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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549

 

FORM 10-Q

 

(Mark one)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2025

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 000-56650

 

TRANSIT PRO TECH INC.

(Exact name of registrant as specified in its charter)

 

Delaware   93-1692034
(State or other jurisdiction of
incorporation or organization)
  (IRS Employer
Identification No.)

 

100 N. Barranca Street, Suite 460
West Covina, California 91791
(Address of principal executive offices)

 

626 332-5398
(Issuer’s telephone number)

 

Securities Registered Pursuant to Section 12(g) of the Act:

 

Title of Each Class   Trading Symbol(s)   Name of each Exchange on which Registered
Common Stock, $0.0001 Par Value   N/A   N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Yes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

Large accelerated filer   Accelerated filer
Non-accelerated filer   Smaller reporting company
      Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Yes No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date: As of May 11, 2025, there were 20,418,500 shares of the registrant’s common stock outstanding.

 

 

 

 

 

TRANSIT PRO TECH INC.
FORM 10-Q
March 31, 2025
INDEX

 

  Page
   
Special Note Regarding Forward Looking Statements 3
     
Part I – Financial Information 4
     
Item 1. Unaudited Condensed Consolidated Financial Statements 4
     
  Condensed Consolidated Balance Sheets as of March 31, 2025 (Unaudited) and September 30, 2024 3
     
  Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Six Months Ended March 31, 2025 and 2024 4
     
  Unaudited Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Six Months Ended March 31, 2025 5
     
  Unaudited Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended March 31, 2025 and 2024 6
     
  Notes to Unaudited Condensed Consolidated Financial Statements 7
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 4
     
Item 4. Controls and Procedures 11
     
Part II – Other Information 12
     
Item 1. Legal Proceedings 12
     
Item 1A. Risk Factors 12
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 12
     
Item 3. Defaults Upon Senior Securities 12
     
Item 5. Other Information 12
     
Item 6. Exhibits 13
     
  Signatures 14

 

2

 

 

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

 

This report contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on forward-looking statements. Forward-looking statements include, among other things, statements relating to:

 

  our goals and strategies;
     
  our future business development, financial condition and results of operations;
     
  our expectations regarding demand for, and market acceptance of, our products;
     
  our expectations regarding keeping and strengthening our relationships with merchants, manufacturers and end-users; and
     
  general economic and business conditions in the regions where we provide our services.

 

Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference and filed as exhibits to the report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

 

FORWARD STOCK SPLIT

 

Effective October 10, 2024, we completed a 20 for 1 forward stock split (the “Stock Split”) of our authorized, issued and outstanding shares of common stock, par value $0.0001. Each pre-split share of common stock outstanding was automatically converted into 20 new shares of common stock. As a result, 1,000,000 shares of post-split Common Stock were converted into 20,000,000 shares of Common Stock. Except as otherwise indicated, all share and per share numbers contained herein have been adjusted to give effect to the forward stock split. 

 

3

 

 

PART I

 

FINANCIAL INFORMATION

 

 

 

 

 

Unaudited Condensed Consolidated Financial Statements as of March 31, 2025, and for the three and six months ended March 31, 2025  
   
Unaudited Condensed Consolidated Balance Sheets 3
   
Unaudited Condensed Consolidated Statements of Operations 4
   
Unaudited Condensed Consolidated Statements of Shareholders’ Deficit 5
   
Unaudited Condensed Consolidated Statements of Cash Flows 6
   
Notes to Unaudited Condensed Consolidated Financial Statements 7 - 22

 

 

 

 

TRANSIT PRO TECH INC.

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

As of March 31, 2025

 

   As of March 31,
2025
   As of September 30,
2024
 
   US$
(Unaudited)
   US$ 
         
ASSETS          
Current assets          
Cash and cash equivalents   265,743    16,507 
Deposit and other receivables, net   5,359    5,665 
Amount due from shareholders, net       14,446 
Total current assets   271,102    36,618 
Total assets   271,102    36,618 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
Current liabilities          
Accrued expenses and other payables   401,261    301,596 
Amount due to shareholders   21,590     
Amount due to related parties   235,425    861,872 
Total current liabilities   658,276    1,163,468 
Total liabilities   658,276    1,163,468 
           
Shareholders’ deficit          
Common stock- $0.0001 par value, 100,000,000 authorized shares, 20,418,500 issued and outstanding shares on March 31, 2025 and $0.0001 par value, 20,000,000 authorized shares, 1,000,000 issued and outstanding shares on September 30, 2024   2,042    100 
Additional paid-in capital   1,681,958    9,900 
Subscription receivables   (726,826)    
Accumulated other comprehensive income   8,724     
Accumulated deficit   (1,353,072)   (1,136,850)
Total shareholders’ deficit   (387,174)   (1,126,850)
Total liabilities and shareholders’ deficit   271,102    36,618 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

3 

 

 

TRANSIT PRO TECH INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

For the three and six months ended March 31, 2025

 

                         
   For the three months ended March 31,   For the six months ended March 31, 
   2025   2024   2025   2024 
  

US$

(Unaudited) 

  

US$

(Unaudited)

  

US$

(Unaudited)

  

US$

(Unaudited)

 
                 
Revenue from related party   70,500        175,796     
Cost of revenue   (17,452)       (28,355)    
                     
Gross profit   53,048        147,441     
General and administrative expenses   (131,902)   (169,300)   (282,733)   (276,246)
Research and development expenses   (46,201)   (89,177)   (71,844)   (89,177)
                     
Operating losses   (125,055)   (258,477)   (207,136)   (365,423)
Other income/(expense)   646    1,461    (7,984)   1,461 
Interest income/(expense)   3,064    (819)   (1,102)   (819)
                     
Loss before income taxes   (121,345)   (257,835)   (216,222)   (364,781)
Income taxes expense                
Net losses   (121,345)   (257,835)   (216,222)   (364,781)
                     
Other comprehensive income                    
Foreign currency translation adjustment   (553)       8,724     
Total comprehensive loss   (121,898)   (257,835)   (207,498)   (364,781)
                     
Loss per share                    
– Basic and diluted   (0.01)   (0.26)   (0.01)   (0.36)
                     
Weighted average number of ordinary shares outstanding                    
– Basic and diluted   20,032,192    1,000,000    19,285,327    1,000,000 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

4 

 

 

TRANSIT PRO TECH INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

 

For the three and six months ended March 31, 2025

 

                         
   Common stock   Paid in capital  

Subscription

receivable

   Accumulated deficit   Accumulated other comprehensive income   Total 
   US$   US$   US$   US$   US$   US$ 
As of September 30, 2024   100    9,900        (1,136,850)       (1,126,850)
Stock split   1,900    (1,900)                
Net losses for the period               (94,877)       (94,877)
Foreign currency translation adjustment                   9,277    9,277 
As of December 31, 2024   2,000    8,000        (1,231,727)   9,277    (1,212,450)
Issuance of common stock   42    1,673,958    (726,826)           947,174 
Net losses for the period               (121,345)       (121,345)
Foreign currency translation adjustment                   (553)   (553)
As of March 31, 2025   2,042    1,681,958    (726,826)   (1,353,072)   8,724    (387,174)
                               
As of September 30, 2023   100    9,900    (10,000)   (141,580)       (141,580)
Net losses for the period               (106,946)       (106,946)
As of December 31, 2023   100    9,900    (10,000)   (248,526)       (248,526)
Proceeds from shareholders           10,000            10,000 
Net losses for the period               (257,835)       (257,835)
As of March 31, 2024   100    9,900        (506,361)       (496,361)

 

The accompanying notes are an integral part of these Unaudited Condensed consolidated financial statements.

 

5 

 

 

TRANSIT PRO TECH INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

For the three and six months ended March 31, 2025

 

             
   For the six months ended March 31, 
   2025   2024 
  

US$ 

(Unaudited)

  

US$

(Unaudited)

 
         
CASH FLOWS FROM OPERATING ACTIVITIES          
Loss before income taxes   (216,222)   (364,781)
Interest expense   1,102    819 
Allowance for credit losses   (295)    
           
Changes in operating assets and liabilities:          
Decrease/(increase) in deposit and other receivables   601    (6,413)
Decrease in amount due from shareholders   14,446     
Increase in accrued expenses and other payables   99,665    46,902 
Net cash used in operating activities   (100,703)   (323,473)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from shareholders   947,174    10,000 
Increase/(decrease) in amount due to shareholders   21,590    (12,700)
(Decrease)/increase in amount due to related parties   (627,549)   340,154 
Net cash provided by financing activities   341,215    337,454 
           
Effect of foreign currency translation   8,724     
           
Net increase in cash and cash equivalents   249,236    13,981 
Cash and cash equivalents, beginning of period   16,507    7,841 
Cash and cash equivalents, end of period   265,743    21,822 
           
Supplemental disclosures of cash flow information:          
Tax paid        
Interest paid        

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

6

 

 

TRANSIT PRO TECH INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2025

 

1.Organization

 

Transit Pro Tech Inc (the “Company”), was incorporated in the State of Delaware on June 1, 2023. On July 24, 2023, the Company established a wholly-owned subsidiary, Transit Pro Tech. Limited (“TPTL”), a limited liability company registered in Hong Kong. On December 7, 2023, TPTL established a wholly-owned subsidiary, Shenzhen Guantu Technology Co., Limited (“SGTCL”) in Shenzhen, the People’s Republic of China.

 

The Company and its subsidiaries (collectively referred to the “Group”) are engaged in selling hardware and software of Intelligent Driver Management System (“IDMS”), Intelligent Rail Flaw Detection System (“IRFDS”), Intelligent Tunnel Inspection System (“ITIS”) and Intelligent Overhead Contact System (“IOCS”) Analysis System.

 

The Group is located in the United States, Hong Kong and Shenzhen and headquartered in West Covina, California. The Group’s revenues are derived primarily from operations in the United States.

 

The Group is subject to a number of risks similar to those of other companies of similar size in its industry, including, but not limited to, the need for successful continuous development of products, the need for additional capital (or financing) to fund operating losses (see below), competition from substitute products and services from larger companies, protection of proprietary technology, patent litigation, dependence on key individuals, and risks associated with changes in information technology.

 

The Group incurred net losses, and utilized cash in operations since inception, has an accumulated deficit as of March 31, 2025, of US$1,353,072, as well as expects to incur future additional losses. The Group’s cash level as of March 31, 2025 was US$265,743, which was not adequate for operations in the 2025 fiscal year and financing was needed.

 

These factors raise substantial doubt about the Group’s ability to continue as a going concern for the next twelve months from the date of issuance of these unaudited condensed consolidated financial statements.

 

7

 

 

TRANSIT PRO TECH INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2025

 

1.Organization (continued)

 

Management’s plan to alleviate the substantial doubt about the Group’s ability to continue as a going concern include attempting to improve its business profitability and its ability to generate sufficient cash flow from its operations to meet its operating needs on a timely basis. The management plan cannot alleviate the substantial doubt of the Group’s ability to continue as a going concern. There can be no assurance that the Group will be successful in achieving its strategic plans, that the Group’s future capital raises will be sufficient to support its ongoing operations. If the Group is unable to raise sufficient financing or events or circumstances occur such that the Group does not meet its strategic plans, the Group’s related party would provide financial supports to the Group to fund operations and meet its obligations as they come due within one year from the date these unaudited condensed consolidated financial statements are issued.

 

If the Group does not achieve revenue anticipated in its current operating plan, management has the ability and commitment to reduce operating expenses or raise more capital or debt as necessary. The Group’s long-term success is dependent upon its ability to successfully raise additional capital, market its existing services, increase revenues, and, ultimately, to achieve profitable operations.

 

The Group’s unaudited condensed consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

 

2.Summary of significant accounting policies

 

The significant accounting policies followed by the Group are:

 

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The unaudited condensed consolidated financial statements are stated in U.S. dollars.

 

8

 

 

TRANSIT PRO TECH INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2025

 

2.Summary of significant accounting policies (continued)

 

Principles of consolidation

The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries, for which, the Company is the primary beneficiary. All significant inter-company transactions and balances between the Company and its subsidiaries are eliminated upon consolidation. Results of a subsidiary are included in the unaudited condensed consolidated financial statements from the date on which control of the subsidiary was transferred to the Company.

 

As of March 31, 2025, the details of the Company’s subsidiaries are as follows:

 

 

Place of

incorporation

 

Ownership 

percentage

Transit Pro Tech. Limited (the “TPTL”) Hong Kong   100%
Shenzhen Guantu Technology Co., Limited (the “SGTCL”)

People’s Republic

of China

  100%

 

Use of estimates

The preparation of unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and cash equivalents

The Group considers all highly liquid investments with an original maturity of three months or less when purchased to be cash and cash equivalents. Cash and cash equivalents are recorded at cost, which approximates fair value. As of March 31, 2025 and 2024, cash consists primarily of checking and savings deposits. The Group’s cash balances may exceed those that are federally insured. To the issuance date of these unaudited condensed consolidated financial statements, the Group has not recognized any losses caused by uninsured balances.

 

Restricted Cash

The Group classifies all cash whose use is limited by contractual provisions as restricted cash. As of March 31, 2025 and 2024, the Group had no restricted cash.

 

9

 

 

TRANSIT PRO TECH INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2025

 

2.Summary of significant accounting policies (continued)

 

Revenue recognition

The Group adopted ASC 606 since June 1, 2023, the date of incorporation of the Company. The Group’s revenue is primarily derived from license agreements. The adoption of ASC 606 affected the Group’s revenue recognition model for both fixed fee license revenue and royalty revenue presented in the Groups’ s unaudited condensed consolidated statements of operations.

 

Fixed fee license revenue

In applying ASC 606, the Group is required to recognize revenue from a fixed fee license agreement when it has satisfied its performance obligations, which typically occurs upon the transfer of rights to the Group’s intellectual properties upon the execution of the license agreement. As a result of the adoption of ASC 606, the Group recognizes fixed fee license revenue on a straight-line basis over the contract terms.

 

Royalty revenue

ASC 606 requires an entity to record royalty revenue in the same period in which the licensee’s underlying sales occur. As the Group generally does not receive licensee royalty reports for sales during a time frame that allows the Group to adequately review the reports and include the actual amounts in its results, the Group accrues the related revenue based on estimates of its licensees’ underlying sales, subject to certain constraints on its ability to estimate such amounts. As a result of accruing royalty revenue based on such estimates, adjustments will be required at the end of each year to true up revenue to the actual amounts reported by its licensees.

 

   For the three months ended March 31,   For the six months ended March 31, 
   2025   2024   2025   2024 
   US$   US$   US$   US$ 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
                 
Fixed fee license revenue   70,500        141,000     
Royalty revenue           34,796     
Total revenue from related party   70,500        175,796     

10

 

TRANSIT PRO TECH INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2025

 

2.Summary of significant accounting policies (continued)

 

Revenue recognition (continued)

 

   For the three months ended March 31,   For the six months ended March 31, 
   2025   2024   2025   2024 
   US$   US$   US$   US$ 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
Timing of Revenue Recognition                
At a point in time           34,796     
Over time   70,500        141,000     
    70,500        175,796     

 

Income taxes

Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and 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 included in the unaudited condensed consolidated financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in FASB ASC 740. As changes in tax laws or rate are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

 

The Group is required to determine whether its tax positions are more likely than not to be sustained upon examination by the applicable taxing authority based on the technical merits of the positions. Tax positions not deemed to meet a more likely than not threshold would be recorded as a tax expense in the current year.

 

11

 

 

TRANSIT PRO TECH INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2025

 

2.Summary of significant accounting policies (continued)

 

Income taxes (continued)

In accordance with ASC 740, Income Taxes, the Group is required to evaluate whether its tax positions taken or expected to be taken are more likely than not to be sustained upon examination by the taxing authority. As of March 31, 2025 and 2024, the management of the Group have determined that no provision for income taxes is required for the Group’s Unaudited Condensed consolidated financial statements based on a review of the Group’s tax positions for all open years. The Group does not expect that its assessment regarding unrecognized tax benefits will materially change over the next 12 months. However, the Group’s conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions, compliance with U.S. federal, U.S. state and foreign tax laws, and changes in the administrative practices and precedents of the relevant taxing authorities.

 

The Group recognize interest and penalties related to unrecognized tax benefits in interest expense and other expenses, respectively. During the three and six months ended March 31, 2025 and 2024, no interest or penalties related to unrecognized tax benefits was recognized. As of March 31, 2025 and 2024, the Group has no accrued interest or penalties.

 

Leases 

The Group adopted ASU No. 2016-02, Leases (Topic 842), as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements.

 

The Group elected to apply practical expedients permitted under the transition method that allow the Group to use the beginning of the period of adoption as the date of initial application, to not recognize lease assets and lease liabilities for leases with a term of twelve months or less, to not separate non-lease components from lease components, and to not reassess lease classification, treatment of initial direct costs, or whether an existing or expired contract contains a lease. Under the new lease standard, the Group determines if an arrangement is or contains a lease at inception. Right-of-use assets and liabilities are recognized at lease commencement date based on the present value of remaining lease payments over the lease terms. The Group considers only payments that are fixed and determinable at the time of lease commencement.

 

12

 

 

TRANSIT PRO TECH INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2025

 

2.Summary of significant accounting policies (continued)

 

Leases (continued)

ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As all of the Group’s leases do not provide an implicit rate, the Group uses elects the risk-free interest rate (US Treasury bill) with similar terms as the discount rate for the lease. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. The Group’s lease terms may include options to extend or terminate the lease. Renewal options are considered within the right-of-use assets and lease liability when it is reasonably certain that the Group will exercise that option.

 

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

 

Concentration risks

Financial instruments that potentially subject the Group to concentrations of credit risk consist primarily of cash and cash equivalents. The Group invests its excess cash in low-risk, highly liquid money market funds and certificates of deposit with major financial institutions.

 

Prior to October 1, 2023, the Group regularly reviewed the creditworthiness of its customers and established an allowance for credit losses primarily based upon factors surrounding the credit risk of specific customers, including creditworthiness of the clients, aging of the receivables and other specific circumstances related to the accounts. Receivables and other financial assets balances are written off after all collection efforts have been exhausted.

 

The Group has adopted Accounting Standard Update (ASU) 2016-13, Financial Instruments-Credit Losses (codified as Accounting Standard Codification Topic 326), since October 1, 2023, which requires measurement and recognition of current expected credit losses for financial instruments held at amortized cost.

 

The Group’s deposit and other receivables and amount due from shareholders are within the scope of ASC Topic 326.

 

13

 

 

TRANSIT PRO TECH INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2025

 

2.Summary of significant accounting policies (continued)

 

Concentration risks (continued)

To estimate expected credit losses, the Group has identified the relevant risk characteristics of its customers and these receivables are assessed on an individual basis for customers with low risk, medium risk, high risk and default. For each pool, the Group considers historical settlement patterns, past default experience of the debtors, overall economic environment in which the debtors operate, and also the assessment of both current and future development of the environment as of the date when this report issued. Other key factors that influence the expected credit loss analysis include payment terms offered in the normal course of business to customers, and industry specific factors that could impact the Group’s receivables. Additionally, external data and macroeconomic factors are also considered.

 

As of March 31, 2025, deposit and other receivables of US$5,475 was anticipated to be used or collected within one year and was classified as balances with low risk.

 

Movement of the allowance for credit losses for deposit and other receivables is as follows:

 

   As of March 31, 2025   As of September 30, 2024 
   US$   US$ 
   (Unaudited)     
         
Balance at beginning of the year   116     
Current year addition       116 
Balance at end of the year   116    116 

 

14

 

 

TRANSIT PRO TECH INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2025

 

2.Summary of significant accounting policies (continued)

 

Concentration risks (continued)

Movement of the allowance for credit losses for amount due from shareholders and a related party is as follows:

 

   As of March 31, 2025   As of September 30, 2024 
   US$   US$ 
         
Balance at beginning of the year   295     
Current year addition   (295)   295 
Balance at end of the year       295 

 

The carrying amounts of deposit and other receivables and amounts due from shareholders are reduced by an allowance to reflect the expected credit losses.

 

Subscription receivable

As of March 31, 2025, subscriptions receivable represented the commitment from an investor to purchase capital stock of the Group. Since the shares have already been issued, and the amount was not yet received by the Group, this item was recorded as subscriptions receivable on the equity section of the Group’s balance sheet as of March 31, 2025.

 

Loss per share

Basic loss per share is computed by dividing net income attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares. There was no dilutive effect for the periods ended March 31, 2025 and 2024.

 

15

 

 

TRANSIT PRO TECH INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2025

 

2.Summary of significant accounting policies (continued)

 

Recently issued accounting standards

On November 27, 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 is designed to improve the reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM.  All public entities will be required to report segment information in accordance with the new guidance starting in annual periods beginning after December 15, 2023, with early adoption permitted. The Group is currently evaluating the impact of adopting the standard and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations and cash flows.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 expands existing income tax disclosures for rate reconciliations by requiring disclosure of certain specific categories and additional reconciling items that meet quantitative thresholds and expands disclosures for income taxes paid by requiring disaggregation by certain jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Group is currently evaluating the impact of adopting the standard and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations and cash flows.

 

3.Deposit and other receivables, net

 

   As of March 31, 2025   As of September 30, 2024 
   US$   US$ 
   (Unaudited)     
Rental deposit   5,475    5,475 
Others       306 
Less: allowance for credit losses   (116)   (116)
Total deposit and other receivables, net   5,359    5,665 

 

16

 

 

TRANSIT PRO TECH INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2025

 

4.Accrued expenses and other payables

 

   As of March 31, 2025   As of September 30, 2024 
  

US$

(Unaudited)

   US$ 
         
Accrued professional expenses   206,204    179,961 
Accrued salary expenses   186,243    111,932 
Other payables and accrued expenses   8,814    9,703 
Total accrued expenses and other payables   401,261    301,596 

 

5.Income taxes

 

There was no provision for income tax for the six months ended March 31, 2025 and 2024.

 

The Group is subject to income taxes in the U.S. federal jurisdiction and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Group’s tax years remain open for examination by all tax authorities since inception, remain open to adjustment by the U.S. and state authorities.

 

5.Leases

 

The Group leases office space under non-cancelable operating lease agreements, which expire in 2025 and the future lease payment under operating leases as of March 31, 2025 was as follows:

 

   2025 
  

US$

(Unaudited)

 
      
Within 1 year   24,971 

 

17

 

 

TRANSIT PRO TECH INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2025

 

6.Leases (continued)

 

Operating lease costs for the three and six months ended March 31, 2025, were US$Nil (2024: US$Nil), which excluded cost of short-term contracts. Rental expenses related to a short-term lease contract for the three and six months ended March 31, 2025 were US$16,613 (2024: US$16,183) and US$33,219 (2024: US$28,138), respectively.

 

7.Equity

 

As of March 31, 2025, the Company had 101,000,000 (September 30,2024: 21,000,000) shares of all classes of capital stock, each with a par value of US$0.0001 per share, authorized and available to issue for purposes of capital financing, consisting of (a) 80,000,000 (September 30,2024: 19,000,000) shares of class A common stock, (b) 20,000,000 (September 30,2024: 1,000,000) shares of class B common stock, and (c)1,000,000 (September 30,2024: 1,000,000) shares of preferred stock.

 

On October 8, 2024, the shareholders and Board of Directors of the Company approved a 20 for 1 forward stock split (the “Stock Split”) of the Company’s authorized, issued and outstanding shares of common stock, par value US$0.0001. Each pre-split share of common stock outstanding was automatically converted into 20 new shares of common stock. As a result, 600,000 shares of post-split Class B Common Stock were converted into Class A Common Stock, and the outstanding Class A and Class B Common Stock after the Stock Split were 600,000 shares and 19,400,000 shares, respectively.

 

In October 2024, the Company had filed a Certificate of Amendment with the Office of the Secretary of State of Delaware to effective an increase in the Company’s authorized shares of capital stock to 101,000,000 shares each with a par value of US$0.0001 per share, consisting of 80,000,000 shares of Class A Common Stock, 20,000,000 shares of Class B Common Stock and 1,000,000 shares of preferred stock.

 

During the six months ended March 31, 2025, shareholders had subscribed for a total of418,500 shares of Class A common stock of the Company, at a price of US$4.00 per share, an aggregate of US$1,674,000. As of March 31, 2025, subscription proceeds of US$947,174 was received by the Company and the outstanding subscription amount of US$726,826 was recorded as a subscription receivable.

 

18

 

 

TRANSIT PRO TECH INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2025

 

7.Equity (continued)

 

As of March 31, 2025, the Company had 20,418,500 (September 30,2024: 1,000,000) issued and outstanding shares of common stock with total par value value of US$2,042 (September 30,2024: US$100) which was presented in the Group’s consolidated balance sheets. During the six months ended March 31, 2025 and 2024, no preferred stock was issued or converted.

 

8.Related party transactions

 

On July 1, 2023, the Group and BEYEBE AI Technology Inc (“BEYEBE”), a related party under the control of Weihong Du, the principal shareholder of the Company, signed an agreement  to the effect that BEYEBE was going to pay all operating expenses for the Group until the end of the agreement when the Group will reimburse all payments made on behalf of the Group in a lump sum to BEYEBE. On December 31, 2023, the Group signed a loan agreement with BEYEBE for a 3 year credit loan in an aggregate principal amount not exceeding US$1,000,000 at an interest rate of 7.5% per annum.

 

During the six months ended March 31, 2025, the Group repaid the outstanding loan principal of US$257,041 to BEYEBE. As of March 31, 2025 and 2024, outstanding balance under this loan agreement was US$Nil and US$106,210, with interest payable to BEYEBE of US$15,384 and US$813, respectively.

 

During the six months ended March 31, 2025, the Group had entered into a License and Supply Agreement (“License Agreement”) with Shenzhen Beyebe Internet Technology Co. Limited (“SZ BEYEBE”), a related party under control of Weihong Du, the principal shareholder of the Company. Pursuant to the terms of License Agreement , the Group granted to SZ BEYEBE the right to use and grant others a sublicense to use the Group’s Licensed Intellectual Property, as such term is defined in the License Agreement, and to use and sell the Group’s Licensed Products, as defined in the License Agreement, within mainland China, at a consideration of (i) a fixed license fee of US$300,000 for the first year and (ii) a royalty equal to 15% of the revenue generated by SZ BEYEBE from the distribution of the Licensed Products and Licensed Intellectual Property. The fixed license fee for each year thereafter will be such amount as is agreed upon by the parties. The License Agreement has a term which expires on December 31, 2040.

 

19

 

 

TRANSIT PRO TECH INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2025

 

8.Related party transactions (continued)

 

During the six months ended March 31, 2025, fixed fee license revenue of US$141,000 (2024: US$Nil) and royalty revenue of US$34,796 (2024: US$Nil) were from the License Agreement.

 

Weihong Du, one of the shareholders of the Company, entered into an employment contract with the Company. Pursuant to the employment contract dated July 1, 2023, Mr. Du is entitled to an annual salary of US$60,000 for serving as the Chief Executive Officer of the Company.

 

Li’ou Xie, one of the shareholders of the Company, entered into a labor contract with the Group’s wholly-owned subsidiary, SGTCL, on January 1, 2024. Pursuant to the terms of the labor contract, Mr. Xie serves as the financial manager for a term of three years, concluding on December 31, 2026, at a monthly salary and bonus of RMB52,200 (approximately US$7,357).

 

The related party transactions of the Group are as follows:

 

   For the three months ended March 31,   For the six months ended March 31, 
   2025   2024   2025   2024 
  

US$

(Unaudited)

  

US$

(Unaudited)

  

US$

(Unaudited)

  

US$

(Unaudited)

 
BEYEBE AI Technology Inc. (“BEYEBE”)                    
- Rental expense       11,955        23,910 
- Interest (income)/expense   (3,064)   813    1,102    813 
                     
Shenzhen Beyebe Internet Technology Co. Limited
(“SZ BEYEBE”)
                    
- Fixed fee license revenue   70,500        141,000     
- Royalty revenue           34,796     
- Rental expense   4,179    4,228    8,359    4,228 

 

20

 

TRANSIT PRO TECH INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2025

 

8.Related party transactions (continued)

 

The related party transactions of the Group are as follows: (continued)

 

   For the three months ended March 31,   For the six months ended March 31, 
   2025   2024   2025   2024 
  

US$

(Unaudited)

  

US$

(Unaudited)

  

US$

(Unaudited)

  

US$

(Unaudited)

 
Weihong Du                    
- Payroll expense   7,500    7,500    15,000    15,000 
                     
Li’ou Xie                    
- Payroll expense   21,875    22,080    43,706    22,080 
                     

 

The balances with the related parties are as follows:

 

   As of March 31, 2025   As of September 30, 2024 
  

US$

(Unaudited)

   US$ 
Amount due to a shareholder:          
Weihong Du   9,512     
Yongsheng Li   8,000     
Li’ou Xie   4,078     
Total amount due to a shareholder   21,590     
           
Amount due to related parties:          
BEYEBE   18,369    456,762 
SZ BEYEBE*   217,056    405,110 
Total amount due to related parties   235,425    861,872 

 

*As of March 31, 2025, accounts receivables of US$143,200 (September 30, 2024: US$Nil) was included in the balance of amount due from SZ BEYEBE.

 

21

 

 

TRANSIT PRO TECH INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2025

 

8.Related party transactions (continued)

 

The balances with the related parties are as follows: (continued)

 

   As of March 31, 2025   As of September 30, 2024 
  

US$

(Unaudited)

   US$ 
Amount due from shareholders:          
Weihong Du       13,836 
Li’ou Xie       905 
Less: allowance for credit losses       (295)
Total amount due from shareholders, net       14,446 

 

9.Subsequent events

 

The Group evaluated subsequent events from March 31, 2025, the date of these Unaudited Condensed consolidated financial statements, through May 15, 2025, which represents the date the Unaudited Condensed consolidated financial statements are issued, for events requiring recording or disclosure in the unaudited condensed consolidated financial statements for the three and six months ended March 31, 2025. The Group concluded that no other events have occurred that would require recognition or disclosure in the unaudited condensed consolidated financial statements.

 

22

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

FORWARD-LOOKING STATEMENTS

 

The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and notes to those statements included elsewhere in this Form 10-Q and with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K, for the year ended September 30, 2025 (the “2024 Form 10-K”).

 

This discussion contains forward-looking statements that involve risks and uncertainties. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Forward-looking statements are subject to risks, uncertainties and factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events. You should specifically consider the various risk factors identified in this report and our 2023 Form 10-K that could cause actual results to differ materially from those anticipated in these forward-looking statements. . Further, although we believe we will not face a material increase in the price of raw materials due to tariffs that may be imposed, ongoing geopolitical conflicts could adversely impact our ability to manufacture our products, the markets for some of our products, and our ability to access debt or equity financing.

 

Overview

 

We were organized in Delaware in June 2023 to engage in the business of developing, marketing and distributing leading edge software for the detection of faults and other defects in railroad tracks; the inspection of tunnel walls for stability and providing ancillary monitoring systems related to the safe operation of railroads and vehicles generally. Mr. Weihong Du, our principal stockholder, chairman and president, has engaged in the development of software to assist in the detection of faults and other defects in railroad tracks in China for more than 5 years.

 

Our Corporate Structure

 

We have a wholly-owned subsidiary Transit Pro Tech Ltd. (“TP Hong Kong”), a limited liability company formed in Hong Kong. TP Hong Kong, in turn, owns Shenzhen Guantu Technology Co. Limited (“SGTCL”), which it formed in Shenzhen. References herein to “Transit Pro,” the “Company, “we,” “us” and words of similar import, unless otherwise indicated, refer collectively to Transit Pro Delaware, TP Hong Kong and SGCTL.

 

Our founding shareholders, own all of the outstanding shares of Shenzhen Beyebe Internet Technology Co. Limited (“Beyebe”) in the same proportions as their interests in Transit Pro Delaware and Mr. Weihong Du, our Chairman and Chief Executive Officer, is Beyebe’s executive director and general manager. Beyebe is engaged in developing and marketing computer compliance software and hardware in the PRC. Beyebe is the owner of all of the outstanding equity of Beyebe AI Technology Inc. (“Beyebe AI”), a corporation formed under the laws of the state of California headquartered in Los Angeles.

 

We have entered into a Loan Agreement wherein Beyebe AI has agreed to lend us up to $1,000,000 to defray our expenses and a License Agreement with Beyebe wherein we have granted Beyebe the right to use and distribute within China hardware and software incorporating our intellectual property.

 

The following charts show our corporate structure, including the relationships resulting from the Loan Agreement with Beyebe AI and the License Agreement with Beyebe:

 

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Although Mr. Du had business success in mainland China, he formed our Company for the purpose of engaging in business outside of mainland China. He believes that that the opportunities afforded by competitive market economies outside of mainland China exceed the long-term opportunities of doing business in communist China. Since formation, we have organized a subsidiary in Hong Kong, TP Hong Kong, which in turn organized a wholly-owned subsidiary in the People’s Republic of China, SGTCL, hired employees and consultants, including individuals based in China engaged in the development of our software, filed patent applications and provisional patent applications in the United States, one related to railway fault detection analysis and the other relating to the monitoring of subway engineers to increase driver safety, participated in academic conferences, marketing events and exhibitions in the United States and met with various prospective users of our products. While it is our goal to grow primarily by hiring individuals in the United States, we chose initially to engage software engineers in China with whom members of our management are familiar to initiate development of our products. We will continually assess the benefits and possible detriments of relying upon individuals outside of the United States, in particular within China, in an effort to maximize our returns. 

 

We do not intend to devote significant monetary resources or time of our personnel to marketing our products in China. Nevertheless, to enable us to benefit from the market in China for our products, we entered into a License Agreement with Shenzhen Beyebe Internet Technology Co. Limited (“Beyebe”) wherein we granted Beyebe the right to market and distribute in mainland China products incorporating our technologies.

 

For the immediate future we intend to recruit additional personnel experienced in the rail maintenance and safety industries, raise capital necessary to expand our operations and continue to promote our rail transit safety solutions by participating in exhibitions and academic conferences in the United States and other international markets, establishing business relationships, and conducting testing and trials in these markets.

 

In addition to funds spent on our business activities, during the next twelve months we anticipate incurring costs related to filing of Exchange Act reports and establishing appropriate management systems for a public company, including financial systems.

 

Results of Operations

 

Results of Operations for the three and six months ended March 31, 2025

 

Revenues: During the three and six months ended March 31, 2025, we generated revenues of $70,500 and $175,796, respectively, consisting of fixed licensing fees of $70,500 and $141,000, respectively, representing a portion of the annual $300,000 fee due pursuant to the Licensing Agreement between the Company and Beyebe, and royalty revenue of $34,796, all of which was generated in the three months ended December 31, 2024, paid by Beyebe in respect of products distributed by Beyebe in China incorporating the Company’s technologies.

 

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Gross Profit: Gross profit for the three and six months ended March 31, 2025 was $53,048 and $147,441, respectively, as the cost of revenue was $17,452 and $28,355, in such periods consisting primarily of travel and promotional expenses and other taxes. We generated no revenues in three and six months ended March 31, 2024, and thus had no gross profit during such period.

 

General and Administrative Expenses: General and administrative expenses were $131,902 and $282,733 in the three and six months ended March 31, 2025. For the six months ended March 31, 2025, general and administrative expenses increased by $6,487 from $276,246 for the comparable period in the prior year. For the three months ended March 31, 2025, general and administrative expenses decreased by $37,398 from $169,300 for the comparable period in the prior year and by $18,929 from the $151,831 of general and administrative expenses in the three months ended December 31, 2024. The principal components of general and administrative expenses in the three months ended March 31, 2025, consisted of accrued salaries of $41,880, professional fees of $ 59,364 relating to our status as a reporting company and patent filings. It is expected that general and administrative expenses will continue to increase as we increase our marketing efforts.

 

Research and Development: We incurred research and development expenses of for the three and six months ended March 31, 2025 of $46,201 and $71,844 respectively, compared to $89,177 in the three months ended March 31, 2024. We expect that we will continue incur research and development expenses as we continue to develop our product offerings.

 

Interest Income (Expense): We had interest income of $3,064 during the three months ended March 31, 2025, as compared to interest expense of $819 during the comparable quarter in 2024.

 

Other income (expense): We generated other income of $646 during the three months ended March 31, 2025, as compared to other income of 1,461 in the comparable period of 2024. The other income in the second quarter of 2025 and 2024 are mainly the result of gains from foreign currency exchanges.

 

Net Loss: Net loss for the three and six months ended March 31, 2025, was $121,345 and $216,222, respectively, compared to a net loss of $257,835 and $364,781 for the three and six months ended March 31, 2024. Our net loss reflects expenses incurred seeking to develop and market our products in the absence of significant revenues.

 

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Liquidity and Capital Resources

 

Our operating expenses to date principally have been paid with monies borrowed from Beyebe AI, a subsidiary of Beyebe controlled by Mr. Du, the accrual of expenses due to related parties and, more recently, licensing fees and royalties received pursuant to the Licensing Agreement with Beyebe. During the quarter ended March 31, 2025, we received subscriptions for $418,500 shares of Class A common stock at $4.00 per share. As of March 31, 2025, we had received proceeds of $947,174, and the balance is expected to be received before September 30, 2025.

 

On December 31, 2023 (the “Execution Date”), we entered into a Loan Agreement with Beyebe AI wherein it agreed to lend us up to $1,000,000 during the period commencing on the Execution Date of the Loan Agreement and ending on the third anniversary thereof. All amounts borrowed will bear interest at the rate of 7.50% per annum and are payable in full on the third anniversary of the Execution Date. All amounts borrowed and interest accrued thereon are to be repaid on each anniversary of the Execution Date of the Loan Agreement and may immediately be reborrowed up to the $1,000,000 limit. Any amount not paid on its due date will bear additional interest at the rate of 0.1% per day. The principal amount due Beyebe AI as of December 31, 2024, was 224,257, which was satisfied in the quarter ended March 31, 2025.

 

To meet our expenses over the next twelve months we likely will require more than the amount of our cash on hand, the amount we will receive as royalties and amounts available under our agreement with Beyebe AI. We intend to seek to acquire such additional amounts, as necessary, through loans from or capital contributions by our stockholders, management or other investors. We have no specific plans, understandings or agreements with respect to the raising of such funds, and we may seek to raise the required capital by the issuance of equity or debt securities or by other means. Since we have no such arrangements or plans currently in effect, our inability to raise funds for the consummation of an acquisition may have a severe negative impact on our ability to become a viable company.

 

At March 31, 2025, we had cash and equivalents of $265,743. As of such date, our total liabilities were $658,276, all of which were current liabilities and of which $18,369 was due to Beyebe AI and $217,056 was due to Beyebe. At March 31, 2025, we had a working capital deficit in excess of $387,184, reflecting the fact that during the six months ended March 31, 2025, we had revenues of $175,796, capital contributions of $1,674,000 and expenses in excess of $354,577. These conditions, among others, raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to meet our financial requirements, raise additional capital, and the success of our future operations as described above.

 

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We anticipate incurring a minimum of $750,000 in expenses over the next twelve months and could incur more significant expenses if necessary. In all likelihood we will remain dependent upon the efforts of Mr. Du and his willingness and that of our principal stockholders to provide the capital necessary to continue our business and fund our cash needs until we generate meaningful revenues or raise capital from third parties. There can be no assurance that we will be able to raise the funds necessary to fund our operations until such time as we are generating positive cash flow or can otherwise fund our operations. If we were to fail to raise the capital necessary to maintain our operations our business would be adversely affected and our common stock would likely become worthless.

 

Cash Flows

 

The following is a summary of cash provided by or used in each of the indicated types of activities during the six months ended March 31, 2025.

 

Net cash provided by (used in) operating activities   $ (100,703)
Net cash provided by (used in) investing activities   $
Net cash provided by (used in) financing activities   $ 341,215

 

Cash used in operating activities

 

Cash used in operating activities was $100,703 for the six months ended March 31, 2025. The use of cash by our operating activities reflects the expenses incurred to develop and market our products and general and administrative expenses while generating minimal revenues from Beyebe our license agreement and the increase in accrued expenses and other payables, partially offset by a decrease in deposits and other receivable and amounts paid to shareholders. We are incurring expenses to develop our business operations and management organization in excess of the amounts being generated from operations and accruing amounts due to related parties to sustain our operations. It is likely that our expenses will increase over the immediate future as we continue to expand our operations.

 

Cash provided by financing activities

 

Cash provided by financing activities was $341,215 in the six months ended March 31, 2025. The net cash provided by financing activities consisted of proceeds from the issuance of common stock and an increase in amounts due shareholders, reduced by payments made against amounts due related parties.

 

Contractual Obligations

 

At March 31, 2025, our significant contractual obligations included $18,369 due to Beyebe AI and $217,056 due to Beyebe and accrued expenses of $401,261 due to third parties.

 

Off-Balance Sheet Arrangements

 

We have not entered into any financial guarantees or other commitments to guarantee the obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

 

Critical Accounting Policies and Estimates

 

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which were prepared in accordance with US GAAP. While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements, we believe the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis.

 

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Going Concern

 

Our financial statements have been prepared assuming that we will continue as a going concern. We have yet to generate revenues sufficient to maintain our operations, incurred a net loss of $121,345 for the three months ended March 31, 2025, have an accumulated deficit of $1,353,072 as of March 31, 2025, and expect to incur future additional losses. Our cash was $265,743 as of March 31, 2025, which is not adequate for the balance of our current fiscal year and additional financing is necessary to maintain our operations. These factors raise substantial doubt about our ability to continue as a going concern. Our capital requirements will depend on many factors in particular, the speed at which we seek to develop our business, the number of software products we seek to develop and our ability to generate revenues. In all likelihood we will remain dependent upon the efforts of our principal stockholders to provide the capital necessary to continue our business and fund our cash needs until we generate meaningful revenues. There can be no assurance that we will be able to raise the funds necessary to fund our operations until such time as we are generating positive cash flow. Our financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Basis of Presentations

 

Our financial statements are prepared in accordance with US GAAP and the requirements of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”).

 

Use of Estimates

 

In preparing financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates, required by management, include the recoverability of long-lived assets, allowance for doubtful accounts, and the reserve for obsolete and slow-moving inventories. Actual results could differ from those estimates.

 

Revenue Recognition

 

The Company follows Accounting Standards Update (“ASU”) 2014-09 (and related amendments subsequently issued in 2016), Revenue from Contracts with Customers (ASC 606). The core principle underlying FASB ASC 606 is that the Company will recognize revenue to represent the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The Company’s revenue streams are recognized when control of goods and services transfers to a customer.

 

FASB ASC Topic 606 requires use of a new five-step model to recognize revenue from customer contracts. The five-step model requires the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies each performance obligation.

 

The Company derives its revenues from product sales and professional service contracts with its customers, with revenues recognized upon delivery of services and products. Persuasive evidence of an arrangement is demonstrated via professional service contracts and invoices; and the service price to the customer is fixed upon acceptance of the professional services contract. The Company recognizes revenue when professional service is rendered to the customer and collectability of payment is reasonably assured. These revenues are recognized at a point in time after all performance obligations are satisfied. Revenue is recognized net of returns and value-added tax charged to customers.

 

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Recent Accounting Pronouncements

 

On November 27, 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 is designed to improve the reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM.  All public entities will be required to report segment information in accordance with the new guidance starting in annual periods beginning after December 15, 2023, with early adoption permitted. The Group is currently evaluating the impact of adopting the standard and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations and cash flows.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 expands existing income tax disclosures for rate reconciliations by requiring disclosure of certain specific categories and additional reconciling items that meet quantitative thresholds and expands disclosures for income taxes paid by requiring disaggregation by certain jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Group is currently evaluating the impact of adopting the standard and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations and cash flows. 

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future CFS.

 

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Item 4. Controls and Procedures.

 

Disclosure Controls and Procedures

 

Management of our Company is responsible for maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. In addition, the disclosure controls and procedures must ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial and other required disclosures.

 

An evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) of the Exchange Act) at March 31, 2025 was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based on their evaluation of our disclosure controls and procedures, they concluded that at March 31, 2025, such disclosure controls and procedures were not effective. This was due to our limited resources, including the absence of a financial staff with accounting and financial expertise and deficiencies in the design or operation of our internal control over financial reporting that adversely affected our disclosure controls and that may be considered to be “material weaknesses.”

 

We plan to designate individuals responsible for identifying reportable developments and to implement procedures designed to remediate the material weakness by focusing additional attention and resources in our internal accounting functions at such time as such actions can be properly supported by the financial results of our operations. However, there is no assurance as to when we will undertake to hire the personnel and implement the procedures necessary to remediate the material weaknesses in our disclosure controls and procedures and the material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

 

Changes in Internal Control over Financial Reporting

 

There have not been any changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter which is the subject of this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not currently party to any material legal or administrative proceedings and are not aware of any claim which might lead to a material legal claim or proceeding being commenced us in the foreseeable future.

 

Item 1A. Risk Factors

 

Reference is made to the risks and uncertainties disclosed in Item 1A (“Risk Factors”) of our Annual Report on Form 10-K for the year ended September 30, 2024 (the “2024 Form 10-K”), which are incorporated by reference into this report. Prospective investors are encouraged to consider the risks described in the 2024 Form 10-K, Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this report and other information publicly disclosed or contained in documents we file with the Securities and Exchange Commission before purchasing our securities.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

During the quarter ended March 31, 2025, we entered into subscription agreements with 38  investors for the sale  of 418,500 shares of our Class A common stock at a price of US$4.00 per share, an aggregate of US$1,674,000. As of March 31, 2025, subscription proceeds of US$947,174 were received and the outstanding subscription amount of US$726,826, which was recorded as a subscription receivable, is anticipated to be received prior to September 30, 2025.

 

The Offering was exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Regulation D. The Company did not conduct a general solicitation in connection with the offering, each of the subscribers is an accredited investor as that term is defined under Regulation D and the certificates evidencing the shares issued have a restricted “Securities Act” legend imprinted thereon and appropriate stop transfer orders have been given to the Company’s transfer agent.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 5. Other Information

 

None 

 

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Item 6. Exhibits

 

Exhibit
No.
  Description
3.1   Articles of Incorporation (Incorporated by reference to Exhibit 3.1 of Form 10 filed July 1, 2024).
     
3.2   Certificate of Amendment to Certificate of Incorporation filed with the Secretary of State of Delaware on October 8, 2024 (incorporated by reference to Exhibit 3.8 to Report on Form 8-K of the Company dated October 8, 2024).
     
3   By-Laws (Incorporated by reference to Exhibit 3.2 of Form 10 filed July 1, 2024).
     
31.1*   Certification of Chief Executive Officer pursuant to Rule 13a-14 or Rule 15d-14 of Securities Exchange Act of 1934.
     
31.2*   Certification of Chief Financial Officer pursuant to Rule 13a-14 or Rule 15d-14 of Securities Exchange Act of 1934.
     
32.1**   Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
     
32.2**   Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
101.INS   Inline XBRL Instance Document
101.SCH   Inline XBRL Taxonomy Extension Schema
101.CAL   Inline XBRL Taxonomy Extension Calculation
101.DEF   Inline XBRL Taxonomy Extension Definition
101.LAB   Inline XBRL Taxonomy Extension Label
101.PRE   Inline XBRL Taxonomy Extension Presentation
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

*Filed herewith

**Furnished herewith

 

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SIGNATURES

 

Pursuant to the requirements of section 13 or 15(d) 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.

 

  TRANSIT PRO TECH INC.
     
Dated: May 15, 2025 By:  /S/ Weihong Du
    Weihong Du
    Chief Executive Officer

 

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