Summary and Analysis of Key Points

Overview of Financial Performance

The company’s financial performance for the three months ended March 31, 2025 showed a decline compared to the same period in 2024. Key highlights:

• Net revenues decreased by 44% from $1.50 million to $0.84 million, primarily due to stagnant sales of high-grade synthetic fuel products and a decline in advertising service revenue.
• Cost of revenues decreased by 32% from $1.15 million to $0.79 million, in line with the decrease in sales.
• Gross profit decreased by 84% from $0.35 million to $0.05 million, reflecting the lower revenue.
• Operating expenses decreased, with selling and marketing expenses increasing by 233% and general and administrative expenses decreasing by 19%.
• Net loss decreased by 26% from $1.08 million to $0.80 million, mainly due to a decrease in net loss from discontinued operations.

Revenue and Profit Trends

The company experienced a significant decline in revenue and profitability during the three-month period ended March 31, 2025 compared to the same period in 2024. The primary drivers were:

• Stagnant sales of high-grade synthetic fuel products, which decreased from $1.12 million to $0.78 million.
• Decline in advertising service revenue from $0.38 million to $nil.
• Decrease in gross profit margin from 23.5% to 6.5% due to the revenue decline.

The company was able to partially offset the revenue decline through cost-cutting measures, leading to a smaller decrease in net loss.

Strengths and Weaknesses

Strengths:

• The company was able to reduce general and administrative expenses by 19%, demonstrating some cost discipline.
• Net loss from discontinued operations decreased significantly, indicating progress in winding down unprofitable business lines.

Weaknesses:

• Significant decline in revenue, particularly in the high-grade synthetic fuel and advertising service segments.
• Inability to maintain profitability, with gross profit margin declining from 23.5% to 6.5%.
• Reliance on private financing and related party loans to fund operations, as evidenced by the increase in financing activities.
• Substantial doubt about the company’s ability to continue as a going concern, as indicated by the net loss, working capital deficit, and accumulated deficit.

Outlook and Future Prospects

The company’s future outlook appears uncertain based on the financial results. Key concerns include:

• Continued decline in revenue and profitability, which raises doubts about the sustainability of the business model.
• Reliance on private financing and related party loans to fund operations, which may not be a long-term solution.
• Substantial doubt about the company’s ability to continue as a going concern, as indicated by the financial statements.

To address these challenges, the company will need to develop a comprehensive plan to stabilize and grow its core business segments, reduce costs, and secure more sustainable sources of financing. Failure to do so may result in the company becoming insolvent.