company Incorporation — Marks the official establishment of Maitong Sunshine Cultural Development Co., Limited.

Glossary

Additional paid-in capital

The amount of money that shareholders have paid for stock above its par or stated value. (Increased by $74,500 due to the issuance of 500,000 shares, indicating capital infusion from new or existing shareholders.)

Accumulated deficit

The cumulative net losses of a company that have not been offset by net income. (The company has an accumulated deficit of $71,303 as of June 30, 2025, indicating historical unprofitability.)

Cost of revenue

The direct costs attributable to the production or purchase of the goods sold by a company. (Increased significantly to $735,678 for the nine months ended June 30, 2025, with 70% attributed to a single supplier.)

Right-of-use assets

Assets that represent a lessee's right to use an underlying asset for the lease term. (The company has $15,033 in right-of-use assets as of June 30, 2025, related to operating leases.)

Share Exchange

A transaction where one company's shareholders receive shares of another company in exchange for their existing shares. (This was the mechanism by which MGSD acquired 100% of MGSD Samoa, forming the current corporate structure.)

Year-Over-Year Comparison

Compared to the prior year, Maitong Sunshine has experienced a dramatic increase in revenue, growing by 123.7% for the nine months ended June 30, 2025. However, this top-line growth has not translated into profitability; net income has plummeted from $16,277 to a mere $9 for the nine-month period, and the company swung to a net loss of $41,718 in the latest quarter. Key risks have emerged, notably the extreme concentration with a single supplier, and the company's cash position has significantly deteriorated due to high operating expenses.

Key Financial Figures

• $0.001 — of the issuer's common stock, par value $0.001 per share. * * * * * TABLE OF CONTENT

Filing Documents

• ea0253848-10q_maitong.htm (10-Q) — 553KB
• ea025384801ex31-1_maitong.htm (EX-31.1) — 9KB
• ea025384801ex31-2_maitong.htm (EX-31.2) — 10KB
• ea025384801ex32-1_maitong.htm (EX-32.1) — 4KB
• ea025384801ex32-2_maitong.htm (EX-32.2) — 3KB
• 0001213900-25-078735.txt ( ) — 3909KB
• mgsd-20250630.xsd (EX-101.SCH) — 42KB
• mgsd-20250630_cal.xml (EX-101.CAL) — 38KB
• mgsd-20250630_def.xml (EX-101.DEF) — 171KB
• mgsd-20250630_lab.xml (EX-101.LAB) — 301KB
• mgsd-20250630_pre.xml (EX-101.PRE) — 188KB
• ea0253848-10q_maitong_htm.xml (XML) — 465KB

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION Item 1

Financial Statements

Financial Statements 1 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 2 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 6 Item 4.

Controls and Procedures

Controls and Procedures 6

—OTHER INFORMATION

PART II—OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 7 Item 1A.

Risk Factors

Risk Factors 7 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 7 Item 3. Defaults Upon Senior Securities 7 Item 4. Mine Safety Disclosure 7 Item 5. Other Information 7 Item 6. Exhibits 8 i PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES Page Consolidated Balance Sheets as of June 30, 2025 (Unaudited) and September 30, 2024 F-1 Consolidated Statements of Operations and Comprehensive Income for the Three and Nine Months Ended June 30, 2025 and 2024 (Unaudited) F-2 Consolidated Statements of Changes in Shareholders' Deficit for the Nine Months Ended June 30, 2025 and 2024 (Unaudited) F-3 Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2025 and 2024 (Unaudited) F-4

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) F-5 – F-16 1 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (EXPRESSED IN US DOLLARS) As of As of June 30, September 30, 2025 2024 (Unaudited) Assets Current Assets: Cash and cash equivalents $ 249,692 $ 698,307 Prepayments 172,064 44,352 Other receivables 2,952 713 Inventories 263 - Total current assets 424,971 743,372 Property and equipment, net 1,858 2,803 Right-of-use assets 15,033 6,159 Total assets $ 441,862 $ 752,334 Liabilities and Stockholders' Equity (Deficit) Current Liabilities: Accounts payable $ - $ 8,991 Advance from customers 155,452 461,946 Accrued expenses 21,082 77,696 Due to related parties 181,410 200,481 Other payables 4,148 3,086 Income tax payable - 1,724 Operating lease liabilities, current 15,033 6,159 Total current liabilities 377,125 760,083 Total liabilities 377,125 760,083 Equity (Deficit): Preferred stock; $ 0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding at June 30, 2025 and September 30, 2024 - - Common stock; $ 0.001 par value, 150,000,000 shares authorized; 60,500,000 and 60,000,000 shares issued and outstanding at June 30, 2025 and September 30, 2024, respectively 60,500 60,000 Additional paid-in capital 74,500 - Retained Earnings (Accumulated deficit) ( 71,303 ) ( 71,312 ) Accumulated other comprehensive income (loss) 1,040 3,563 Total stockholders' equity (deficit) 64,737 ( 7,749 ) Total liabilities and equity (deficit) $ 441,862 $ 752,334 The accompanying notes are an integral part of these consolidated financial statements. F-1 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (INCOME) (UNAUDITED) (EXPRESSED IN US DOLLARS) For the Three Months Ended For the Nine Months Ended June 30, June

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED JUNE 30, 2025 AND 2024 (UNAUDITED) (AMOUNTS IN US DOLLARS) NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION Maitong Sunshine Cultural Development Co., Limited ("MGSD", together as a group with its subsidiaries referred to as "Maitong Sunshine", "Company", "us" or "we") was incorporated in the State of Nevada on October 26, 2023. MGSD through its operating subsidiary Tongzhilian, which has headquarters in Beijing, China, has provided cultural tourism (including Education Tours and Family Tours) and the sale of gift products, Chinese cultural and creative products, as well as a hotel reservation service. MGSD plans to market arts expositions in the future. The Company currently has 12 full-time employees. MGSD's subsidiaries includes: Maitong Sunshine Cultural Development Co., Limited (Samoa) ("MGSD Samoa"), initially named Oriental Culture Development Co., Limited, was established on September 7, 2023 under the laws of Samoa. On November 27, 2023, MGSD issued 60,000,000 shares of its common stock to the original shareholders of MGSD Samoa, in exchange for 100 % of the outstanding shares of MGSD Samoa (the "Share Exchange"). Maitong Sunshine Cultural Development Co., Limited (Hong Kong) ("MGSD HK"), initially named Oriental Culture Development Co., Limited, was established on September 13, 2023 under the laws of Hong Kong. MGSD Samoa holds a 100 % interest in MGSD HK. Beijing Tongzhilian Cultural Development Co., Limited ("Tongzhilian") is a privately held Limited Company that was approved on September 13, 2023 and registered on October 11, 2023 in Beijing, China. MGSD HK holds a 100 % interest in Tongzhilian. The transactions summarized above are treated in our financial statements as a corporate restructuring (reorganization) of entities under common control, as each of the four entities has at all times been under the control of Ms. Huang Fang. Therefore, in accordance with ASC 805

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED JUNE 30, 2025 AND 2024 (UNAUDITED) (AMOUNTS IN US DOLLARS) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Basis of presentation The accompanying consolidated financial statements are expressed in U.S. Dollars and have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). B. Principles of consolidation The consolidated financial statements include the accounts of MGSD and its subsidiaries. All significant inter-company accounts and transactions have been eliminated. The consolidated financial statements include 100 % of assets, liabilities, and net income or loss of these subsidiaries. MGSD's subsidiaries as of June 30, 2025 are listed as follows: Name Place of Incorporation Attributable equity interest % Authorized capital Maitong Sunshine Cultural Development Co., Limited Samoa 100 USD 1,000,000 Maitong Sunshine Cultural Development Co., Limited Hong Kong 100 HKD 10,000 Beijing Tongzhilian Cultural Development Co., Ltd China 100 RMB 1,000,000 C. Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. Actual results could differ from these estimates. D. Functional currency and foreign currency translation An entity's functional currency is the currency of the primary economic environment in which it operates. Normally that is the currency of the environment in which the entity primarily generates and expends cash. Management's judgment is essential

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED JUNE 30, 2025 AND 2024 (UNAUDITED) (AMOUNTS IN US DOLLARS) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Foreign currency exchange gains and losses resulting from these transactions are included in operations. The exchange rates used for foreign currency translation are as follows: For the Three Months Ended June 30, For the Nine Months Ended June 30, 2025 2024 2025 2024 (USD to RMB/ USD to HKD) (USD to RMB/ USD to HKD) (USD to RMB/ USD to HKD) (USD to RMB/ USD to HKD) Assets and liabilities period end exchange rate 7.1586 / 7.8498 7.2675 / 7.8081 7.1586 / 7.8498 7.2675 / 7.8081 Revenue and expenses period weighted average 7.1828 / 7.7849 7.2407 / 7.8175 7.2725 / 7.7801 7.2020 / 7.8172 E. Concentration of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk are due from related parties and other receivables arising from its normal business activities. The carrying amounts of these financial instruments represent the maximum amount of loss due to credit risk. The deposits placed with financial institutions are not protected by statutory or commercial insurance. In the event of bankruptcy of one of these financial institutions, the Company may be unlikely to reclaim its deposits in full. Management believes that these financial institutions are of high credit quality and continually monitors the credit worthiness of these financial institutions. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base. The majority of sales are cash receipt in advance. For those credit sales, the Company routinely assesses the financial strength of its customers and, based upo

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED JUNE 30, 2025 AND 2024 (UNAUDITED) (AMOUNTS IN US DOLLARS) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) For the nine months ended June 30, 2025 and 2024, the Company had 1 major supplier in each year that accounted for over 10% of its total cost of revenue. For the Nine Months Ended June 30, 2025 For the Nine Months Ended June 30, 2024 Cost of Revenue Percentage of Cost of revenue Cost of Revenue Percentage of Cost of revenue Supplier A $ 545,186 70 % $ 160,564 64 % Supplier B - - 73,335 29 % For the three months ended June 30, 2025 and 2024, the Company had 2 and 1 major supplier in each year that accounted for over 10% of its total cost of revenue. For the Three Months Ended June 30, 2025 For the Three Months Ended June 30, 2024 Cost of Revenue Percentage of Cost of revenue Cost of Revenue Percentage of Cost of revenue Supplier A $ - - $ Supplier B 24,985 53 % 73,335 81 % Supplier C 6,014 13 % - - F. Fair value measurements The Company applies the provisions of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Section 820, Fair Value Measurements ("ASC 820"), for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements. Fair value is defined as the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining the fair value for the assets and liabilities required or permitted to be recorded, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that marke

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED JUNE 30, 2025 AND 2024 (UNAUDITED) (AMOUNTS IN US DOLLARS) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Financial assets and liabilities of the Company are primarily comprised of cash, receivable from payment collection service institution, prepayments, other receivables, accounts payable, advance from customers, accrued expenses, other payables, income tax payable and due to related parties. As of June 30, 2025 and 2024, the carrying values of these financial instruments approximated their fair values due to the short-term maturity of these instruments. G. Segment information and geographic data The Company is operating in one segment in accordance with the accounting guidance in FASB ASC Topic 280, Segment Reporting . The company's revenues are from customers in People's Republic of China ("PRC"). Most assets of the Company are located in the PRC. H. Revenue recognition The Company adopted FASB ASC Section 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the sales of products and services by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue as each performance obligation is satisfied. The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that economic benefits will flow to the entity, and specific criteria have been met for each of the Company's activities as described below. Service Revenue The Company provides cultural tourism services, small-scale training services and hotel reservation services. The Company's policy is to recognize revenue at that time the services have been performed. Cost of service revenue consists primarily of the purchase cost, s

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED JUNE 30, 2025 AND 2024 (UNAUDITED) (AMOUNTS IN US DOLLARS) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability may be materially different from our estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities or the deferred tax asset valuation allowance. As a result of the implementation of ASC 740-10, the Company made a comprehensive review of its portfolio of tax positions in accordance with recognition standards established by ASC 740-10. The Company recognized no material adjustments to liabilities or shareholder's equity as a result of the implementation. J. Earnings (loss) per share The Company computes earnings (loss) per share ("EPS") in accordance with ASC 260, Earnings Per Share . ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding during the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of contracts to issue ordinary common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. The computation of diluted EPS includes the estimated impact of the exercise of contracts to purchase common stock using the treasury stock method and the potential shares of converted common stock associated with the convertible debt using the if-converted method. Potential common shares that have an anti-diluti

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