Item 7. Management’s Discussion and Analysis
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion and analysis of our results of operations and financial condition for fiscal years ended December 31, 2025, and 2024,
should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in
this Annual Report. Some of the information contained in this management’s discussion and analysis or set forth elsewhere in this
Annual Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking
statements that involve risks, uncertainties, and assumptions. As a result of many factors, including those factors set forth in the “Risk
Factors” section of this Annual Report, our actual results could differ materially from the results described in or implied by the
forward-looking statements contained in this Annual Report.
Company Overview
Greenpro
Capital Corp. (the “Company” or “Greenpro”) was incorporated in the State of Nevada on July 19, 2013. We provide
cross-border business solutions and accounting outsourcing services to small and medium-sized businesses located in Asia, with an initial
focus on Hong Kong, China and Malaysia. Greenpro provides a range of services as a package solution (the “Package Solution”)
to our clients, and we believe that our clients can reduce their business costs and improve their revenues.
In addition to our business solution
services, we also operate a venture capital business through Greenpro Venture Capital Limited, an Anguilla corporation. One of our venture
capital business segments focuses on (1) establishing a business incubator for start-up and high-growth companies to support such companies
during critical growth periods, which will include education and support services, and (2) searching for investment opportunities in selected
start-up and high-growth companies, which may generate significant returns to the Company. Our venture capital business focuses on companies
located in Southeast Asia and East Asia, including Hong Kong, China, Malaysia, Thailand, and Singapore. Another venture capital business
segment focuses on rental activities of commercial properties and the sale of investment properties.
One of our Labuan subsidiaries,
Green-X Corp. (“Green-X”), was approved and compliant with all the requirements by Labuan Financial Services Authority (Lembaga
Perkhidmatan Kewangan Labuan) in 2022 to establish a platform under Part IX of the Labuan Financial Services and Securities Act 2010 (LFSSA),
pursuant to Section 134 of the LFSSA.
Green-X
is a platform operator licensed under the LFSSA whereby security token issuers (“Issuers”) offer their security tokens for
subscription and trading by investors (“Investors”) through the Green-X digital asset exchange (“Green-X DAX”)
platform. ISRA International Consulting Sdn. Bhd. (“ISRA Consulting” or “Shariah Adviser of the platform”) is
responsible for advising on and ensuring end-to-end Shariah compliance for the Green-X DAX platform’s operations.
ISRA Consulting issued a Shariah
pronouncement for the Green-X DAX platform (the “Pronouncement”) on June 22, 2023. The Pronouncement was valid for one (1)
renewable year from the signing date. Following the expiration of the Pronouncement, ISRA Consulting conducted a Shariah review exercise
in preparation for its renewal. The Shariah review followed a specific methodology and serves as the basis for the renewal decision.
Pursuant to the Shariah review, the Green-X DAX platform’s operations and related documents complied with the principles of Shariah.
The Pronouncement was renewed on September 20, 2024, and is subject to further renewal from September 20, 2025, for one (1) year. As
of the date of the report, the renewal process is still in progress.
Results of Operations
For information regarding our
controls and procedures, see Part–II, Item 9A - Controls and Procedures, of this Annual Report.
During
the years ended December 31, 2025, and 2024, we principally operated in three regions: Hong Kong, China, and Malaysia. We derived revenues
from the provision of business services, digital platform services and trading of digital assets, and leasing or trading of our commercial
properties, respectively.
A table
further describing our revenues and the cost of revenues is set forth below:
Year ended December 31,
2025
2024
REVENUES:
Service revenue (including $58,861 and $364,336 of service revenue from related parties for the years ended December 31, 2025, and 2024, respectively)
$ 1,843,968
$ 3,091,903
Digital revenue (including $21,000 of digital revenue from related parties for the year ended December 31, 2024)
168,240
327,802
Rental revenue
61,349
76,700
Total revenues
2,073,557
3,496,405
COST OF REVENUES:
Cost of service revenue (including $14,642 and $10,934 of cost of revenue to related parties for the years ended December 31, 2025, and 2024, respectively)
(351,491 )
(355,120 )
Cost of digital revenue
(41,509 )
(48,495 )
Cost of rental revenue
(14,393 )
(22,825 )
Total cost of revenues
(407,393 )
(426,440 )
GROSS PROFIT
1,666,164
3,069,965
OPERATING EXPENSES:
General and administrative expenses (including $145,505 and $149,817 of general and administrative expenses to related parties for the years ended December 31, 2025, and 2024, respectively)
(3,818,580 )
(4,039,243 )
LOSS FROM OPERATIONS
$ (2,152,416 )
$ (969,278 )
67
Comparison of the years
ended December 31, 2025, and 2024
Total Revenues
Total revenue was $2,073,557 and
$3,496,405 for the years ended December 31, 2025, and 2024, respectively.
The decrease of $1,422,848 was
primarily due to a decrease in service business revenue during the year ended December 31, 2025. We expect revenue from our service business
to recover slightly as we are exploring new markets.
Service Business Revenue
Revenue from the provision of
business services was $1,843,968 and $3,091,903 for the years ended December 31, 2025, and 2024, respectively. It was derived principally
from the provision of business consulting and advisory services, as well as company secretarial, accounting, and financial analysis services.
We experienced a decrease in service business revenue as fewer corporate advisory services including both listing and non-listing services
were rendered during 2025.
Digital Revenue
Revenue
from the digital platform and trading was $168,240 and $327,802 for the years ended December 31, 2025, and 2024, respectively. It was
derived from the sale of our digital assets, GX Token, of $752 and provision of platform services and trading of other digital assets
of $167,488 for the year ended December 31, 2025, and the sale of GX Token of $131,921 and provision of platform services and trading
of other digital assets of $195,881 for the year ended December 31, 2024, respectively. We experienced a decrease in digital revenue as
a drop in income from both the sales of GX Token and the platform services during 2025.
Real Estate Business
Rental
Revenue
Revenue
from rentals was $61,349 and $76,700 for the years ended December 31, 2025, and 2024, respectively. It was derived from the leasing properties
in Malaysia and Hong Kong. We expect our rental income to be stable.
Sale
of Properties
There
was no revenue generated from the sale of real estate properties for the years ended December 31, 2025, and 2024, respectively.
Total Operating Costs
and Expenses
Total
operating costs and expenses were $4,225,973 and $4,465,683 for the years ended December 31, 2025, and 2024, respectively. They consist
of cost-of-service revenue, cost of digital revenue, cost of rental revenue and general and administrative (“G&A”) expenses.
The Company incurred $3,818,580 and $4,039,243 of G&A expenses for the years ended December 31, 2025, and 2024, respectively.
Loss
from operations for the years ended December 31, 2025, and 2024 was $2,152,416 and $969,278, respectively. The increase in the loss from
operations was mainly due to a decrease in our service business revenue of $1,247,935 during 2025.
Cost of Service Business
Revenue
Cost
of revenue from the provision of services was $351,491 and $355,120 for the years ended December 31, 2025, and 2024, respectively. It
primarily consists of employee compensation and related payroll benefits, company formation costs, and other professional fees, directly
attributable to costs related to the services rendered.
We experienced
a slight decrease in other professional fees directly attributable to the provision of services for the year ended December 31, 2025.
68
Cost of Digital Revenue
Cost
of revenue for the provision of digital platform services and trading of digital assets was $41,509 and $48,495 for the years ended December
31, 2025, and 2024, respectively. It primarily consists of the cost of technical advisory and IT support to blockchain-based services,
directly attributable to the cost of digital platforms and digital assets.
Cost of Rental Revenue
Cost
of rental revenue was $14,393 and $22,825 for the years ended December 31, 2025, and 2024, respectively. It includes the costs associated
with governmental charges, repairs and maintenance, property management fees and insurance, depreciation, and other related administrative
costs. Utility expenses are borne and paid directly by individual tenants. A decrease in the cost of rental revenue was mainly due to
40% of our Hong Kong subsidiary’s real estate properties being distributed to its non-controlling interest in April 2024. As a result,
fewer property units were available for leasing and lower costs were incurred during 2025.
Cost of Real Estate Properties
Sold
During
the years ended December 31, 2025, and 2024, no real estate property was sold, and hence no cost was incurred.
General and Administrative
Expenses
G&A expenses were $3,818,580
and $4,039,243 for the years ended December 31, 2025, and 2024, respectively. In 2025, our G&A expenses primarily consisted of staff
costs of $1,508,563, directors’ salaries and compensation of $717,424, advertising and marketing of $116,347, consulting fee of
$294,234, IT expenses of $120,101, rent and rates of $113,351, and audit, legal, and other professional fees of $451,553. In 2024, our
G&A expenses primarily consisted of staff costs of $1,618,143, directors’ salaries and compensation of $720,658, advertising
and marketing of $262,326, consulting fee of $141,512, provision for credit losses of $90,223, rent and rates of $114,208, and audit,
legal, and other professional fees of $447,342. The decreased G&A expense of $220,663 was mainly derived from the decrease in staff
costs of $109,580 and advertising and marketing of $145,979 and provision for credit losses of $91,048, offset by the increase of consulting
fee of $152,722 during 2025. We expect our G&A expenses to slightly increase as we are developing our digital platform business through
our Labuan subsidiary, Green-X Corp., and the digital banking businesses through another Labuan subsidiary, Global Business Hub Limited.
Other Income or Expenses
Net other expenses were $817,676 for the year ended
December 31,2025, while net other income was $247,890 for the year ended December 31, 2024. In 2025, net other expenses mainly consisted
of impairment of property and equipment of $813,552 and impairment of real estate held for sale of $96,846, offset by a gain on disposal
of investment of $39,800. In 2024, the net other income mainly consisted of other income from a gain on disposal of investments of $324,917,
a gain on disposal of real estate held for investment of $21,634 and interest income of $19,161, offset by impairment of other investments
of $87,425 and impairment of goodwill of $82,561.
Net Loss Attributable
to Non-controlling Interest
The Company
recorded net loss attributable to noncontrolling interest in the consolidated statements of operations for a non-controlling interest
(the “NCI”) of a consolidated subsidiary, Forward Win International Limited (“FWIL”), which is principally engaged
in trading and leasing of properties in Hong Kong.
The Company
had been a 60% shareholder of FWIL since its inception.
On April 15, 2024, the Company
acquired the remaining 40% shares of FWIL from the NCI by the distribution of 40% of FWIL’s real estate properties for consideration
of its acquisition and settlement of a loan from the NCI (the “Acquisition”).
After the Acquisition, FWIL becomes
the wholly owned subsidiary of the Company, and hence no profit or loss was attributable to the NCI thereafter.
The Company recorded a net loss
attributable to the NCI of $10,543 for the year ended December 31, 2024.
Net Loss
Net loss
was $2,982,333 and $725,827 for the years ended December 31, 2025, and 2024, respectively. The increase in net loss was mainly due to
a decreased service business revenue of $1,247,935, impairment of property of equipment of $813,552 and impairment of real estate held
for sale of $96,846 during 2025, while no such impairments in 2024.
There
were no seasonal aspects that had a material effect on the financial condition or results of operations of the Company.
Other than as disclosed elsewhere
in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2025
that are reasonably likely to have a material adverse effect on our financial condition, changes in our financial condition, revenues
or expenses, results of operations, liquidity, capital expenditures or capital resources, or that would cause the disclosed financial
information to be not necessarily indicative of future operating results or financial conditions.
69
Off-Balance Sheet Arrangements
We have
no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,
changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources
that are material to our stockholders as of December 31, 2025.
Contractual Obligations
As of
December 31, 2025, one of our subsidiaries has an operating lease agreement for one office space in Hong Kong with a non-cancellable term
of two years from March 15, 2023, to March 14, 2025, and a cancellable term of one year from March 15, 2025, to March 14, 2026.
On December
31, 2025, the future minimum rental payments under this lease in the aggregate is approximately $20,001 and is due in the first quarter
of 2026.
In June
2023, one of our subsidiaries in Malaysia purchased a motor vehicle, and the majority amount of the purchase, $18,957, was funded by Maybank
Islamic under a finance lease agreement with a term of five years commencing from June 3, 2023, to June 2, 2028. As of December 31, 2025,
the future minimum lease payments under this lease in the aggregate are approximately $12,266 and are due as follows: 2026: $5,077, 2027:
$5,077 and 2028: $2,112.
Related Party Transactions
For the years ended December 31,
2025, and 2024, related party service revenue totaled $58,861 and $364,336, respectively.
During 2025, related party service
revenue principally includes service revenue generated from Greenpro Trust Limited (“GTL”) of $16,137 and SEATech Ventures
Corp. (“SEATech”) of $13,132, in aggregate representing approximately 50% of the related party service revenue and 2% of the
service revenue for the year ended December 31, 2025.
During 2024, related party service
revenue principally includes service revenue generated from Celmonze Wellness Corporation (“Celmonze”) of $149,459 and REBLOOD
Biotech Corp. (“REBLOOD”) of $66,245, in aggregate representing approximately 59% of the related party service revenue and
7% of the service revenue for the year ended December 31, 2024.
For the year ended December 31,
2024, digital revenue from related parties totaled $21,000.
During 2024, related party digital
revenue principally includes revenue generated from our Chief Executive Officer, Lee, Chong Kuang (“Mr. Lee”), of $20,000,
representing approximately 95% of revenue from the related party digital revenue for the year ended December 31, 2024.
For the years ended December 31,
2025, and 2024, cost of service revenue to related parties was $14,642 and $10,934, respectively.
During 2025, related party cost
of service revenue includes cost of services paid to Falcon Management Limited (“FML”) of $5,000, Falcon Consulting Limited
(“FCL”) of $2,142, and Loke Yu (“Jimmy”) of $7,500, respectively. FML is wholly owned by our Chief Financial Officer,
Loke, Che Chan Gilbert (“Mr. Loke”), FCL is wholly owned by Mr. Loke’s spouse, and Jimmy is Mr. Loke’s brother.
During 2024, related party cost
of service revenue includes cost of services paid to FML of $5,054, FCL of $2,130 and Jimmy of $3,750, respectively.
For the years ended December 31,
2025, and 2024, related party G&A expenses totaled $145,505 and $149,817, respectively.
During 2025, related party G&A
expenses included consulting fees paid to Ms. Yap, Pei Ling (“Ms. Yap”), spouse of our Chief Executive Officer, Mr. Lee of
$13,850, Ms. Yap’s wholly owned company, Bright Interlink Sdn. Bhd. (“BISB”), of $14,057 and FML of $31,420, and management
fees paid to Greenpro Global Capital Village Sdn. Bhd. (“GGCVSB”) of $86,178, a Malaysian company jointly owned by Mr. Lee
and Mr. Loke.
During 2024, related party G&A
expenses include consulting fees paid to Ms. Yap of $14,996, BISB of $13,814 and FCL of $40,293, and management fees paid to GGCVSB of
$80,714.
70
For the years ended December 31,
2025, and 2024, related party other income was $38,729 and $47,635, respectively.
During 2025, related party other
income includes other income generated from Acorn Finance Limited (“Acorn”) of $10,773 and Greenpro Trust Limited (“GTL”)
of $27,956.
During 2024, related party other
income includes other income generated from Acorn of $11,895, GTL of $35,685, and SEATech Ventures Corp. (“SEATech”) of $55.
For the years ended December 31,
2025, and 2024, related party interest income was $6,103 and $5,073, respectively.
During 2025, related party interest
income includes interest income generated from GTL of $1,616 and GTL’s subsidiary, Greenpro Custodian Service Limited (“GCSL”)
of $4,487.
During 2024, related-party interest
income includes interest income generated from GTL of $962 and GCSL of $4,111.
For the
years ended December 31, 2025, and 2024, gain on disposal of related party investments was $39,800 and $324,917, respectively.
During
2025, gain on disposal of related party investment generated from the sale of common stock of Jocom Holdings Corp. (“Jocom”)
of $39,800.
During
2024, gain on disposal of related party investments includes the gain from the sale of common stock of Agape ATP Corporation (“Agape”)
of $307,597 and MU Global Holding Limited (“MUGH”) of $17,320.
A reversal
of impairment of related party investment represents the reversal of impairment of Jocom of $150 for the year ended December 31, 2025.
For the
years ended December 31, 2025, and 2024, impairment of related party investments was $12,073 and $87,425, respectively.
During 2025, impairment of related
party investments includes impairment from investment of GTL of $11,981 and SEATech of $92.
During 2024, impairment of related
party investments includes impairment from investment of New Business Media Sdn. Bhd. of $82,000, Angkasa-X Holdings Corp. of $2,800,
Global Leaders Corporation of $900, ACT Wealth Academy Inc. of $600, Best2bid Technology Corp. of $550, Ata Global Inc. of $225, catTHIS
Holdings Corp. of $200 and Jocom Holdings Corp. of $150.
Loss
on disposal of a related party investment, REBLOOD Biotech Corp. was $100 for the year ended December 31, 2024.
Net accounts receivable from related
party of $41 was recorded as of December 31, 2024.
As of December 31, 2024, the net
accounts receivable from a related party, was due from Mr. Loke of $41.
Amounts due from related parties
were $995,640 and $954,184 as of December 31, 2025, and 2024, respectively. Amounts due to related parties were $101,922 and $57,497 as
of December 31, 2025, and 2024, respectively.
As of December 31, 2025, amounts
due from related parties mainly include amounts due from GGCVSB of $815,034, First Bullion Holdings Inc. (“FBHI”) of $90,000
and GTL of $88,909, while the amounts due to related parties mainly include Mr. Loke’s wholly owned company, Falcon Certified Public
Accountants Limited (“FCPA”), of $91,209.
As of December 31, 2024, amounts
due from related parties mainly include amounts due from GGCVSB of $772,311, FBHI of $90,000 and GTL of $90,207, while amounts due to
related parties mainly include FCPA of $22,820 and our CEO, Mr. Lee of $20,677.
71
Deferred costs of revenue
to related parties were $6,250 and $18,750 as of December 31, 2025, and 2024, respectively.
As of December 31, 2025, deferred
costs of revenue to related parties were $3,750 and $2,500 associated with Loke Yu (“Jimmy”) and Falcon Management Limited
(“FML”), respectively.
As of December 31, 2024, deferred
costs of revenue to related parties were $11,250 and 7,500 associated with Jimmy and FML, respectively.
As of December 31, 2024, other
investments in related parties were $12,073 which mainly include an investment in GTL of $11,981.
Our related parties are mainly
those companies, in which Greenpro Venture Capital Limited or Greenpro Resources Limited owns a certain number of shares or a certain
percentage of interest in those companies, or the Company can have significant influence over those companies’ financial and operating
policy decisions. Some of the related parties are either controlled by or under the common control of Mr. Loke, Che Chan Gilbert or Mr.
Lee, Chong Kuang, executive officers and directors of the Company.
Critical Accounting Policies
and Estimates
Use of estimates
The preparation of financial statements
in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions relating to the
reporting of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Significant accounting estimates include certain assumptions related to,
among others, the allowance for doubtful accounts receivable, impairment analysis of real estate assets and other long-term assets, including
goodwill, valuation allowance on deferred income taxes, and the accrual of potential liabilities. Actual results may differ from these
estimates.
Revenue recognition
The Company follows the guidance
of Accounting Standards Codification (ASC) 606, Revenue from Contracts . ASC 606 creates a five-step model that requires entities
to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer,
(2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction
price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only
applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange
for the services it transfers to its clients.
The Company’s revenue consists
of revenue from providing business consulting and corporate advisory services (“service revenue”), revenue from the provision
of digital platforms and trading of digital assets (“digital revenue”), revenue from the rental of real estate properties,
and the sale of real estate properties (“real estate revenue”).
Impairment of long-lived assets
Long-lived assets primarily include
real estate held for investment, property and equipment, and intangible assets. In accordance with the provisions of ASC 360, the Company
generally conducts its annual impairment evaluation of its long-lived assets in the fourth quarter of each year, or more frequently if
indicators of impairment exist, such as a significant sustained change in the business climate. The recoverability of long-lived assets
is measured at the reporting unit level. If the total of the expected undiscounted future net cash flows is less than the carrying amount
of the asset, a loss is recognized for the difference between the fair value and the carrying amount of the asset. In addition, for real
estate held for sale, an impairment loss is the adjustment to fair value less estimated cost to dispose of the asset.
Goodwill
Goodwill is the excess of cost
of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination. Under
the guidance of ASC 350, goodwill is not amortized; rather, it is tested for impairment annually and will be tested for impairment between
annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. An impairment loss generally
would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting
unit and would be measured as the excess carrying value of goodwill over the derived fair value of goodwill. The Company’s policy
is to perform its annual impairment testing for its reporting units on December 31 of each fiscal year.
Digital
assets
Effective
January 1, 2025, the Company adopts Accounting
Standards Update (ASU) 2023-08, Intangibles — Goodwill and Other—Crypto Assets
(Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. This update requires the Company subsequently to remeasure
its crypto assets at fair value in the consolidated balance sheets and record gains and losses from remeasurement in net income (loss)
in the consolidated statements of operations.
The
Company determines the fair value of its crypto assets on a nonrecurring basis in accordance with ASC 820, Fair Value Measurements ,
based on quoted (unadjusted) prices on the exchange market. The Company performs an analysis each quarter to identify whether events
or changes in circumstances, principally decreases in the quoted (unadjusted) prices on the active exchange, indicates that it is more
likely than not that any of the assets are impaired.
Derivative financial instruments
Derivative financial instruments
consist of financial instruments that contain a notional amount and one or more underlying variables, such as interest rate, security
price, variable conversion rate or other variables, require no initial net investment and permit net settlement. The derivative financial
instruments may be free-standing or embedded in other financial instruments. The Company evaluates its financial instruments to determine
if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company follows the provision of ASC
815, Derivatives and Hedging, for derivative financial instruments that are accounted for as liabilities. The derivative instrument is
initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements
of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as
equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current
or non-current based on whether net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet
date. At each reporting date, the Company reviews its convertible securities to determine that their classification is appropriate.
Recent accounting pronouncements
Refer to Note 1 in the accompanying consolidated financial
statements.
72
Liquidity and Capital
Resources
Our cash balance on December 31,
2025, was $636 , 659, as compared to $1,124,818 on December 31, 2024, a decrease of $488,159.
We estimate we may have sufficient cash available to meet our anticipated working capital for the next twelve months upon improving its
profitability and the continuing financial support from its major shareholders.
The accompanying consolidated
financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the settlement of liabilities
and commitments in the normal course of business. During the year ended December 31, 2025, the Company recorded a net loss of $2,982,333
and net cash used in operations of $1,790,250, and as of December 31, 2025, the Company incurred accumulated deficit of $40,246,712. These
factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the
financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on the
Company’s financial statements on December 31, 2025, has expressed substantial doubt about the Company’s ability to continue
as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue
as a going concern.
The Company’s ability to
continue as a going concern is dependent upon improving its profitability and the continuing financial support from its major shareholders.
Management believes the existing shareholders or external financing will provide additional cash to meet the Company’s obligations
as they become due.
Despite
the amount of funds that the Company has raised in the past, no assurance can be given that any future financing, if needed, will be available
or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company can obtain additional financing,
if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its shareholders,
in the case of equity financing.
Operating activities
Net cash used in operating activities
was $1,790,250 and $1,360,454 for the years ended December 31, 2025, and 2024, respectively. The net cash used in operating activities
in 2025 primarily consisted of a net loss of $2,982,333 and an increase in digital assets of $89,763, offset by impairment of property
and equipment of $813,552, impairment of real estate held for sale of $96,846, a decrease in net accounts receivable of $85,716 and an
increase in accounts payable and accrued liabilities of $190,714. The net cash used in operating activities in 2024 primarily consisted
of a net loss of $725,827, a gain on disposal of other investments of $324,917, a decrease in deferred revenue of $862,404, an increase
in digital assets of $192,398 and offset by an increase in accounts payable and accrued liabilities of $250,412 and a decrease in prepaids
and other current assets of $179,857.
Non-cash
net expenses totaled $1,132,696 and $159,679 for the years ended December 31, 2025, and 2024, respectively.
Non-cash expenses, net was comprised
of non-cash expenses from depreciation and amortization of $240,147, impairment of property and equipment of $813,552, impairment of real
estate held for sale of $96,846, impairment of other investments of $12,073, impairment of goodwill of $6,035 and fair value loss on digital
assets of $4,818 and offset by non-cash income from gain on disposal of investment of $39,800, recapture of credit losses of $825 and
reversal of impairment of investment of $150 for the year ended December 31, 2025.
Non-cash
expenses, net was comprised of non-cash expenses from depreciation and amortization of $245,921, provision for credit losses of $90,223,
impairment of other investments of $87,425, impairment of goodwill of $82,561 and loss of disposal of investment of $100 and offset by
non-cash income from gain on disposal of investments of $324,917 and gain on disposal of real estate held for investment of $21,634 for
the year ended December 31, 2024.
The Company
incurred operating losses and had net cash used in operating activities during the past two years.
Investing activities
Net cash
provided by investing activities was $37,162 and $601,277 for the years ended December 31, 2025, and 2024, respectively.
During
2025, the cash provided by investing activities was the proceeds from disposal of other investments of $39,950, offset by the cash used
in the purchase of equipment of $2,788.
During
2024, the cash provided by investing activities was composed of the proceeds from the disposal of other investments of $322,820, proceeds
from real estate held for investment of $267,985 and proceeds from real estate held for sale of $15,632, offset by the cash used in the
purchase of equipment of $5,068 and purchase of other investment of $92.
Financing activities
Net cash
provided by financing activities was $1,234,025 for the year ended December 31, 2025, while net cash used in financing activities was
$208,768 for the year ended December 31, 2024.
During
2025, the net cash provided by financing activities was composed of the proceeds from the sale of Common Stock in private placements of
$1,235,000 and the advance payments from related parties of $2,969, offset by the cash used in the principal repayment of finance lease
liabilities of $3,944.
During
2024, the net cash used in financing activities was composed of the cash used in the advance payments to related parties of $205,321 and
the principal repayment of finance lease liabilities of $3,447.
During
2025, the Company issued 1,050,000 shares of its Common Stock in private placements, for total cash proceeds of $1,235,000. As of December
31, 2025, there were 8,625,813 shares of Common Stock issued and outstanding.
During
2024, the Company did not issue any shares of its Common Stock, and as of December 31, 2024, there were 7,575,813 shares of Common Stock
issued and outstanding.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
We are a smaller reporting company
as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
The financial statements required
by this item are located following the signature page of this Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.