Chanson H1 net income $0.85M on investment income
CHSN returned to a small first-half profit on investment income and new equity capital, while core bakery operations and cash flow remained under pressure.
Chanson International Holding (CHSN) reported results for the six months ended June 30, 2026 showing a shift to profitability driven largely by investment income. Net income was $848,927 versus a net loss of $1,048,793 a year earlier, helped by $1,804,232 of investment income from long-term debt investments. Revenue was $8,295,755, slightly below $8,688,208 in the prior-year period, while gross profit rose to $3,957,340. Core operations remained loss-making with a loss from operations of $781,907, but this narrowed compared with 2025. Cash and cash equivalents increased to $20,005,381 from $8,644,357 at December 31, 2025, primarily due to $12,954,871 of equity issuance proceeds, lifting total assets to $97,609,298 and shareholders’ equity to $70,448,947. Operating cash flow was negative $3,193,054, and the company now holds $54,877,527 in long-term debt investments, which are concentrated among a limited number of counterparties and evaluated under expected credit loss rules.
Positive
- Returned to profitability: Net income of $848,927 for the first half of 2026 versus a net loss of $1,048,793 a year earlier, driven by higher investment income.
- Stronger balance sheet: Cash rose to $20.0 million from $8.6 million and shareholders’ equity increased to $70.4 million, supported by $13.0 million of proceeds from ordinary share issuances.
- Improved operating loss: Loss from operations narrowed to $781,907 from $1,190,545, indicating some expense improvement despite flat-to-lower revenue.
Negative
- Negative operating cash flow: Net cash used in operating activities was $3,193,054 for the first half of 2026, significantly worse than $390,299 used in the prior-year period.
- Profit heavily reliant on investment income: Long-term debt investments generated $1,804,232 of income; without this, core operations remained loss-making.
- Concentrated credit and cash risk: Long-term debt investments of $54.9 million are concentrated among few counterparties, and about $18.6 million of PRC bank deposits exceeded local deposit insurance.
- Regulatory and structural risk: A significant portion of business is conducted through PRC Variable Interest Entities, and the company notes that changes in PRC law could affect its ability to consolidate these entities.
Filing Explained
Reported assets include contractually controlled VIEs, while 7.1 million dollars of lease liabilities remained on the balance sheet as of June 30, 2026.
As a Form 6-K, this is a foreign private issuer’s interim report; the company reports unaudited results for the six months ended
That structure means reported assets, liabilities, revenue and cash flows depend on the enforceability of those contracts; the filing says PRC legal uncertainty could prevent continued consolidation. At
Separately, the company presents approximately
The
Key Figures
Key Terms
Variable Interest Entities regulatory
current expected credit loss financial
right-of-use asset financial
deferred revenue financial
Enterprise Income Tax regulatory
long-term debt investments financial
Earnings Snapshot
FAQ
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of September
Commission File Number:
B9 Xinjiang Chuangbo Zhigu Industrial Park
No. 100 Guangyuan Road, Shuimogou District
Urumqi, Xinjiang, China
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
EXPLANATORY NOTE
Chanson International Holding (the “Company”) is filing this report of foreign private issuer on Form 6-K to report its financial results for the six months ended June 30, 2026 and to discuss its recent corporate developments.
Attached as exhibits to this report of foreign private issuer on Form 6-K are:
(1) the unaudited condensed consolidated interim financial statements and related notes as Exhibit 99.1;
(2) a press release dated September 18, 2026, titled “Chanson International Holding Announces First Half of Fiscal Year 2026 Financial Results” as Exhibit 99.2; and
(3) Interactive Data File disclosure as Exhibit 101 in accordance with Rule 405 of Regulation S-T.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in this report of foreign private issuer with respect to the Company’s current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of the Company. Forward-looking statements include, but are not limited to, those statements using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “aim,” “intend,” “seek,” “may,” “might,” “could” or “should,” and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management’s assumptions, judgments and beliefs in light of the information currently available to it. The Company cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, including but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the Company with the U.S. Securities and Exchange Commission. Therefore, investors should not place undue reliance on such forward-looking statements. Actual results may differ significantly from those set forth in the forward-looking statements.
All such forward-looking statements, whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
Incorporation by Reference
The contents of this Current Report on Form 6-K are hereby incorporated by reference into (i) the Company’s registration statement on Form S-8 (File No. 333-288739) filed with the SEC on July 18, 2025 and (ii) the Company’s registration statement on Form F-3 (File No. 333-289600) that was initially filed with the SEC on August 14, 2025 and declared effective by the SEC on September 30, 2025.
1
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Unaudited Condensed Consolidated Financial Statements and Related Notes as of June 30, 2026 and for the Six Months Ended June 30, 2026 and 2025 | |
| 99.2 | Press release titled “Chanson International Holding Announces First Half of Fiscal Year 2026 Financial Results” | |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Chanson International Holding | ||
| Date: September 18, 2026 | By: | /s/ Gang Li |
| Name: | Gang Li | |
| Title: | Chief Executive Officer, Director, and Chairman of the Board of Directors | |
3
Exhibit 99.1
CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| NON-CURRENT ASSETS: | ||||||||
| Operating lease right-of-use assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Long-term security deposits | ||||||||
| Long-term debt investments | ||||||||
| Long-term prepaid expenses | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Short-term bank loans | $ | $ | ||||||
| Current portion of long-term bank loans | ||||||||
| Accounts payable | ||||||||
| Due to a related party | ||||||||
| Taxes payable | ||||||||
| Deferred revenue | ||||||||
| Operating lease liabilities, current | ||||||||
| Other current liabilities | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Long-term bank loans | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES (Note 14) | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Ordinary shares, $ | ||||||||
| Class A ordinary share, $ | ||||||||
| Class B ordinary share, $ | ||||||||
| Additional paid-in capital | ||||||||
| Statutory reserve | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive income | ||||||||
| TOTAL SHAREHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
| For the Six Months Ended June 30, |
||||||||
| 2026 | 2025 | |||||||
| REVENUE | $ | $ | ||||||
| COST OF REVENUE | ||||||||
| GROSS PROFIT | ||||||||
| OPERATING EXPENSES | ||||||||
| Selling expenses | ||||||||
| General and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER (EXPENSE) INCOME | ||||||||
| Interest (expense) income, net | ( | ) | ( | ) | ||||
| Other expense, net | ( | ) | ( | ) | ||||
| Investment income from long-term debt investments | ||||||||
| Total other income, net | ||||||||
| PROFIT (LOSS) BEFORE INCOME TAX EXPENSE | ( | ) | ||||||
| INCOME TAX EXPENSE | ( | ) | ( | ) | ||||
| NET INCOME (LOSS) | ( | ) | ||||||
| Foreign currency translation gain | ||||||||
| TOTAL COMPREHENSIVE INCOME (LOSS) | $ | $ | ( | ) | ||||
| Earnings (loss) per ordinary share - basic and diluted | $ | $ | ( | ) | ||||
| Weighted average shares - basic and diluted * | ||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
| Retained | Accumulated | |||||||||||||||||||||||||||||||||||
| Ordinary Shares * | Additional | Earnings | Other | Total | ||||||||||||||||||||||||||||||||
| Class A | Class B | Paid-in | Statutory | (Accumulated | Comprehensive | Shareholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Reserve | Deficit) | Gain (Loss) | Equity | ||||||||||||||||||||||||||||
| Balance, January 1, 2025 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Issuance of the Equity Security Units ^ | - | - | - | - | - | |||||||||||||||||||||||||||||||
| Share issuance for warrants exercised | - | - | ( | ) | - | - | - | - | ||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||
| Foreign currency translation gain | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||
| Balance, January 1, 2026 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Issuance of ordinary shares | - | - | - | - | - | |||||||||||||||||||||||||||||||
| Surrender of ordinary shares | ( | ) | ( | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Effect of rounding fractional shares into whole shares upon the reverse share split | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Foreign currency translation gain | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| * |
| ^ |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Six Months Ended June 30, |
||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Amortization of operating lease right-of-use assets | ||||||||
| Depreciation and amortization | ||||||||
| Allowance for credit losses | - | |||||||
| Write off of bad debts | - | |||||||
| Loss on disposal of property and equipment | - | |||||||
| Accrued interest income from long-term debt investments | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Long-term security deposits | ||||||||
| Long-term prepaid expenses | ||||||||
| Accounts payable | ( | ) | ||||||
| Taxes payable | ( | ) | ||||||
| Deferred revenue | ||||||||
| Other current liabilities | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Interest income received from long term debt investment | ||||||||
| Repayment from loans to third parties | - | |||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from sales of the Equity Security Units, net of issuance costs | - | |||||||
| Proceeds from sales of ordinary shares, net of issuance costs | - | |||||||
| Proceeds from short-term bank loans | ||||||||
| Repayments of short-term bank loans | ( | ) | ( | ) | ||||
| Proceeds from long-term bank loans | - | |||||||
| Repayments of long-term bank loans | ( | ) | - | |||||
| Advances received from (payments made to) a related party | ( | ) | ||||||
| Payments made for deferred offering costs | ( | ) | - | |||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate fluctuation on cash and cash equivalents | ||||||||
| Net increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental cash flow information | ||||||||
| Cash paid for income taxes | $ | - | $ | |||||
| Cash paid for interest | $ | $ | ||||||
| Non-cash operating, investing and financing activities | ||||||||
| Property and equipment acquired in settlement of the amount due from a related party | $ | - | $ | |||||
| Reduction of right-of-use assets and operating lease obligations due to early termination or modification of lease agreement | $ | $ | ||||||
| Right of use assets obtained in exchange for operating lease liabilities | $ | $ | ||||||
| Deferred offering cost offset with additional paid-in capital | $ | $ | - | |||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION
Chanson International Holding (“Chanson International,” or the “Company”), formerly known as RON Holding Limited, was incorporated under the laws of the Cayman Islands on July 26, 2019 as a holding company. Chanson International owns
Chanson International, Deen Global, and Jenyd do not currently engage in any active business operations and act solely as holding companies.
Xinjiang United Family Trading Co., Ltd. (“Xinjiang United Family”), is a company incorporated in the People’s Republic of China (the “PRC”) on August 7, 2009. On September 27, 2020, the original shareholders of Xinjiang United Family entered into a share transfer agreement pursuant to which they transferred their
On March 3, 2025, Xinjiang United Family incorporated a wholly-owned subsidiary, Urumqi George Chanson Trading Co., Ltd. (“George Chanson Trading”) in the PRC, which is engaged in the business of sales and distribution of bakery and beverage products.
Xinjiang United Family and its subsidiary, George Chanson Trading, operate a bakery chain in China’s Xinjiang Uygur Autonomous Region under the brand name of “George●Chanson”. The chain currently consists of eight directly owned, high-end bakery stores in Urumqi and 45 bakery stores organized as individually owned businesses and collectively known as the United Family Group (each a “UFG entity” and, collectively, the “UFG entities”) in the Xinjiang region. The UFG entities are owned by the original shareholders of Xinjiang United Family but are operated pursuant to a series of contractual arrangements entered into between their respective owners and Xinjiang United Family.
On April 17, 2015, Xinjiang United Family incorporated a wholly-owned subsidiary, George Chanson (NY) Corp. (“Chanson NY”), in the State of New York, which owns and operates Chanson 23rd Street LLC (“Chanson 23rd Street”), a modern European-style café and eatery that specializes in the art of making French-style viennoiseries and pastries in the heart of Manhattan’s Flatiron District. On February 20, 2020, the Company’s Chairman, Mr. Gang Li, formed Chanson 355 Greenwich LLC (“Chanson Greenwich”), a New York limited liability company, and subsequently assigned his membership interests in Chanson Greenwich to Chanson NY on September 28, 2020. After the transfer, Chanson Greenwich became a wholly owned subsidiary of Chanson NY. Chanson Greenwich is another boutique café in Manhattan that opened in December 2021 and closed in the second half of fiscal year 2023. On April 21, 2021, Chanson NY formed a wholly owned subsidiary, Chanson Management LLC, a Delaware limited liability company. On August 5, 2021, Chanson NY formed a wholly owned subsidiary, Chanson 1293 3rd Ave LLC (“Chanson 3rd Ave”), a New York limited liability company. On March 21, 2022, Chanson NY formed a wholly owned subsidiary, Chanson 2040 Broadway LLC (“Chanson Broadway”), a New York limited liability company. Chanson 3rd Ave and Chanson Broadway are another two boutique cafés opened in March 2023 and July 2023, respectively.
5
Reorganization
In connection with its initial public offering, the Company has undertaken a reorganization of its legal structure (the “Reorganization”). The Reorganization involved the incorporation of Chanson International, Deen Global, and Jenyd, the execution of a Share Transfer Agreement pursuant to which the ownership interest in Xinjiang United Family was transferred from its original shareholders to Jenyd, and the execution of a series of contractual agreements between Xinjiang United Family and the owners of the UFG entities. After the Reorganization, Chanson International became the ultimate holding company of Xinjiang United Family and Xinjiang United Family became the primary beneficiary of the UFG entities through the VIE Agreements, as further discussed below.
Xinjiang United Family entered into a series of contractual arrangements with the owners of the 22 UFG entities on May 2, 2020, and with the owners of three newly established UFG entities in fiscal year 2020, five newly established UFG entities in fiscal year 2021, one newly established UFG entity in fiscal year 2022, nine newly established UFG entity in fiscal year 2023, twenty newly established UFG entities in fiscal year 2024, four newly established UFG entities in fiscal year 2025, and three newly established UFG entities in fiscal year 2026, respectively. Three of these UFG entities were closed in fiscal year 2021, three of these UFG entities were closed in fiscal year 2023, two of these UFG entities were closed in fiscal year 2024, three of these UFG entities were closed in fiscal year 2025 and nine of these UFG entities were closed in fiscal year 2026. Two of these UFG entities were converted into franchise stores in fiscal year 2026. These agreements include Exclusive Service Agreements, Pledge Agreements, Call Option Agreements, Operating Rights Proxy and Powers of Attorney Agreements and Spousal Consents (collectively, the “VIE Agreements”). Pursuant to the above VIE Agreements, Xinjiang United Family has the exclusive right to provide the UFG entities with consulting services related to business operations including operational and management consulting services. The VIE Agreements obligate Xinjiang United Family to absorb all of the risk of loss from business activities of these UFG entities and entitle Xinjiang United Family to receive all of their residual returns. In essence, Xinjiang United Family has the power to direct activities of the UFG entities that most significantly impact their economic performance, and the right to receive benefits from the UFG entities that could potentially be significant to Xinjiang United Family. Therefore, the Company believes that Xinjiang United Family has a controlling financial interest in and is the primary beneficiary of the UFG entities and that these UFG entities should be considered as Variable Interest Entities (“VIEs”) under the Statement of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 Consolidation. The eight bakery stores directly owned by Xinjiang United Family and the UFG entities controlled through the VIE Agreements are collectively referred to herein as the “PRC Stores.”
The Company, together with its wholly owned subsidiaries, was under the common control of the same shareholders before and after the Reorganization. Accordingly, the Reorganization was accounted for as a transaction among entities under common control, and the accompanying consolidated financial statements were prepared using the historical carrying amounts of the entities presented.
6
After the Reorganization, the unaudited condensed consolidated financial statements of the Company include the following entities:
| Name of Entity | Date of Incorporation | Place of Incorporation | % of Ownership | Principal Activities | ||||
| Chanson International | | |||||||
| Deen Global | | |||||||
| Jenyd | | |||||||
| Xinjiang United Family | | |||||||
| George Chanson Trading | | |||||||
| 44 UFG entities | | |||||||
| Chanson NY | | |||||||
| Chanson 23rd Street | | |||||||
| Chanson Greenwich | | |||||||
| Chanson Management LLC | | |||||||
| Chanson 3rd Ave | | |||||||
| Chanson Broadway | |
The VIE contractual arrangements
The UFG entities are controlled by the Company through contractual arrangements in lieu of direct equity ownership by the Company or any of its subsidiaries.
A VIE is an entity that either has a total equity investment that is insufficient to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity, or obligation to absorb the expected losses of the entity. The variable interest holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiary of, and must consolidate, the VIE.
7
Xinjiang United Family and its subsidiary is deemed to have a controlling financial interest in and be the primary beneficiary of the UFG entities because it has both of the following characteristics:
| ● | The power to direct activities at the UFG entities that most significantly impact such entities’ economic performance, and |
| ● | The obligation to absorb losses of, and the right to receive benefits from, the UFG entities that could potentially be significant to such entities. |
Pursuant to the contractual arrangements with the UFG entities, the UFG entities pay service fees equal to all of their net profit after tax payments to Xinjiang United Family and its subsidiary. At the same time, Xinjiang United Family and its subsidiary are obligated to absorb all of their losses. Such contractual arrangements are designed so that the operation of the UFG entities is for the benefit of Xinjiang United Family and, ultimately, the Company.
Risks associated with the VIE structure
The Company believes that the contractual arrangements with the UFG entities and their respective owners are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce such contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could:
| ● | revoke the business and operating licenses of the Company’s PRC subsidiaries and the UFG entities; |
| ● | discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiaries and the UFG entities; |
| ● | limit the Company’s business expansion in China by way of entering into contractual arrangements; |
| ● | impose fines or other requirements with which the Company’s PRC subsidiaries and the UFG entities may not be able to comply; |
| ● | require the Company or the Company’s PRC subsidiaries and the UFG entities to restructure the relevant ownership structure or operations; or |
| ● | restrict or prohibit the Company’s use of the proceeds from its public offering to finance the Company’s business and operations in China. |
The Company’s ability to conduct its consulting services business may be negatively affected if the PRC government were to carry out of any of the aforementioned actions. As a result, the Company may not be able to consolidate the UFG entities in its unaudited condensed consolidated financial statements as it may lose the ability to direct activities of the UFG entities and receive economic benefits from the UFG entities. The Company, however, does not believe such actions would result in the liquidation or dissolution of the Company and its PRC subsidiaries and the UFG entities. The financial position, operation, and cash flow of the UFG entities are material to total assets and liabilities presented on the unaudited condensed consolidated balance sheets and revenue, expenses, and net income (loss) presented on the unaudited condensed consolidated statements of operations and other comprehensive income (loss) as well as the cash flows from operating, investing, and financing activities presented on the unaudited condensed consolidated statements of cash flows.
8
The Company did not provide any financial support to the UFG entities for the six months ended June 30, 2026 and 2025. The Company had no contractual obligation to provide financial support to the VIEs as of June 30, 2026 and December 31, 2025. The amount of the revenue-producing assets held by the VIEs was $
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| Current assets | $ | $ | ||||||
| Non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Current liabilities | $ | $ | ||||||
| Non-current liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Net revenue | $ | $ | ||||||
| Net income | $ | $ | ||||||
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and principles of consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission and have been consistently applied. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal years ended December 31, 2025, 2024 and 2023. Operating results for the six-month period ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.
The accompanying unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries and the VIEs. All intercompany balances and transactions are eliminated upon consolidation.
9
Uses of estimates
In preparing the unaudited condensed consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates are based on information as of the date of the unaudited condensed consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the assessment of the current expected credit losses for receivables and long-term debts investments, the recoverability and impairment of long-lived assets, realization of deferred tax assets and revenue recognition. Actual results could differ from those estimates.
Cash and cash equivalents
Cash includes currency on hand and deposits held by banks that can be added or withdrawn without limitation. The Company maintains a significant amount of its bank accounts in the PRC. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents.
Accounts receivable
Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for credit losses, as necessary. Accounts are written off against the allowance after efforts at collection prove unsuccessful. As of June 30, 2026 and December 31, 2025, the allowance for credit losses were $
Long-term debt investments
Long-term debt investments are measured at amortized cost in accordance with applicable accounting guidance. The Company evaluates these investments for expected credit losses in accordance with ASC Topic 326 and records an allowance for credit losses based on lifetime expected losses, considering historical experience, current conditions, and reasonable and supportable forecasts. As of June 30, 2026, the Company’s long-term debt investments were concentrated with a limited number of counterparties. The Company monitors the creditworthiness of these counterparties on an ongoing basis and updates its estimates as necessary. Management assessed the expected credit losses associated with these investments, taking into account the financial condition of the counterparties, contractual terms and repayment history. While the Company has not experienced any defaults to date and expects to realize these investments in accordance with their contractual terms, the concentration of these investments and reliance on counterparty performance and guarantees may expose the Company to credit and liquidity risks. Based on management’s assessment, no material allowance for credit losses was recorded as of June 30, 2026.
Interest income from long-term debt investments is recognized over the contractual term of the investment based on the contractual interest or return rate and is presented as investment income in the unaudited condensed consolidated statements of operations and comprehensive income (loss).
As of June 30, 2026 and December 31, 2025, the Company had long-term debt investments balance of $
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Credit losses
The Company follows Accounting Standards Update 2016-13 “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with a current expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology.
The Company’s account receivables and other receivables included in prepaid expenses and other current assets on the unaudited condensed consolidated balance sheets are within the scope of ASC Topic 326. The Company makes estimates of expected credit and collectability trends for the allowance for credit losses based upon assessment of various factors, including historical experience, the age of the accounts receivable and other receivables balances, credit-worthiness of the customers and other debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from the customers and other debtors. The Company also provides specific provisions for allowance when facts and circumstances indicate that the receivable is unlikely to be collected.
ASC Topic 326 is also applicable to short-term and long-term loans to third parties. Management estimates the allowance for credit losses on loans not sharing similar risk characteristics on an individual basis. The key factors considered when determining the above allowances for credit losses include estimated loan collection schedule, discount rate, and assets and financial performance of the borrowers.
Current expected credit losses are recorded as allowance for credit losses on the unaudited condensed consolidated statements of operations and comprehensive income (loss). After all attempts to collect a receivable have failed, the receivable is written off against the allowance. In the event the Company recovers amounts previously reserved for, the Company will reduce the specific allowance for credit losses.
Leases
Lessee accounting
The Company follows FASB ASC No. 842, Leases (“Topic 842”). The Company leases office spaces, bakery store facilities, employee dormitories, and a vehicle, which are classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases, usually with initial term of 12 months or less) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.
At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease. The ROU asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All ROU assets are reviewed for impairment annually. There was no impairment for ROU lease assets as of June 30, 2026 and December 31, 2025.
In response to the large volume of anticipated lease concessions to be granted related to the effects of the COVID-19 pandemic, and the resultant expected cost and complexity of applying the lease modification requirements in Topic 842, the FASB issued Staff Q&A—Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic in April 2020 as interpretive guidance to provide clarity in response to the crisis. The FASB staff indicated that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract. Consequently, for such lease concessions, an entity will not need to reassess each existing contract to determine whether enforceable rights and obligations for concessions exist and an entity can elect to apply or not to apply the lease modification guidance in Topic 842 to those contracts. The election is available for concessions related to the effects of the COVID-19 pandemic that result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract.
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Due to the COVID-19 pandemic, the Company renegotiated the leases for some of its PRC stores and New York stores. Based on the nature of the agreements reached with the landlords, the Company has accounted for rent concessions as if they were part of the enforceable rights and obligations of the existing lease contracts and did not account for the concessions as lease modifications. As of the date of this report, the Company has received a total of lease concessions amounting to $
Lessor accounting
Rental income from leasing arrangements is accounted for in accordance with ASC 842, Leases. Rental income is recognized on a straight-line basis over the lease term and is presented as other income in the unaudited condensed consolidated statements of operations and comprehensive income (loss), as such leasing activities are not part of the Company’s primary operations.
Inventories
Inventories of the Company consist of ingredient materials, finished goods, packaging materials, and other materials. Inventories are stated at the lower of cost or net realizable value, on a weighted average basis. Costs include the cost of ingredient materials, direct labor, and related production overhead. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. The Company periodically evaluates inventories for their net realizable value adjustments and reduces the carrying value of those inventories that are obsolete or in excess of the forecasted usage to their estimated net realizable value based on various factors including aging and expiration dates, as applicable, taking into consideration historical and expected future product sales. For the six months ended June 30, 2026 and 2025, the Company did not record a material inventory reserve as any write-downs for slow-moving, obsolete, or expired inventory were not significant.
Property and equipment
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment are provided using the straight-line method over their expected useful lives, as follows:
| Useful life | ||
| Commercial property (hotel unit) | ||
| Bakery production equipment | ||
| Office equipment and furniture | ||
| Automobiles | ||
| Leasehold improvement | Lesser of useful life and lease term |
The Company owns a commercial property unit located within a hotel building. The asset is accounted for as property and equipment under U.S. GAAP. The purchase price was not separately allocated between land use rights and building components as such allocation is not practicable. Accordingly, the asset is accounted for as a single property and equipment asset and depreciated over its estimated useful life. The Company evaluates the classification of real estate assets under U.S. GAAP based on their intended use and the nature of the Company’s involvement. Although certain properties generate rental income, such assets are classified as property and equipment when they are held for use in the Company’s operations and the Company is actively involved in managing and operating the property. Rental activities are considered part of the Company’s broader business operations rather than passive investment activities. Management determined the useful life of the commercial property unit based on the expected period over which the asset will generate economic benefits, taking into consideration the physical condition and intended use of the property.
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Expenditures for repair and maintenance, which do not materially extend the useful lives of the assets, are charged to expenses as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the unaudited condensed consolidated statements of operations and comprehensive income (loss) in other income or expenses.
Intangible assets
Intangible assets consist primarily of purchased software. Intangible assets are stated at cost less accumulated amortization, which are amortized using the straight-line method with the estimated useful lives of
Impairment of long-lived assets
Long-lived assets with finite lives, including property and equipment, ROU assets, and intangible assets, are reviewed for impairment in accordance with ASC 360 whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. ROU assets are evaluated for impairment under ASC 360 as required by ASC 842.
For assets to be held and used, recoverability is assessed by comparing the carrying amount of an asset or asset group to the undiscounted future cash flows expected to be generated.
The Company assesses impairment at the lowest level of identifiable cash flows:
| ● | For its retail operations, which are centrally managed, individual outlets are operationally interdependent and do not generate largely independent cash flows. Accordingly, impairment is assessed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. |
| ● | For assets that generate independently identifiable cash flows, such as the Company’s commercial property, impairment is assessed separately. |
If the carrying amount exceeds the undiscounted future cash flows, an impairment loss is recognized based on the excess of the carrying amount over fair value. During the six months ended June 30, 2026, the Company closed certain retail locations following sustained underperformance. The Company considered these closures and the operating performance of the affected locations as part of its assessment of impairment indicators and recoverability of the related long-lived assets. No impairment losses were recognized for the six months ended June 30, 2026 and 2025.
Revenue recognition
The Company follows ASC 606, Revenue from Contracts with Customers (“ASC 606”), for revenue recognition. ASC 606 establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized, as performance obligations are satisfied.
The Company currently generates its revenue through its bakery/café stores as well as through online sales. The Company recognizes revenue from bakery/café sales upon delivery of the related food and other products to the customer and fulfillment of all performance obligations. Revenue is recognized net of any discounts, sales incentives, sales taxes, and value added taxes that are collected from customers and remitted to tax authorities.
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In the PRC Stores, the Company sells membership cards that do not have an expiration date and from which the Company does not deduct non-usage fees from outstanding card balances. Membership cards are reloadable and redeemable at any of the Company’s store locations. Amounts loaded into these cards are initially recorded as deferred revenue. When membership cards are redeemed at stores, the Company recognizes revenue and reduces the deferred revenue. While the Company continues to honor all membership cards presented for payments, management determines the likelihood of redemption to be remote for certain cards with long periods of inactivity (“breakage”), which is five years after the last usage, based upon the Company’s historical redemption patterns. Membership card breakage is recorded as revenue in the unaudited condensed consolidated statements of operations and comprehensive income (loss). Membership card breakage was immaterial for the six months ended June 30, 2026 and 2025.
In the PRC Stores, the Company maintains a customer loyalty program in which customers earn free cash vouchers when purchasing or reloading membership cards at certain amount. These cash vouchers typically do not expire, except for certain vouchers given out at special occasions, which usually state an expiration date and can only be exchanged for certain seasonal products or specialty cakes. The Company establishes corresponding liabilities in deferred revenue for the membership cards and the free cash vouchers upon issuance. The Company allocates the consideration received proportionately between the membership cards and cash vouchers based on their face values. Revenue is recognized at the allocated amount upon redemption of membership cards and cash vouchers, at which point, the Company delivers products to customers and reduces the deferred revenue. Unredeemed cash vouchers will be recognized as revenue upon their expiration dates, if any, or five years after their issuance if there are no stated expiration dates, when management determines the likelihood of redemption to be remote.
Contract balances and remaining performance obligations
Contract balances typically arise when a difference in timing between the transfer of control to the customer and receipt of consideration occurs. The Company did not have contract assets as of June 30, 2026 and December 31, 2025. The Company’s contract liabilities, which are reflected in its unaudited condensed consolidated balance sheets as deferred revenue of $
Disaggregation of revenue
The Company disaggregates its revenue by geographic areas, as the Company believes it best depicts how the nature, amount, timing, and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s disaggregation of revenue for the six months ended June 30, 2026 and 2025 is disclosed in Note 15 of the unaudited condensed consolidated financial statements.
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Fair value of financial instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| ● | Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. |
| ● | Level 3 — inputs to the valuation methodology are unobservable. |
Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, other current assets, short-term bank loans, accounts payable, due to a related party, taxes payable, current portion of long-term bank loans, current portion of operating lease liabilities, current and other current liabilities, approximates the fair value of the respective assets and liabilities as of June 30, 2026 and December 31, 2025 based upon the short-term nature of the assets and liabilities. The fair value of long-term debt investment and long-term bank loans, as well as non-current portion of operating lease liabilities approximates their recorded values as their stated interest rates approximate the rates currently available.
Foreign currency translation
The functional currency of the Company’s PRC subsidiaries and the UFG entities is the Chinese Yuan (“RMB”) and the functional currency of the Company’s U.S. subsidiaries is the U.S. Dollars (“US$”). RMB amounts in the Company’s unaudited condensed consolidated financial statements have been translated into the reporting currency US$. Assets and liabilities of the Company are translated at the exchange rate at each reporting period end date. Equity is translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets. Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations.
RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.
The following table outlines the currency exchange rates that were used in creating the unaudited condensed consolidated financial statements in this report:
| For the Six Months Ended June 30, | For the Year Ended December 31, | ||||||||
| 2026 | 2025 | 2025 | |||||||
| Period/Year-end spot rate | US$ | US$ | US$ | ||||||
| Average rate | US$ | US$ | US$ | ||||||
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Income taxes
The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the unaudited condensed consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than
The Company’s operating subsidiary in China is subject to the income tax laws of the PRC. The Company’s operating subsidiaries in the United States are subject to the tax law of the United States. As of June 30, 2026, for the tax years ended December 31, 2021 through December 31, 2025, the Company’s PRC subsidiaries remained open for statutory examination by PRC tax authorities, and for the tax years ended December 31, 2023 through December 31, 2025, the Company’s U.S. subsidiaries remained open for statutory examination by the U.S. tax authorities.
Value added tax (“VAT”)
The Company’s subsidiaries, Xinjiang United Family and its branch offices are general tax payers. The applicable VAT rate is
Related party transactions
Related parties include entities and individuals that have the ability to control or exercise significant influence over the Company, including the Company’s controlling shareholder and entities under common control.
Transactions with related parties are carried out in the normal course of business and are measured at the amounts agreed between the parties. The Company discloses related party relationships, transactions, and outstanding balances in accordance with applicable accounting guidance.
Certain transactions involve guarantees or financial support arrangements from related parties. The Company evaluates such arrangements in accordance with applicable accounting standards and discloses them where relevant.
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Warrant accounting
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent interim period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations and comprehensive income (loss).
As the warrants issued meet the criteria for equity classification under ASC 815, therefore, the warrants are classified as equity as of reporting date.
Earnings (Loss) per share
The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, Earnings per Share (“ASC 260”). 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 ordinary shares outstanding for the period. Diluted presents the dilutive effect on a per share basis of potential ordinary 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. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. As of June 30, 2026 and December 31, 2025, there were no dilutive shares.
Comprehensive income (loss)
Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive gain. The foreign currency translation gain resulting from the translation of the financial statements expressed in RMB to US$ is reported in other comprehensive gain in the unaudited condensed consolidated statements of operations and comprehensive income (loss).
Statement of cash flows
In accordance with ASC 230, “Statement of Cash Flows”, cash flows from the Company’s operations are formulated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.
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Segment reporting
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The Company adopted this ASU commencing January 1, 2024 retrospectively to all periods presented in the unaudited condensed consolidated financial statement and the adoption of the ASU does not have a material effect on its unaudited condensed consolidated financial statements.
The Company has identified the measure of segment profit or loss reviewed by the CODM and the significant segment expenses regularly provided to the CODM, which are disclosed in the accompanying segment information.
The Company uses the management approach in determining its operating segments. The management approach considers the internal reporting used by the Company’s CODM. The Company’s CODM has been identified as the Chief Executive Officer (“CEO”) who reviews the financial information of separate operating segments when making decisions about allocating resources and assessing performance of the Company. The CODM evaluates segment performance and allocates resources primarily based on net income (loss). Significant segment expenses that are regularly provided to the CODM are included in the measure of segment profit or loss and are disclosed in the segment reporting note. Management, including the CODM, reviews operation results by locations. Based on management’s assessment, the Company has determined that it has two reportable segments: China and the United States. Other operations are not material and are included within the United States segment.
Risks and uncertainties
Political and economic risk
The operations of the Company are located in the PRC and the United States. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC and the United States, as well as by the general state of the PRC and United States economy. The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions in the PRC and the United States. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, such experience may not be indicative of future results.
Foreign currency exchange risk
A majority of the Company’s revenue and expense transactions are denominated in RMB and most of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.
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Credit risk
As of June 30, 2026 and December 31, 2025, $
As of June 30, 2026 and December 31, 2025, $
As of June 30, 2026 and December 31, 2025, the Company had long-term debt investments of $
The Company is exposed to credit risk primarily from its long-term debt investments and accounts receivable. As of June 30, 2026, a significant portion of the Company’s long-term debt investments is concentrated in a limited number of counterparties. The Company manages this risk by performing credit evaluations and monitoring counterparty performance.
For the six months ended June 30, 2026 and 2025, the Company’s substantial assets were located in the PRC and the U.S. and the Company’s substantial revenue was derived from its subsidiaries and the UFG entities located in the PRC and the U.S.
Accounts receivable are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risk. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances.
Concentrations
As of June 30, 2026, the Company’s cash balance was concentrated in two bank accounts, representing
No single customer accounted for more than 10% of the Company’s revenue for the six months ended June 30, 2026 and 2025.
As of June 30, 2026 and December 31, 2025, no customer accounted for more than 10% of the Company’s total accounts receivable balance.
For the six months ended June 30, 2026, one supplier accounted for
As of June 30, 2026, one supplier accounted for
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Recent accounting pronouncements
Recently issued accounting pronouncements adopted
In July 2025, the FASB issued ASU No. 2025-05, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” This ASU provides a practical expedient for all entities related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under Topic 606. The standard is effective for annual periods beginning after December 15, 2025. Early adoption of ASU 2025-05 is permitted and should be applied prospectively. The Company adopted this guidance effectively January 1, 2026 and the adoption of this ASU did not have a material impact on its financial statements.
Recently issued accounting pronouncements not yet adopted
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement - Reporting Comprehensive Income (Topic 22): Expense Disaggregation Disclosures”. This ASU requires entities to 1. disclose amounts of (a) purchase of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and, (e) depreciation, depletion, and amortization recognized as part of oil-and gas-producing activities, 2. include certain amounts that are already required to be disclosed under current Generally Accepted Accounting Principles in the same disclosures as other disaggregation requirements, 3. disclose a qualitative description of the amounts remaining in relevant expense captions that are not necessarily disaggregated quantitatively, and 4. disclose the total amount of selling expenses, in annual reporting periods, an entity’s definition of selling expense. The ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Additionally, in January 2025, the FASB issued ASU No. 2025-01 to clarify the effective date of ASU 2024-03. The standard provides guidance to expand disclosures related to the disaggregation of income statement expenses. The standard requires, in the notes to the financial statements, disclosure of specified information about certain costs and expenses which includes purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. The Company plans to adopt this guidance effective January 1, 2027 and the Company is currently evaluating the impact of adopting this ASU on its financial statements.
In May 2025, the FASB issued ASU No. 2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810): Accounting Acquirer in a Business Combination Involving a Variable Interest Entity”. This ASU clarifies that when a business that is a VIE is acquired primarily with equity interests, the determination of the accounting acquirer should follow ASC 805 rather than defaulting to the primary beneficiary under ASC 810. The standard is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company plans to adopt this guidance effective January 1, 2027 and the Company is currently evaluating the impact of adopting this ASU on its financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The purpose of this update is to improve the clarity and organization of interim reporting guidance and to enhance the disclosure requirements applicable to interim financial statements. ASU 2025-11 does not change the fundamental principles of interim reporting but clarifies the scope and presentation of required disclosures. A public business entity shall apply for interim reporting periods within annual reporting periods beginning after December 15, 2027. An entity other than a public business entity shall apply for interim reporting periods within annual reporting periods beginning after December 15, 2028. The Company plans to adopt this guidance effective January 1, 2028 and the Company is currently evaluating the impact of adopting this ASU on its financial statements.
Except for the above-mentioned pronouncement, there are no new recently issued accounting standards that are expected to have a material impact on the Company’s unaudited condensed consolidated financial position, statements of operations, and cash flows.
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NOTE 3 — ACCOUNTS RECEIVABLE, NET
The Company’s accounts receivable primarily include balance generated from selling bakery products to local corporate customers, billed but has not been collected as of the balance sheet dates. Accounts receivable also include amounts due from third-party online delivery and e-commerce platforms for which settlement is typically received within a short period.
Accounts receivable, net consisted of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| Accounts receivable | $ | $ | ||||||
| Less: allowance for credit losses | ( | ) | - | |||||
| Total accounts receivable, net | $ | $ | ||||||
The Company evaluates accounts receivable for expected credit losses in accordance with ASC 326, Financial Instruments - Credit Losses. The Company considers historical loss experience, current conditions, and reasonable and supportable forecasts in estimating expected credit losses. As of June 30, 2026 and December 31, 2025, allowance for credit losses for accounts receivable amounted to $
Allowance for credit losses movement is as follows:
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| Beginning balance | $ | - | $ | - | ||||
| Additions | - | |||||||
| Foreign currency translation adjustments | - | |||||||
| Ending balance | $ | $ | - | |||||
NOTE 4 — PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET
Prepaid expenses and other current assets, net consisted of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| Prepayments (1) | $ | $ | - | |||||
| Advance to suppliers (2) | ||||||||
| Prepaid expenses (3) | ||||||||
| Other receivables (4) | ||||||||
| VAT recoverable | - | |||||||
| Less: allowance for credit losses | - | - | ||||||
| Total prepaid expenses and other current assets, net | $ | $ | ||||||
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| (1) | Prepayments primarily represent advance payments under two separate custom software development agreements.
On April 15, 2026, the Company entered into a custom development services agreement for an AI-enabled smart store system with ELEFUN Group Co., Limited (“ELEFUN”). Pursuant to the agreement, ELEFUN shall develop, deploy and deliver a custom AI-enabled smart store system tailored to the Company’s bakery-industry operating scenarios, including modules for AI customer management and precision marketing, AI-enabled in-store service functions, and a centralized data visualization dashboard. The total contract price is $
On June 1, 2026, the Company entered into a special agreement for the development, delivery and acceptance of the omnichannel livestream commerce system with Snow Leopard HK Limited (“Snow Leopard”). Pursuant to the agreement, Snow Leopard will provide custom development, deployment, testing, training and warranty services for the bakery chain’s dedicated omnichannel livestream commerce system, which covers proprietary online stores, dedicated livestream selling system, integration with domestic and overseas e-commerce platforms, integrated online and offline procurement, sales and inventory synchronization, and a centralized omnichannel data platform. The total contract price is $ |
| (2) |
| (3) |
| (4) | Other receivables are mainly business advances to officers and staff for business travel and sundry expenses. As of June 30, 2026 and December 31, 2025, the balance also included $
As of June 30, 2026, certain balances were outstanding beyond their contractual due dates; however, management expects these amounts to be fully collected and no disputes or collection issues have been identified. The Company evaluates other receivables for expected credit losses in accordance with ASC 326, Financial Instruments - Credit Losses. Based on the assessment of historical collection experience, current conditions, and subsequent receipts, no material allowance for credit losses was considered necessary as of June 30, 2026 and December 31, 2025. |
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NOTE 5 — INVENTORIES
Inventories consisted of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| Ingredient materials | $ | $ | ||||||
| Package and other materials | ||||||||
| Finished goods | ||||||||
| Total inventories | $ | $ | ||||||
The Company’s inventories primarily consist of perishable bakery products with relatively short shelf lives. The Company manages inventory levels through a just-in-time production approach to minimize excess inventory and obsolescence risk. Management assesses net realizable value based on recent sales performance and subsequent sales after the reporting period. As of June 30, 2026 and December 31, 2025,
NOTE 6 — LEASES
The Company leases office spaces, bakery store facilities, employee dormitories and a vehicle under non-cancelable operating leases, with terms ranging from
The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate.
The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The table below presents the operating lease related assets and liabilities recorded on the balance sheets.
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| ROU lease assets | $ | $ | ||||||
| Operating lease liabilities – current | $ | $ | ||||||
| Operating lease liabilities – non-current | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
Certain lease agreements require lease payments to be made in advance, resulting in prepaid lease balances. These balances represent timing differences between cash payments and straight-line lease expense recognition and are reflected in the measurement of the right-of-use assets.
23
The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of June 30, 2026 and December 31, 2025:
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| Remaining lease term and discount rate: | ||||||||
| Weighted average remaining lease term (years) | ||||||||
| Weighted average discount rate * | % | % | ||||||
| * | The Company used new incremental borrowing rate of
The Company determines its incremental borrowing rates based on the lease term, the economic environment in which the lease is denominated, and the Company’s credit risk. As a result, different incremental borrowing rates may be applied to lease contracts entered into at different times and in different jurisdictions to reflect changes in market conditions. |
During the six months ended June 30, 2026 and 2025, the Company incurred total operating lease expenses of $
The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2026:
| Remainder of 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liabilities | $ |
24
NOTE 7 — PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consisted of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| Commercial property (hotel unit) (1) | $ | $ | ||||||
| Bakery production equipment | ||||||||
| Automobiles | ||||||||
| Office equipment and furniture | ||||||||
| Leasehold improvements | ||||||||
| Subtotal | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
| (1) | On January 21, 2025, the Company acquired a commercial property unit from its controlling shareholder, Mr. Gang Li, through a debt settlement arrangement. The transaction involved the settlement of amounts due from the controlling shareholder, whereby the property was transferred to the Company in settlement of the outstanding balance.
The Company determined the acquisition cost of the property based on its fair value at the acquisition date, supported by an independent third-party valuation. Management considers the fair value to be a reasonable proxy for the acquisition cost in this transaction. The property is legally owned by the Company and is currently leased to third parties to generate rental income. Consistent with the Company’s accounting policy, management has classified the property as property and equipment as it is held for use in the Company’s operations and the Company is actively involved in managing the property. Management determined the useful life of the property to be |
Loss on disposal of property and equipment was $nil and $
Depreciation expenses were $
NOTE 8 — INTANGIBLE ASSETS, NET
Intangible assets, net, consisted of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| Intangible assets | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total intangible assets, net | $ | $ | ||||||
Management assessed whether events or changes in circumstances, including store closures and changes in business operations, indicated that the carrying amount of the intangible assets may not be recoverable. As the software systems are utilized across the Company’s operations and are not dependent on individual store performance, management concluded that such events did not represent impairment indicators. Accordingly, no impairment loss was recognized for the six months ended June 30, 2026.
25
Amortization expenses were $
Amortization of intangible assets attributable to future periods as of June 30, 2026 is as follows:
| Twelve months ended June 30: | ||||
| (Unaudited) | ||||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Thereafter | ||||
| Total | $ | |||
NOTE 9 — LONG-TERM DEBT INVESTMENTS
Long-term debt investments consisted of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| Worthy Credit Limited (“Worthy Credit”) (1) | $ | $ | ||||||
| Shenzhen Yongdahui Trading Co., Ltd. (“Yongdahui”) (2) | ||||||||
| Beijing Zhixuan Tiangong Technology Development Co., Ltd. (“Zhixuan Tiangong”) (3) | ||||||||
| Total long-term debt investments | $ | $ | ||||||
| (1) |
| (2) |
| (3) |
26
The Company’s long-term debt investments are measured at amortized cost. The Company evaluates these investments for expected credit losses in accordance with ASC 326, Financial Instruments - Credit Losses, and recognizes an allowance for credit losses based on lifetime expected losses, considering historical experience, current conditions, and reasonable and supportable forecasts. As of June 30, 2026, the Company’s long-term debt investments were concentrated with a limited number of counterparties. The Company monitors the creditworthiness of these counterparties on an ongoing basis and considers such concentration risk in its assessment of expected credit losses. Management assessed the expected credit losses associated with these investments, taking into account the financial condition of the counterparties, contractual terms, repayment history, and available guarantees. While the Company has not experienced any defaults to date and expects to realize these investments in accordance with their contractual terms, the concentration of these investments and reliance on counterparty performance and guarantees may expose the Company to credit and liquidity risks. Based on management’s assessment, no material allowance for credit losses was recorded as of June 30, 2026.
During the year ended December 31, 2025, the Company significantly increased its long-term debt investments as part of its strategy to enhance returns on excess cash and expand financing-related activities. The realization of returns from these investments is an important component of the Company’s liquidity planning and is subject to counterparty performance.
NOTE 10 — LOANS
Short-term bank loans
On March 24, 2025, Xinjiang United Family entered into a loan agreement with Huaxia Bank to borrow RMB
Subsequently, on March 23, 2026, Xinjiang United Family entered into another loan agreement with Huaxia Bank to borrow RMB
27
Long-term bank loans
Long-term bank loans consisted of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| Tianshan Rural Commercial Bank (1) | $ | $ | ||||||
| Bank of China (2) | ||||||||
| Total long-term bank loans | $ | $ | ||||||
| Long-term bank loans - current | $ | $ | ||||||
| Long-term bank loans - non-current | $ | $ | ||||||
| (1) | On January 22, 2025, Xinjiang United Family entered into a loan agreement with Tianshan Rural Commercial Bank to borrow RMB
On March 24, 2025, Xinjiang United Family entered into another loan agreement with Tianshan Rural Commercial Bank to borrow RMB
As of the date of this report, these two loans were repaid as scheduled. |
| (2) | On June 19, 2025, Xinjiang United Family entered into a loan agreement with Bank of China to borrow RMB
On September 16, 2025, George Chanson Trading entered into a loan agreement with Bank of China to borrow RMB
As of the date of this report, these two loans were repaid as scheduled. |
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The future maturities of long-term bank loans as of June 30, 2026 were as follows:
| Twelve months ended June 30: | ||||
| (Unaudited) | ||||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| Total | $ | |||
For the above-mentioned short-term and long-term bank loans, the Company recorded interest expenses of $
The Company is subject to certain customary covenants under its loan agreements. Management has assessed compliance with these covenants as of June 30, 2026 and concluded that the Company was in compliance with all applicable covenants. There were no events of default or breaches identified during the period.
Management has assessed compliance with the terms of the loan agreements as of June 30, 2026 and concluded that the Company was in compliance with all applicable repayment and other contractual requirements. No events of default had occurred as of June 30, 2026 that would trigger early repayment or otherwise affect the classification of the borrowings.
Management has reviewed the terms of the loan agreements, including provisions related to covenant compliance and potential acceleration, and determined that the classification of the loans between current and non-current is appropriate as of June 30, 2026.
Certain of the Company’s borrowings are guaranteed by the Company’s controlling shareholder, Mr. Gang Li, his family member, Ms. Ying Xiong, and entities controlled by Mr. Gang Li. These guarantees were provided to support the Company’s financing arrangements and were not separately compensated.
NOTE 11 — RELATED PARTY TRANSACTIONS
| a. | Due to a related party |
As of June 30, 2026, the Company had both amounts due from and due to Mr. Gang Li arising primarily from funding arrangements involving the Company’s PRC and U.S. entities, with Mr. Gang Li acting as the central counterparty in facilitating the transfer and settlement of funds. On a gross basis, the Company had amounts due from Mr. Gang Li of approximately $
| b. | Other related party transactions |
During the six months ended June 30, 2026, the Company entered into various funding arrangements with Mr. Gang Li and entities controlled by or associated with Mr. Gang Li and his family. These transactions primarily consisted of interest-free advances and repayments, funding transfers, and payments made on behalf of the Company or related parties. The related transactions were authorized in accordance with the Company’s applicable approval procedures, and the related outstanding balances as of June 30, 2026 are reflected in the related-party balances described above, as applicable.
Several related parties provided guarantees in connection with the Company’s short-term and long-term bank loans (see Note 10).
29
Pursuant to a Premises Use Agreement dated April 30, 2020 and a Supplemental Agreement dated June 18, 2020, Urumqi Plastic Surgery Hospital Co., Ltd., a PRC company controlled by Mr. Gang Li, provided approximately
During the year ended December 31, 2025, the Company acquired a commercial property unit from its controlling shareholder, Mr. Gang Li, through a debt settlement arrangement. The transaction involved the settlement of amounts due from the controlling shareholder, whereby the property was transferred to the Company in satisfaction of the outstanding balance. The Company determined the value of the property based on an independent third-party valuation at the acquisition date.
Management considers the above transactions to be conducted in the normal course of business and, where applicable, based on terms comparable to those that could be obtained in transactions with unrelated parties.
NOTE 12 — TAXES
| (a) | Corporate Income Taxes (“CIT”) |
Cayman Islands
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains, or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands. No stamp duty is payable in the Cayman Islands on the issue of shares by, or any transfers of shares of, Cayman Islands companies (except those which hold interests in land in the Cayman Islands). There are no exchange control regulations or currency restrictions in the Cayman Islands.
Payments of dividends and capital in respect of our ordinary shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our ordinary shares, as the case may be, nor will gains derived from the disposal of our ordinary shares be subject to Cayman Islands income or corporation tax.
British Virgin Islands
Deen Global is incorporated in the BVI as an offshore holding company and is not subject to tax on income or capital gain under the laws of BVI.
Hong Kong
Jenyd is incorporated in Hong Kong and is subject to profit taxes in Hong Kong at a rate of
30
PRC
Under the Enterprise Income Tax (“EIT”) Law of the PRC, domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified
The UFG entities are individually-owned businesses, which are not subject to the EIT Law of the PRC, but the Individual Income Tax. The Measures for Individual Income Tax Calculation of Individual Industrial and Commercial Households, or the “Measures,” were adopted by the State Administration of Taxation on December 19, 2014 and promulgated on December 27, 2014, and amended on June 15, 2018. According to Article 7 of the Measures, for the income from production and operation of individually-owned businesses, the amount of taxable income shall be the balance of the total income of each tax year after deducting costs, expenses, taxes, losses and other expenditures, and allowable compensation for losses in previous years. Income tax for an individually-owned business can generally be assessed on an actual basis or a deemed basis, which the UFG entities apply. The deemed basis adopted by the UFG entities includes two types: taxation based on fixed amount (“Fixed Amount Method”) and taxation based on fixed tax rate (“Fixed Rate Method”), both methods are as determined by the local tax authority on a case-by-case basis. Therefore, income tax for the UFG entities is levied either as a fixed amount pursuant to Fixed Amount Method, or at an industry-specific fixed rate pursuant to the Fixed Rate Method. According to Announcement No. 12 [2021], Announcement No. 6 [2023] and Announcement No. 12 [2023] of the State Taxation Administration, the income tax payable by the UFG entities shall be halved during the period from January 1, 2021 to December 31, 2027. For the six months ended June 30, 2026 and 2025, 42 and 14 of these UFG entities paid income tax, respectively. The rest of these UFG entities were exempted from paying income tax. During the six months ended June 30, 2026 and 2025, the total tax exemption of the UFG entities were $
United States
The Company’s subsidiaries in the U.S. are subject to a U.S. federal corporate income tax rate of
Income (loss) before provision for income taxes is attributable to the following geographic locations for the six months ended June 30, 2026 and 2025:
| For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cayman Islands | $ | $ | ( | ) | ||||
| PRC | ||||||||
| United States | ( | ) | ( | ) | ||||
| Total income (loss) before income taxes | $ | $ | ( | ) | ||||
31
The components of the income tax provision were as follows:
| For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Current tax provision | ||||||||
| Cayman Islands | $ | - | $ | - | ||||
| BVI | - | - | ||||||
| Hong Kong | - | - | ||||||
| PRC | ||||||||
| United States | - | - | ||||||
| $ | $ | |||||||
| Deferred tax provision | ||||||||
| Cayman Islands | $ | - | $ | - | ||||
| BVI | - | - | ||||||
| Hong Kong | - | - | ||||||
| PRC | - | - | ||||||
| United States | - | - | ||||||
| - | - | |||||||
| Income tax provisions | $ | $ | ||||||
Reconciliation of the differences between the income tax provision computed based on PRC statutory income tax rate and the Company’s actual income tax provision for the six months ended June 30, 2026 and 2025 are as follows:
| For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Income tax expense (benefit) computed based on PRC statutory rate | $ | $ | ( | ) | ||||
| Favorable tax rate and tax exemption impact in PRC entities (a) | ( | ) | ( | ) | ||||
| Effect of rate differential for non-PRC entities | ( | ) | ||||||
| Change in valuation allowance | ||||||||
| Total income tax provisions | $ | $ | ||||||
| (a) |
32
The Company’s deferred tax assets, net was comprised of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| Net operating loss | $ | $ | ||||||
| Total deferred tax assets | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Total deferred tax assets, net | $ | - | $ | - | ||||
The Company’s operations in the U.S. incurred a cumulative net operating loss (“NOL”) which may reduce future federal taxable income. As of December 31, 2025, the cumulative NOL was $
The Company periodically evaluates the likelihood of the realization of deferred tax assets, and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. Management considers new evidence, both positive and negative, that could affect the Company’s future realization of deferred tax assets including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes and other relevant factors. The Company determined that it is more likely than not its deferred tax assets could not be realized due to uncertainty on future earnings in the U.S. operations. The Company provided a
| (b) | Taxes payable |
Taxes payable consisted of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| Income tax payable | $ | $ | ||||||
| Value added tax payable | - | |||||||
| Other taxes payable | ||||||||
| Total taxes payable | $ | $ | ||||||
NOTE 13 — SHAREHOLDERS’ EQUITY
Ordinary Shares
Chanson International (formerly known as RON Holding Limited) was incorporated under the laws of the Cayman Islands on July 26, 2019.
33
On March 27, 2021, the Company’s shareholders and board of directors approved
On March 12, 2025, the Company’s shareholders resolved to increase the authorized share capital from $
On August 1, 2025, the Company’s board of directors approved a
On November 12, 2025, the Company’s shareholders resolved to increase the authorized share capital from $
34
On January 6, 2026, the Company entered into a sales agreement (the “Sales Agreement”), with AC Sunshine Securities LLC (the “Sales Agent”) to act as its sales agent in connection with an at-the-market (“ATM”) offering program. Pursuant to the Sales Agreement, the Company may offer and sell, from time to time, to or through the Sales Agent, Class A Ordinary Shares, par value $
On February 23, 2026, the Company’s shareholders resolved a series resolution relating to the reduction and reorganization of the Company’s share capital (the “Share Capital Reduction and Reorganization”), and on March 13, 2026, the Share Capital Reduction and Reorganization were approved by the Registrar of Companies of the Cayman Islands (the “Cayman Registrar”). The principal components of the Share Capital Reduction and Reorganization are as follows:
| 1. | To increase the authorized share capital from $ |
| 2. | The par value of each issued and outstanding Class A Ordinary Share of $ |
| 3. | Immediately following the Share Capital Reduction, each authorized but unissued Class A Ordinary Share of $ |
| 4. | Immediately following the Subdivision, the authorized share capital of the Company be altered by the cancellation of such number of unissued Class A Ordinary Shares of $ |
As a result of the Share Capital Reduction and Reorganization, the Company’s authorized share capital was $
35
On May 5, 2026, the Company announced a
Initial Public Offering
On April 3, 2023, the Company closed its IPO of
Representative Warrants
In connection with the Company’s IPO, the Company agreed to issue warrants to the representative of several underwriters (“Representative warrants”), exercisable for a period of four and a half years commencing six months from the date of commencement of sales of the offering, to purchase
Conversion of Ordinary Shares
On February 5, 2024, the Company’s shareholder Haily Global Limited elected to convert
Issuance of Ordinary Shares
On September 13, 2024, the Company entered into a securities purchase agreement with certain investors identified therein for a best efforts follow-on public offering of (i)
36
On November 5, 2025, the Company entered into a securities purchase agreement with certain investors for a private placement offering of
Issuance of the Equity Security Units
On June 13, 2025, the Company priced a best-efforts public offering for the sale of units as described below. The offering was comprised of
As a result, the Company had
Statutory Reserve
The Company’s PRC subsidiaries are required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve are required to be at least
37
Restricted net assets
The Company’s PRC subsidiaries and the UFG entities are restricted in their ability to transfer a portion of their net assets, equivalent to their statutory reserves and their share capital to the Company in the form of loans, advances, or cash dividends. The payment of dividends by entities organized in China is subject to limitations, procedures, and formalities. Regulations in the PRC currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China. As of June 30, 2026 and December 31, 2025, the total restricted net assets amounted to $
NOTE 14 — COMMITMENTS AND CONTINGENCIES
Contingencies
From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. As of June 30, 2026 and December 31, 2025, there were no legal claims and litigation against the Company.
NOTE 15 — SEGMENT REPORTING
In accordance with ASC 280,
38
The following table presents the segment information for the six months ended June 30, 2026 and 2025, respectively:
| For the Six Months Ended June 30, 2026 | ||||||||||||
| China | United States | Total | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Revenue | $ | $ | $ | |||||||||
| Less: | ||||||||||||
| Cost of revenue | ||||||||||||
| Selling expenses | ||||||||||||
| General and administrative expenses | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||
| Other (expense) income | ||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ||||||
| Other (expense) income, net | ( | ) | ( | ) | ||||||||
| Interest income from long-term debt investments | ||||||||||||
| Profit before income tax expense | ||||||||||||
| Income tax expense | ( | ) | - | ( | ) | |||||||
| Net income | $ | $ | $ | |||||||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Capital expenditures | $ | $ | - | $ | ||||||||
| For the Six Months Ended June 30, 2025 | ||||||||||||
| China | United States | Total | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Revenue | $ | $ | $ | |||||||||
| Less: | ||||||||||||
| Cost of revenue | ||||||||||||
| Selling expenses | ||||||||||||
| General and administrative expenses | ||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ||||||
| Other (expense) income, net | ( | ) | ( | ) | ||||||||
| Interest income from long term debt investment | - | |||||||||||
| Profit (loss) before income tax expense | ( | ) | ( | ) | ||||||||
| Income tax expense | ( | ) | - | ( | ) | |||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | |||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Capital expenditures | $ | $ | $ | |||||||||
39
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| Total assets: | ||||||||
| China | $ | $ | ||||||
| United States | ||||||||
| Total assets | $ | $ | ||||||
| Total liabilities: | ||||||||
| China | $ | $ | ||||||
| United States | ||||||||
| Total liabilities | $ | $ | ||||||
NOTE 16 — SUBSEQUENT EVENTS
On August 14, 2026, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain investors for a private placement offering (the “Private Placement”) of
The Company evaluated subsequent events through September 18, 2026, the date on which these unaudited condensed consolidated financial statements were issued, and concluded that there were no additional subsequent events, other than those disclosed above, requiring adjustment to or disclosure in, the unaudited condensed consolidated financial statements.
40
Exhibit 99.2
Chanson International Holding Announces First Half of Fiscal Year 2026 Financial Results
URUMQI, China, Sep. 18, 2026 /PRNewswire/ -- Chanson International Holding (Nasdaq: CHSN) (the “Company” or “Chanson”), a provider of bakery, seasonal, and beverage products through its chain stores in China and the United States, today announced its unaudited financial results for the six months ended June 30, 2026.
Mr. Gang Li, Chairman of the Board of Directors and Chief Executive Officer of the Company, commented, “In the first half of fiscal year 2026, we remained focused on disciplined execution and operational resilience amid a challenging and evolving consumer environment. We improved our gross margin to 47.7% and returned to profitability, with net income of $0.8 million. This improvement reflects our continued focus on enhancing gross profitability, managing expenses, and optimizing our operations. Our cash position also strengthened significantly, providing us with greater financial flexibility to support ongoing operations and future development. Looking ahead, we will continue to prioritize operational efficiency, prudent cost and capital management, and disciplined execution. We will focus on optimizing our product portfolio and store operations, strengthening customer engagement, and actively pursuing growth opportunities in our markets. We believe these efforts will further strengthen our business fundamentals, enhance our resilience, and support sustainable long-term value creation for our shareholders.”
First Half of Fiscal Year 2026 Financial Summary
| ● | Total revenue was $8.3 million, compared to $8.7 million for the same period of last year. |
| ● | Gross profit was $4.0 million, compared to $3.9 million for the same period of last year. |
| ● | Gross margin was 47.7%, compared to 44.5% for the same period of last year. |
| ● | Net income was $0.8 million, compared to net loss of $1.0 million for the same period of last year. |
| ● | Basic and diluted earnings per share were $0.64, compared to basic and diluted loss per share $286.93 for the same period of last year. |
First Half of Fiscal Year 2026 Financial Results
Revenue
Total revenue was $8.3 million for the six months ended June 30, 2026, representing a 4.5% decrease from $8.7 million for the same period of last year. The decrease in revenue was due to decreased revenue from the stores in the United States (the “United States Stores”), which was partially offset by slightly increased revenue from the stores in China (the “China Stores”).
China Stores
Revenue from the China Stores remained relatively stable with a slight increase by $0.03 million, or 0.4%, from $7.78 million for the six months ended June 30, 2025 to $7.81 million for the six months ended June 30, 2026. The slight increase was mainly due to the increased revenue from bakery products, which was partially offset by the decreased revenue from other products.
| ● | Revenue from bakery products was $7.3 million for the six months ended June 30, 2026, representing a 2.5% increase from $7.2 million for the same period of last year. China’s economic recovery has progressed at a slower pace than expected amid ongoing downward economic pressure, which has softened consumer confidence and led to more cautious spending. Meanwhile, with the growing prevalence of online consumption, consumers have a wider range of choices and can conveniently purchase bakery products from online brands, which has intensified market competition. As a result, the Company’s revenue from bakery products slightly increased due to the challenging economic environment, cautious consumer spending, and shifts in consumer spending patterns, such as the transition from in-store consumption to online consumption during the six months ended June 30, 2026. |
| ● | Revenue from other products was $0.48 million for the six months ended June 30, 2026, representing a 23.9% decrease from $0.63 million for the same period of last year. The decrease was mainly due to decreased revenue from seasonal products and beverage products. Revenue from seasonal products was $0.38 million for the six months ended June 30, 2026, which decreased by 24.7% from $0.51 million for the same period of last year. The decrease was primarily attributable to the challenging economic environment and consumption downgrade as mentioned above. The Company’s customers were more sensitive to the selling price and preferred lower-priced seasonal products with the same quality during the six months ended June 30, 2026. Revenue from beverage products was $0.10 million for the six months ended June 30, 2026, a decrease by 20.5% from $0.12 million for the same period of last year. The opening of new stores by several well-known coffee chain brands in Xinjiang, offering products at low prices to gain market share, provided customers with more choices and contributed to a decline in beverage product revenue at the Company’s China Stores. As of June 30, 2026, a total of five coffee bakery stores were closed: one in fiscal year 2024, one in the first half of fiscal year 2025, and three in the six months ended June 30, 2026. |
United States Stores
Revenue from the U.S. Stores was $0.5 million for the six months ended June 30, 2026, representing a 46.7% decrease from $0.9 million for the same period of last year. The decrease was mainly due to decreased revenue from bakery products, eat-in services and beverage products.
| ● | Revenue from bakery products was $0.04 million for the six months ended June 30, 2026, representing an 82.7% decrease from $0.22 million for the same period of last year. The decrease was primarily attributable to the decreased revenue from Chanson 23rd Street LLC (“Chanson 23rd Street”) and Chanson 2040 Broadway LLC (“Chanson Broadway”). Facing increased competition from competitors operating in the same area, Chanson 23rd Street suspended its bakery products operations in April 2025. For Chanson Broadway, against the same backdrop of intensified local competition, the Company entered into a management and profit-sharing agreement with a third party in February 2026. Under the agreement, Chanson Broadway was rebranded and its operations were entrusted to the third party for a term from February 1, 2026 to January 31, 2032. The Company continued to provide relevant cooperation and business support and is entitled to receive a revenue-based fee from the third party. As a result, Chanson Broadway suspended its self-operated business, which contributed to the decline in bakery products revenue for the six months ended June 30, 2026. |
| ● | Revenue from beverage products was $0.41 million for the six months ended June 30, 2026, representing a 35.8% decrease from $0.64 million for the same period of last year. The decrease was mainly attributable to the decreased revenue from Chanson 23rd Street, driven by intensified competition from operators in the same area, as well as the decreased revenue from Chanson Broadway resulting from the suspension of self-operated business as mentioned above. |
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| ● | Revenue from eat-in services was $0.03 million for the six months ended June 30, 2026, representing a 30.3% decrease from $0.05 million for the same period of last year. As mentioned above, Chanson Broadway suspended its self-operated business in February 2026, hence, revenue from eat-in services decreased for the six months ended June 30, 2026. |
Gross Profit and Gross Margin
Gross profit was $4.0 million for the six months ended June 30, 2026, which slightly increased by 2.4% from $3.9 million for the same period of last year. Gross margin was 47.7% for the six months ended June 30, 2026, which increased by 3.2 percentage points from 44.5% for the same period of last year.
Operating Expenses
Operating expenses were $4.7 million for the six months ended June 30, 2026, compared to $5.1 million for the same period of last year.
| ● | Selling expenses were $3.3 million for the six months ended June 30, 2026, representing a 15.6% increase from $2.8 million for the same period of last year. The increase was primarily attributable to (i) an increase of $0.30 million in salaries and welfare benefit expenses, driven by expanded sales headcount. The Company deployed additional sales personnel to support new stores in the PRC opened in the second half of the fiscal year 2025, in light of its strong business outlook for these operations; and (ii) an increase of $0.22 million in online platform service fees, resulting from the increased online sales on the third-party platform during the six months ended June 30, 2026. |
| ● | General and administrative expenses were $1.5 million for the six months ended June 30, 2026, representing a 33.7% decrease from $2.2 million for the same period of last year. The decrease was primarily attributable to the non-recurrence of $0.5 million bad debt write-off expense recognized during the six months ended June 30, 2025. On April 3, 2023, the Company entered a loan agreement with Liberty Asset Management Capital Limited (the “Borrower”) to lend the Borrower $2.0 million for two years, with a maturity date of April 3, 2025. Due to the Borrower’s financial distress, the Company collected $1.5 million upon maturity of the loan, and the remaining balance of $0.5 million was fully written off and recognized as bad debt expense during the six months ended June 30, 2025. The decrease in general and administrative expenses was also attributable to a decrease of $0.2 million in consultant and professional fees, driven by reduced expenditures on audit, legal and other professional services during the six months ended June 30, 2026. |
Interest Expense, Net
Net interest expense was $0.11 million for the six months ended June 30, 2026, representing a 45.6% increase from net interest expense of $0.08 million for the same period of last year. The increase in net interest expense was primarily attributable to the increased interest expense, which was in line with the increased weighted average loan balance during the six months ended June 30, 2026.
Investment Income from Long-term Debt Investments
Investment income from long-term debt investments was $1.8 million for the six months ended June 30, 2026, representing a 402.6% increase from $0.4 million for the same period of last year. The increase was primarily attributable to the two long-term debt investments entered into on June 30, 2025 and November 6, 2025, respectively. Together, these two investments generated $1.4 million of interest income for the full six months in the current period, while no interest income was recognized from them during the same period of last year. The remaining $0.4 million of interest income was recognized in each of the six-month periods ended June 30, 2026 and 2025, and was solely attributable to the long-term debt investment with Worthy Credit Limited (“Worthy Credit”) entered into on March 31, 2023.
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Net Income (Loss)
Net income was $0.8 million for the six months ended June 30, 2026, compared to net loss of $1.0 million for the same period of last year.
Basic and Diluted Earnings (Loss) per Share
Basic and diluted earnings per share were $0.64 for the six months ended June 30, 2026, compared to basic and diluted loss per share of $286.93 for the same period of last year.
Balance Sheet
As of June 30, 2026, the Company had cash and cash equivalents of $20.0 million, compared to $8.6 million as of December 31, 2025.
Cash Flow
Net cash used in operating activities was $3.2 million for the six months ended June 30, 2026, compared to $0.4 million for the same period of last year.
Net cash provided by investing activities was $0.3 million for the six months ended June 30, 2026, compared to $1.5 million for the same period of last year.
Net cash provided by financing activities was $13.9 million for the six months ended June 30, 2026, compared to $8.6 million for the same period of last year.
About Chanson International Holding
Founded in 2009, Chanson International Holding is a provider of bakery, seasonal, and beverage products through its chain stores in China and the United States. Headquartered in Urumqi, China, Chanson directly operates stores in Xinjiang, China and New York, United States. Chanson currently manages 53 stores in China, and three stores in New York City while selling on digital platforms and third-party online food ordering platforms. Chanson offers not only packaged bakery products but also made-in-store pastries and eat-in services, serving freshly prepared bakery products and extensive beverage products. Chanson aims to make healthy, nutritious, and ready-to-eat food through advanced facilities based on in-depth industry research, while creating a comfortable and distinguishable store environment for customers. Chanson’s dedicated and highly-experienced product development teams constantly create new products that reflect market trends to meet customer demand. For more information, please visit the Company’s website: http://ir.chanson-international.net/.
Forward-Looking Statements
Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can find many (but not all) of these statements by the use of words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may” or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the U.S. Securities and Exchange Commission.
For investor and media inquiries, please contact:
Chanson International Holding
Investor Relations Department
Email: IR@chansoninternational.com
Ascent Investor Relations LLC
Tina Xiao
Phone: +1-646-932-7242
Email: investors@ascent-ir.com
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