# EDGAR Filing Document

**Accession Number:** 0002008007
**File Stem:** 0001213900-25-104870
**Filing Date:** 2025-11
**Character Count:** 114328
**Document Hash:** dc85a57a356ca42fc8d2ccdb8da4601e
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-25-104870.hdr.sgml**: 20251103

**ACCESSION NUMBER**: 0001213900-25-104870

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 89

**CONFORMED PERIOD OF REPORT**: 20250430

**FILED AS OF DATE**: 20251103

**DATE AS OF CHANGE**: 20251031

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** MaxsMaking Inc.
- **CENTRAL INDEX KEY:** 0002008007
- **STANDARD INDUSTRIAL CLASSIFICATION:** MISCELLANEOUS FABRICATED TEXTILE PRODUCTS [2390]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 000000000
- **STATE OF INCORPORATION:** D8
- **FISCAL YEAR END:** 1031

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-42735
- **FILM NUMBER:** 251441946

**BUSINESS ADDRESS:**
- **STREET 1:** NO. 1288 ZHENNAN RD.
- **STREET 2:** KANGJIAN BUSINESS PLAZA, BLDG 2, RM 903
- **CITY:** SHANGHAI
- **STATE:** F4
- **ZIP:** 000000
- **BUSINESS PHONE:** 02162990223

**MAIL ADDRESS:**
- **STREET 1:** NO. 1288 ZHENNAN RD.
- **STREET 2:** KANGJIAN BUSINESS PLAZA, BLDG 2, RM 903
- **CITY:** SHANGHAI
- **STATE:** F4
- **ZIP:** 000000

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 6-K**

**REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934**

**For the month of October 2025**

**Commission File Number: 001-42735**

**<u>MaxsMaking Inc.</u>**

**(Exact name of registrant as specified in its charter)**

**Room 903, Building 2, Kangjian Business Plaza No. 1288 Zhennan Road** 

**Putuo District, Shanghai, China, 200331** 

**(Address of principal executive offices)**

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

**INFORMATION CONTAINED IN THIS REPORT ON FORM 6-K**

On October 31, 2025, MaxsMaking Inc., a British Virgin Islands business company (the "Company"), released its unaudited financial results for the six months ended April 30, 2025.

Attached as Exhibit 99.1 to this report are the unaudited condensed consolidated financial statements of the Company for the six months ended April 30, 2025 and 2024.

Attached as Exhibit 99.2 to this report are the management's discussion and analysis of financial condition and operating results for the six months ended April 30, 2025 and 2024.

**Financial Statements and Exhibits.**

The following exhibits are being filed herewith:

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 99.1 | [Unaudited Condensed Consolidated Financial Statements for the Six Months Ended April 30, 2025 and 2024](ea026305701ex99-1_maxsmaking.htm) |
| 99.2 | [Management's Discussion and Analysis of Financial Condition and Operating Results for the Six Months Ended April 30, 2025 and 2024](ea026305701ex99-2_maxsmaking.htm) |
| 101.INS | Inline XBRL Instance Document. |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |

---

**SIGNATURE**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | |
|:---|:---|
| **MaxsMaking Inc.** | **MaxsMaking Inc.** |
| By: | /s/ *Xiaozhong Lin* |
|  | Xiaozhong Lin<br> Chief Executive Officer |

---

Dated: October 31, 2025

## Exhibit 99.1

?xml version='1.0' encoding='ASCII'?

**Exhibit 99.1**

**<u>**TABLE OF CONTENTS**</u>**

---

| | |
|:---|:---|
|  | **PAGE(S)** |
| [Condensed Consolidated Balance Sheets as of April 30, 2025 (Unaudited) and October 31, 2024](#a_001) | 1 |
| [Unaudited Condensed Consolidated Statements of Income and Comprehensive Income for the Six Months Ended April 30, 2025 and 2024](#a_002) | 2 |
| [Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity for the Six Months Ended April 30, 2025 and 2024](#a_003) | 3 |
| [Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended April 30, 2025 and 2024](#a_004) | 4 |
| [Notes to Unaudited Condensed Consolidated Financial Statements](#a_005) | 5-22 |

---

i

**MAXSMAKING INC.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**AS OF APRIL 30, 2025 (UNAUDITED) AND OCTOBER 31, 2024**

**IN U.S. DOLLARS, EXCEPT SHARE DATA**

---

| | | |
|:---|:---|:---|
|  | **April 30,<br> 2025** | **October 31,<br> 2024** |
|  | **(Unaudited)** | |
| **ASSETS** | | |
| **Current Assets** | | |
| Cash | $186007 | $176236 |
| Accounts receivable, net | 6011750 | 6188992 |
| Due from related parties | 5554 | - |
| Inventories | 3528337 | 2633615 |
| Prepayments and other current assets | 6825994 | 7452317 |
| **Total current assets** | **16557642** | **16451160** |
| **Non-Current Assets** |  |  |
| Property and equipment, net | 120785 | 119125 |
| Intangible assets, net | 6850 | 7433 |
| Right-of-use assets, net | 117526 | 86441 |
| Deferred tax assets | 44407 | 24538 |
| Deferred offering cost | 1058003 | 986206 |
| **Total non-current assets** | **1347571** | **1223743** |
| **Total Assets** | $**17905213** | $**17674903** |
| **LIABILITIES AND EQUITY** |  |  |
| **Current Liabilities** |  |  |
| Short-term loans | $2173189 | $2785965 |
| Accounts payable | 2433012 | 2127623 |
| Contract liability | 459408 | 512859 |
| Income tax payable | 892739 | 859194 |
| Other payables and accrued liabilities | 932469 | 867249 |
| Due to related parties | 737188 | 149757 |
| Lease liabilities-current | 97190 | 47895 |
| **Total current liabilities** | **7725195** | **7350542** |
| **Non-Current Liabilities** |  |  |
| Lease liabilities-non current | 6776 | - |
| Long-term loans | 1840642 | 2058651 |
| **Total non-current liabilities** | **1847418** | **2058651** |
| **Total liabilities** | **9572613** | **9409193** |
| **COMMITMENTS AND CONTINGENCIES (NOTE 17)** |  | - |
| **Equity** |  |  |
| A Shares (US$0.01 par value; 7,575,000 A Shares authorized, 7,575,000 A Shares issued and outstanding as of April 30, 2025 and October 31, 2024) | 75750 | 75750 |
| B Shares (US$0.01 par value; 7,425,000 B Shares authorized, 7,425,000 B Shares issued and outstanding as of April 30, 2025 and October 31, 2024) | 74250 | 74250 |
| Additional paid-in capital | 1712492 | 1712492 |
| Statutory surplus reserve | 705396 | 705396 |
| Retained earnings | 5972806 | 5806881 |
| Accumulated other comprehensive income | (529822) | (421542) |
| **Total MaxsMaking Inc.'s Equity** | **8010872** | **7953227** |
| **Non-Controlling Interests** | **321728** | **312483** |
| **Total equity** | **8332600** | **8265710** |
| &nbsp;&nbsp;&nbsp;**Total Liabilities and Equity** | $**17905213** | $**17674903** |

---

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

**MAXSMAKING INC.**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME**

**FOR THE SIX MONTHS ENDED APRIL 30, 2025 AND 2024**

**IN U.S. DOLLARS, EXCEPT SHARE DATA**

---

| | | |
|:---|:---|:---|
|  | **For The Six Months Ended** | **For The Six Months Ended** |
|  | **April 30,** | **April 30,** |
|  | **2025** | **2024** |
| **Revenues** | $**12404234** | **9734003** |
| Cost of revenues | (11061783) | (7751700) |
| **Gross profit** | $**1342451** | **1982303** |
| **Operating expenses:** |  |  |
| Sales and marketing expenses | (293041) | (306224) |
| General and administrative expenses | (416039) | (314290) |
| Research and development expenses | (458025) | (298381) |
| **Total operating expenses** | $**(1167105)** | **(918895)** |
| **Income from operations** | $**175346** | **1063408** |
| **Other income (expense), net** |  |  |
| Interest expenses | (84275) | (69615) |
| Interest income | 135 | 326 |
| Other income | 42771 | 14848 |
| Exchange gains | 57949 | 11614 |
| Other expenses | (17126) | (11713) |
| **Income before income tax provision** | $**174800** | **1008868** |
| Income tax benefit (expense) | 370 | (25006) |
| **Net income** | $175170 | **983862** |
| Less: Net income attributable to non-controlling interest | 9245 | 41455 |
| **Net income attributable to MaxsMaking Inc.** | **165925** | **942407** |
| **Other comprehensive income:** |  |  |
| Foreign currency translation adjustment | 108280 | 13554 |
| **Comprehensive income** | $**283450** | **997416** |
| Less: comprehensive income (loss) attributable to non-controlling interests | 3379 | (9286) |
| **Comprehensive income attributable to MaxsMaking Inc.** | $**280071** | **1006702** |
| **Weighted Average Shares Outstanding- Diluted** | **15000000** | **15000000** |
| Earnings per A share- basic and diluted | $0.02 | 0.13 |
| Earnings per B share- basic and diluted | 0.02 | 0.14 |

---

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

**MAXSMAKING INC**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY**

**FOR THE SIX MONTHS ENDED APRIL 30, 2025 AND 2024**

**IN U.S. DOLLARS, EXCEPT SHARE DATA**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | | | | | |
|  | **Shares\*** | **Shares\*** | | | | | | | |
|  | **Class A** | **Class B** |<br>**Amount** | **Additional**<br>**Paid-in**<br>**Comprehensive** | **Accumulated**<br>**Other**<br>**Loss** |<br>**Statutory**<br>**Reserve** | **Non-**<br>**Controlling**<br>**Interests** |<br>**Retained**<br>**Earnings** | **Total**<br>**Stockholders'**<br>**Equity** |
| **Balance as of October 31, 2023** | **7575000** | **7425000** | **150000** | **925226** | **(458256)** | **515560** | **244987** | **4183547** | **5561064** |
| Capital Contributions |  |  |  | 70360 |  |  |  |  | 70360 |
| Net income |  |  |  |  |  |  | 41455 | 942407 | **983862** |
| Foreign currency translation adjustment |  |  |  |  | (13554) |  |  |  | (13554) |
| **Balance as of April 30, 2024 (Unaudited)** | **7575000** | **7425000** | **150000** | **995586** | **(471810)** | **515560** | **286442** | **5125954** | **6601732** |
| **Balance as of October 31, 2024** | **7575000** | **7425000** | **150000** | **1712492** | **(421542)** | **705396** | **312483** | **5806881** | **8265710** |
| Net income |  |  |  |  |  |  | 9245 | 165925 | 175170 |
| Foreign currency translation adjustment |  |  |  |  | (108280) |  |  |  | (108280) |
| **Balance as of April 30, 2025 (Unaudited)** | **7575000** | **7425000** | **150000** | **1712492** | **(529822)** | **705396** | **321728** | **5972806** | **8332600** |

---

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

**MAXSMAKING INC.**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR THE SIX MONTHS ENDED APRIL 30, 2025 AND 2024**

**IN U.S. DOLLARS, EXCEPT SHARE DATA**

---

| | | |
|:---|:---|:---|
|  | **For The Six Months Ended** | **For The Six Months Ended** |
|  | **April 30,** | **April 30,** |
|  | **2025** | **2024** |
| **Cash Flows from Operating Activities:** |  |  |
| **Net income** | $**175170** | **983862** |
| &nbsp;&nbsp;&nbsp;Depreciation of property and equipment | 50879 | 14133 |
| &nbsp;&nbsp;&nbsp;Allowance for expected credit loss | 119131 | 8529 |
| &nbsp;&nbsp;&nbsp;Reversal of expected credit loss | (15579) | (145) |
| &nbsp;&nbsp;&nbsp;Amortization of right-of-use assets | 26092 | 90317 |
| &nbsp;&nbsp;&nbsp;Amortization of intangible assets | 506 | 511 |
| &nbsp;&nbsp;&nbsp;Other current assets and other receivables | (402681) | - |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable | 8324 | (1709906) |
| &nbsp;&nbsp;&nbsp;Inventories | (5247) | (91692) |
| &nbsp;&nbsp;&nbsp;Prepayments and other current assets | 951385 | (245798) |
| &nbsp;&nbsp;&nbsp;Amount due from related party | (5569) | 422 |
| &nbsp;&nbsp;&nbsp;Deferred tax assets | (960210) | 597 |
| &nbsp;&nbsp;&nbsp;Operating lease-right of use assets | (58178) | (45183) |
| &nbsp;&nbsp;&nbsp;Deferred financing cost | (938993) | (646615) |
| &nbsp;&nbsp;&nbsp;Other current liabilities | 75276 | - |
| &nbsp;&nbsp;&nbsp;Other non-current assets | - | 50162 |
| &nbsp;&nbsp;&nbsp;Accounts payable | 328826 | 425692 |
| &nbsp;&nbsp;&nbsp;Income tax payable | 42114 | 22280 |
| &nbsp;&nbsp;&nbsp;Contract liability | (48136) | (381151) |
| &nbsp;&nbsp;&nbsp;Other payables and accrued liabilities | - | 106249 |
| &nbsp;&nbsp;&nbsp;Lease liabilities | 56727 | (161742) |
| &nbsp;&nbsp;&nbsp;Amount due to related party | 1447089 | (147967) |
| **Net cash provided by/ (used in) operating activities** | **846926** | **(1727445)** |
| **Cash Flows from Investing Activities:** |  |  |
| Purchases of property and equipment | (53810) | (9027) |
| **Net cash used in investing activities** | **(53810)** | **(9027)** |
| **Cash Flows from Financing Activities:** |  |  |
| Capital contributions | - | 70305 |
| Proceeds from third parties loans | - | 239015 |
| Proceeds from bank borrowings | 124609 | 2671579 |
| Repayments of borrowings to third parties | (255316) | (729763) |
| Repayment of bank borrowings | (650735) | (421828) |
| **Net cash (used in)/ provided by financing activities** | **(781442)** | **1829308** |
| **Effect of Exchange Rate Changes on Cash** | **(492)** | **1404** |
| **Net Increase in cash** | **11182** | **94240** |
| Cash, Beginning of Period | 174825 | 132150 |
| **Cash, End of Period** | $**186007** | **226390** |
| **Supplemental disclosure of cash flow information:** | $— |  |
| Cash paid for income tax | $10959 | 2345 |
| Cash paid for interest | $29403 | 64902 |
| **Supplemental disclosure of non-cash flow information:** |  |  |
| Right-of-use assets obtained in exchange for operating lease obligation | $56398 | 125552 |

---

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

**MAXSMAKING INC.**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

1. Organization and Principal Activities

 

*<u>Business</u>*

MaxsMaking Inc. ("MaxsMaking" and collectively with its consolidated subsidiaries, the "Company") is a manufacturer of customized consumer goods with a strong focus on advanced technology and innovation. The Company consists of various subsidiaries that specialize in different aspects of its businesses, including digital production, software development, product design and brand management, online sales and international trade. The Company was founded in 2007, with its headquarters located in Shanghai, China, our manufacturing facilities located in Yiwu, Zhejiang province and Zhumadian, Henan province.

Leveraging the advantages of talent and resource integration, industrial chain and internet, the Company specializes in the manufacturing customized products, a blue ocean market of the manufacturing industry. Serving small and medium-sized enterprises and individual e-commerce sellers with their needs for small batch customized products, the Company currently mainly uses cotton cloth, nylon cloth, polyester, recycled polyethylene terephthalate (rPET) and other materials to produce backpacks, shopping bags, aprons, tablecloths and other consumer goods. The Company serves enterprises, schools, government agencies, non-profit organizations, e-commerce sellers and various groups and organizations to meet their needs for small-batch customized products. The Company is committed to helping customers build brand image and improve market competitiveness. In the production process, the Company uses sustainable raw materials and production methods to provide customers with high-quality products, and it pays attention to environmental protection and social responsibility in the meantime.

 

*<u>Organizations</u>*

MaxsMaking Inc. ("MaxsMaking" and collectively with its consolidated subsidiaries, the "Company") is a limited liability company incorporated under the laws of the BVI on August 14, 2023.

MaxKraft Inc ("MaxKraft") is a limited liability company incorporated on August 21, 2023 under the Laws of Hong Kong and a wholly owned subsidiary of MaxsMaking.

MaxsMaking Group Limited ("MaxsMaking HK") is a limited liability company incorporated on September 4, 2023, under the Laws of Hong Kong and a wholly owned subsidiary of MaxKraft.

Ververise Group Limited ("Ververise HK") is a limited liability company incorporated on November 6, 2023,under the laws of Hong Kong and a wholly owned subsidiary of MaxKraft.

Zhejiang MaxsMaking Technology Co., Ltd. ("WFOE" or "Zhejiang MaxsMaking") is a limited liability company incorporated on January 11 under the laws of the PRC, and is 100% owned by MaxsMaking HK.

Zhejiang Haodingduo Intelligent industry Group Co., Ltd. ("Intelligent Industry Company") is a limited liability company incorporated on July 27, 2023 under the laws of the PRC with 99% equity interest owned by WOFE and 1% equity interest owned by Ververise HK.

Shanghai Alliance Industrial Co., Ltd. ("Shanghai Alliance") is a limited liability company incorporated on January 29, 2007 under the laws of the PRC with 100% equity interest owned by Intelligent Industry Company.

Shanghai Supreme Technology Co., Ltd. ("Supreme Technology") is a limited liability company incorporated on December 12, 2016 under the laws of the PRC with 90% equity interest owned by Shanghai Alliance.

Zhejiang Alliance Arts and Crafts Co., Ltd. is a limited liability company incorporated on December 27, 2018 under the laws of the PRC and a wholly owned subsidiary of Shanghai Alliance.

Shanghai Lvzao Intelligent Technology Co., Ltd. is a limited liability company incorporated on October 11, 2021 under the laws of the PRC and a wholly owned subsidiary of Shanghai Alliance.

Haodingduo (Shanghai) Technology Co., Ltd. ("Haodingduo Shanghai") is a limited liability company incorporated on August 10, 2021 under the laws of the PRC and a wholly owned subsidiary of Shanghai Alliance.

Zhumadian City Haoyi Craft Products Co., Ltd.("Zhumadian") is a limited liability company incorporated on March 20, 2022 under the laws of the PRC with 95% equity interest owned by Haodingduo Shanghai.

Haodingduo (Zhejiang) Web Science and Technology Co., Ltd. is a limited liability company incorporated on July 27, 2021 under the laws of the PRC and a wholly owned subsidiary of Supreme Technology.

Haodingduo Brand Management Co., Ltd. is a limited liability company incorporated on November 29, 2021 under the laws of the PRC and a wholly owned subsidiary of Supreme Technology.

*<u>Reorganization</u>*

A reorganization of the Company's legal structure ("Reorganization") was completed on February 1, 2024. The reorganization involved the incorporation of offshore entities of MaxsMaking, MaxKraft, Ververise HK and MaxsMaking HK.

Intelligent Industry Company was originally wholly owned by Zhejiang Haodingduo Intelligent Technology Group Co., Ltd. In December 2023, Ververise HK acquired an aggregate of 1% equity interest of Intelligent Industry Company by subscribing to its additional capital, after which Zhejiang Haodingduo Intelligent Technology Group Co. became a 99% shareholder of Intelligent Industry Company. In January 2024, Zhejiang MaxsMaking acquired an aggregate of 99% equity interest of Intelligent Industry Company from Zhejiang Haodingduo Intelligent Technology Group Co., Ltd., replacing it as a shareholder of Haodingduo Intelligent Industry. Zhejiang MaxsMaking is a wholly-owned subsidiary of MaxsMaking HK. After Ververise HK was acquired by Maxkraft on February 1, 2024, MaxsMaking Inc. indirectly owned 100% of the equity interest of the Intelligent Industry Company and Shanghai Alliance, becoming the ultimate holding company of Shanghai Alliance's subsidiaries.

The Reorganization has been accounted for as a recapitalization among entities under common control since the same controlling shareholders controlled all these entities before and after the Reorganization. The consolidation of the Company and its subsidiaries have been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements. Results of operations for the periods presented comprise those of the previously separate entities combined from the beginning of the period to the end of the period, eliminating the effects of intra-entity transactions.

2. Summary of significant accounting policies

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Basis of presentation

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements. Significant accounting estimates reflected in the Company's consolidated financial statements include allowance for accounts receivable, recoverability, useful lives of long-lived assets, intangible assets and income taxes related to realization of deferred tax assets and uncertain tax position. The Group bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Principles of Consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries. Subsidiaries are all entities over which the Company has controlled. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date on that control ceases.

In preparing the consolidated financial statements, transactions, balances and unrealized gains on transactions between group entities are eliminated. Unrealized losses are also eliminated unless the transactions provide evidence of an impairment indicator of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Cash

The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Accounts receivable, net

Accounts receivable is recognized initially at the original invoice amount and subsequently measured at amortized cost, net of an allowance for expected credit losses. The Company typically provides credit terms of up to 360 days to customers with sound creditworthiness.

The adequacy of the allowance for credit losses is assessed based on a combination of specific individual customer account analysis and historical collection experience. The Company recognizes a provision for expected credit losses when there is evidence indicating a potential inability to collect the due amounts. This allowance reflects management's best estimate of specific losses on individual exposures, as well as a general provision based on historical collection trends.

Actual collections may differ from these estimates due to variations in the assessment of creditworthiness and changes in the economic environment. Balances of delinquent accounts are written off against the allowance for credit losses when management determines that collection is no longer probable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Inventories

Inventories are stated at the lower of cost or market value. Costs include the cost of raw materials, freight, direct labor and related production overhead. The cost of inventories is calculated using the weighted average method. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Allowances for obsolescence are also assessed based on expiration dates, as applicable, taking into consideration historical and expected future product sales.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Deferred offering cost

Deferred Offering cost represents the incremental costs incurred for the Company's initial public offering ("IPO"). These costs are deferred and will be deducted from the proceeds of the IPO upon the completion of the IPO. Deferred IPO costs primarily include professional fees related to the IPO. As of October 31, 2024 and April 30, 2025, the deferred IPO costs were $986,206 and $1,058,003, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Property and equipment, net

Property and equipment are stated at cost. The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets, as follows:

---

| | |
|:---|:---|
| **Items** | **Useful life** |
| Office equipment | 3 ~5years |
| Machinery and equipment | 10 years |
| Electronic equipment | 3 years |
| Vehicle | 10 years |
| Leasehold improvement | 1~3years |

---

Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the statement of income in other income and expenses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Intangible assets, net

Intangible assets are copyright developed by the Company, which are recorded at cost less accumulated amortization. Intangible assets are amortized using the straight-line method with the estiated 10-year useful lives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Impairment of long-lived assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset's carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no indicators of impairment of these assets as of October 31, 2024 and April 30, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Accounts and other payables

Accounts and other payables represent liabilities for goods, accrued payroll and other operating related services provided to the Company prior to the end of the financial year which are unpaid. They are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). Otherwise, they are presented as non-current liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) Leases

The Company adopted Accounting Standards Update ("ASU") 2016-02. For all leases that were entered into prior to the effective date of ASC 842, we elected to apply the package of practical expedients. Based on this guidance we will not reassess the following: (1) whether any expired or existing contracts are or contain leases; (2) the lease classification for any expired or existing leases; and (3) initial direct costs for any existing leases. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets, current portion of obligations under operating leases, and obligations under operating leases, non-current on the Company's consolidated balance sheets. Finance leases are included in property and equipment, net, current portion of obligations under capital leases, and obligations under capital leases, non-current on the Company's consolidated balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date, adjusted by the deferred rent liabilities at the adoption date. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The Company's terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.

As of April 30, 2025 and October 31, 2024, there were $117,526 and $86,441 in operating lease ROU asset and $103,966 and $47,895 in operating lease liability based on the present value of the future minimum rental payments of leases, respectively. The amortization of right-of-use-assets were $26,092 and $90,317 for the six months ended April 30, 2025 and 2024, respectively. All right-of-use assets are reviewed for impairment. No impairment for right-of-use lease assets as of April 30, 2025 and October 31, 2024, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) Borrowings

Borrowings comprise short-term loans and long-term loans. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds net of transaction costs and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) Statutory Reserves

The Company's subsidiaries established in the PRC are required to make appropriations to certain non-distributable reserve funds.

In accordance with the laws applicable to the foreign invested enterprises established in the PRC, the Company's subsidiaries registered as wholly foreign owned enterprises have to make appropriations from their after-tax profits (as determined under generally accepted accounting principles in the PRC ("PRC GAAP")) to non-distributable reserve funds including general reserve fund, enterprise expansion fund and staff bonus and welfare fund. The appropriation to the general reserve fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the general reserve fund has reached 50% of the registered capital of the Company.

In addition, in accordance with the PRC Company Law, the Company's subsidiaries, registered as Chinese domestic companies, must make appropriations from their after-tax profits as determined under the PRC GAAP to non-distributable reserve funds including statutory surplus fund and discretionary surplus fund. The appropriation to the statutory surplus fund must be 10% of the after-tax profits as determined under PRC GAAP. Appropriation is not required if the statutory surplus fund has reached 50% of the registered capital of the Company. Appropriation to the discretionary surplus fund is made at the discretion of the Company.

The general reserve fund, enterprise expansion fund, statutory surplus fund and discretionary surplus fund are restricted for use. They may only be applied to offset losses or increase the registered capital of the respective entity. The staff bonus and welfare fund are liability in nature and is restricted for payment of special bonuses to employees and for the collective welfare of employees. None of these reserves is allowed to be transferred to the Company by way of cash dividends, loans or advances, nor can they be distributed except under liquidation.

For the six months ended April 30, 2025 and 2024, appropriation of nil and nil was made to the statutory surplus fund by the Company's subsidiaries, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) Revenue recognition

The Company adopted ASC 606 "Revenue Recognition." It recognizes revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The Company recognizes revenue based on the consideration specified in the applicable agreement.

Revenue from contracts with customers is recognized using the following five steps:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Identify the contract(s) with a customer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Identify the performance obligations in the contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Determine the transaction price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Allocate the transaction price to the performance obligations
in the contract; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Recognize revenue when (or as) the entity satisfies a performance
obligation.

Generally, revenues are recognized when the Company has negotiated the terms of the transaction, which includes determining either the overall price, or price for each performance obligation in the form of a service or a product, the service or product has been delivered to the customer, no obligation is outstanding regarding that service or product, and the Company is reasonably assured that funds have been or will be collected from the customer.

The Company generates revenue from production and sales of personalized goods including domestic sales and oversea sales. The Company typically receives purchase orders from its customers which will set forth the terms and conditions including the transaction price, products to be delivered, terms of delivery, and terms of payment. The terms serve as the basis of the performance obligations that the Company must fulfill in order to recognize revenue.

The Company's contracts have one single performance obligation as the promise is to transfer the individual goods to customers, and there is no other identifiable promises in the contracts for both domestic and oversea sales.

obligation is fulfilled upon customers' receipt and acceptance of the products for domestic sales (evidenced through delivery tickets with customers' signatures), which is considered at point in time. For overseas customers, where the FOB (Free on Board) terms are applied, the insurance and freight costs borne bythe buyer. The company recognizes revenue upon the bill of lading date, which is considered at point in time. Revenue is reported net of all value added taxes ("VAT"). For domestic customers, the Company usually grants credit to customers with good credit standing with a maximum of 360 days and for oversea customers, 30%-70% payment is due upon receiving the booking confirmation or signing the contract. The Company offers customer warranty of 30 days for defective products that are beyond contemplated defective rate mutually agreed in contract with customers normally. The Company analyzed historical refund claims for defective products and concluded that they have been immaterial.

 ****

*Contract Assets and Liabilities*

Payment terms are established on the Company's pre-established credit requirements based upon an evaluation of customers' credit quality. Contract assets are recognized for in related accounts receivable. Contract liabilities are recognized for contracts where payment has been received in advance of delivery. The contract liability balance can vary significantly depending on the timing when an order is placed and when shipment or delivery occurs. As of October 31, 2024 and April 30, 2025, other than accounts receivable and advances from customers, the Company had no other material contract assets recorded on its consolidated balance sheet. The balance of contract liability as of October 31 and April 30, 2024 and 2025 are disclosed in Note 11. Costs of fulfilling customers' purchase orders, such as shipping, handling and delivery, which occur prior to the transfer of control, are recognized in selling, general and administrative expense when incurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) Cost of revenue

Cost of revenue consists primarily of cost of materials, direct labor cost, depreciation and maintenance costs for equipment, rental expense and other related manufacturing expenses that are directly attributable to the Company's principal operations.

 ****

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) Research and development expenses

The Company expense all internal research costs as incurred, which primarily comprise employee costs, materials costs and the expenses related to the research and development activities. For the six months ended April 30, 2025 and 2024, total research and development expenses were approximately $458,025 and $298,381, respectively, which were recorded in research and development expenses in the consolidated statement of income and comprehensive income.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) Sales and marketing expenses

Sales and marketing expenses consist primarily of logistics costs, staff costs, promotion expense and other related incidental expenses that are incurred to conduct the Company's sales and marketing activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) General and administrative expenses

General and administrative expenses consist primarily of salaries, and those not specifically dedicated to research and development or sales and marketing activities, depreciation of property and equipment, amortization of operating leasing assets, legal and professional services fees, rental and other general corporate related expenses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) Taxation

 

*Income tax*

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company recognizes deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company does not believe that there were any uncertain tax positions at April 30, 2025 and October 31, 2024.

 

 

*Value added taxes*

The Company's PRC subsidiaries are subject to value added tax ("VAT"). Revenue from sales of transaction is generally subject to VAT at the rate of 13% and subsequently paid to PRC tax authorities after netting input VAT on purchase of materials and service received. The excess of output VAT over input VAT is reflected in accrued expenses and other payables, and the excess of input VAT is reflected in Prepayments and other current assets in the Consolidated Balance Sheets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) Earnings per share

The Company computes earnings per share ("EPS") in accordance with ASC 260, "Earnings per Share" ("ASC 260"). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There were no diluted shares for the six months ended April 30, 2025 and 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Comprehensive income

Comprehensive income is defined to include all changes in equity of the Company during a period arising from transactions and other event and circumstances except those resulting from investments by shareholders and distributions to shareholders. For the six months ended April 30, 2025 and 2024 presented, the Company's comprehensive income includes net income and other comprehensive income, which mainly consists of the foreign currency translation adjustment and non-controlling interests that have been excluded from the determination of net income.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) Related parties

The Company follows subtopic 850-10 of the FASB ASC for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20, related parties include: (a) affiliates of the Company; (b) entities for which investments in their equity securities would be required, absent the election of the FV option under the FV Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) Commitments and Contingencies

In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, and non-income tax matters. An accrual for a loss contingency is recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) Foreign Currency Translation

The Company's principal country of operations is the PRC. The financial position and results of its operations are determined using RMB, the local currency, as the functional currency. Our financial statements are reported using U.S. Dollars. The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income included in statement of changes in equity. Gains and losses from foreign currency transactions are included in the consolidated statement of income and comprehensive income.

The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in the PRC's political and economic conditions. Any significant revaluation of RMB may materially affect the Company's financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

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| | | |
|:---|:---|:---|
|  | &nbsp;&nbsp;**As of** | &nbsp;&nbsp;**As of** |
|  | &nbsp;&nbsp;**April 30, <br> 2025** | &nbsp;&nbsp;**October 31,<br> 2024** |
| Period end RMB:US $l exchange rate | &nbsp;&nbsp;US$1=RMB 7.2014 | &nbsp;&nbsp;US$1=RMB 7.1250 |
| Six months end average RMB:US $l exchange rate | &nbsp;&nbsp;US$1=RMB 7.1825 | &nbsp;&nbsp;US$1=RMB 7.1126 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) Fair value measurements

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The three levels of inputs that may be used to measure fair value include:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Observable, market-based inputs, other than quoted prices, in active markets for identical assets or liabilities.

Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Accounting guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.

The Company does not have any non-financial assets or liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis.

As of April 30, 2025 and October 31, 2024, the carrying values of cash, accounts receivable, net, other current assets accounts payable, short-term loans and other payables approximated their fair values reported in the consolidated balance sheets due to the short term nature of these instruments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) Credit Risk

Financial instruments that potentially expose the Company to credit risk consist primarily of cash and cash equivalent and accounts receivable. The Company places its cash and cash equivalents with financial institutions with high credit ratings and quality.

A majority of the Company's expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries' assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People's Bank of China ("PBOC"). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.

As of October 31, 2024 and April 30, 2025, $176,236 and $186,007 of the Company's cash and cash equivalents and certificates of deposit were on deposit at financial institutions in the PRC with upper limited RMB 500,000 insurance to cover bank deposits in the event of bank failure. To limit exposure to credit risk relating to deposits, the Company primarily places cash and cash equivalent deposits with large financial institutions in China which management believes are of high credit quality and management also continually monitors the financial institutions' credit worthiness.

The Company conducts credit evaluations of our customers and generally does not require collateral or other security. The Company establishes an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific third-party customers and related parties. Account receivables as of October 31 and April 30, 2024 and 2025 are disclosed in Note 3 of this consolidation financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ab) Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker and included within segment profit and loss. The amendments were effective for the Company's annual periods beginning June 1, 2024, and interim periods beginning June 1, 2025 and have been applied retrospectively to all prior periods presented in the financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company's annual periods beginning June 1, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. The new disclosure requirements are effective for the Company's annual periods beginning June 1, 2027, and interim periods beginning June 1, 2028, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures.

In January 2025, the FASB issued ASU 2025-01, "Income Statement – Comprehensive Income – Expense Disaggregation Disclosure (Subtopic 220-40): Clarifying the Effective Date." This pronouncement revises the effective date of ASU 2024-03 and clarifies that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Entities within the ASU's scope are permitted to early adopt the accounting standard update.

3. Accounts receivable, net

Accounts receivable consisted of the following：

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| | | |
|:---|:---|:---|
|  | **April 30,<br> 2025** | **October 31,<br> 2024** |
| Accounts receivable | $6132027 | $6206171 |
| Less: Expected credit loss | (120277) | (17179) |
| **Accounts receivable, net** | $**6011750** | $**6188992** |

---

The movement in the expected credit loss accounts are as follows:

---

| | | |
|:---|:---|:---|
|  | **April 30,<br> 2025** | **October 31,<br> 2024** |
| Beginning balance | $17179 | $143 |
| Additions | 119132 | 17064 |
| Reversal | (15579) | - |
| Translation adjustments | (455) | (28) |
| **Expected credit loss** | $**120277** | $**17179** |

---

The Company's credit policy typically requires payment within 180 to 360 days, and payments on the vast majority of its sales have been collected within 360 days.

The additions of expected credit loss was $119,132 and the reversal was $15,579 for the six months ended April 30, 2025 and the expected credit loss was $17,064 as of October 31, 2024.

4. Inventories

Inventories consisted of the following:

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| | | |
|:---|:---|:---|
|  | **April 30,<br> 2025** | **October 31,<br> 2024** |
| Raw material | $1556842 | $1568246 |
| Finished goods | 1971495 | 1065369 |
| **Total inventories** | $**3528337** | $**2633615** |

---

The allowance for obsolete and expired inventories were nil and nil for the six months ended April 30, 2025 and 2024, respectively.

5. Prepayments and other current assets

Other receivable and other current assets consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **April 30,<br> 2025** | **October 31,<br> 2024** |
| Deposit | $24018 | $26935 |
| Warranty | 4574 | 13087 |
| VAT deductibles | 254022 | 140944 |
| Export tax rebate receivable | 31295 | 75639 |
| Cash advanced to employees | 390296 | 51343 |
| Advances to suppliers | 6089427 | 7144369 |
| Others | 32362 |  |
| **Total prepayments and other current assets** | $**6825994** | $**7452317** |

---

6. Property and equipment, net

Property and equipment, net consists of the following:

---

| | | |
|:---|:---|:---|
|  | **April 30,<br> 2025** | **October 31,<br> 2024** |
| Office equipment | $79637 | $21541 |
| Electronic Equipment | 66288 | 42170 |
| Machinery | 86286 | 97852 |
| Vehicle | 44215 | 44689 |
| Leasehold improvement | - | 18895 |
| **Total original costs** | **276426** | **225147** |
| Less: accumulated depreciation | (155641) | (106022) |
| **Property and equipment, net** | $**120785** | $**119125** |

---

For the six months ended April 30, 2025 and 2024, the Company purchased new property and equipment of $53,810 and $9,027, respectively.

Depreciation expense recognized for the six months ended April 30, 2025 and 2024 was $50,879 and $14,133 respectively.

7. Intangible assets, net

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| | | |
|:---|:---|:---|
|  | **April 30,<br> 2025** | **October 31, 2024** |
| Capitalized copyrights, cost | $10084 | $10193 |
| Less: accumulated amortization | (3234) | (2760) |
| **Intangible assets, net** | $**6850** | $**7433** |

---

Capitalized copyrights represent software that is developed or purchased by an entity that will be sold, leased, or marketed as a stand-alone product as well as a software that will be sold as part of another product or process. All costs of developing software prior to establishing its technological feasibility are research and development costs and are expensed as incurred. Technological feasibility is achieved when an entity has completed all planning, designing, coding, and testing activities necessary to establish that the software product can be produced to meet its design specifications, including functions, features, and technical performance requirements. As described in ASC 985-20-25-1, this can be achieved through the use of either (1) a detailed program design, or (2) the combination of a product design and working model, which have been confirmed for completeness by testing. Costs of developing software after establishing technological feasibility are recorded capitalized software.

The capitalized costs of developing software that will be sold, leased, or marketed are amortized separately for each software product. An entity amortized the capitalized costs of the software when the product first became available for general release to customers.

For the six months ended April 30, 2025 and 2024, the Company amortized $506 and $511, respectively.

The estimated amortization expense for these intangible assets in the next five years and thereafter is as follows:

---

| | |
|:---|:---|
| **Period ending April 30, 2025:** | **Amount** |
| &nbsp;&nbsp;&nbsp;2026 | $1008 |
| &nbsp;&nbsp;&nbsp;2027 | 1008 |
| &nbsp;&nbsp;&nbsp;2028 | 1008 |
| &nbsp;&nbsp;&nbsp;2029 | 1008 |
| &nbsp;&nbsp;&nbsp;2030 | 1008 |
| &nbsp;&nbsp;&nbsp;Thereafter | 1810 |
| Total: | $6850 |

---

---

| | |
|:---|:---|
| **Period ending October 31, 2024:** | **Amount** |
| &nbsp;&nbsp;&nbsp;2025 | $1021 |
| &nbsp;&nbsp;&nbsp;2026 | 1021 |
| &nbsp;&nbsp;&nbsp;2027 | 1021 |
| &nbsp;&nbsp;&nbsp;2028 | 1021 |
| &nbsp;&nbsp;&nbsp;2029 | 1021 |
| &nbsp;&nbsp;&nbsp;Thereafter | 2328 |
| Total: | $7433 |

---

8. Leases

The Company leases factories under non-cancellable operating leases, with terms ranging from three to five years. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of right of use assets and lease liabilities. Lease expense for lease payment is recognized on a straight-line basis over the lease term.

The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. Therefore, the Company discount lease payments based on an estimate of its incremental borrowing rate. As of April 30, 2025 and October 31, 2024, the operating lease's weighted average remaining lease term was 0.63 years and 0.97 years, respectively. As of April 30, 2025 and October 31, 2024, and weighted average discount rate was 4.23% and 4.13%, respectively. The rental expense for the six months ended April 30, 2025 and 2024 was $105,307 and $90,317, respectively.

The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Supplemental balance sheet information related to operating lease was as follows:

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| | | |
|:---|:---|:---|
|  | **April 30,<br> 2025** | **October 31,<br> 2024** |
| Right-of-use assets | $117526 | $86441 |
| Operating lease liabilities - current | $97190 | $47895 |
| Operating lease liabilities - non-current | $6776 | $- |
| **Total operating lease liabilities** | $103966 | $47895 |

---

The following is a schedule, by fiscal years, of maturities of lease liabilities as of April 30, 2025:

---

| | |
|:---|:---|
| 2025 |  |
| Total lease payments | 105307 |
| Less: imputed interest | 1341 |
| Present value of lease liabilities | $**103966** |

---

The following is a schedule, by fiscal year, of maturities of lease liabilities as of October 31, 2024:

---

| | |
|:---|:---|
| 2024 | $— |
| Total lease payments | 49583 |
| Less: imputed interest | 1688 |
| Present value of lease liabilities | $**47895** |

---

9. Short-term loans

Short-term loans represent amounts due to various banks normally due within one year. The principal of the loans is due at maturity. Accrued interest is due either monthly or quarterly.

Short-term loans consist of the following:

---

| | | |
|:---|:---|:---|
|  | **April 30,<br> 2025** | **October 31,<br> 2024** |
| Zhejiang Yiwu Rural Commercial Bank | $840114 | $849123 |
| Ning Bo Bank | 1221985 | 1235087 |
| China Merchants Bank | - | 589474 |
| Zhejiang Mingtai Commercial Bank | 111090 | 112281 |
| **Total short-term loans** | **2173189** | **2785965** |

---

In July, August and September 2024, the Company entered into four short-term loans agreements with Ningbo Bank with a loan period of twelve months. One loan of RMB 7,000,000 (approximately $972 thousands) pledged by the personal assets of Xuefen Zhang, Chairman and shareholder of MaxsMaking and Mr. Xiaozhong Lin, CEO of MaxsMaking, bears a fixed interest rate of 4% per annum, and will mature in July, August and September 2025. The other loan of RMB 1,800,000 (approximately $249 thousands) pledged by the personal assets of Xuefen Zhang and Xiaozhong Lin bears a fixed interest rate of 4% per annum and will mature in September 2025.

On July 31, 2024, the Company entered into a short-term loan agreement with Zhejiang Mingtai Commercial Bank with a loan period of twelve months. The loan of RMB800,000 (approximately $111 thousands) bears a fixed interest rate of 8.7% per annum and will mature in July 2025.

In December 2024, the Company entered into a short-term loans agreement with Zhejiang Yiwu Rural Commercial Bank with a loan period of twelve months. The loan of RMB 6,050,000 (approximately $840 thousands) bears a fixed interest rate of 5% per annum and will mature in December 2025.

10. Accounts payable

Accounts payable consists of the following:

---

| | | |
|:---|:---|:---|
|  | **April 30,<br> 2025** | **October 31,<br> 2024** |
| Account payable to material suppliers | $2207775 | $1909791 |
| Account payable to other suppliers | 225237 | 217832 |
| **Accounts payable** | $**2433012** | $**2127623** |

---

11. Contract liability

The movement in the contract liability accounts are as follows:

---

| | | |
|:---|:---|:---|
|  | **April 30,<br> 2025** | **October 31,<br> 2024** |
| Beginning balance | $512859 | $822121 |
| Additions | 458705 | 1823429 |
| Transfer to revenue | (506842) | (1786236) |
| Refund | - | (353109) |
| Exchange (loss)/gain | (5314) | 6654 |
| **Total** | $**459408** | $**512859** |

---

12. Other payables and accrued liabilities

Other payables and accrued liabilities consist of the following:

---

| | | |
|:---|:---|:---|
|  | **April 30,<br> 2025** | **October 31,<br> 2024** |
| Salary and welfare payable | $58115 | $46080 |
| Other tax payable | - | 39976 |
| Equity transfer payment | 759058 | 767197 |
| Other payables and accrued liabilities | 115296 | 13996 |
| **Total** | $**932469** | $**867249** |

---

On September 10, 2021, Haodingduo Shanghai entered into a share purchase agreement with the former sole shareholder of Zhumadian (the "Former Shareholder") (collectively, the "Parties") for the purchase of 95% of the total equity interest of Zhumadian (the "Acquisition") for a consideration of RMB 1. On October 25, 2021, the Parties entered into a supplementary agreement ("Supplementary Agreement 1") with the Former Shareholder in which the purchase consideration was revised to RMB 5,466,280 (approximately $856,000). The Parties have further agreed in Supplementary Agreement 1 that the consideration will be paid within 3 years from the date of Supplementary Agreement 1. On October 15, 2024, the Parties had further entered another supplementary agreement ("Supplementary Agreement 2") to extend the repayment period by an additional 2 years from the date of Supplementary Agreement 2. The carrying amount of the unpaid consideration as of April 30, 2025 and October 31, 2024 for the Acquisition is presented as "Equity transfer payment" in the table above.

Other payables and accrued liabilities consist of mainly employees out-of-pocket expenses and employees advances approximately $90,000 for business related expenses.

13. Taxes

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Corporation income tax

The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled.

 ****

***BVI***

MaxsMaking Inc. is incorporated in BVI as an offshore holding company and is not subject to tax on income or capital gain under the laws of BVI. Additionally, upon payments of dividends by the Company or its subsidiaries to their shareholders, no withholding tax will be imposed.

 ****

***Hong Kong***

MaxsMaking Holding Limited is incorporated in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate for the first HKD$2 million of assessable profits is 8.25% and assessable profits above HKD$2 million will continue to be subject to the rate of 16.5% for corporations in Hong Kong, effective from 2022. Before that, the applicable tax rate was 16.5% for corporations in Hong Kong. Under Hong Kong tax laws, MaxsMaking Holding Limited is exempted from income tax on its foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends. For the six months ended April 30, 2025 and 2024, the Company provided provision of income tax expenses of nil against MaxsMaking Holding Limited.

 ****

***PRC***

The Company's operating subsidiary is incorporated in the PRC and is subject to PRC income tax, which is computed according to the relevant laws regulations in the PRC. Under the Corporation Income Tax Law of PRC, current corporation income tax rate of 25% is applicable to all companies, including both domestic and foreign-invested companies.

In accordance with the implementation rules of Enterprise Income Tax Laws of the PRC (the "EIT Laws"), a qualified "High and New Technology Enterprise" ("HNTE") is eligible for a preferential tax rate of 15%. The HNTE certificate is effective for a period of three years. An entity could re-apply for the HNTE certificate when the prior certificate expires. The Company's subsidiaries, Supreme Technology, Zhejiang Alliance and Shanghai Lvzao, are qualified as HNTE in 2019, 2021 and 2021, respectively.

In addition, in accordance with Announcement on Corporate Income Tax Policies for Promoting High-quality Development of Integrated Circuit Industry and Software Industry, promulgated on December 11, 2020 and effective on January 1, 2020, an entity recognized as the "Software Enterprise" will be exempted from corporate income tax for the first two years after making profits and will be subject to corporate income tax at a tax rate of 12.5% (half of the statutory corporate income tax rate of 25%) for the third to fifth years. The Company's subsidiary, Shanghai Lvzao, was recognized as the "Software Enterprise" from May 30, 2022 to May 29, 2023 and from May 30, 2023 to May 29, 2024, and started making profits from January 2023, and thus was exempted from corporate income tax in the year of 2023 and 2024, and will be subject to corporate income tax at the rate of 12.5% from the year of 2025 to 2027.

Per the consolidated statements of income and comprehensive income, the income tax expenses for the Company can be reconciled to the income before income taxes for the six months ended April 30, 2025 and 2024 as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> April 30,** | **For the Six Months Ended<br> April 30,** |
|  | **2025** | **2024** |
|  | **USD** | **USD** |
| Income before income taxes | 174800 | 1008868 |
| PRC statutory tax rate | 25% | 25% |
| Income tax computed at PRC statutory tax rate | 79906 | 309987 |
| Preferential tax treatments | 83752 | 275100 |
| Non-deductible expense | 3781 | 611 |
| Additional deduction for research and development expenses | - | (9208) |
| Tax-exempted income | (304) | (1284) |
| &nbsp;&nbsp;**Total** | **(370)** | **25006** |

---

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended <br> April 30,** | **For the Six Months Ended <br> April 30,** |
|  | **2025** | **2024** |
|  | **USD** | **USD** |
| Current income tax expense | 19812 | 27131 |
| Deferred income tax expense | (20182) | (2125) |
| **Total** | **(370)** | **25006** |

---

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of April 30, 2025 and October 31, 2024 are as follows:

---

| | | |
|:---|:---|:---|
|  | **April 30,<br> 2025** | **October 31, 2024** |
| **Deferred tax assets** |  |  |
| Expected credit loss | $21266 | $1149 |
| Net operating loss carry-forward | 23141 | 23389 |
| **Total** | $**44407** | $**24538** |

---

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income, projections for future taxable income over the periods in which the deferred tax assets are deductible, the company will realize the benefits of those deductible differences as of April 30, 2025 and October 31, 2024.

14. Long-term loans

---

| | | |
|:---|:---|:---|
|  | **April 30,<br> 2025** | **October 31,<br> 2024** |
| &nbsp;&nbsp;&nbsp;Loans from third parties | $334685 | $662160 |
| &nbsp;&nbsp;&nbsp;Loan from bank | 1505957 | 1396491 |
| **Total** | $**1840642** | $**2058651** |

---

The Company entered into several loan agreements with third parties without any fixed term or interest to support daily operation of the Company.

In December 2023, the Company entered into one long-term loan agreement with Zhejiang Yiwu Rural Commercial Bank with a loan period of 36 months. The loan of RMB9,950,000 (approximately $1,382 thousands) bears a fixed interest rate of 3.6% per annum and will mature in December 2026.

In October 2024, the Company entered into one long-term loan agreement with China Construction Bank with a loan period of 36 months. The loan of RMB895,000 (approximately $123 thousands) bears a fixed interest rate of 3.9% per annum and will mature in December 2027.

15. Related party transactions

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Amount due from related parties

As of April 30, 2025 and October 31, 2024, amount due from related parties consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **April 30,<br> 2025** | **October 31,<br> 2024** |
| Xiaozhong Lin<sup>(1)</sup> | 5554 | &nbsp;&nbsp;&nbsp;&nbsp; - |
| **Total** | $**5554** | $**-**  |

---

 

<sup>(1)</sup> Xiaozhong Lin, Chairman and CEO of the Company. The balance represents temporary advances to employee for business purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Amount due to related parties

As of April 30, 2025 and October 31, 2024, amount due to related parties consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **April 30,<br> 2025** | **October 31,<br> 2024** |
| Xiaozhong Lin<sup>(1)</sup> | $102188 | $79301 |
| Xuefen Zhang<sup>(2)</sup> | 635000 | 70456 |
| **Total** | $**737188** | $**149757** |

---

**** 

**<sup>(1)</sup>** Xiaozhong Lin, Chairman and CEO of the Company

**** 

<sup>(2)</sup> Xuefen Zhang, director and Chief Operating Officer of the Company.

As of April 30, 2025 and October 31, 2024, Xiaozhong Lin and Xuefen Zhang provided loans in the aggregate amounts of $737,188 and $149,757 to the Company, as unsecured, interest-free and due-on-demand advances for working capital purposes.

16. Equity

**Ordinary shares**

MaxsMaking is authorized to issue an unlimited number of shares, divided into unlimited number of A shares with a par value of US $0.01 each, of which 7,575,000 shares were issued, and up to a maximum of 7,425,000 B shares with a par value of $0.01 each, of which 7,425,000 shares were issued.

17. Commitments and contingencies

The Company and its wholly-owned subsidiaries may be involved in certain legal proceedings, claims and other disputes arising from the commercial operations, projects, employees and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. The Company and its wholly-owned subsidiaries determine whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. Although the outcomes of these legal proceedings cannot be predicted, the Company and its wholly-owned subsidiaries do not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity.

18. Subsequent events

The Company has assessed all subsequent events from April 30, 2025 up through October 31, 2025, which is the date that these consolidated financial statements are available to be issued. No subsequent event which had a material impact on the Company was identified through the date of issuance of the financial statements

On July 8, 2025, the Company offered 1,625,000 A Shares at an initial public offering price of $4.00 per share, which generated gross proceeds of $6,500,000 before deducting underwriting discounts and offering expenses. The Company granted the underwriters an option, exercisable within 45 days of issuance date, to purchase up to an additional 243,750 A Shares at the public offering price less underwriting discounts and commissions for the purpose of covering over-allotments.

## Exhibit 99.2

**Exhibit 99.2**

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND<br> RESULTS OF OPERATIONS**

Unless context otherwise requires, all references herein to "we," "us," "our" or the "Company" refer to MaxsMaking Inc. and its subsidiaries. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below. All amounts included herein with respect to the six months ended April 30, 2025 and 2024 are derived from our unaudited consolidated financial statements included in this filing. Our financial statements are prepared in accordance with U.S. GAAP.

You can identify some of these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "is/are likely to," "potential," "continue" or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

● our dependence on introducing new products on a timely basis;

● our dependence on growth in the demand for our products;

● our ability to effectively manage inventories;

● our ability to compete effectively;

● our dependence on a small number of suppliers for a substantial portion of our supplies;

● our dependence on a limited number of customers for a substantial portion of our revenues;

● our ability to successfully manage our capacity expansion and allocation in response to changing industry and market conditions;

● implementation of our expansion plans and our ability to obtain capital resources for our planned growth;

● our ability to acquire sufficient raw materials and certain products and obtain equipment and services from our suppliers in suitable quantity and quality;

● our dependence on key personnel;

● our ability to expand into new businesses, industries or internationally and to undertake mergers, acquisitions, investments or divestments;

● changes in technology and competing products;

● general economic and political conditions, including those related to the customized goods industry;

● possible disruptions in commercial activities caused by events such as natural disasters, terrorist activities; and

● fluctuations in foreign currency exchange rates.

The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. These are subject to various and significant risks and uncertainties, including those which are beyond our control. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. The forward-looking statements made in this filing relate only to events or information as of the date on which the statements are made in this filing. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should thoroughly read this report and the documents that we refer to herein with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

**Overview**

We are a manufacturer of customized consumer goods with a strong focus on advanced technology and innovation. Our group consists of various subsidiaries that specialize in different aspects of our businesses, including digital production, software development, product design and brand management, online sales and international trade.

We commenced our operations through Shanghai Alliance Industry Co., Ltd. in 2007 under the leadership of our founders, Mr. Xiaozhong Lin and Ms. Xuefen Zhang, and have been operating our two digital production plants in China, located in Yiwu, Zhejiang Province and Zhumadian, Henan Province with an aggregate of 4,192 square meters. Our principal executive offices are located in Shanghai where we focus on software development, design and brand management. We seek to strengthen our market position by fostering our close collaborative relationships with customers, prioritizing the development of brand marketing and improving our small-batch customization capacity.

**Key Factors Affecting Our Results of Operations**

Our business and results of operations are affected by a number of general factors that impact our industry including, among others, economic, political and social conditions in the PRC, raw material costs, and the competitive environment. Unfavorable changes in any of these general factors could adversely affect demand for our products and materially and adversely affect our results of operations.

While our business is influenced by these general factors, our results of operations are more directly affected by the following company-specific factors.

 ****

***Our ability to increase small batch customization orders***

For a manufacturer specializing in customized goods, the increase in small batch customization orders is an important driver for business growth and profit acquisition. Our sales revenue is directly influenced by customer decisions regarding the adoption of small batch or large batch customization procurement. Therefore, it is critical to not only be able to attract more small batch customization customers but also to maintain flexibility in production plans. Our ability to adapt to fluctuations in order volume and meet unstable demands ensures a responsive approach. Continuous monitoring over market trends and quick adjustments to production plans further enable us to meet customer needs while minimizing inventory backlog or avoiding insufficient production.

 ****

 ****

***Our ability to expand our product offering***

In the realm of customized goods manufacturing, the design and development of new products hold profound significance. The visual appeal, color schemes, and styles of newly introduced products play a pivotal role in determining customer preferences and their likelihood to place orders. The quantity and expediency of new product offering also directly impact customer loyalty and the potential for repeat purchases across various product categories. This underscores the importance of a proactive approach to designing and launching new products, enhancing the company's engagement with customers.

 ****

***Our ability to effectively manage our supply chain***

The efficacy of our supply chain management is paramount to our operations. As a manufacturer specializing in personalized goods, the establishment and maintenance of a reliable supply chain are imperative. We have focused on cultivating stable and trustworthy relationships with our suppliers and engaged in diligent oversight of the raw material supply chain to ensure the punctual receipt of materials. In addition to supplies, we also strive to ensure the timely fulfilment and delivery of our products to customers. Any failure to effectively manage our supply chain may adversely impact our results of operations.

 ****

***Our ability to manage our operating expenses and control costs***

Our results of operations depend in part on our ability to manage our operating expenses, including fulfillment expenses, sales and marketing expenses, general and administrative expenses and research and development expenses. We expect our operating expenses to increase in absolute amounts in the foreseeable future as we keep growing our business and hire more personnel. We will continue our initiatives to optimize our operating expenses. As our business scale grows, we believe we will have more operating leverage on our operating expenses.

**Results of Operations**

The following table summarizes our consolidated results of operations for the six months ended April 30, 2025 and 2024. This information should be read together with our unaudited consolidated financial statements and related notes. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended<br> April 30,** | **For the Six Months Ended<br> April 30,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
| Revenue | $12404234 | $9734003 | 2670231 | 27.43% |
| Cost of sales | (11061783) | (7751700) | (3310083) | 42.70% |
| Gross profit | 1342451 | 1982303 | (639852) | (32.28)% |
| Operating expenses |  |  |  |  |
| Selling expenses | (293041) | (306224) | 13183 | (4.31)% |
| General and administrative expenses | (416039) | (314290) | (101749) | 32.37% |
| Research and development expenses | (458025) | (298381) | (159644) | 53.50% |
| Total operating expenses | (1167105) | (918895) | **(248210**) | 27.01% |
| Income from operations | 175346 | 1063408 | (888062) | (83.51)% |
| Other income (expense) |  |  |  |  |
| Interest income | 135 | 326 | (191) | (58.59)% |
| Interest expense | (84275) | (69615) | (14660) | 21.06% |
| Other income, net | 42771 | 14848 | 27923 | 188.06% |
| Other expense, net | (17126) | (11713) | (5413) | 46.21% |
| Exchange gains | 57949 | 11614 | 46335 | 398.96% |
| Total other expenses, net | (546) | (54540) | (53994) | (99.00)% |
| Income before income tax provision | 174800 | 1008868 | (834068) | (82.67)% |
| Income tax benefit (expense) | 370 | (25006) | 25376 | (101.48)% |
| Net income | 175170 | 983862 | **(808692**) | (82.20**)%** |

---

 ****

***Revenue***

Our revenue is reported net of all value added taxes ("VAT"). We generate revenue primarily from sales of customized backpacks, shopping bags, aprons, tablecloths, and other consumer goods.

The following table sets forth the breakdown of our revenues by geography for the periods indicated.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **For the Six Months Ended<br> April 30, 2025** | **For the Six Months Ended<br> April 30, 2025** | **For the Six Months Ended<br> April 30, 2024** | **For the Six Months Ended<br> April 30, 2024** | | |
| | | | | | **Change** | **Change** |
| <br>**Country/Region** | **Sales**<br> **Amount** | **As % of**<br> **Sales** | **Sales**<br> **Amount** | **As % of**<br> **Sales** | **Amount** | **%** |
| Mainland China | $11459301 | 92.38 | $7544314 | 77.50% | $3914987 | 51.89% |
| Asia (excluding mainland China) | 371784 | 3.00 | 1556241 | 15.99% | (1184457) | (76.11)% |
| North America | 59069 | 0.48 | 123884 | 1.27% | (64815) | (52.32)% |
| Europe | 427115 | 3.44 | 499126 | 5.13% | (72011) | (14.43)% |
| Oceania | 39715 | 0.32 | 7970 | 0.08% | 31745 | 398.31% |
| South America | 11634 | 0.09 | 2468 | 0.03% | 9166 | 371.39% |
| Africa | 35616 | 0.29 | - | -% | 35616 | 100.00% |
| Total | $12404234 | 100 | $9734003 | 100% | $2670231 | 27.43% |

---

Compared with the six months ended April 30, 2024, our revenue for the six months ended April 30, 2025 increased by approximately $2.67 million, or 27.43%, which was primarily attributable to an approximately $3.91 million increase in sales in mainland China, and partially offset by the decrease of approximately $1.18 million in sales in Asia (excluding mainland China). The increase in revenue in mainland China and the decrease in other Asian markets were mainly due to uncertainties in overseas markets, where customers' demand and consumption prospects remained relatively weak, leading the company to strengthen its domestic sales initiatives, such as increasing participation in trade fairs and promotional events, expanding direct marketing and business negotiations with key customers, and adopting more competitive pricing to strengthen its market position in mainland China.

 ****

***Cost of Revenues***

Our cost of revenue consists primarily of (i) cost of materials, (ii) sale taxes and additional surcharges, (iii) labor costs, production overhead and (iv) other costs related to business operation.

Our cost of revenue increased by approximately 42.7% from approximately $7.75 million for the six months ended April 30, 2024 to approximately $11.06 million for the six months ended April 30, 2025, which was primarily due to the increase in raw material cost and labor cost, as well as the effect of our strategic shift to a volume-driven model, which resulted in higher sales volume and corresponding higher production expenses.

 ****

***Gross Profit and Gross Profit Margin***

Gross profit represents our revenue less cost of revenue. Our gross profit margin represents our gross profit as a percentage of our revenue. For the six months ended April 30, 2025 and 2024, our gross profit was approximately $1.34 million and approximately $1.98 million, respectively, and our gross profit margin was 10.82% and 20.36%, respectively. The decrease in gross profit margin was primarily due to (i) an increase in raw material cost and labor cost, and (ii) our strategic shift toward a volume-driven model, which prioritizes market share growth over near-term margins.

 ****

 ****

***Operating Expenses***

The following table sets forth the breakdown of our operating expenses for the six months ended April 30, 2025 and 2024.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended<br> April 30,** | **For the Six Months Ended<br> April 30,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
| Selling expenses | $(293041) | $(306224) | $13183 | (4.3)% |
| General and administrative expenses | (416039) | (314290) | (101749) | 32.37% |
| Research and development expenses | (458025) | (298381) | (159644) | 53.50% |
| **Total operating expenses** | $**(1167105)** | $**(918895)** | $**(248210)** | **27.01%** |

---

 ****

***Selling Expenses***

Selling expenses mainly consist of (i) salaries and benefits of sales and marketing staff (ii) traveling costs of sales and marketing staff, (iii) freight and vehicle expenses, and (iv) others, such as office costs and lease payment for sales office.

Our selling expenses decreased by approximately $13,000, or 4.3%. The decrease is mainly due to the reduction in employee salaries.

 ****

***General and Administrative Expenses***

General and administrative expenses mainly consist of (i) salaries and benefits for our administrative personnel; (ii) professional fees, which primarily include legal, accounting and consulting fees we paid in connection with our initial public offering and as a public company; (iii) lease expenses relating to leased properties used for administrative purposes; (iv) utilities for administrative purposes; (v) entertainment expenses used for business operation; (vi) bad debt and fixed assets depreciation (vii) others, which primarily include freight, traveling, conference expenses, and other miscellaneous expenses for administrative purposes.

Our general and administrative expenses increased by approximately $102,000, or 32.37%, from approximately $314,000 for the six months ended April 30, 2024 to approximately $416,000 for the six months ended April 30, 2025, which was primarily due to an increase in the bad debt expense of approximately $95,000, as a result of the slow collection of accounts receivable.

 ****

***Research and Development Expenses***

Research and development expenses mainly comprise cost of materials used for experiment, employee costs and other daily expenses related to research and development activities.

Our research and development expenses increased by approximately $160,000, or 53% from approximately $298,000 for the six months ended April 30, 2024 to approximately $458,000 for the six months ended April 30, 2025, which was primarily attributable to the research and development of five projects related to technologies for production processes.

 ****

***Other Income (Expenses)***

Other income (expenses) primarily consists of: (i) government subsidies provided as incentives from the PRC local government to encourage the expansion of local business; (ii) penalties, overdue fee and other operating related losses; (iii) interest income on bank deposits, interest expense on short-term bank borrowings, interest expense on lease liabilities, which is non-cash and calculated as the difference between lease payments and the net present value of the lease payment over the entire term of the lease; and (iv) foreign exchange gains.

Our total other expenses decreased by 99% from approximately $54,000 to approximately $500, which was primarily due to an increase of approximately $26,000 in foreign exchange gains due to foreign exchange fluctuations, as well as an increase of approximately $27,000 in government grants.

 ****

***Income Tax Expenses***

<u>British Virgin Islands ("BVI")</u>

MaxsMaking Inc. (the "Company") is incorporated in the BVI Islands. Under the current laws of the BVI, these entities are not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the BVI.

<u>Hong Kong</u>

In accordance with the relevant tax laws and regulations of Hong Kong, a company registered in Hong Kong is subject to income taxes within Hong Kong at the applicable tax rate on taxable income. From the year of assessment of 2018/2019 onwards, Hong Kong profit tax rates are 8.25% on assessable profits up to HK$2,000,000, and 16.5% on any part of assessable profits over HK$2,000,000.

<u>PRC</u>

Generally, the Company's PRC subsidiaries that are considered PRC resident enterprises under PRC tax law, are subject to enterprise income tax at a rate of 25% on their worldwide taxable income as determined under PRC tax laws and accounting standards.

In accordance with the implementation rules of Enterprise Income Tax Laws of the PRC (the "EIT Laws"), a qualified "High and New Technology Enterprise" ("HNTE") is eligible for a preferential tax rate of 15%. The HNTE certificate is effective for a period of three years. An entity could re-apply for the HNTE certificate when the prior certificate expires. The Company's subsidiaries, Zhejiang Alliance Arts and Crafts Co., Ltd. and Shanghai Lvzao Intelligent Technology Co., Ltd., were each qualified as a HNTE in the year of 2022 and 2024, respectively.

In addition, in accordance with Announcement on Corporate Income Tax Policies for Promoting High-quality Development of Integrated Circuit Industry and Software Industry, promulgated on December 11, 2020 and effective on January 1, 2020, an entity recognized as the "Software Enterprise" will be exempted from corporate income tax for the first two years after making profits and will be subject to corporate income tax at a tax rate of 12.5% (half of the statutory corporate income tax rate of 25%) for the third to fifth years. The Company's subsidiary, Shanghai Lvzao Intelligent Technology Co., Ltd., was recognized as the "Software Enterprise" from May 30, 2022 to May 29, 2023 and from May 30, 2023 to May 29, 2024, and started making profits from January 2023, and thus was exempted from corporate income tax in the year of 2023 and 2024, and will be subject to corporate income tax at the rate of 12.5% from the year of 2025 to 2027.

Our income tax benefit was $370 for the six months ended April 30, 2025, and income tax expense was $25,006 for the six months ended April 30, 2024. The variation from the six months ended April 30, 2024 to the six months ended April 30, 2025 was due to our decreased taxable income and increase in recognition of a deferred tax asset. (see Note 13 of the consolidated financial statements incorporated in this filing for details)

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***Net Income***

As a result of the foregoing, our net income decreased by approximately 82%, from approximately $0.98 million for the six months ended April 30, 2024 to net income of approximately $0.18 million for the six months ended April 30, 2025.

**Liquidity and Capital Resources**

As of April 30, 2025, we had approximately $0.18 million in cash. Our cash primarily consists of cash in bank and other monetary funds. Our principal source of cash came from our operation, net proceeds from our initial public offering, bank loans and loans from third party. Most of our cash resources were used to pay for the procurement of raw materials, purchase of equipment and property, payroll and operating expenses. Currently, we are working to improve our liquidity and capital sources primarily through cash flows from operations, bank loans, and financial support from our principal shareholders or investors. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our shareholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. There can be no assurances that we will be able to raise additional capital. If we are unable to raise additional capital when required, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, results of operations, financial condition, and cash flows would be adversely affected.

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***Indebtedness.*** As of April 30, 2025, we had outstanding short-term bank loans of approximately $2.17 million, composed of $1.22 million from Ningbo Bank, with a fixed interest rate of 4% per annum, $0.11 million from Zhejiang Mintai Commercial Bank, with a fixed interest rate of 8.7% per annum, and $0.84 million from Zhejiang Yiwu Rural Commercial Bank, with a fixed interest rate of 5% per annum. We had outstanding long-term bank loans of approximately $1.51 million, including $1.38 million from Zhejiang Yiwu Rural Commercial Bank, with a fixed interest rate of 3.6% per annum, and $0.13 million from China Construction Bank, with a fixed interest rate of 3.9% per annum. We also had outstanding loans from third party individuals of approximately $0.33 million, which bore no interest and had no repayment terms. Beside the above loans, we did not have any debts, finance leases or purchase commitments, guarantees or other material contingent liabilities.

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***Working Capital.*** Total working capital as of April 30, 2025 amounted to approximately $8.83 million, compared to approximately $9.1 million as of October 31, 2024.

**Cash Flows**

The following table sets forth a summary of our cash flows for the periods indicated:

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| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> April 30,** | **For the Six Months Ended<br> April 30,** |
|  | **2025** | **2024** |
| Net cash provided by/(used in) operating activities | $846926 | $(1727445) |
| Net cash used in investing activities | (53810) | (9027) |
| Net cash (used in)/provided by financing activities | (781442) | 1829308 |
| Effect of exchange rate changes on cash held in foreign currencies | (492) | 1404 |
| Net increase in cash | 11182 | 94240 |
| Cash at beginning of the period | 174825 | 132150 |
| Cash at end of the period | $186007 | $226390 |

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***Operating Activities***

For the six months ended April 30, 2025, our net cash provided by operating activities was approximately $0.85 million, as compared to approximately $1.72 million net cash used in operating activities for the six months ended April 30, 2024, which was primarily attributable to (i) an increase of approximately $1.44 million in amount due to related party, resulting from a strengthened management of cash expenditures and (ii) a decrease of approximately $0.95 million in prepayments and other current assets, resulting from the decrease in prepayment to suppliers of Zhumadian City Haoyi Craft Products Co., Ltd., mainly offset by (i) an increase in deferred tax assets of approximately $0.96 million; and (ii) an increase in deferred financing cost of approximately $0.94 million due to professional fees related to the IPO.

For the six months ended April 30, 2024, our net cash used in operating activities was approximately $1.7 million, which was primarily attributable to a net income of approximately $0.98 million, as mainly offset by (i) a decrease in account receivables of approximately $1.7 million due to a decrease in revenue; (ii) a decrease in deferred financing cost of approximately $0.65 million due to professional fees relating to the IPO; and (iii) a decrease of approximately $0.38 million in contract liability.

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***Investing Activities***

For the six months ended April 30, 2025, our net cash used in investing activities was $53,810, which was attributable to purchases of property and equipment.

For the six months ended April 30, 2024, our net cash from investing activities was approximately $9,027, which was attributable to purchases of property and equipment.

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***Financing Activities***

For the six months ended April 30, 2025, our net cash used in financing activities was approximately $0.78 million, which was attributable to (i) repayments of bank borrowings of approximately $0.65 million; and (ii) repayments of borrowings to third parties of approximately $0.25 million, partially offset by proceeds from bank borrowings of approximately $0.12 million.

For the six months ended April 30, 2024, our net cash provided by financing activities was approximately $1.83 million, which was attributable to (i) proceeds from bank borrowings of approximately $2.67 million; (ii) proceeds from third party borrowings of approximately $0.24 million, and (iii) capital from contribution approximately $0.07 million; partially offset by (i) repayments of borrowings bank of approximately $0.42 million; and (ii) repayments of borrowings to third parties of approximately $0.73 million.

**Contractual Obligations**

The following table sets forth our contractual obligations as of April 30, 2025:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Contractual obligations** | **Total** | **Less than 1 year** | **1 to 2 years** | **3 to 5 years** |
| Short-term bank loans<sup>(1)</sup> | $2173189 | $2173189 |  |  |
| Operating lease obligations<sup>(2)</sup> | 103965 | 97190 | 6775 |  |
| Loan-term bank loans<sup>(3)</sup> | 1505957 |  | 1381676 | 124281 |
| Total | $3783111 | $2270379 | $1388451 | 124281 |

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(1) As of April 30, 2025, the Company had outstanding short-term
bank loans of approximately $2.17 million (see Note 9 of the consolidated financial statements for details).

(2) As of April 30, 2025, the Company had operating lease commitment
of approximately $0.10 million (see Note 8 of the consolidated financial statements for details).

(3) As of April 30, 2025, the Company had outstanding long-term
bank loans of approximately $1.51 million (see Note 14 of the consolidated financial statements for details).

Other than as shown above, we did not have any significant capital and other commitments, long-term obligations, or guarantees as of April 30, 2025.

**Research and Development, Patents and Licenses, etc.**

Technology plays a crucial role in reducing costs and increasing efficiency and profitability in the customized goods industry. Investing in production technology and product research and development is critical to our growth and success. Since our inception, we have placed a high value on research and development and have utilized the talent resources in Shanghai to recruit highly skilled professionals who drive our research efforts. Currently we have included 3D design system related to product design, automated order processing system and intelligent production system related to digital manufacturing, as well as procurement, sales and inventory ERP management system related to refined management to our production. As of the date of this filing, as a result of our efforts, we had a total of 18 registered patents and 53 software copyrights. For the six months ended April 30, 2025 and the fiscal years ended October 31, 2024 and 2023, we invested $458,025, $559,048 and $740,800, respectively, in research and development and plan to continue increasing our investment in this area as our business expands.

Our commitment to research and development has earned us several accolades for our achievements. We have been recognized as a national high-tech enterprise, a technological enterprise in Zhejiang Province, and earned a certification for being a software enterprise and the registration of our software products, reflecting the ongoing success of our research and development initiatives. Our dedication to innovation and improvement is a key component of our strategy for long-term growth and competitiveness in the industry. In order to further improve our research and development capabilities, we plan to establish strategic partnerships with more large enterprises and cooperate with academic institutions.

We plan to focus research and development efforts on several areas, including but not limited to, improving our automatic design technology to enable quicker design and production of customized products based on customer requirements, implementing data analysis technology to better understand our customers' needs and purchasing behavior and provide more accurate product recommendations and better services, continuously upgrading our intelligent production technology to achieve more efficient production and reduce costs, integrating virtual reality technology to provide customers with a better vision and feeling of their customized products and improve their purchase experience, and utilizing blockchain technology to ensure the security and confidentiality of customer information and design drawings.

**Trend Information**

Other than as disclosed elsewhere in this filing, we are not aware of any trends, uncertainties, demands, commitments or events for the six months ended April 30, 2025 that are reasonably likely to have a material adverse effect on our total revenues, profitability, liquidity, or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

**Critical Accounting Policies and Estimates**

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, inventory write-down, useful lives of property, plant and equipment and intangible assets, valuation allowance of deferred tax assets. We evaluate our estimates on an ongoing basis, including those related to revenue recognition and income taxes. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making the judgments we make about the carrying values of our assets and liabilities that are not readily apparent from other sources. Because these estimates can vary depending on the situation, actual results may differ from the estimates.

The critical accounting policies summarized in this section are discussed in further detail in the notes to our consolidated financial statements appearing elsewhere in this annual report. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.

***Revenue Recognition***

ASC 606, Revenue from Contracts with Customers, establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

We adopted ASC 606 "Revenue Recognition." It recognizes revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We recognize revenue based on the consideration specified in the applicable agreement.

Revenue from contracts with customers is recognized using the following five steps:

&nbsp;&nbsp;&nbsp;&nbsp;1. Identify
 the contract(s) with a customer;

&nbsp;&nbsp;&nbsp;&nbsp;2. Identify
 the performance obligations in the contract;

&nbsp;&nbsp;&nbsp;&nbsp;3. Determine
 the transaction price;

&nbsp;&nbsp;&nbsp;&nbsp;4. Allocate
 the transaction price to the performance obligations in the contract; and

&nbsp;&nbsp;&nbsp;&nbsp;5. Recognize
 revenue when (or as) the entity satisfies a performance obligation.

Generally, revenues are recognized when we have negotiated the terms of the transaction, which includes determining either the overall price, or price for each performance obligation in the form of a service or a product, the service or product has been delivered to the customer, no obligation is outstanding regarding that service or product, and we are reasonably assured that funds have been or will be collected from the customer.

We generate revenue from production and sales of personalized goods including domestic sales and oversea sales. We typically receive purchase orders from its customers which will set forth the terms and conditions including the transaction price, products to be delivered, terms of delivery, and terms of payment. The terms serve as the basis of the performance obligations that we must fulfill in order to recognize revenue.

Our contracts have one single performance obligation as the promise is to transfer the individual goods to customers, and there is no other identifiable promises in the contracts for both domestic and oversea sales.

Performance obligation is fulfilled upon customers' receipt and acceptance of the products for domestic sales (evidenced through delivery tickets with customers' signatures), which is considered at point in time. For overseas customers, where the FOB (Free on Board) terms are applied, the insurance and freight costs shall be borne by the buyer. We recognize revenue upon the bill of lading date, which is considered at point in time. Revenue is reported net of all value added taxes ("VAT"). For domestic customers, we usually grant credit to customers with good credit standing with a maximum of 360 days and for oversea customers, 30%-70% payment is due upon receiving the booking confirmation or signing the contract. We offer customer warranty of 30 days for defective products that are beyond contemplated defective rate mutually agreed in contract with customers normally. We analyzed historical refund claims for defective products and concluded that they have been immaterial.

***Accounts receivables, net***

Accounts receivable is recognized initially at the original invoice amount and subsequently measured at amortized cost, net of an allowance for expected credit losses. We typically provide credit terms of up to 360 days to customers with sound creditworthiness.

The adequacy of the allowance for credit losses is assessed based on a combination of specific individual customer account analysis and historical collection experience. We recognize a provision for expected credit losses when there is evidence indicating a potential inability to collect the due amounts. This allowance reflects management's best estimate of specific losses on individual exposures, as well as a general provision based on historical collection trends.

Actual collections may differ from these estimates due to variations in the assessment of creditworthiness and changes in the economic environment. Balances of delinquent accounts are written off against the allowance for credit losses when management determines that collection is no longer probable.

***Inventories, net***

Inventories are stated at the lower of cost or market value. Costs include the cost of raw materials, freight, direct labor and related production overhead. The cost of inventories is calculated using the weighted average method. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Allowances for obsolescence are also assessed based on expiration dates, as applicable, taking into consideration historical and expected future product sales.