QDMI Revenue Soars 286% YOY, But Q3 Net Income Plunges to Loss

TL;DR

**QDMI's revenue growth is impressive, but the massive jump in cost of sales and the resulting quarterly loss are red flags that demand immediate scrutiny.**

AI Summary

QDM International Inc. (QDMI) reported a significant increase in revenue for the six months ended September 30, 2025, reaching $7,565,671, a 286% increase from $1,958,182 in the same period of 2024. Despite this, the company experienced a net loss of $1,113,358 for the three months ended September 30, 2025, a sharp decline from a net income of $488,706 in the prior year's comparable quarter. This quarterly loss was primarily driven by a negative gross profit of $(976,303) for the three months ended September 30, 2025, compared to a positive gross profit of $884,278 in the same period of 2024, largely due to a substantial increase in cost of sales to $4,946,977 from $109,639. However, for the six-month period, net income was $1,082,947, up from $948,086 in 2024. Cash and cash equivalents surged to $12,519,196 as of September 30, 2025, from $8,557,305 at March 31, 2025, primarily from operating activities. Key business changes include a 1-for-34 reverse stock split effective September 19, 2025, and the conversion of 531,886 shares of Series C preferred stock by CEO Huihe Zheng into 58,507 common shares. Risks include political uncertainty in Hong Kong and Mainland China, and the ability to attract and retain qualified personnel.

Why It Matters

QDMI's substantial revenue growth for the six-month period, coupled with a significant quarterly net loss, presents a mixed signal for investors. The dramatic increase in cost of sales suggests potential operational inefficiencies or a shift in business model that is impacting profitability, which could erode investor confidence. For employees, the company's expansion in Hong Kong's insurance sector could mean growth opportunities, but the volatile financial performance might raise concerns about stability. Customers of YeeTah Insurance Broker Limited could benefit from an expanding service provider, but the underlying financial health needs close monitoring. Competitively, QDMI operates in the Hong Kong insurance market, and its ability to manage costs while scaling revenue will be crucial to challenging established players and maintaining market share.

Risk Assessment

Risk Level: high — The risk level is high due to the significant net loss of $1,113,358 for the three months ended September 30, 2025, a stark reversal from a $488,706 net income in the prior year. This loss is primarily driven by a massive increase in cost of sales to $4,946,977 from $109,639, leading to a negative gross profit of $(976,303). Additionally, the company cites political uncertainty and social unrest in Hong Kong and Mainland China as key risks, which could impact its operations through its subsidiary YeeTah Insurance Broker Limited.

Analyst Insight

Investors should exercise extreme caution and conduct thorough due diligence on QDMI. The substantial increase in cost of sales warrants a deep dive into the company's operational structure and business model to understand if this is a sustainable trend or a one-off event. Consider waiting for more consistent profitability before making any investment decisions.

Financial Highlights

revenue

$7,565,671

total Assets

$13,782,943

total Debt

$3,858,698

net Income

$1,082,947

eps

$0.13

gross Margin

26.18%

cash Position

$12,519,196

revenue Growth

+286%

Revenue Breakdown

Key Numbers

• $7.57M — Revenue (Increased 286% for the six months ended September 30, 2025, from $1.96M in 2024.)
• $(1.11M) — Net Loss (For the three months ended September 30, 2025, compared to $0.49M net income in 2024.)
• $4.95M — Cost of Sales (Increased significantly for the three months ended September 30, 2025, from $0.11M in 2024.)
• $12.52M — Cash and Cash Equivalents (Increased from $8.56M at March 31, 2025, to September 30, 2025.)
• 1-for-34 — Reverse Stock Split Ratio (Effective September 19, 2025, reducing common shares outstanding.)
• 531,886 — Preferred Shares Converted (Series C preferred stock converted by CEO Huihe Zheng into common stock.)
• 8,636,090 — Common Shares Outstanding (As of September 30, 2025, after the reverse stock split and conversion.)
• $1.08M — Six-Month Net Income (Increased from $0.95M for the six months ended September 30, 2024.)

Key Players & Entities

• QDM International Inc. (company) — registrant of the 10-Q filing
• QDMI (company) — ticker symbol for QDM International Inc.
• Huihe Zheng (person) — CEO, President, and Chairman of QDM International Inc.
• YeeTah Insurance Broker Limited (company) — indirectly wholly owned subsidiary of QDM International Inc. operating in Hong Kong
• SEC (regulator) — Securities and Exchange Commission
• FINRA (regulator) — Financial Industry Regulatory Authority
• $7,565,671 (dollar_amount) — revenue for the six months ended September 30, 2025
• $1,113,358 (dollar_amount) — net loss for the three months ended September 30, 2025
• $4,946,977 (dollar_amount) — cost of sales for the three months ended September 30, 2025
• 8,634,193 (dollar_amount) — shares of common stock outstanding as of November 14, 2025

FAQ

Risk Factors

• Political Uncertainty in Hong Kong and Mainland China [medium — market]: The Company's primary business operations are conducted through its subsidiary in Hong Kong, which is subject to the political and economic conditions of Hong Kong and Mainland China. Significant political or economic instability in these regions could adversely affect the Company's operations, financial condition, and prospects.
• Attracting and Retaining Qualified Personnel [medium — operational]: The Company's success depends on its ability to attract and retain qualified personnel, particularly in specialized roles within the insurance brokerage industry. Failure to do so could impede the Company's growth and operational capabilities.

Industry Context

QDM International Inc. operates as an insurance brokerage company in Hong Kong, offering a range of life, medical, and general insurance products, as well as retirement scheme services. The insurance brokerage sector is competitive and subject to regulatory oversight, with success often depending on strong client relationships, product offerings, and operational efficiency.

Regulatory Implications

As an insurance brokerage operating in Hong Kong, QDMI is subject to regulations governing financial services and insurance providers. Compliance with these regulations is crucial, and any changes or stricter enforcement could impact operations. The company also operates within the broader regulatory environment of its incorporation jurisdiction (Florida).

What Investors Should Do

1. Monitor Cost of Sales Trends
2. Analyze the Impact of the Reverse Stock Split
3. Evaluate the Sustainability of Six-Month Net Income
4. Assess Cash Flow Generation from Operations

Key Dates

• 2025-09-19: Reverse Stock Split — A 1-for-34 reverse stock split was effective, reducing the number of outstanding common shares and potentially impacting per-share metrics.
• 2025-09-30: End of Second Quarter — Reporting period for the 10-Q, showing significant revenue growth but a quarterly net loss, alongside a strong cash position.
• 2024-04-05: Forward Stock Split — A 10-for-1 forward stock split was effective, which has been retrospectively applied to prior period share counts and EPS.

Glossary

Reverse Stock Split

A corporate action where a company reduces the total number of its outstanding shares by consolidating existing shares into fewer, proportionally more valuable shares. (QDMI executed a 1-for-34 reverse stock split on September 19, 2025, significantly reducing its common shares outstanding.)

Series C preferred stock

A class of preferred stock with specific rights and privileges, which in this case, was convertible into common stock. (The CEO converted 531,886 shares of Series C preferred stock into common shares, impacting the capital structure.)

Gross Profit (Loss)

Revenue minus the cost of goods sold. A negative gross profit indicates that the cost of sales exceeded revenue. (QDMI reported a significant negative gross profit of $(976,303) for the three months ended September 30, 2025, a key driver of the quarterly net loss.)

Mandatory Provident Fund (MPF)

A compulsory, privately managed, defined contribution retirement savings scheme in Hong Kong. (QDMI's subsidiary, YeeTah, is licensed to provide assistance with MPF account opening and related services.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, QDM International Inc. has experienced a remarkable 286% increase in revenue for the six months ended September 30, 2025. However, this top-line growth has been overshadowed by a significant deterioration in profitability at the quarterly level, with a net loss of $1.11 million compared to a net income of $488,706 in the same quarter last year. This shift is primarily due to a massive surge in the cost of sales, which turned a healthy gross profit into a substantial gross loss. While the six-month net income saw a modest increase, the quarterly performance is a key concern. The company's cash position has strengthened considerably, and a reverse stock split was executed.

Key Financial Figures

• $0.0001 — (g) of the Act: Common Stock, par value $0.0001 Indicate by check mark whether the re

Filing Documents

• ea0265264-10q_qdm.htm (10-Q) — 481KB
• ea026526401ex31-1_qdm.htm (EX-31.1) — 11KB
• ea026526401ex31-2_qdm.htm (EX-31.2) — 12KB
• ea026526401ex32-1_qdm.htm (EX-32.1) — 4KB
• ea026526401ex32-2_qdm.htm (EX-32.2) — 4KB
• 0001213900-25-110954.txt ( ) — 3154KB
• qdmi-20250930.xsd (EX-101.SCH) — 22KB
• qdmi-20250930_cal.xml (EX-101.CAL) — 23KB
• qdmi-20250930_def.xml (EX-101.DEF) — 137KB
• qdmi-20250930_lab.xml (EX-101.LAB) — 230KB
• qdmi-20250930_pre.xml (EX-101.PRE) — 146KB
• ea0265264-10q_qdm_htm.xml (XML) — 236KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION 1 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 14 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 20 Item 4.

Controls and Procedures

Controls and Procedures 20

– OTHER INFORMATION

PART II – OTHER INFORMATION 21 Item 1.

Legal Proceedings

Legal Proceedings 21 Item 1A.

Risk Factors

Risk Factors 21 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22 Item 3. Defaults Upon Senior Securities 22 Item 4. Mine Safety Disclosures 22 Item 5. Other Information 22 Item 6. Exhibits 23

SIGNATURES

SIGNATURES 24 i CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q (this "Report"), including, without limitation, statements under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations," includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements can be identified by the use of forward-looking terminology, including the words "believes," "estimates," "anticipates," "expects," "intends," "plans," "may," "will," "potential," "projects," "predicts," "continue," or "should," or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. These statements are based on management's current expectations, but actual results may differ materially due to various factors, including, but not limited to: the impact of political uncertainty and social unrest in Hong Kong and laws, rules and regulations of the Chinese government aimed at addressing such unrest; the market for our services in Hong Kong and Mainland China; our expansion and other plans and opportunities; our future financial and operating results, including revenues, income, expenditures, cash balances and other financial items; current and future economic and political conditions in Hong Kong and Mainland China; the future growth of the Hong Kong insurance industry as a whole and the professional insurance intermediary sector in particular; our ability to attract customers, further enhance our brand recognition; our ability to hire and retain qualified management personnel and key employees in order to enable them to develop our business; changes in applicable laws or regulations in Hong Kong related to or that

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements QDM INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30 AND MARCH 31, 2025 September 30, 2025 March 31, 2025 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 12,519,196 $ 8,557,305 Accounts receivable 718,979 1,702,217 Prepaid expenses and deposits 73,503 144,768 Due from related parties 256,410 — Deferred offering cost 40,000 — Total current assets 13,608,088 10,404,290 Right of use assets – operating lease 130,710 185,662 Long-term prepaid expenses and deposits 26,733 86,316 Property and equipment, net 17,412 33,030 Total assets $ 13,782,943 $ 10,709,298 LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities: Accounts payable & accrued liabilities $ 2,080,383 $ 286,074 Operating lease liabilities - current 82,155 115,125 Income tax payable 1,647,992 1,395,418 Total current liabilities 3,810,530 1,796,617 Operating lease liabilities – non current 48,168 71,383 Total liabilities 3,858,698 1,868,000 Shareholders' equity: Preferred stock, $ 0.0001 par value, 30,000,000 shares authorized, 6,013,500 and 6,545,386 issued and outstanding as of September 30, 2025 and March 31, 2025, respectively 601 654 Common stock, $ 0.0001 par value, 700,000,000 shares authorized, 8,636,090 and 8,577,583 shares issued and outstanding as of September 30, 2025 and March 31, 2025, respectively 3,572 3,519 Treasury stock, 139 and 139 shares at cost ( 60,395 ) ( 60,395 ) Additional paid-in capital 12,500,631 12,500,631 Accumulated deficit ( 2,520,164 ) ( 3,603,111 ) Total shareholders' equity 9,924,245 8,841,298 Total liabilities and shareholders' equity $ 13,782,943 $ 10,709,298 Retrospectively applied for effect of the forward stock split on April 5, 2024 and the 2025 Reverse Stock Split on September 19, 2025. See accompanying notes to condensed consolidated

financial statements

financial statements. 1 QDM INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 For the Three Months Ended For the Six Months Ended September 30, September 30, 2025 2024 2025 2024 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue $ 3,970,674 $ 993,917 $ 7,565,671 $ 1,958,182 Cost of sales 4,946,977 109,639 5,585,155 288,271 Gross profit (loss) ( 976,303 ) 884,278 1,980,516 1,669,911 Operating expenses General & administrative expenses $ 349,519 $ 273,762 $ 716,713 $ 522,541 Total operating expenses 349,519 273,762 716,713 522,541 (Loss) income from operations ( 1,325,822 ) 610,516 1,263,803 1,147,370 Other income (expenses) Interest expenses ( 2,075 ) ( 2,304 ) ( 3,793 ) ( 3,281 ) Other income 23,105 23 75,511 9,807 Total other income (expenses) 21,030 ( 2,281 ) 71,718 6,526 (Loss) income before income taxes ( 1,304,792 ) 608,235 1,335,521 1,153,896 Current income tax (recovery) expenses ( 191,434 ) 119,529 252,574 205,810 Net (loss) income $ ( 1,113,358 ) $ 488,706 $ 1,082,947 $ 948,086 Total comprehensive (loss) income $ ( 1,113,358 ) $ 488,706 $ 1,082,947 $ 948,086 (Loss) earnings per share of common stock: Basic (loss) earnings per share $ ( 0.13 ) $ 0.06 $ 0.13 $ 0.11 Diluted (loss) earnings per share $ ( 0.13 ) $ 0.06 $ 0.13 $ 0.11 Weighted average basic & diluted shares outstanding: Preferred 6,493,913 545,386 6,519,228 545,386 Common 8,583,245 8,577,583 8,580,460 8,577,583 Retrospectively applied for effect of the forward stock split on April 5, 2024 and the 2025 Reverse Stock Split on September 19, 2025. See accompanying notes to condensed consolidated

financial statements

financial statements. 2 QDM INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 For the three months ended Preferred Stock Common Stock Treasury Stock Preferred Stock Amount Common Stock Amount Treasury Amount Additional Paid-in Capital Accumulated Deficit Total June 30, 2024 (Unaudited) 545,386 8,577,583 ( 139 ) $ 54 $ 3,519 ( 60,395 ) $ 11,901,231 $ ( 7,967,069 ) $ 3,877,340 Net income — — — — — — — 488,706 488,706 September 30, 2024 (Unaudited) 545,386 8,577,583 ( 139 ) $ 54 $ 3,519 ( 60,395 ) $ 11,901,231 $ ( 7,478,363 ) $ 4,366,046 June 30, 2025 (Unaudited) 6,545,386 8,577,583 ( 139 ) $ 654 $ 3,519 ( 60,395 ) $ 12,500,631 $ ( 1,406,806 ) $ 11,037,603 Net loss — — — — — — — ( 1,113,358 ) ( 1,113,358 ) Conversion of Preferred Stock into Common Stock ( 531,886 ) 58,507 — ( 53 ) 53 — — — — September 30, 2025 (Unaudited) 6,013,500 8,636,090 ( 139 ) $ 601 $ 3,572 ( 60,395 ) $ 12,500,631 $ ( 2,520,164 ) $ 9,924,245 For the six months ended Preferred Stock Common Stock Treasury Stock Preferred Stock Amount Common Stock Amount Treasury Amount Additional Paid-in Capital Accumulated Deficit Total March 31, 2024 545,386 8,577,583 ( 139 ) $ 54 $ 3,519 ( 60,395 ) $ 11,901,231 $ ( 8,426,449 ) $ 3,417,960 Net income — — — — — — — 948,086 948,086 September 30, 2024 (Unaudited) 545,386 8,577,583 ( 139 ) $ 54 $ 3,519 ( 60,395 ) $ 11,901,231 $ ( 7,478,363 ) $ 4,366,046 March 31, 2025 6,545,386 8,577,583 ( 139 ) $ 654 $ 3,519 ( 60,395 ) $ 12,500,631 $ ( 3,603,111 ) $ 8,841,298 Net income — — — — — — — 1,082,947 1,082,947 Conversion of Preferred Stock into Common Stock ( 531,886 ) 58,507 — ( 53 ) 53 — — — — September 30, 2025 (Unaudited) 6,013,500 8,636,090 ( 139 ) $ 601 $ 3,572 ( 60,395 ) $ 12,500,631 $ ( 2,5

financial statements

financial statements. 3 QDM INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 September 30, 2025 September 30, 2024 (Unaudited) (Unaudited) Cash flows from operating activities: Net income $ 1,082,947 $ 948,086 Adjustments to reconcile net income to net cash used in operating activities: Depreciation 15,618 21,294 Non-cash lease expenses 54,952 55,845 Changes in working capital: Accounts receivable 983,238 ( 43,704 ) Prepaid expenses 71,265 ( 128,265 ) Long-term prepaid expenses 59,583 — Accounts payable & accrued liabilities 1,794,309 58,012 Income tax payable 252,574 205,810 Operating lease liabilities ( 56,185 ) ( 67,988 ) Net cash provided by operating activities 4,258,301 1,049,090 Cash flows from investing activities: Net cash used in investing activities — — Cash flows from financing activities: Advances to related parties ( 256,410 ) — Proceeds borrowed from related parties — 129,056 Payment for offering cost ( 40,000 ) ( 37,500 ) Net cash (used in) provided by financing activities ( 296,410 ) 91,556 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS — — NET INCREASE IN CASH AND CASH EQUIVALENTS 3,961,891 1,140,646 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 8,557,305 $ 5,158,223 CASH AND CASH EQUIVALENTS, END OF PERIOD 12,519,196 6,298,869 SUPPLEMENTAL DISCLOSURES: Cash paid for interest $ — $ — Cash paid for income taxes $ — $ — See accompanying notes to condensed consolidated

financial statements

financial statements. 4 QDM International Inc. Notes to Condensed Consolidated Financial Statements September 30, 2025 and 2024 1. Organization and principal activities QDM International Inc. ("QDM," and collectively with its subsidiaries, the "Company") was incorporated in Florida in March 2020 and is the successor to 24/7 Kid Doc, Inc. ("24/7 Kid"), which was incorporated in Florida in November 1998. The Company conducts its business through an indirectly wholly owned subsidiary, Hong Kong YeeTah Insurance Broker Limited (formerly known as YeeTah Insurance Consultant Limited, "YeeTah"), a licensed insurance brokerage company located in Hong Kong, China. YeeTah sells a wide range of insurance products, consisting of two major categories: (1) life and medical insurance, such as individual life insurance; and (2) general insurance, such as automobile insurance, commercial property insurance, liability insurance, homeowner insurance. In addition, as a Mandatory Provident Fund ("MPF") Intermediary, YeeTah is also licensed to provide its customers with assistance on account opening and related services under the MPF and the Occupational Retirement Schemes Ordinance schemes ("ORSO") in Hong Kong, both of which are retirement protection schemes set up for employees. In 2022, 24/7 Kid was administratively dissolved with the State of Florida. In March 2023, the Company consummated a public offering of its common stock, par value $ 0.0001 per share (the "2023 Offering"), in which the Company issued and sold an aggregate of 289,104,000 shares of its common stock at a price of $ 0.0081 per share to certain investors, generating gross proceeds to the Company of $ 2,339,937 . On March 28, 2024, the Company filed an Articles of Amendment to Articles of Incorporation of the Company (the "Amendment") with the Florida Department of State to (i) increase its authorized shares of common stock, par value $ 0.0001 per share, from 200,000,000 shares to 700,000,000 shares and

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