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What changed in Fitell Corp's 20-F — 2023 vs 2024

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Paragraph-level year-over-year comparison of Fitell Corp's 2023 and 2024 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+275 added−274 removedSource: 20-F (2024-11-15) vs 20-F (2023-10-30)

Top changes in Fitell Corp's 2024 20-F

275 paragraphs added · 274 removed · 197 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

66 edited+27 added−29 removed221 unchanged
Biggest changeIn addition to potential damage to our reputation and brand, failure to comply with applicable federal, state and local laws and regulations such as those outlined above may result in our being subject to claims, lawsuits, fines and adverse publicity that could have a material adverse effect on our business, results of operations and financial condition. 5 Fluctuations in product costs and availability due to inflationary pressures, fuel price uncertainty, supply chain constraints, increases in commodity prices, labor shortages and other factors could negatively impact our business and results of operations.
Biggest changeThese competitive pressures could have a material adverse effect on our business. Fluctuations in product costs and availability due to inflationary pressures, fuel price uncertainty, supply chain constraints, increases in commodity prices, labor shortages and other factors could negatively impact our business and results of operations. Our product costs are affected, in part, by the costs of component materials.
A cyber-attack involving our information systems and related infrastructure, or those of our business partners, could disrupt our business and negatively impact our operations in a variety of ways, such as, among others: ● an attack on the computers which control our operations could cause a temporary interruption of our business; ● a cyber-attack on our accounting or accounts payable systems could expose us to liability to employees and third parties if their sensitive personal information is obtained; ● a possible loss of material information, which in turn could delay our operations and selling efforts, causing economic losses; or ● a cyber-attack on a service provider could result in supply chain disruptions, which could delay or halt our operations.
A cyber-attack involving our information systems and related infrastructure, or those of our business partners, could disrupt our business and negatively impact our operations in a variety of ways, such as, among others: ● an attack on the computers which control our operations could cause a temporary interruption of our business; 8 ● a cyber-attack on our accounting or accounts payable systems could expose us to liability to employees and third parties if their sensitive personal information is obtained; ● a possible loss of material information, which in turn could delay our operations and selling efforts, causing economic losses; or ● a cyber-attack on a service provider could result in supply chain disruptions, which could delay or halt our operations.
If Nasdaq delists our Ordinary Shares from trading on its exchange, the Company could face significant material adverse consequences, including: ● a limited availability of market quotations for our Ordinary Shares; ● a determination that our Ordinary Shares is a “penny stock” which will require brokers trading in our Ordinary Shares to adhere to more stringent rules, which could result in a reduced level of trading activity in the secondary trading market for our Ordinary Shares; ● more limited news and analyst coverage of the Company; and ● a decreased ability to issue additional securities or obtain additional financing in the future. 21
If Nasdaq delists our Ordinary Shares from trading on its exchange, the Company could face significant material adverse consequences, including: ● a limited availability of market quotations for our Ordinary Shares; ● a determination that our Ordinary Shares is a “penny stock” which will require brokers trading in our Ordinary Shares to adhere to more stringent rules, which could result in a reduced level of trading activity in the secondary trading market for our Ordinary Shares; ● more limited news and analyst coverage of the Company; and ● a decreased ability to issue additional securities or obtain additional financing in the future.
In addition, failure to comply with applicable requirements could subject us to fines, sanctions, governmental investigations, lawsuits or reputational damage. 9 Problems with the third-party e-commerce platform for online stores and retail point-of-sale system that we utilize and our information systems could disrupt our operations and negatively impact our financial results and materially adversely affect our business operations.
In addition, failure to comply with applicable requirements could subject us to fines, sanctions, governmental investigations, lawsuits or reputational damage. Problems with the third-party e-commerce platform for online stores and retail point-of-sale system that we utilize and our information systems could disrupt our operations and negatively impact our financial results and materially adversely affect our business operations.
Certain adverse U.S. federal income tax consequences could apply to a U.S. Holder if we are treated as a PFIC for any taxable year during which such U.S. Holder holds our Ordinary Shares. The laws of the Cayman Islands may not provide our shareholders with benefits comparable to those provided to shareholders of corporations incorporated in the United States.
Certain adverse U.S. federal income tax consequences could apply to a U.S. Holder if we are treated as a PFIC for any taxable year during which such U.S. Holder holds our Ordinary Shares. 19 The laws of the Cayman Islands may not provide our shareholders with benefits comparable to those provided to shareholders of corporations incorporated in the United States.
Therefore, any foreign private issuer exemptions we have availed ourselves of, or may avail ourselves of in the future, may reduce the scope of information and protection to you as an investor. New climate-related disclosure obligations in proposed SEC rule amendments could have uncertain impacts on our business, impose additional reporting obligations on us, and increase our costs.
Therefore, any foreign private issuer exemptions we have availed ourselves of, or may avail ourselves of in the future, may reduce the scope of information and protection to you as an investor. 16 New climate-related disclosure obligations in proposed SEC rule amendments could have uncertain impacts on our business, impose additional reporting obligations on us, and increase our costs.
Continued monitoring and efforts to ensure compliance with these regulations require considerable expenditure of Company time and money, which could detract from other operational initiatives. Lawsuits may be filed against us or arbitration proceedings may be commenced and an adverse ruling in any such lawsuit or arbitration may adversely affect our business or financial condition.
Continued monitoring and efforts to ensure compliance with these regulations require considerable expenditure of Company time and money, which could detract from other operational initiatives. 14 Lawsuits may be filed against us or arbitration proceedings may be commenced and an adverse ruling in any such lawsuit or arbitration may adversely affect our business or financial condition.
A violation of these laws or regulations would negatively affect our business, financial condition and results of operations. We have implemented policies and procedures designed to ensure compliance by us and our directors, officers, employees, representatives, consultants and agents with the FCPA, OFAC restrictions and other export control, anti-corruption, anti-money-laundering and anti-terrorism laws and regulations.
A violation of these laws or regulations would negatively affect our business, financial condition and results of operations. 15 We have implemented policies and procedures designed to ensure compliance by us and our directors, officers, employees, representatives, consultants and agents with the FCPA, OFAC restrictions and other export control, anti-corruption, anti-money-laundering and anti-terrorism laws and regulations.
Further, quality problems could adversely affect the experience for users of our products and services, and result in harm to our reputation, loss of competitive advantage, poor market acceptance, reduced demand for our products and services, delays in new product and service introductions, and lost revenue. 11 Our business could be adversely affected by an accident, safety incident, or workforce disruption.
Further, quality problems could adversely affect the experience for users of our products and services, and result in harm to our reputation, loss of competitive advantage, poor market acceptance, reduced demand for our products and services, delays in new product and service introductions, and lost revenue. Our business could be adversely affected by an accident, safety incident, or workforce disruption.
Any debt financing secured by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We are subject to payment processing risk .
Any debt financing secured by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. 12 We are subject to payment processing risk .
If the industries we serve were to suffer a downturn, then our business may be further adversely affected. 4 Intense competition in the gym and fitness equipment industry and in retail could limit our growth and reduce our profitability. The market for gym and fitness equipment retailers is highly fragmented, intensely competitive, and continually evolving.
If the industries we serve were to suffer a downturn, then our business may be further adversely affected. Intense competition in the gym and fitness equipment industry and in retail could limit our growth and reduce our profitability. The market for gym and fitness equipment retailers is highly fragmented, intensely competitive, and continually evolving.
Under-stocking can lead to missed sales opportunities, while over-stocking could result in inventory depreciation and decreased shelf space for stocks that are in higher demands. These results could adversely affect our business, financial condition and results of operations. Russia’s invasion of Ukraine may present risks to our operations and investments.
Under-stocking can lead to missed sales opportunities, while over-stocking could result in inventory depreciation and decreased shelf space for stocks that are in higher demands. These results could adversely affect our business, financial condition and results of operations. 6 Russia’s invasion of Ukraine may present risks to our operations and investments.
Such concentration of voting power could have the effect of delaying, deterring, or preventing a change of control or other business combination, which could, in turn, have an adverse effect on the market price of our Ordinary Shares or prevent our shareholders from realizing a premium over the then-prevailing market price for their Ordinary Shares. Ms.
Such concentration of voting power could have the effect of delaying, deterring, or preventing a change of control or other business combination, which could, in turn, have an adverse effect on the market price of our Ordinary Shares or prevent our shareholders from realizing a premium over the then-prevailing market price for their Ordinary Shares.
If we fail to meet or exceed such expectations, the market price of our shares could fall substantially, and we could face costly lawsuits, including securities class action suits. 12 If we are unable to sustain pricing levels for our products and services, our business could be adversely affected.
If we fail to meet or exceed such expectations, the market price of our shares could fall substantially, and we could face costly lawsuits, including securities class action suits. If we are unable to sustain pricing levels for our products and services, our business could be adversely affected.
A decline in future subscriber levels could have an adverse effect on our business, financial condition, and/or operating results. Online growth in our business is complex and there are risks associated with operating our own online platform, including those relating to confidential consumer data.
A decline in future subscriber levels could have an adverse effect on our business, financial condition, and/or operating results. 7 Online growth in our business is complex and there are risks associated with operating our own online platform, including those relating to confidential consumer data.
In addition, from time to time, we encounter fraudulent use of payment methods, which could impact our results of operations and if not adequately controlled and managed could create negative consumer perceptions of our services. 13 We may face exposure to foreign currency exchange rate fluctuations.
In addition, from time to time, we encounter fraudulent use of payment methods, which could impact our results of operations and if not adequately controlled and managed could create negative consumer perceptions of our services. We may face exposure to foreign currency exchange rate fluctuations.
Consumer spending may be affected by many factors outside of the Company’s control, including general economic conditions; consumer disposable income; consumer confidence and perception of economic conditions; the threat or outbreak of war, terrorism or public unrest (including, without limitation, the conflict in Ukraine) which may cause supply chain disruptions, increase fuel costs and the cost of materials, and create general economic instability; wage and unemployment levels; consumer debt and inflationary pressures; the costs of basic necessities and other goods; effects of weather and natural disasters caused by climate change or otherwise; and epidemics, contagious disease outbreaks, and other public health concerns including the ongoing COVID-19 pandemic.
Consumer spending may be affected by many factors outside of the Company’s control, including general economic conditions; consumer disposable income; consumer confidence and perception of economic conditions; the threat or outbreak of war, terrorism or public unrest (including, without limitation, the conflict in Ukraine) which may cause supply chain disruptions, increased fuel costs and the cost of materials, and create general economic instability; wage and unemployment levels; consumer debt and inflationary pressures; the costs of basic necessities and other goods; effects of weather and natural disasters caused by climate change or otherwise; and epidemics, contagious disease outbreaks, and other public health concerns including the ongoing COVID-19 pandemic.
Any material disruption, malfunction or other similar problems in or with our core information systems could negatively impact our financial results and materially adversely affect our business operations. We may be unable to attract, train, engage and retain key personnel.
Any material disruption, malfunction or other similar problems in or with our core information systems could negatively impact our financial results and materially adversely affect our business operations. 9 We may be unable to attract, train, engage and retain key personnel.
There are a number of factors that could lead to a decline in subscriber levels or that could prevent us from increasing our subscriber levels, including: ● our failure to introduce new features, products, or services that our potential subscribers find engaging or our introduction of new products or services, or changes to existing products and services that are not favorably received; ● harm to our brand and reputation; ● pricing and perceived value of our offerings; ● our inability to deliver quality products, content, and services; ● unsatisfactory experiences with the delivery, installation, or servicing of our products, including due to prolonged delivery timelines and limitations on or the suspension of the in-home installation, return, and warranty servicing processes as a result of the current COVID-19 pandemic; ● our potential subscribers engaging with competitive products and services; ● technical or other problems preventing subscribers from accessing our content and services in a rapid and reliable manner or otherwise affecting the subscribers’ experience; ● a decline in the public’s interest in interactive fitness equipment and platforms; ● deteriorating general economic conditions or a change in consumer spending preferences or buying trends, whether as a result of the COVID-19 pandemic or otherwise; and ● interruptions in our ability to sell or deliver our products or to create content and services for our potential subscribers as a result of the COVID-19 pandemic.
There are a number of factors that could lead to a decline in subscriber levels or that could prevent us from increasing our subscriber levels, including: ● our failure to introduce new features, products, or services that our potential subscribers find engaging or our introduction of new products or services, or changes to existing products and services that are not favorably received; ● harm to our brand and reputation; ● pricing and perceived value of our offerings; ● our inability to deliver quality products, content, and services; ● unsatisfactory experiences with the delivery, installation, or servicing of our products, including due to prolonged delivery timelines and limitations on or the suspension of the in-home installation, return, and warranty servicing process; ● our potential subscribers engaging with competitive products and services; ● technical or other problems preventing subscribers from accessing our content and services in a rapid and reliable manner or otherwise affecting the subscribers’ experience; ● a decline in the public’s interest in interactive fitness equipment and platforms; ● deteriorating general economic conditions or a change in consumer spending preferences or buying trends, whether as a result of the COVID-19 pandemic or otherwise; and ● interruptions in our ability to sell or deliver our products or to create content and services for our potential subscribers as a result of the COVID-19 pandemic.
Negative publicity, work stoppages, or strikes by unions could have an adverse effect on our business, prospects, financial condition, and operating results. Our quarterly operating results and other operating metrics may fluctuate from quarter to quarter, which makes these metrics difficult to predict.
Negative publicity, work stoppages, or strikes by unions could have an adverse effect on our business, prospects, financial condition, and operating results. 11 Our quarterly operating results and other operating metrics may fluctuate from quarter to quarter, which makes these metrics difficult to predict.
The ultimate resolution of any litigation or proceeding through settlement, mediation, or a judgment could have a material impact on our reputation and adversely affect our financial performance and financial position. 15 Our sales and operating results could be adversely affected by product safety concerns.
The ultimate resolution of any litigation or proceeding through settlement, mediation, or a judgment could have a material impact on our reputation and adversely affect our financial performance and financial position. Our sales and operating results could be adversely affected by product safety concerns.
Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. 17 Our management team has limited experience managing a public company.
Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. Our management team has limited experience managing a public company.
At June 30, 2023 and 2022, the Company had brand names and goodwill with costs of approximately $337,504 and $1,161,052, respectively, which all have indefinite lives. The Company evaluates intangible assets with indefinite lives for impairment at least annually or when events or changes in circumstances indicate that an impairment may exist.
At June 30, 2024 and 2023, the Company had brand names and goodwill with costs of approximately $337,504 and $1,161,052, respectively, which all have indefinite lives. The Company evaluates intangible assets with indefinite lives for impairment at least annually or when events or changes in circumstances indicate that an impairment may exist.
If our suppliers or licensee incur increased costs, they may attempt to pass such costs on to us. Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have a retroactive effect.
If our suppliers or licensees incur increased costs, they may attempt to pass such costs on to us. Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have a retroactive effect.
If we remain an “emerging growth company” after FY2023, we may take advantage of other exemptions, including the exemptions from the advisory vote requirements and executive compensation disclosures under the Dodd-Frank Wall Street Reform and Customer Protection Act, or the Dodd-Frank Act, and the exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act.
If we remain an “emerging growth company” after FY2024, we may take advantage of other exemptions, including the exemptions from the advisory vote requirements and executive compensation disclosures under the Dodd-Frank Wall Street Reform and Customer Protection Act, or the Dodd-Frank Act, and the exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act.
We have limited control over our suppliers, contract manufacturers, and logistics partners, which subjects us to the following risks, many of which have materialized due to the COVID-19 pandemic: ● inability to satisfy demand for our products; ● reduced control over delivery timing and product reliability; ● reduced ability to monitor the manufacturing processes and components used in our products; ● limited ability to develop comprehensive manufacturing specifications that take into account any materials shortages or substitutions; ● variance in the manufacturing capability of our third-party manufacturers; ● price increases; ● failure of a significant supplier, manufacturer, or logistics partner to perform its obligations to us for technical, market, or other reasons; ● variance in the quality of services provided by our third-party logistics partners; ● difficulties in establishing additional supplier, manufacturer, or logistics partner relationships if we experience difficulties with our existing suppliers, manufacturers, or logistics partners; ● shortages of materials or components; ● misappropriation of our intellectual property; ● exposure to natural catastrophes, political unrest, terrorism, labor disputes, and economic instability resulting in the disruption of trade from foreign countries in which our products are manufactured or the components thereof are sourced; ● changes in local economic conditions in the jurisdictions where our suppliers, manufacturers, and logistics partners are located; ● the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, tariffs, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds; and ● insufficient warranties and indemnities on components supplied to our manufacturers or performance by our partners.
We have limited control over our suppliers, contract manufacturers, and logistics partners, which subjects us to the following risks: ● inability to satisfy demand for our products; ● reduced control over delivery timing and product reliability; ● reduced ability to monitor the manufacturing processes and components used in our products; ● limited ability to develop comprehensive manufacturing specifications that take into account any materials shortages or substitutions; ● variance in the manufacturing capability of our third-party manufacturers; ● price increases; ● failure of a significant supplier, manufacturer, or logistics partner to perform its obligations to us for technical, market, or other reasons; ● variance in the quality of services provided by our third-party logistics partners; ● difficulties in establishing additional supplier, manufacturer, or logistics partner relationships if we experience difficulties with our existing suppliers, manufacturers, or logistics partners; ● shortages of materials or components; ● misappropriation of our intellectual property; ● exposure to natural catastrophes, political unrest, terrorism, labor disputes, and economic instability resulting in the disruption of trade from foreign countries in which our products are manufactured or the components thereof are sourced; ● changes in local economic conditions in the jurisdictions where our suppliers, manufacturers, and logistics partners are located; 13 ● the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, tariffs, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds; and ● insufficient warranties and indemnities on components supplied to our manufacturers or performance by our partners.
We are an exempted company incorporated with limited liability under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, by the Companies Act (Revised) of the Cayman Islands and by the common law of the Cayman Islands.
We are an exempted company incorporated with limited liability under the laws of the Cayman Islands. Our corporate affairs are governed by our amended and restated memorandum and articles of association, by the Companies Act (Revised) of the Cayman Islands and by the common law of the Cayman Islands.
The Company determined that none of its intangible assets were impaired in the fiscal year ended June 30, 2023 and 2022.
The Company determined that none of its intangible assets were impaired in the fiscal year ended June 30, 2024, and 2023.
Continued high levels of inflation or a return to a recession or a weak recovery, due to factors that include, but are not limited to, disruptions in financial markets in the United States, or elsewhere, federal budget, tax or trade policy issues in the United States, political upheavals, war or unrest economic sanctions against trading nations, and demonetization, could cause us to experience revenue declines due to deteriorated consumer confidence and spending, and a decrease in the availability of credit or on commercially acceptable terms, which could have a material adverse effect on our business prospects or financial condition.
Continued high levels of inflation or a return to a recession or a weak recovery, due to factors that include, but are not limited to, disruptions in financial markets in the United States, or elsewhere, federal budget, tax or trade policy issues in the United States, political upheavals, war or unrest economic sanctions against trading nations, and demonetization, could cause us to experience revenue declines due to deteriorated consumer confidence and spending, and a decrease in the availability of credit or on commercially acceptable terms, which could have a material adverse effect on our business prospects or financial condition. 4 Our business is also dependent upon certain industries, such as the gym, fitness, and fitness equipment industries, and these are also cyclical in nature.
Our directors may in the future be in a position of conflict of interest. Some of our directors currently also serve as directors and officers of other companies involved in the fitness industry, and any of our directors may in the future serve in such positions.
Some of our directors and officers currently also serve as directors and officers of other companies involved in the fitness industry, and any of our directors may in the future serve in such positions.
Jieting Zhao, our director, beneficially owns approximately 57.9% of our outstanding shares, and her interests may differ from the interests of other shareholders, which could cause a material decline in the value of our Ordinary Shares.
Risks Related to Our Ordinary Shares Ms. Jieting Zhao, our director, beneficially owns approximately 32.0% of our outstanding shares, and her interests may differ from the interests of other shareholders, which could cause a material decline in the value of our Ordinary Shares. Ms.
While we are a Cayman Islands exempted company headquartered in Australia, as of the date of this annual report, less than 16% of our revenue is derived from China and approximately 53% of the products that we purchase in the fiscal year ended June 30, 2023, were manufactured abroad in China.
While we are a Cayman Islands exempted company headquartered in Australia, as of the date of this annual report, less than 10 % of our revenue is derived from China and approximately 85 % of the products that we purchase are manufactured abroad in China.
If the market price of our Ordinary Shares declines, you may be unable to resell your Ordinary Shares at a competitive price. We cannot assure you that the market price of our Ordinary Shares will not fluctuate or significantly decline in the future. In addition, we cannot assure you that a trading market for our Ordinary Shares will be maintained.
We cannot assure you that the market price of our Ordinary Shares will not fluctuate or significantly decline in the future. In addition, we cannot assure you that a trading market for our Ordinary Shares will be maintained.
The occurrence of any of these risks could cause us to experience a significant disruption in our ability to produce and deliver our products to our customers. 14 Less than 16% of our revenue is derived from China and approximately 53% of the products that we purchase in the fiscal year June 30, 2023, were manufactured in China.
The occurrence of any of these risks could cause us to experience a significant disruption in our ability to produce and deliver our products to our customers. Less than 10% of our revenue is derived from China and approximately 85% of the products that we purchase are manufactured in China.
Our manufacturing processes and related activities, as well as our warehousing and logistics activities, could expose us to significant personal injury claims that could subject us to substantial liability. The COVID-19 pandemic increases our exposure to these risks.
Our manufacturing processes and related activities, as well as our warehousing and logistics activities, could expose us to significant personal injury claims that could subject us to substantial liability.
Approximately 53% of the products that the Company purchases in the fiscal year ended June 30, 2023, were manufactured abroad in China.
Approximately 85% of the products that the Company purchased in the fiscal year ended June 30, 2024, were manufactured abroad in China.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of Australia may not permit you to enforce a judgment against our assets or the assets of our directors and officers. 20 We have broad discretion in the use of the net proceeds from our IPO and may not use them effectively.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of Australia may not permit you to enforce a judgment against our assets or the assets of our directors and officers.
We cannot assure you that we will be able to maintain proper inventory levels for our business at all times, and any such failure may have a material and adverse effect on our business, financial condition and results of operations. 6 Inventory levels in excess of demand may result in inventory write-downs or an increase in inventory holding costs and a potential negative effect on our liquidity.
We cannot assure you that we will be able to maintain proper inventory levels for our business at all times, and any such failure may have a material and adverse effect on our business, financial condition and results of operations.
We are incorporated under the laws of the Cayman Islands and are considered a “foreign private issuer” under U.S. securities laws. Although we will be subject to the periodic reporting requirements of the Exchange Act, the periodic disclosure required of foreign private issuers under the Exchange Act is different from the periodic disclosure required of U.S. domestic issuers.
Although we will be subject to the periodic reporting requirements of the Exchange Act, the periodic disclosure required of foreign private issuers under the Exchange Act is different from the periodic disclosure required of U.S. domestic issuers.
Furthermore, the prevalence of social media and a constant, on-demand news cycle may accelerate and in the short-term increase the potential scope of any negative publicity we or others might receive and could increase the negative impact of these issues on our reputation, business, results of operations, and financial condition. 8 Our strategic plans and initiatives may initially result in a negative impact on our financial results and such plans and initiatives may not achieve the desired results within the anticipated time frame or at all.
Risk Factors”. Furthermore, the prevalence of social media and a constant, on-demand news cycle may accelerate and in the short-term increase the potential scope of any negative publicity we or others might receive and could increase the negative impact of these issues on our reputation, business, results of operations, and financial condition.
We are incorporated in the Cayman Islands and conduct our operations primarily in Australia. Substantially all of our assets are located outside of the United States and the proceeds of this offering will primarily be held in banks outside of the United States. In addition, the majority of our directors and officers reside outside of the United States.
We are incorporated in the Cayman Islands and conduct our operations primarily in Australia. Substantially all of our assets are located outside of the United States and the proceeds which we raised from the capital markets will primarily be held in banks outside of the United States.
As we rely heavily on our computer and communications systems, and the internet to conduct our business and provide high-quality customer service, these disruptions could negatively impact our ability to run our business and either directly or indirectly disrupt suppliers’ and/or our contract manufacturers’ businesses, which could have an adverse effect on our business, financial condition, and/or operating results.
As we rely heavily on our computer and communications systems, and the internet to conduct our business and provide high-quality customer service, these disruptions could negatively impact our ability to run our business and either directly or indirectly disrupt suppliers’ and/or our contract manufacturers’ businesses, which could have an adverse effect on our business, financial condition, and/or operating results. 17 We are an “emerging growth company,” and our election to comply with the reduced disclosure requirements as a public company may make our Ordinary Shares less attractive to investors.
Our ability to successfully implement and execute our strategic plans and initiatives depends on many factors, some of which are out of our control. For example, a strategic determination to increase promotional activities in response to challenging conditions in the retail market may not achieve the desired results and could negatively impact our gross profit margin.
For example, a strategic determination to increase promotional activities in response to challenging conditions in the retail market may not achieve the desired results and could negatively impact our gross profit margin.
Our sales could decline significantly if we misjudge the market for our new merchandise, which may result in significant merchandise markdowns and lower margins, missed opportunities for other products, or inventory write-downs, and could have a negative impact on our reputation, profitability and demand. 7 We may be unable to attract and retain subscribers, which could have an adverse effect on our strategy to develop new interactive fitness equipment and platforms/mobile application with subscription service.
Our sales could decline significantly if we misjudge the market for our new merchandise, which may result in significant merchandise markdowns and lower margins, missed opportunities for other products, or inventory write-downs, and could have a negative impact on our reputation, profitability and demand.
The market price and trading volume of our Ordinary Shares may be volatile and may be affected by economic conditions beyond our control. The market price of our Ordinary Shares may be highly volatile and subject to wide fluctuations. In addition, the trading volume of our Ordinary Shares may fluctuate and cause significant price variations to occur.
The market price of our Ordinary Shares may be highly volatile and subject to wide fluctuations. In addition, the trading volume of our Ordinary Shares may fluctuate and cause significant price variations to occur. If the market price of our Ordinary Shares declines, you may be unable to resell your Ordinary Shares at a competitive price.
Although there are none known to us, the potential for conflicts of interest exists among us and affiliated persons for future business opportunities that may not be presented to us. Our directors may have conflicts of interests in allocating time, services, and functions between the other business ventures in which those persons may be or become involved.
Our independent directors do not devote their time exclusively to the Company and engage in other business activities. Although there are none known to us, the potential for conflicts of interest exists among us and affiliated persons for future business opportunities that may not be presented to us.
If some investors find our Ordinary Shares less attractive as a result, a less active trading market for our Ordinary Shares may develop or be sustained and our stock price may decline and/or become more volatile. 18 Risks Related to Our Ordinary Shares Since our director, Ms.
In addition, investors may find our Ordinary Shares less attractive if we rely on the exemptions and relief granted by the JOBS Act. If some investors find our Ordinary Shares less attractive as a result, a less active trading market for our Ordinary Shares may develop or be sustained and our stock price may decline and/or become more volatile.
In addition, research and reports that Australian securities or industry analysts may, initiate or may continue to, publish about us, our business or our Common Stock may impact the market price of our Ordinary Shares.
In addition, research and reports that Australian securities or industry analysts may, initiate or may continue to, publish about us, our business or our Common Stock may impact the market price of our Ordinary Shares. 20 Nasdaq may de-list the Company’s securities from its exchange, which could limit investors’ ability to make transactions in the Company’s securities and subject the Company to additional trading restrictions.
Although the risks are organized by headings, and each risk is discussed separately, many are interrelated. Our business, financial condition, results of operations and cash flows could be materially and adversely affected by these risks, and, as a result, the trading price of our common stock could decline.
Our business, financial condition, results of operations and cash flows could be materially and adversely affected by these risks, and, as a result, the trading price of our common stock could decline. We have in the past been adversely affected by certain of, and may in the future be affected by, these risks.
Item 3. Key Information 3A. [Reserved] 3B. Not Applicable. 3C. Not Applicable. 3D. Risk Factors . You should carefully consider each of the following risks and all the other information contained in this annual report and in our other filings with the SEC in evaluating us and our common stock.
Risk Factors You should carefully consider each of the following risks and all the other information contained in this annual report and in our other filings with the SEC in evaluating us and our common stock. Although the risks are organized by headings, and each risk is discussed separately, many are interrelated.
Without her consent, we may be prevented from entering into transactions that could be beneficial to us or our minority shareholders. Her interest may differ from the interests of our other shareholders. The concentration in the ownership of our Ordinary Shares may cause a material decline in the value of our Ordinary Shares.
Her interest may differ from the interests of our other shareholders. The concentration in the ownership of our Ordinary Shares may cause a material decline in the value of our Ordinary Shares.
We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our Ordinary Shares if the market price of our Ordinary Shares increases.
We do not intend to pay dividends for the foreseeable future. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future.
Approximately 53% of the products that the Company purchases in the fiscal year ended June 30, 2023, were manufactured abroad, which subjects us to various international risks and costs, including foreign trade issues, currency exchange rate fluctuations, shipment delays and supply chain disruption and political instability, which could cause our sales and profitability to suffer.
Further, difficulties in moving products manufactured overseas and through the ports of other jurisdictions, whether due to port congestion, government shutdowns, labor disputes, product regulations and/or inspections or other factors, including natural disasters or health pandemics, could negatively affect our business. 5 Approximately 85% of the products that the Company purchased in the fiscal year ended June 30, 2024, were manufactured abroad, which subjects us to various international risks and costs, including foreign trade issues, currency exchange rate fluctuations, shipment delays and supply chain disruption and political instability, which could cause our sales and profitability to suffer.
If the market price for our Ordinary Shares drops below the IPO price of $5 per Ordinary Share, you may not realize any return on your investment in us and may lose some or all of your investment. 19 Certain recent IPOs of companies with relatively small public floats comparable to our public float have experienced extreme volatility that was seemingly unrelated to the actual or expected operating performance and financial condition or prospects of the respective company.
Certain recent IPOs of companies with relatively small public floats comparable to our public float have experienced extreme volatility that was seemingly unrelated to the actual or expected operating performance and financial condition or prospects of the respective company.
Our independent directors do not devote their full-time attention to the affairs of the Company and could allocate their time and attention to other business ventures which may not benefit the Company. Our independent directors do not devote their time exclusively to the Company and engage in other business activities.
As a result, our use of the services of consultants could have a material adverse effect on us and could prevent us from effectively pursuing our business plan Our independent directors do not devote their full-time attention to the affairs of the Company and could allocate their time and attention to other business ventures which may not benefit the Company.
Fitell’s mission is to build an ecosystem with a whole fitness and wellness experience powered by technology to our customers. Our business depends on consumer discretionary spending, and our results are highly dependent on Australian and Asian consumer confidence and the health of the Australian and Asian economies.
Our business depends on consumer discretionary spending, and our results are highly dependent on Australian and Asian consumer confidence and the health of the Australian and Asian economies.
Our business is also dependent upon certain industries, such as the gym, fitness, and fitness equipment industries, and these are also cyclical in nature. Therefore, these industries may experience their own significant fluctuations in demand for our products based on such things as economic conditions and consumer demand. Many of these factors are beyond our control.
Therefore, these industries may experience their own significant fluctuations in demand for our products based on such things as economic conditions and consumer demand. Many of these factors are beyond our control. As a result of the volatility in the industries we plan to serve, we may ultimately have difficulty increasing or maintaining our level of sales or profitability.
Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, curtailment of operations in certain jurisdictions, and might adversely affect our business, earnings or financial condition. 16 We are a “foreign private issuer” under U.S. securities laws and, as a result, are subject to disclosure obligations that are different from those applicable to U.S. domestic issuers listed on the Nasdaq Capital Market.
We are a “foreign private issuer” under U.S. securities laws and, as a result, are subject to disclosure obligations that are different from those applicable to U.S. domestic issuers listed on the Nasdaq Capital Market. We are incorporated under the laws of the Cayman Islands and are considered a “foreign private issuer” under U.S. securities laws.
Risks Related to Our Industry and Macroeconomic Conditions Our business is dependent on macroeconomic conditions and consumer discretionary spending, and reductions in such spending might adversely affect the Company’s business, operations, liquidity, and financial results. We are an online retailer of gym and fitness equipment both under our proprietary brands and other brand names.
You should not interpret the disclosure of any risk factor to imply that the risk has not already materialized. Risks Related to Our Industry and Macroeconomic Conditions Our business is dependent on macroeconomic conditions and consumer discretionary spending, and reductions in such spending might adversely affect the Company’s business, operations, liquidity, and financial results.
Zhao therefore currently has the right to vote 57.9% of the Ordinary Shares. She thus has significant influence over a decision to enter into any corporate transaction and has the ability to prevent any transaction that requires the approval of shareholders, regardless of whether or not our other shareholders believe that such transaction is in our best interests.
Jieting Zhao, our director, is the 100% owner of SKMA and thus, she is deemed as the beneficial owner of our shares owned by SKMA. She thus has significant influence over a decision to enter into any corporate transaction and has the ability to prevent any transaction that requires the approval of shareholders.
Nasdaq may de-list the Company’s securities from its exchange, which could limit investors’ ability to make transactions in the Company’s securities and subject the Company to additional trading restrictions. The Company’s Ordinary Shares are currently on Nasdaq. In the future, the Company’s Ordinary Shares may fail to meet the continued listing requirements to be listed on the Nasdaq.
The Company’s Ordinary Shares are currently on Nasdaq. In the future, the Company’s Ordinary Shares may fail to meet the continued listing requirements to be listed on the Nasdaq.
Since Jieting Zhao, our director, beneficially owns approximately 57.9% of our outstanding shares, she will have significant influence on determining the outcome of any matters submitted to the shareholders for approval, including mergers, consolidations, the election of directors and other significant corporate actions.
She will have significant influence on determining the outcome of any matters submitted to the shareholders for approval, including mergers, consolidations, the election of directors and other significant corporate actions. Without her consent, we may be prevented from entering into transactions that could be beneficial to us or our minority shareholders.
Furthermore, detecting, investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management.
Furthermore, detecting, investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, curtailment of operations in certain jurisdictions, and might adversely affect our business, earnings or financial condition.
If such parties’ work is deficient or negligent or is not completed in a timely manner, it could have a material adverse effect on the Company. As a result, our use of the services of consultants could have a material adverse effect on us and could prevent us from effectively pursuing our business plan.
Our ability to continue conducting our activities is in large part dependent upon the efforts of third parties. We may need to engage additional third parties for new business operations. If such parties’ work is deficient or negligent or is not completed in a timely manner, it could have a material adverse effect on the Company.
Certain areas in which we operate are highly competitive regions and competition for qualified personnel is intense.
Certain areas in which we operate are highly competitive regions and competition for qualified personnel is intense. We may be unable to hire suitable personnel or there may be periods of time where a particular position remains vacant while a suitable replacement is identified and appointed.
We may be unable to hire suitable personnel or there may be periods of time where a particular position remains vacant while a suitable replacement is identified and appointed. 10 Our inability to hire and maintain suitable personnel could have a material adverse effect on us and could prevent us from effectively pursuing our business plan, including developing, growing, and operating our business profitably.
Our inability to hire and maintain suitable personnel could have a material adverse effect on us and could prevent us from effectively pursuing our business plan, including developing, growing, and operating our business profitably. We also depend upon third parties, including consultants, suppliers and others, for their expertise and expect to continue to do so for the foreseeable future.
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We have in the past been adversely affected by certain of, and may in the future be affected by, these risks. You should not interpret the disclosure of any risk factor to imply that the risk has not already materialized.
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Item 3. Key Information A. [Reserved] B. Capitalization and indebtedness. Not applicable. C. Reasons for the offer and use of proceeds. Not applicable . D.
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As a result of the volatility in the industries we plan to serve, we may ultimately have difficulty increasing or maintaining our level of sales or profitability.
Added
We are an online retailer of gym and fitness equipment both under our proprietary brands and other brand names. Fitell’s mission is to build an ecosystem with a whole fitness and wellness experience powered by technology to our customers.
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These competitive pressures could have a material adverse effect on our business. The COVID-19 pandemic has impacted and is expected to continue to have an impact on our business and results of operations. The COVID-19 pandemic has significantly affected worldwide consumer shopping patterns and caused the overall health of the worldwide economy to deteriorate, including in Australia and Asia.
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Inventory levels in excess of demand may result in inventory write-downs or an increase in inventory holding costs and a potential negative effect on our liquidity.
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Many measures that have been, and in the future may be, periodically implemented to reduce the spread of COVID-19 have adversely affected workforces, customers, consumer sentiment, economies and financial markets.
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We may be unable to attract and retain subscribers, which could have an adverse effect on our strategy to develop new interactive fitness equipment and platforms/mobile application with subscription service.
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We are unable to predict the long-term impact that the COVID-19 pandemic will have on our business due to a number of uncertainties, including the duration of the COVID-19 pandemic, the long-term health and economic impact of the COVID-19 pandemic, the success or impact of vaccines and other mitigation or recovery efforts, changes in consumer demand and shopping patterns, and the impact of governmental regulations issued in response to the pandemic.
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Our strategic plans and initiatives may initially result in a negative impact on our financial results and such plans and initiatives may not achieve the desired results within the anticipated time frame or at all. Our ability to successfully implement and execute our strategic plans and initiatives depends on many factors, some of which are out of our control.
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In addition to an increase in eCommerce penetration, the COVID-19 pandemic has driven an increase in demand in certain categories due to the renewed interest and perceived importance of health and fitness, participation in socially-distant and outdoor activities, and a shift toward athletic apparel and active lifestyle products.
Added
Our directors may have conflicts of interests in allocating time, services, and functions between the other business ventures in which those persons may be or become involved. 10 Our directors and officers may in the future be in a position of conflict of interest.
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It is uncertain whether or the extent to which these trends will continue, or whether new trends will emerge as the COVID-19 pandemic continues or after the current impacts of the COVID-19 pandemic subside. While the COVID-19 pandemic continues, governmental interventions or new outbreaks could, among other things, make it difficult or impossible to operate our business.
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Flying Height Consulting Services Limited, our shareholder, beneficially owns approximately 44.7% of our outstanding shares, and its interests may differ from the interests of other shareholders, which could cause a material decline in the value of our Ordinary Shares.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

43 edited+7 added−17 removed55 unchanged
Biggest changeSea freight cost Mid of 2022 (AUD) Mid of 2023 (AUD) Change 20GP from Shanghai $ 5,501.76 $ 602.65 89.0 % ● Delayed Delivery: Prior to the COVID-19 pandemic, delivery was approximately 1 to 2 business days to metro and NSW areas in Sydney, Australia, 2 to 3 business days in transit for interstate or other metro cities, and approximately 5 business days to remote areas.
Biggest changeSea freight cost Mid of 2023 (AUD) Early 2024 (AUD) Increase 20GP from Shanghai $ 878.22 $ 2,551.02 190.5 % ● Delivery time remain stable: Subsequent to the COVID-19 pandemic, delivery time was back to normal and was approximately 1 to 2 business days to metro and NSW areas in Sydney, Australia, 2 to 3 business days in transit for interstate or other metro cities, and approximately 5 business days to remote areas in the fiscal year ended June 30, 2024 and 2023. ● Strategies for Possible Out-of-Stock Products Due to the increased sea freight cost and the delays in shipment, we increased our minimum order quantity (MOQ) to ensure sufficient stock.
We believe the coverage of the brand awareness extends beyond the physical locations of our licensees and penetrates into wider markets and segments of fitness consumers. Product Design and Innovation To provide our customers with high quality user experience, we constantly search for creativity and innovation to expand and diversify our product portfolio by leveraging different resources and channels.
We believe the coverage of the brand awareness extends beyond the physical locations of our licensees and penetrates into wider markets and segments of fitness consumers. 24 Product Design and Innovation To provide our customers with high quality user experience, we constantly search for creativity and innovation to expand and diversify our product portfolio by leveraging different resources and channels.
Users pay a premium and will receive customized programs to fit individual schedules and personalized needs. ○ It will allow both online and offline users to participate in the training either on their own schedule or via livestreaming to interact with other subscribed members to encourage a more interactive, engaging and motivating lifestyle.
Users pay a premium and will receive customized programs to fit individual schedules and personalized needs. 23 ○ It will allow both online and offline users to participate in the training either on their own schedule or via livestreaming to interact with other subscribed members to encourage a more interactive, engaging and motivating lifestyle.
Our business development and expansion strategies over the next two to three years are as follows: Increase Fitness Equipment Product Marketing ● We currently rely primarily on organic traffic through search engine optimization to achieve customer acquisition.
Our business development and expansion strategies over the next two to three years are as follows: 26 Increase Fitness Equipment Product Marketing ● We currently rely primarily on organic traffic through search engine optimization to achieve customer acquisition.
Fitness Mirror, an e-training platform, and Yoga-Mirror are in final testing stages, and we expect to commercially launch these platforms in March 2024. The beta versions of these platforms have been in trial stages since March 2022.
Fitness Mirror, an e-training platform, and Yoga-Mirror are in final testing stages, and we expect to commercially launch these platforms in November 2024. The beta versions of these platforms have been in trial stages since March 2022.
Additional marketers of competitive products include the following: activity trackers and content-driven physical activity products, such as Fitbit®, Garmin vivofit®, Whoop, and Oura; group fitness, such as cross-fit classes; and gym memberships, each of which offers alternative solutions for a fit and healthy lifestyle. 29 Competitive Strengths We believe that there are several competitive strengths that differentiate us from our competitors.
Additional marketers of competitive products include the following: activity trackers and content-driven physical activity products, such as Fitbit®, Garmin vivofit®, Whoop, and Oura; group fitness, such as cross-fit classes; and gym memberships, each of which offers alternative solutions for a fit and healthy lifestyle. 28 Competitive Strengths We believe that there are several competitive strengths that differentiate us from our competitors.
Moreover, based on the large, consolidated dataset we received from our fitness equipment customers, we believe we will be able to create and develop on-trend fitness content for our users. Consolidated Database with Loyal Customer Base ● GD has served over 100,000 customers with large portions of sales coming from repeat customers over the years.
Moreover, based on the large, consolidated dataset we received from our fitness equipment customers, we believe we will be able to create and develop on-trend fitness content for our users. Consolidated Database with Loyal Customer Base ● GD has served over 190,000 customers with large portions of sales coming from repeat customers over the years.
As of May 5, 2022, we entered into a Share Exchange Agreement (“Share Exchange Agreement”) with KMAS, which holds all of the issued and outstanding shares of GD, and SKMA, which holds all of the issued and outstanding shares of KMAS, pursuant to which the Company shall acquire all of the shares in KMAS from SKMA in exchange for the Company issuing 6,439,999 Ordinary Shares to SKMA in accordance with the terms of the Share Exchange Agreement. 4B.
On May 5, 2022, we entered into a Share Exchange Agreement (“Share Exchange Agreement”) with KMAS, which holds all of the issued and outstanding shares of GD, and SKMA, which holds all of the issued and outstanding shares of KMAS, pursuant to which the Company shall acquire all of the shares in KMAS from SKMA in exchange for the Company issuing 6,439,999 Ordinary Shares to SKMA in accordance with the terms of the Share Exchange Agreement. 4B.
Organizational Structure The following diagram illustrates our corporate structure as of the date of this annual report: 32 4D. Property, plants and equipment We do not own any real property. Our corporate headquarters are located at 23-25 Mangrove Lane, Taren Point, New South Wales 2229, Australia, where we occupy facilities totaling over 30,000 square feet.
Organizational Structure The following diagram illustrates our corporate structure as of the date of this annual report: 30 4D. Property, plants and equipment We do not own any real property. Facilities Our corporate headquarters is located at 23-25 Mangrove Lane, Taren Point, New South Wales 2229, Australia, where we occupy facilities totaling over 30,000 square feet.
Our brand portfolio can be categorized into three proprietary brands under our Gym Direct brand: Muscle Motion, Rapid Motion, and FleetX, in closed to 2,000 stock-keeping units (SKUs). In addition to our all-around fitness equipment portfolio to individual and commercial customers, we launched three new business verticals with integration of technology in 2021. 1.
Our brand portfolio can be categorized into three proprietary brands under our Gym Direct brand: Muscle Motion, Rapid Motion, and FleetX, in approximately 2,000 stock-keeping units (SKUs). In addition to our all-around fitness equipment portfolio to individual and commercial customers, we launched three new business verticals with integration of technology in 2021. 21 1.
We expect that the interactive gym equipment will be commercially launched in March 2024 and believe that our new product will better serve both retail and commercial customers and accelerate our business growth.
We expect that the interactive gym equipment will be commercially launched in December 2024 and believe that our new product will better serve both retail and commercial customers and accelerate our business growth.
Our full spectrum of product coverage is exemplified by the following three proprietary brand names, which represent over 84% of our revenues in the fiscal year ended June 30, 2023: ● Our Muscle Motion brand is a supplier of home gym and commercial strength-training equipment.
Our full spectrum of product coverage is exemplified by the following three proprietary brand names, which represent over 70% of our revenues in the fiscal year ended June 30, 2024: ● Our Muscle Motion brand is a supplier of home gym and commercial strength-training equipment.
Our joint development of interactive fitness equipment and platforms with subscription service comprises the following: ● Smart connected equipment: interactive exercise bikes, treadmills, and workout mirrors with built-in touchscreens and training content platforms. ● 1FinalRound: our proprietary artificial intelligence training platform under development, currently in its final testing stage. ○ 1FinalRound will come pre-installed with our interactive fitness equipment.
Our joint development of interactive fitness equipment and platforms with subscription service comprises the following: ● Smart connected equipment: interactive exercise bikes, treadmills, and workout mirrors with built-in touchscreens and training content platforms. ● 1FinalRound: our proprietary artificial intelligence training platform under development, currently in its internal testing stage prior to public launch. ○ 1FinalRound will come pre-installed with our interactive fitness equipment.
We expect commercial launch in March 2024, with retail products being available in July/August 2024. 2. 1FinalRound: Our AI-powered interactive platform with our proprietary online training content and capability to be interactive with personal trainers, follow members and track workout progress. 3.
We expect commercial launch in December 2024, with retail products being available in November 2024. 2. 1FinalRound: Our AI-powered interactive platform with our proprietary online training content and capability to be interactive with personal trainers, follow members and track workout progress. 3.
Revenue from our own e-commerce website accounted for approximately 67.73% of our total sales for the fiscal year ended June 30, 2023 with the remaining sales derived from commercial sale orders, our showroom and phone orders as well as third party channels, such as Bunnings Marketplace and eBay.
Revenue from our own e-commerce website accounted for approximately 58.72% of our total sales for the fiscal year ended June 30, 2024 with the remaining sales derived from commercial sale orders, our showroom and phone orders as well as third party channels, such as Bunnings Marketplace and eBay.
Approximately 53% of our products come from overseas suppliers and they predominantly manufacture made-to-order products, such as commercial machine equipment XRFM series and FT1009 under our proprietary brands Muscle Motion and Rapid Motion and FX AB03 bike and FleetX Rower are under our proprietary brand FleetX.
Approximately 85% of our products come from overseas suppliers and they predominantly manufacture made-to-order products, such as commercial machine equipment XRFM series and FT1009 under our proprietary brands Muscle Motion and Rapid Motion and FX AB03 bike and FleetX Rower are under our proprietary brand FleetX. Payment terms with our suppliers vary.
In addition to our retail customers, our commercial customers include chains of fitness gyms and studios, government agencies, schools, healthcare providers and educational institutions. 26 Below is the graph summary of revenue by customer type: For fiscal year 2023, retail customers accounted for 75% of the Company’s total revenue.
In addition to our retail customers, our commercial customers include chains of fitness gyms and studios, government agencies, schools, healthcare providers and educational institutions. Below is the graph summary of revenue by customer type: For fiscal year 2024, retail customers accounted for 70.35% of the Company’s total revenue.
Seller releases the B/L to buyer after receiving payment Nantong Duro Fitness Co Ltd (16.55%) Weight Plates Payment within 14 days from receiving goods. QINGDAO IMBELL SPORTING GOODS CO.,LTD. (10.66%) Strength Products Payment paid against copy of B/L. Seller releases the B/L to buyer after receiving payment.
Nantong Duro Fitness Co., Ltd. (7.09%) Weight Plates Payment within 14 days from receiving goods. Qingdao Imbell Sporting Goods Co., Ltd (8.58%) Strength Products Payment paid against copy of B/L. Seller releases the B/L to buyer after receiving payment.
Based on our database, customers stood at 171,905members by end of fiscal year 2023, compared to 167,264 members at the end of fiscal year 2022, which we believe reflects the ability of the business to respond in economic downturn with challenging obstacles.
Based on our database, customers stood at 198,163 members by end of fiscal year 2024, compared to 171,897 members at the end of fiscal year 2023, which we believe reflects the ability of the business to respond in economic downturn with challenging obstacles.
These products are developed based on the existing data and feedback we received from our customers and intend to target these health-conscious consumers. ● Leveraging our expertise in developing and marketing fitness equipment, there is the opportunity for us to expand our businesses into used fitness equipment sales (e-commerce), including used home cardio machines and other domestic used fitness equipment. ● In addition, we also intend to expand our business segments to target the health and fitness needs of our target consumers in the following cross selling opportunities: apparel, niche sports and health equipment, and sporting footwear, among others, which widen the shopping choices to fitness-conscious or generic consumers.
These products are developed based on the existing data and feedback we received from our customers and intend to target these health-conscious consumers. ● Leveraging our expertise in developing and marketing fitness equipment, there is the opportunity for us to expand our businesses into used fitness equipment sales (e-commerce), including used home cardio machines and other domestic used fitness equipment. ● In addition, we also intend to expand our business segments to target the health and fitness needs of our target consumers in the following cross selling opportunities: apparel, niche sports and health equipment, and sporting footwear, among others, which widen the shopping choices to fitness-conscious or generic consumers. 27 Supply Chain Challenges and Strategies ● Buying cost remain stable: Subsequent to the COVID-19 pandemic, the cost of raw materials has remain relatively stable in the last one to two years.
Licensing Business We offer a turnkey solution for personal training studios and commercial gym chains. The primary focus of our licensing business is the new concept fitness studios established to meet the increasing demand of affluent, educated, middle class individuals with higher brand awareness and loyalty, usually from ages 28 to 55.
The primary focus of our licensing business is the new concept fitness studios established to meet the increasing demand of affluent, educated, middle class individuals with higher brand awareness and loyalty, usually from ages 28 to 55.
Boutique Fitness Clubs Licensing : Leveraging our years of experience in the fitness and wellness industry servicing both businesses and individual customers, we launched our licensing business in late 2021. mYSTEPS Training Clinic, a new concept fitness club chain, is our first licensee and dedicated to helping fitness-savvy and health-conscious consumers with higher disposable incomes achieve a motivating and healthy lifestyle with an engaging and dynamic fitness community in both online and offline settings. 22 Products and Services Fitness Equipment We market and sell fitness equipment and related products as well as serving as a one-stop shop for business setup from personal training studios to commercial gyms.
Boutique Fitness Clubs Licensing : Leveraging our years of experience in the fitness and wellness industry servicing both businesses and individual customers, we launched our licensing business in late 2021. mYSTEPS Training Clinic, a new concept fitness club chain, is our first licensee and dedicated to helping fitness-savvy and health-conscious consumers with higher disposable incomes achieve a motivating and healthy lifestyle with an engaging and dynamic fitness community in both online and offline settings.
Revenue from the licensing agreement was less than 12.0% of the Company’s revenue in the fiscal year ended June 30, 2022 and less than 16.0% of the Company’s revenue in the fiscal year ended June 30, 2023. 23 With approximately two decades of experience in the fitness market and constant innovative product development based on feedback collected over the years from our customers, we are developing a model that allows fitness users to access the flexibility of virtual training platforms with connected machines or in-person offline training modules in the licensed studios.
With approximately two decades of experience in the fitness market and constant innovative product development based on feedback collected over the years from our customers, we are developing a model that allows fitness users to access the flexibility of virtual training platforms with connected machines or in-person offline training modules in the licensed studios.
The 13 APPs prescribe responsibilities for maintaining personal information privacy, including around collection, use, disclosure and access to data, as well as the publication of a clearly expressed and up-to-date privacy policy.
The 13 APPs prescribe responsibilities for maintaining personal information privacy, including around collection, use, disclosure and access to data, as well as the publication of a clearly expressed and up-to-date privacy policy. A breach of those requirements may result in investigations, enforceable undertakings, injunctions, or civil penalty orders.
We are now developing a native mobile application to further expand the marketing platform and provide easy, repeatable and convenient shopping experiences for customers, which will also be beneficial in tracking consumer trends and purchasing data.
We are now developing a native mobile application to further expand the marketing platform and provide easy, repeatable and convenient shopping experiences for customers, which will also be beneficial in tracking consumer trends and purchasing data. The beta versions of these platforms have been in trial stages since March 2022 and the official version has been launched since November 2023.
Such operations of ours are subject to the Spam Act 2003 (Cth) (Spam Act) and the Spam Regulations 2021 (Cth)(Spam Regulations), which the Australian Communications and Media Authority (ACMA) can enforce through court action.
Regulation of electronic communications We operate in the Australian online market and use telecommunication services to publish and distribute electronic marketing material. Such operations of ours are subject to the Spam Act 2003 (Cth) (Spam Act) and the Spam Regulations 2021 (Cth)(Spam Regulations), which the Australian Communications and Media Authority (ACMA) can enforce through court action.
Development of Smart Connected Equipment and Digital Fitness Program ● Digital subscription-based machines have led the trend in the U.S. market, such as Mirror, Peloton, Tonal, where the demand for interactive fitness applications has risen.
Going forward, we intend to seek opportunities to expand our licensing partnership footprint in the Asia-Pacific regions with other selective partners. Development of Smart Connected Equipment and Digital Fitness Program ● Digital subscription-based machines have led the trend in the U.S. market, such as Mirror, Peloton, Tonal, where the demand for interactive fitness applications has risen.
We currently have 35 suppliers, 14 of which are Australian suppliers and 21 are overseas suppliers.
We currently have 27 suppliers, 12 of which are Australian suppliers and 15 are overseas suppliers.
As of the third quarter of 2023, mYSTEPS has opened 6 fitness and gym studios. Currently, our licensee has no plans to open additional fitness centers in China (including Hong Kong and Macau) due to COVID-19 policies and market conditions and will continue to explore opportunities in Indonesia, Singapore, and Malaysia.
Currently, our licensee has no plans to open additional fitness centers in China (including Hong Kong and Macau) due to COVID-19 policies and market conditions and will continue to explore opportunities in Indonesia, Singapore, and Malaysia. Based on the current license sold, we believe there will be long-term potential and opportunities for us outside of the Australian market.
The Company has no material affiliations or relationships with any of the above six suppliers. In the twelve-month period ended June 30, 2023, we received 15,189 orders and 23,231 customers, a decrease of 42.6% and a decrease of 41% respectively, compared to the same period in 2022.
In the twelve-month period ended June 30, 2023, we received 15,189 orders and 23,231 customers, a decrease of 42.6% and a decrease of 41% respectively, compared to the same period in 2022. This was primarily due to the management has strategically lower the selling prices or our products in order to cope with the recent economic conditions in Australia.
Our showroom and storage facility are located at the same address as our corporate office. We lease these facilities. The lease commenced on July 15, 2018 and was extended on July 14, 2023 for two years until July 14, 2025.
Our showroom and storage facility are located at the same address as our corporate office. We lease the facilities in Taren Point, New South Wales, Australia. The current lease commenced on July 15, 2023.
Payment terms with our suppliers vary. 25 Below is a tabular summary of our relationships with suppliers that represent over 5% of our supplies: Supplier Name Product Name Terms Nantong Tengtai Sporting Fitness (28.63%) Rubber Hex Dumbbells Payment paid against copy of B/L.
Below is a tabular summary of our relationships with suppliers that represent over 5% of our supplies: Supplier Name Product Name Terms Kynson Limited (23.68%) Motion Bikes and Spin Bikes Payment within 7 days from invoice date Nantong Tengtai Sporting Fitness (16.83%) Rubber Hex Dumbbells Payment paid against copy of B/L. Seller releases the B/L to buyer after receiving payment.
Legal Proceedings We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business.
We protect our proprietary rights and attempt to take prompt, reasonable actions to prevent counterfeit products and other infringement on our intellectual property. 29 Legal Proceedings We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business.
The beta versions of these platforms have been in trial stages since March 2022. 27 Expansion of Licensing Business ● Leveraging our years of experience in the fitness and wellness industry servicing both business and individual customers, we launched our licensing business with mYSTEPS Training Clinic in late 2021.
Expansion of Licensing Business ● Leveraging our years of experience in the fitness and wellness industry servicing both business and individual customers, we launched our licensing business with mYSTEPS Training Clinic in late 2021. As of the fiscal year ended June 30, 2024, mYSTEPS has opened 6 fitness and gym studios.
Below is a tabular summary of our online customer purchase data: Status # of Customers Average Size of Order Average Total Spending First time Customers FY2023 17,786 2.2 Units $ 389.60 Return Customers FY2023 7,844 2.7 Units $ 376.05 Status # of Customers Average Size of Order Average Total Spending First time Customers FY2023 8,528 2.4 Units $ 467.96 Return Customers FY2023 1,259 3.1 Units $ 1,698.79 We received 15,189 orders and acquired 23,321 customers in fiscal year 2023, a decrease of 42.6% and 41.1%, respectively, compared to the same period of fiscal year 2022.
Below is a tabular summary of our online customer purchase data: Status # of Customers Average Size of Order Average Total Spending First time Customers FY2024 12,261 1.3 Units $ 254.13 Return Customers FY2024 3,937 4.6 Units $ 304.77 We received 17,926 orders and acquired 26,266 customers in fiscal year 2024, an increase of 18.0% and 13.1%, respectively, compared to the same period of fiscal year 2023.
Revenue from our own e-commerce website accounted for approximately 67.73% of our total sales for the fiscal year ended June 30, 2023 with the remaining sales derived from commercial sale orders, our showroom and phone orders as well as third party channels, such as Bunnings Marketplace and eBay. 24 Our marketing strategy focuses on delivering fitness equipment to our customers and, in the future, to our licensees and their members and raising awareness of our brand through a broad range of channels.
Revenue from our own e-commerce website accounted for approximately 58.72% of our total sales for the fiscal year ended June 30, 2024, with the remaining sales derived from commercial sale orders, our showroom and phone orders as well as third party channels, such as Bunnings Marketplace and eBay. 22 Licensing Business We offer a turnkey solution for personal training studios and commercial gym chains.
The Company has not entered into any written agreements with these four suppliers, but places purchase orders with these three suppliers as needed. The rest three suppliers are based in Australia. The company has not entered into any written agreements with these suppliers, but places purchase orders with these two suppliers.
Morgan Imports Pty Ltd (5.23%) Boxing & MMA products 1 st of the following month. 25 The top four suppliers representing over 5% of the Company’s supplies are based in China. The Company has not entered into any written agreements with these four suppliers, but places purchase orders with these three suppliers as needed.
We believe that our sales strategies also create inventive solutions for existing customers and drive loyalty. As of June 30, 2023, 12.86% of our orders are from existing customers, the average purchase frequency is 1.19 across all customers while the average purchase frequency is 6.53 among loyalty reward members, and the average time to second purchase is approximately 1.36 months.
We believe that our sales strategies also create inventive solutions for existing customers and drive loyalty. As of June 30, 2024, 34.41% of our orders are from existing customers, the average purchase frequency is 2.2 across all customers. We believe that we will be able to deepen our customer loyalty through our newly developed Gym Direct mobile application and 1FinalRound.
We believe that with the growth potential and strong unit economics of the Asia-Pacific region, we will be able to scale this licensing model and make us a leader in the region’s boutique fitness market. 30 Intellectual Property Trademarks, patents and other forms of intellectual property are vital to the success of our business and are an essential factor in maintaining our competitive position in the health and fitness industry.
Compelling and Scalable Licensing Model Intellectual Property Trademarks, patents and other forms of intellectual property are vital to the success of our business and are an essential factor in maintaining our competitive position in the health and fitness industry. We own the following trademarks: Gym Direct, Muscle Motion, Rapid Motion and FleetX.
Approximately 26.6% of orders were from existing customers and the average purchase frequency was 1.19 across all customers in fiscal year 2023. Customers with redeeming loyalty rewards purchased approximately 4.26 times on average per fiscal year. The number of our repeat customers decreased from 7,844 in fiscal year 2022 to 3,453 in fiscal year 2023.
Our e-commerce conversion rates have decreased by 1.37% from 0.73% in fiscal year 2023 to 0.72% in fiscal year 2024. Approximately 34.4% of orders were from existing customers and the average purchase frequency was 2.2 across all customers in fiscal year 2024.
Sea freight usually took approximately 3 to 4 weeks pre-pandemic and had increased to 6 to 8 weeks during the pandemic. ● Logistics cost decrease: During the fiscal year 2023, sea freight costs decreased dramatically by approximately 89.0%, which caused the decrease of landing cost of the products accordingly.
The Sea freight in the fiscal year ended 2024 and 2023, usually took approximately 3 to 4 weeks, as compare to up 6 to 8 weeks during the COVID-19 pandemic. ● Logistics cost increase: During the fiscal year 2024, sea freight costs increased dramatically by approximately 190.5%, the significant increase in logistic cost was due to the drop in supply of available shipping vessels on a global basis, due to recent geopolitical tensions.
We own the following trademarks: Gym Direct, Muscle Motion, Rapid Motion and FleetX. We regularly monitor commercial activity in our industry to identify potential infringement of our intellectual property. We protect our proprietary rights and attempt to take prompt, reasonable actions to prevent counterfeit products and other infringement on our intellectual property.
We regularly monitor commercial activity in our industry to identify potential infringement of our intellectual property.
In the twelve-month period ended June 30, 2022, we received 26,467 orders and 39,573 customers, a decrease of 42.6% and an increase of 17.07%, respectively, compared to the same period in 2021. This was primarily due to inflation and raising of interest rates in Australia, has significantly reduced the disposal income of Australia households and affected the consumers’ sentiment.
In the twelve-month period ended June 30, 2024, we received 17,926 orders and 26,266 customers, an increase of 18.0% and an increase of 13.1%, respectively, compared to the same period in 2023.
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We also plan to support our licensee with access to high quality accredited health supplements selected by us and to introduce trendsetting designers to design proprietarily branded clothing and accessories to the members of our licensees, enhancing both their brand loyalty and profitability.
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Products and Services Fitness Equipment We market and sell fitness equipment and related products as well as serving as a one-stop shop for business setup from personal training studios to commercial gyms.
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Currently, our licensee is evaluating various sites opportunities and offers, and expect to open 5 to 10 more studios in next 6 months, and will continue to explore opportunities in Indonesia, Singapore, and Malaysia.
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Our marketing strategy focuses on delivering fitness equipment to our customers and, in the future, to our licensees and their members and raising awareness of our brand through a broad range of channels.
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Morgan Imports Pty Ltd (9.64%) Boxing & MMA products 1 st of the following month. Leisure Concepts (7.66%) Strength Products At sight of invoice. IFit (5.16%) Cardio Products 30 days from invoice. The top three suppliers representing over 5% of the Company’s supplies are based in China.
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The remaining supplier is based in Australia. The company has not entered into any written agreements with this supplier, but places purchase orders with it. The Company has no material affiliations or relationships with any of the above five suppliers.
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In the fiscal year June 30, 2023, the inflation was more than 6% throughout the year, and the Australis cash rate target, which was set by the Reserve Bank of Australia, has also increased from 0.10% to 4.10%. Our e-commerce conversion rates has decreased by 14.91% from 1.61% in fiscal year 2022 to 1.37% in fiscal year 2023.
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The number of our repeat customers increased from 3,793 in fiscal year 2023 to 3,937 in fiscal year 2024.
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Based on the current license sold, we believe there will be long-term potential and opportunities for us outside of the Australian market. Going forward, we intend to seek opportunities to expand our licensing partnership footprint in the Asia-Pacific regions with other selective partners.
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Our buying cost in the fiscal year ended June 30, 2024 has remain relatively constant, as compare to the fiscal year ended June 30, 2023. ● Leading time remain stable: Subsequent to the COVID-19 pandemic, the leading time of manufacturing and logistics has been stabilized and back to normal.
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Impact of COVID-19 With the outbreak and spread of the COVID-19 pandemic, the fitness industry was negatively impacted in Australia in terms of fitness and gym studios due to the lockdown policies. Therefore, we believe that more and more health-conscious consumers steered their demand toward in-house fitness and gym equipment.
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The monthly lease payment is AUD40,334, with goods and services tax, and is subject to an annual escalation rate of 3%. 31 Our Employees As of June 30, 2024, we have a total of 15 employees and all of them are full-time employees—5 employees serve as management, 5 employees serve as sales and marketing, 4 employees serve as warehouse management, and 1 employees serve as procurement and logistics.
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Throughout the pandemic, we experienced increased demand in both number of customers and orders. ● The number of customers increased by 181.9% in fiscal year 2020 to 31,935, compared to 11,329 in fiscal year 2019 ● Orders increased by 170.7% in fiscal year 2020 to 29,393 orders, compared to 10,860 in fiscal year 2019 ● Revenue increased by 53.0% in fiscal year 2020, compared to fiscal year 2019.
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All of our employees and contractors are located in Sydney, Australia. Our employees are not represented by a labor organization or covered by a collective bargaining agreement. We have not experienced any work stoppages. We believe that we maintain a good working relationship with our employees, and we have not experienced any major labor disputes.
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However, the year-on-year increase has been sustained as we maintained the growth in fiscal year 2021 since we believe more consumers have become health and fitness conscious post-pandemic.
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Further, we believe the pandemic has led to the shift in consumer behavior as more consumers engage in online shopping and we believe that our online platform enables them to easily conclude their purchasing decisions.
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Supply Chain Challenges and Strategies ● Buying cost increase: Due to the impact of the COVID-19 pandemic, the cost of raw materials has increased in the last 2 to 3 years, which caused our buying cost increase of approximately 10-30%, and even more than 50% for limited items, in fiscal year 2020 as compared to fiscal year 2019. 28 ● Leading time increase: Due to the impact of the COVID-19 pandemic, the leading time of manufacturing and logistics increased dramatically, which caused the increase of our minimum order quantity.
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Prior to the COVID-19 pandemic, the average manufacture leading time is approximately 6 to 8 weeks, which increased to 6 to 12 months during the COVID-19 pandemic.
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During the COVID-19 pandemic, approximately 5 to 12 business days delay were expected to all deliveries due to higher volumes of orders and lockdown restrictions. ● Strategies for Possible Out-of-Stock Products Due to the increased sea freight cost and the delays in shipment, we increased our minimum order quantity (MOQ) to ensure sufficient stock.
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We believe that we will be able to deepen our customer loyalty through our newly developed Gym Direct mobile application and 1FinalRound. Compelling and Scalable Licensing Model ● We license our gym and equipment trademark and share our business processes and branding with our licensees, and in exchange we charge royalties and other fees for our services.
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We intend to provide support to help our licensees optimize their business performance and maximize their return on investment.
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A breach of those requirements may result in investigations, enforceable undertakings, injunctions, or civil penalty orders. 31 Regulation of electronic communications We operate in the Australian online market and use telecommunication services to publish and distribute electronic marketing material.
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The monthly lease payment is AUD 40,333, with goods and services tax, and is subject to an annual escalation rate of 3%. The Company’s property and equipment is set forth in note 4 to our audited consolidated financial statements included in this annual report.
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The Company does not have any plan to significantly increase its property, plants and equipment in the near future. 33 Item 4A. Unresolved Staff Comments None.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

60 edited+37 added−26 removed7 unchanged
Biggest changeFor the Years Ended June 30, 2023 2022 Variance US$ % of revenue US$ % of revenue US$ % REVENUE 4,799,222 100.0 % 8,155,734 100.0 % (3,356,512 ) -41.2 % COST OF GOODS SOLD (2,625,821 ) -54.7 % (4,520,078 ) -55.4 % 1,894,257 -41.9 % GROSS PROFIT 2,173,401 45.3 % 3,635,656 44.6 % (1,462,255 ) -40.2 % OPERATING EXPENSES Personnel expenses 965,395 20.1 % 981,711 12.0 % 207,684 21.2 % General and administrative expenses 888,141 18.5 % 503,269 6.2 % 384,872 76.5 % Sales and marketing expenses 454,995 9.5 % 604,200 7.4 % (149,205 ) -24.7 % Operating lease expense 198,914 4.1 % 213,490 2.6 % (14,576 ) -6.8 % Depreciation expenses 12,268 0.3 % 730 0.0 % 11,538 1580.5 % Total operating expenses 2,519,713 52.5 % 2,303,400 28.2 % 440,313 19.1 % INCOME FROM OPERATION (346,312 ) -7.2 % 1,332,256 16.3 % (1,902,568 ) -142.8 % OTHER INCOME (EXPENSE) IPO related expense (662,418 ) -13.8 % (605,950 ) -7.4 % 503,532 -83.1 % Unrealized loss on investment (529,488 ) -11.0 % (466,478 ) -5.7 % (63,010 ) 13.5 % Other income - N/A - N/A - N/A Other expense 9,885 0.2 % (54 ) 0.0 % 9,939 -18405.6 % Interest income 1,978 0.0 % 99 0.0 % 1,879 1898.0 % Interest expense (92,800 ) -1.9 % (27,419 ) -0.3 % (65,381 ) 238.5 % Total other income (expenses) (1,272,843 ) -26.5 % (1,099,802 ) -13.5 % 386,959 -35.2 % INCOME BEFORE TAX (1,619,155 ) -33.7 % 232,454 2.9 % (1,515,609 ) -652.0 % INCOME TAX EXPENSE (CREDIT) (25,761 ) -0.5 % 219,852 2.7 % (245,613 ) -111.7 % NET INCOME (1,593,394 ) -33.2 % 12,602 0.2 % (1,269,996 ) -10077.7 % EXTRAORDINARY ITEMS IPO related expense 662,418 13.8 % 605,950 7.4 % 56,468 9.3 % Unrealized loss on investment, net of tax 397,116 8.3 % 349,859 4.3 % 47,257 13.5 % NORMALIZED NET INCOME (LOSS) (533,860 ) -11.1 % 968,411 11.9 % (1,502,271 ) -155.1 % 36 Revenues We currently generate our revenue from two business activities: merchandise revenue and service revenue.
Biggest changeFor the Years Ended June 30, 2024 2023 Variance US$ % of revenue US$ % of revenue US$ % REVENUE 4,466,775 100.0 % 4,799,222 100.0 % (332,447 ) -6.9 % COST OF GOODS SOLD (2,881,060 ) -64.5 % (2,625,821 ) -54.7 % 255,239 9.7 % GROSS PROFIT 1,585,715 35.5 % 2,173,401 45.3 % (587,686 ) -27.0 % OPERATING EXPENSES Personnel expenses 951,451 21.3 % 965,395 20.1 % (13,944 ) -1.4 % Consulting fees 5,468,126 122.4 % - N/A 5,468,126 N/A Licensing fees 65,839 1.5 % - N/A 65,839 N/A General and administrative expenses 2,452,954 54.9 % 888,141 18.5 % 1,564,813 176.2 % Sales and marketing expenses 351,298 7.9 % 454,995 9.5 % (103,697 ) -22.8 % Operating lease expense 284,169 6.4 % 198,914 4.1 % 85,255 42.9 % Depreciation expense 10,385 0.2 % 12,268 0.3 % (1,883 ) -15.3 % Total operating expenses 9,584,222 214.6 % 2,519,713 52.5 % 7,064,509 280.4 % LOSS FROM OPERATIONS (7,998,507 ) -179.1 % (346,312 ) -7.2 % 7,652,195 2209.6 % OTHER INCOME (EXPENSE) IPO related expense (50,523 ) -1.1 % (662,418 ) -13.8 % (611,895 ) -92.4 % Unrealized loss on investment (354,781 ) -7.9 % (529,488 ) -11.0 % (174,707 ) -33.0 % Other income (expenses) 121,889 2.7 % 9,885 0.2 % 112,004 1133.1 % Interest income 2,574 0.1 % 1,978 0.0 % 596 30.1 % Interest expense (1,242,140 ) -27.8 % (92,800 ) -1.9 % 1,149,340 1238.5 % Total other income (expenses) (1,522,981 ) -34.1 % (1,272,843 ) -26.5 % (250,138 ) -19.7 % LOSS BEFORE TAX (9,521,488 ) -213.2 % (1,619,155 ) -33.7 % 7,902,333 488.1 % INCOME TAX CREDIT (209,343 ) -4.7 % (25,761 ) -0.5 % (183,582 ) 712.6 % NET LOSS (9,312,145 ) -208.5 % (1,593,394 ) -33.2 % (7,718,751 ) 484.4 % EXTRAORDINARY ITEMS Consulting fees 5,468,126 122.4 % - N/A 5,468,126 N/A IPO related expense 50,523 1.1 % 662,418 13.8 % (611,895 ) -92.4 % Unrealized loss on investment, net of tax 266,086 6.0 % 397,116 8.3 % (131,030 ) -33.0 % Debt discount (in interest expense) 1,108,088 24.8 % - N/A 1,108,088 N/A NORMALIZED NET LOSS (2,419,322 ) -54.2 % (533,860 ) -11.1 % 1,885,462 353.2 % 34 Revenues We currently generate our revenue from three business activities: merchandise revenue, sales of consumable products, and revenue from licensing customers.
The Company’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information — 3.D. Risk Factors” or in other parts of this annual report. 5A. Operating Results Overview The Company runs its business through its wholly-owned subsidiary GD.
The Company’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information — 3.D. Risk Factors” or in other parts of this annual report. A. Operating Results Overview The Company runs its business through its wholly-owned subsidiary GD.
Sales and marketing expenses consisted primarily of advertising and marketing expenses on various online platforms. The decrease was due to the company has cut costs in the view of the economic conditions in Australia.
Sales and marketing expenses consisted primarily of advertising and marketing expenses on various online platforms. The decrease was due to the fact the company has cut costs in the view of the economic conditions in Australia.
GD carries closed to 2,000 SKUs and has served over 100,000 customers with large portion of sales from repeat customers over the years – a testament of our product quality and brand loyalty.
GD carries over 2,000 SKUs and has served over 190,000 customers with a large portion of sales from repeat customers over the years – a testament of our product quality and brand loyalty.
The net loss and comprehensive loss were a result of the drop in revenue, and the negative effect caused by various other items, such as the provision for bad debt, IPO related expenses, and the unrealized loss on investment in the fiscal year of June 30, 2023.
The net loss and comprehensive loss were a result of the drop in revenue, and the negative effect caused by various other items, such as the provision for bad debt, IPO related expenses, the unrealized loss on investment, and additional interest related to the debt discount, in the fiscal year of June 30, 2024.
The sales and marketing expenses, as a percentage of total revenue, have increased to 9.5% for the fiscal year ended June 30, 2023 from 7.4% for the fiscal year ended June 30, 2021.
The sales and marketing expenses, as a percentage of total revenue, have decreased to 7.9% for the fiscal year ended June 30, 2024, from 9.5% for the fiscal year ended June 30, 2023.
The decrease was a result of the drop in total revenues while the operating expenses were increasing.
The increase in loss was a result of the drop in total revenues while the operating expenses were increasing.
These items include, but are not limited to, government subsidy tech boost, stock issued for services expense, IPO related expenses, provision for bad debt, unrealized loss on investments etc. The combined effect of the aforesaid items had made the effective tax rates move away from the applicable corporate tax rate.
These items include, but are not limited to, government subsidy tech boost, stock issued for services expense, IPO related expenses, provision for bad debt, unrealized loss on investments, fair value adjustment on financial instruments etc. The combined effect of the aforesaid items would make the effective tax rates move away from the applicable corporate tax rate.
The effective tax rate has decreased significantly from 94.6% for the fiscal year ended June 30, 2022 to 2.0% for the fiscal year ended June 30, 2023. The applicable corporate tax rate in Australia was 25% for the fiscal year ended June 30, 2023 and 2022. However, there are several items which are either tax exempted or non-tax deductible.
The effective tax rate has decreased from (1.6)% for the fiscal year ended June 30, 2023 to (0.4)% for the fiscal year ended June 30, 2024. The applicable corporate tax rate in Australia was 25% for the fiscal year ended June 30, 2024 and 2023. However, there are several material items which are either tax exempted or non-tax deductible.
In the fiscal year June 30, 2023, the inflation was more than 6% throughout the year, and the Australis cash rate target, which was set by the Reserve Bank of Australia, has also increased from 0.10% to 4.10%.
In the fiscal year June 30, 2024, the inflation was more than 4% on average throughout the year, and the Australis cash rate target, which was set by the Reserve Bank of Australia, has also increased from 0.25% to 4.35%.
IPO related expenses For the Years Ended June 30, Change (in US dollars, except percentage) 2023 2022 Amount % IPO related expenses 662,418 605,950 56,468 9.3 % as percentage of revenue 13.8 % 7.4 % 6.4 % The IPO related expenses include the accounting fee, auditing fee, legal fee, and consulting fee which are incurred due to the Initial Public Offering project and is not related to the daily operations of the Company.
IPO related expenses For the Years Ended June 30, Change (in US dollars, except percentage) 2024 2023 Amount % IPO related expenses 50,523 662,418 (611,895 ) -92.4 % as percentage of revenue 1.1 % 13.8 % -12.7 % The IPO related expenses include the accounting fee, auditing fee, legal fee, and consulting fee which are incurred due to the Initial Public Offering project and are not related to the daily operations of the Company.
Unrealized loss on investment For the Years Ended June 30, Change (in US dollars, except percentage) 2023 2022 Amount % Unrealized loss on investment (529,488 ) (466,478 ) (63,010 ) 13.5 % as percentage of revenue -11.0 % -5.7 % -5.3 % The Company had purchased certain securities on the Hong Kong Stock Exchange for investment purpose in the fiscal year June 30, 2022.
Unrealized loss on investment For the Years Ended June 30, Change (in US dollars, except percentage) 2024 2023 Amount % Unrealized loss on investment (354,781 ) (529,488 ) 174,707 -33.0 % as percentage of revenue -7.9 % -11.0 % 3.1 % The Company had purchased some securities on the Hong Kong stock exchange for investment purpose in the fiscal year June 30, 2022.
Depreciation expense For the Years Ended June 30, Change (in US dollars, except percentage) 2023 2022 Amount % Depreciation expense 12,268 730 11,538 1580.5 % as percentage of revenue 0.3 % 0.0 % 0.2 % Depreciation expense was $12,268 and $730 for the fiscal year ended June 30, 2023 and 2022, respectively.
Depreciation expense For the Years Ended June 30, Change (in US dollars, except percentage) 2024 2023 Amount % Depreciation expense 10,385 12,268 (1,883 ) -15.3 % as percentage of revenue 0.2 % 0.3 % 0.0 % Depreciation expense was $10,385 and $12,268 for the fiscal year ended June 30, 2024 and 2023, respectively.
Personnel expenses consist primarily of employee salaries, superannuation, external consulting expenses and other employment expenses. The management has maintained a stable and similar size team. Therefore, the personnel expenses for the fiscal year ended June 30, 2023 is similar to the fiscal year ended June 30, 2022.
Personnel expenses consist primarily of employee salaries, superannuation, external consulting expenses and other employment expenses. The Personnel Expenses for the fiscal year ended June 30, 2024 is similar to the fiscal year ended June 30, 2023.
Almost all of our sales were sold to end users, and in most cases, we do not provide credits to them. Therefore, we receive payments from customers upfront for most of our sales.
Our merchandise revenue is driven by changes in the number of sales orders, and the average order value. Almost all our sales were sold to end users, and in most cases, we do not provide credits to them. Therefore, we receive payments from customers upfront for most of our sales.
Liquidity and capital resources Current Liquidity and Capital Resources for the Twelve Months Ended June 30, 2023 compared to Twelve Months Ended June 30, 2023 2023 2022 Summary of Cash Flows: Net cash provided (used) by operating activities $ (373,104 ) $ (131,781 ) Net cash used in investing activities - (465,295 ) Net cash provided by (used in) financing activities (79,064 ) 93,915 Foreign currency translation (27,063 ) (66,949 ) Net increase in cash and cash equivalents (479,231 ) (570,110 ) Beginning cash and cash equivalents 716,052 1,286,162 Ending cash and cash equivalents $ 236,821 $ 716,052 40 Operating Activities Cash used in operating activities of $373,104 during the year ended June 30, 2023 was primarily a result of our net loss of $1,593,394 reconciled with our changes in operating assets and liabilities, which include primarily (i) an unrealized loss in investments of $529,488 due to the fall in share prices of the investments; (ii) Stock issued for services of $560,000 due to fund raising activities; (iii) bad debt provision of $426,971 due to recoverability problems, (iv) an decrease in inventory of $393,636 which is in-line with the decrease in revenue; and (v) an increase in trade and other payables of $363,694 because the management has obtained better credit terms from the supplier in the fiscal year ended June 30, 2023; partially offset by (vi) net increase in net account receivables of $560,215 due to increase in corporate client sales; (vii) a decrease in deferred revenue of $263,625 which is inline with the drop in sales; (viii) a decrease in income tax payable of $169,615 due to the net loss in the fiscal year ended June 30, 2023; (viii) an increase in account receivables of $133,244 due to the increase in sales to corporate clients.
Cash used in operating activities of $373,104 during the year ended June 30, 2023 was primarily a result of our net loss of $1,593,394reconciled with our changes in operating assets and liabilities, which include primarily (i) an unrealized loss in investments of $529,488 due to the fall in share prices of the investments; (ii) Stock issued for services of $560,000 due to fund raising activities; (iii) bad debt provision of $426,971 due to recoverability problems, (iv) a decrease in inventory of $393,636 which is in-line with the decrease in revenue; and (v) an increase in trade and other payables of $363,694 because the management has obtained better credit terms from the supplier in the fiscal year ended June 30, 2023; partially offset by (vi) net increase in net account receivables of $560,215 due to increase in corporate client sales; (vii) a decrease in deferred revenue of $263,625 which is inline with the drop in sales and; (viii) a decrease in income tax payable of $169,615 due to the net loss in the fiscal year ended June 30, 2023.
It accounts for 4.1% and 2.6% of revenue for the fiscal year ended June 30, 2023 and 2022, respectively. The absolute amount is $198,914 and $213,490 for the fiscal year ended June 30, 2023 and 2022, respectively, which is relatively stable.
It accounts for 6.4% and 4.1% of revenue for the fiscal year ended June 30, 2024 and 2023, respectively. The absolute amount is $284,169 and $198,914 for the fiscal year ended June 30, 2024 and 2023, respectively.
The decrease was a combined result of the decrease in merchandise revenues and service revenue. The Gross Profit margin increased 0.7% from 44.6% in the fiscal year June 30, 2022, to 45.3% in the fiscal year ended June 30, 2023.
The decrease was a combined result of the decrease in merchandise revenues and service revenue. The Gross Profit margin decreased 9.8% from 45.3% in the fiscal year June 30, 2023, to 35.5% in the fiscal year ended June 30, 2024.
Our personnel expenses consist primarily of employee salaries, superannuation, external consulting expenses and other employment related expenses. Personnel expenses were 24.8% and 12.0% of our revenues for the fiscal year ended June 30, 2023 and 2022, respectively.
Our personnel expenses consist primarily of employee salaries, superannuation, external consulting expenses and other employment-related expenses. Personnel expenses were 21.3% and 20.1% of our revenues for the fiscal years ended June 30, 2024 and 2023, respectively.
Sales and Marketing Expenses For the Years Ended June 30, Change (in US dollars, except percentage) 2023 2022 Amount % Sales and marketing expenses 454,995 604,200 (149,205 ) -24.7 % as percentage of revenue 9.5 % 7.4 % 2.1 % Sales and marketing expenses were $454,995 for the fiscal year ended June 30, 2023 and $604,200 for the fiscal year ended June 30, 2022, a decrease of $149,205, or 24.7%.
Sales and Marketing Expenses For the Years Ended June 30, Change (in US dollars, except percentage) 2024 2023 Amount % Sales and marketing expenses 351,298 454,995 (103,697 ) -22.8 % as percentage of revenue 7.9 % 9.5 % -1.6 % Sales and marketing expenses were $351,298 for the fiscal year ended June 30, 2024, and $454,955 for the fiscal year ended June 30, 2023, a decrease of $103,697, or 22.8%.
Nevertheless, we will expand these services again, especially to the Asia market, when the time is right. Gross Profit Gross profit is equal to revenue minus cost of goods sold. Cost of goods sold primarily includes inventory costs (third-party products purchase price, freight costs, custom duties, and other miscellaneous costs related to purchase).
Gross Profit Gross profit is equal to revenue minus cost of goods sold. Cost of goods sold primarily includes inventory costs (third-party products purchase price, freight costs, custom duties, and other miscellaneous costs related to purchase).
Normalized Income The net income includes some extraordinary items which may not reflect the true picture of the operations of the Company. For the fiscal year ended June 30, 2023, the extraordinary items include the IPO related expenses of $662,418, and the unrealized loss on investment of $397,116, net of tax.
For the fiscal year ended June 30, 2023, the extraordinary items include the IPO related expenses of $662,418, and the unrealized loss on investment of $397,116, net of tax. All of these items are not related to our normal operations.
The sales volume of our merchandise revenues by sales orders has decreased by 42.6% in fiscal year ended June 30, 2023, as compared to fiscal year ended June 30, 2022. This was primarily due to inflation and raising of interest rates in Australia, has significantly reduced the disposal income of Australia households and affected the consumers’ sentiment.
Our average order value per sales order has dropped slightly by 16.9% in fiscal year ended June 30, 2024, as compared to fiscal year ended June 30, 2023. This was primarily due to inflation and interest rates in Australia, which has significantly reduced the disposal income of Australia households and affected the consumers’ sentiment.
However, the management has temporarily suspended the overseas expansions in recent months, because the market sentiments are negatively affected by the inflations and the rising in interest rate in the global market. Nevertheless, we will expand these services again, especially to the Asia market, when the time is right.
The decrease was due to the management having to strategically postpone the overseas expansions in this area, as the market sentiments are negatively affected by the inflations and the high interest rate in the global market. Nevertheless, we will expand these services again, especially to the Asia market, when the time is right.
The management targets to hire the right persons for each different task and to maintain an effective and efficient operational team of the appropriate size.
Management always aims to hire the right people for each different tasks, and to maintain an effective and efficient operational team in the right size.
Personnel Expenses For the Years Ended June 30, Change (in US dollars, except percentage) 2023 2022 Amount % Personnel expenses 965,395 981,711 (16,316 ) -1.7 % as percentage of revenue 20.1 % 12.0 % 8.1 % Personnel expenses were $965,395 for the fiscal year ended June 30, 2023 and $981,711 for the fiscal year ended June 30, 2022, a decrease of $16,316, or 1.7%.
Personnel Expenses For the Years Ended June 30, Change (in US dollars, except percentage) 2024 2023 Amount % Personnel expenses 951,451 965,395 (13,944 ) -1.4 % as percentage of revenue 21.3 % 20.1 % 1.2 % Personnel expenses were $951,451 for the fiscal year ended June 30, 2024, and $965,395 for the fiscal year ended June 30, 2023, a slight decrease of $13,944, or 1.4%.
In the fiscal year June 30, 2023, the inflation was more than 6% throughout the year, and the Australis cash rate target, which was set by the Reserve Bank of Australia, has also increased from 0.10% to 4.10%.; (ii) a slight decrease of 3.0% in the average revenue per order from $273.9 in fiscal year June 30, 2022 to $265.72 in the fiscal year June 30, 2023.
In the fiscal year June 30, 2024, the inflation was more than 4% on average throughout the year, and the Australis cash rate target, which was set by the Reserve Bank of Australia, has also increased from 0.25% to 4.35%.
The key measures that we use to evaluate the performance of our business are set forth below and are discussed in greater details under “Results of Operations”: Revenue Our revenue consists of both merchandise revenues and service revenue, which accounted for 84.1% and 15.9% of our total revenue for the fiscal year ended June 30, 2023, and accounted for 88.9% and 11.1% of our total revenue for the fiscal year ended June 30, 2022, respectively. 34 Our merchandise revenue is driven by changes in the number of sales orders, and the average order value.
The key measures that we use to evaluate the performance of our business are set forth below and are discussed in greater details under “Results of Operations”: Revenue Our revenue consists of merchandise revenues, sales of consumable products, and revenue from licensing customers accounted for 88.6%, 8.0%, and 3.4% of our total revenue for the fiscal year ended June 30, 2024, and accounted for 84.1%, 4.7%, and 11.2% of our total revenue for the fiscal year ended June 30, 2023, respectively.
It was derived from the depreciation of a motor vehicle. Income from Operations The Company had a loss from operations of $346,312 for the fiscal year ended June 30, 2023 and an income from operations of $1,332,256 for the fiscal year ended June 30, 2022, a decrease of $1,678,568, or 126.0%.
It was derived from the depreciation of a motor vehicle. 37 Income from Operations The Company had loss from operations of $7,998,507 for the fiscal year ended June 30, 2024, and $346,312 for the fiscal year ended June 30, 2023, an increase of $7,652,195.
The decrease was in line with the drop in merchandise revenues. Our cost of goods sold account for 54.7% and 55.4% of our total revenue for the fiscal year ended June 30, 2023 and fiscal year ended June 30, 2022, respectively.
Our cost of goods sold account for 64.5% and 54.7% of our total revenue for the fiscal year ended June 30, 2024 and fiscal year ended June 30, 2023, respectively.
Income Tax Expense For the Years Ended June 30, Change (in US dollars, except percentage) 2023 2022 Amount % Income tax expense (credit) (25,761 ) 219,852 (245,613 ) -111.7 % effective tax rate 1.6 % 94.6 % -93.0 % Income tax credit was $25,761 for the fiscal year ended June 30, 2023 and income tax expense was $219,852 for the fiscal year ended June 30, 2022, a decrease of $245,613, or 111.7%.
Income tax credit For the Years Ended June 30, Change (in US dollars, except percentage) 2024 2023 Amount % Income tax credit (209,343 ) (25,761 ) (183,582 ) 712.6 % effective tax rate -0.4 % -1.6 % -1.1 % Income tax credit was $209,343 for the fiscal year ended June 30, 2024 and income tax credit was $25,761 for the fiscal year ended June 30, 2023, an increase of $183,582, or 712.6%.
Our general and administrative expenses consist primarily of insurance, warehouse costs and other corporate expenses. General and administrative expenses account for 18.5% and 6.2% of our revenue for the fiscal year ended June 30, 2023 and 2022, respectively. The increase in general and administrative expenses mainly due to the doubtful debt provision of $429,401.
Our general and administrative expenses consist primarily of insurance, warehouse costs and other corporate expenses. General and administrative expenses account for 54.9% and 18.5% of our revenue for the fiscal years ended June 30, 2024 and 2023, respectively.
The net cash from financing activities for the year ended June 30, 2022 was come from non-interest bearing short term borrowing from a related party. Future Capital Requirements Our capital requirements for 2023 will depend on numerous factors, including management’s evaluation of the timing of projects to pursue.
The net cash used in financing activities for the fiscal year ended June 30, 2023 was due to the repayment of intercompany balance to a related company. 40 Future Capital Requirements Our capital requirements for the fiscal year ending June 30, 2025 and beyond, will depend on numerous factors, including management’s evaluation of the timing of projects to pursue.
For the Years Ended June 30, 2023 2022 Change Change US$ % US$ % US$ % Merchandise revenue 4,036,047 84.1 % 7,246,588 88.9 % (3,210,541 ) -44.3 % Sales of consumable products 223,343 4.7 % 200,104 2.5 % 23,239 11.6 % Revenue from licensing customers 539,832 11.2 % 709,042 8.7 % (169,210 ) -23.9 % Total Revenue 4,799,222 100.0 % 8,155,734 100.0 % (3,356,512 ) -41.2 % Merchandise revenue The merchandise revenue represents the sales of our various gym & fitness equipment and products.
For the Years Ended June 30, 2024 2023 Change Change US$ % US$ % US$ % Merchandise revenue 3,956,962 88.6 % 4,036,047 84.1 % (79,085 ) -2.0 % Sales of consumable products 358,536 8.0 % 223,343 4.7 % 135,193 60.5 % Revenue from licensing customers 151,277 3.4 % 539,832 11.2 % (388,555 ) -72.0 % Total Revenue 4,466,775 100.0 % 4,799,222 100.0 % (332,447 ) -6.9 % Merchandise revenue The merchandise revenue represents the sales of our various gym & fitness equipment and products.
The Company has launched its global expansion strategy with initial geographic focus in South-East Asia markets in late 2021 as described in detailed in the “Recent Developments” section immediately below.
The Company has launched its global expansion strategy with initial geographic focus in South-East Asia markets in late 2021 as described in detailed in the “Recent Developments” section immediately below. Recent Developments On January 15, 2024, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with Flying Height Consulting Services Limited (“Flying Height”).
Our cost of goods sold account for 54.7% and 55.4% of our total revenue for the fiscal year ended June 30, 2023 and fiscal year ended June 30, 2022, respectively. Our gross profit margin was 45.3% for the fiscal year ended June 30, 2023, which was similar to 44.6% for fiscal year ended June 30, 2022.
Our cost of goods sold account for 64.5% and 54.7% of our total revenue for the fiscal year ended June 30, 2024 and fiscal year ended June 30, 2023, respectively. Our gross profit margin has decreased 9.8% for the fiscal year ended June 30, 2024, as compared to the fiscal year ended June 30, 2023.
Revenues consist primarily of merchandise revenues of $4,036,047 for the fiscal year ended June 30, 2023 and $7,246,588 for the fiscal year ended June 30, 2022, plus sales of consumable products of $223,343 for the fiscal year ended June 30, 2023 and $200,104 for the fiscal year ended June 30, 2022, and also revenue from licensing customers of $539,832 for the fiscal year ended June 30, 2023 and $709,042 for the fiscal year ended June 30, 2022.
Revenues consist primarily of (i) merchandise revenues of $3,956,962 and $4,036,047 for the fiscal years ended June 30, 2024 and 2023 respectively; plus (ii) sales of consumable products of $358,536 and $223,343 for the fiscal years ended June 30, 2024 and 2023 respectively; and (iii) revenue from licensing customers of $151,277 and $539,832 for the fiscal years ended June 30, 2024 and 2023 respectively.
Financing Activities Net cash used in financing activities was $79,064 for the year ended June 30, 2023 versus net cash from financing activities of $93,915 for the year ended June 30, 2022. The net cash used in financing activities for the year ended June 30, 2023 was due to the repayment of intercompany balance to a related company.
Financing Activities Net cash from financing activities was $15,469,405 for the fiscal year ended June 30, 2024, versus net cash used in financing activities of $79,064 for the fiscal year ended June 30, 2023.
The net operating profit shown would be smaller than reported if the effects of inflation was reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments. 41 Off-Balance Sheet Arrangements We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. 5C.
Off-Balance Sheet Arrangements We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Revenues were $4,799,222 for the fiscal year ended June 30, 2023 and $8,155,734 for the fiscal year ended June 30, 2022, a decrease of $3,356,512, or 41.2%.
Revenues were $4,466,775 for the fiscal year ended June 30, 2024 and $4,799,222 for the fiscal year ended June 30, 2023, a decrease of $332,447, or 6.9%.
Merchandise revenue decreased significantly by 44.3% or $3,210,541 to $4,036,047 in fiscal year June 30, 2023 from $7,246,588 in the fiscal year June 30, 2022.
Merchandise revenue decreased slightly by 2.0% or $79,085 to $3,956,962 in fiscal year June 30, 2024 from $4,036,047 in the fiscal year June 30, 2023.
General and administrative expenses consist primarily of insurance, warehouse costs and other corporate expenses. The increase in general and administrative expenses mainly due to the doubtful debt provision of $429,401.
General and administrative expenses consist primarily of insurance, warehouse costs and other corporate expenses.
The unrealized loss on investment was attributable to the dropping in market value of the investment. Other Income and other expense Other income was $9,885 for the fiscal year ended June 30, 2023 and which was referring the governmental subsidy provided for staff parental leaves. Other expense was $54 for the fiscal year ended June 30, 2022.
For the fiscal year ended June 30, 2023, there was a net other income of $9,885, which was mainly referring to the governmental subsidy provided for staff parental leaves. 38 Interest Income Interest income was $2,574 for the fiscal year ended June 30, 2024 and $1,978 for the fiscal year ended June 30, 2023.
However, the management believes that the impact is short-term because the salaries of Australian individuals are also increasing gradually, and the interest may start falling again in the near future. Our average order value per sales order has dropped slightly by 3.0% in fiscal year ended June 30, 2023, as compare to fiscal year ended June 30, 2022.
However, the management believes that the impact is short-term because the salaries of Australian individuals are also increasing gradually, and the interest may start falling again in the near future. Sales of consumable products The sales of consumable products represent the sales of fitness and wellness related products to overseas market.
The increase is mainly due to that consumer confidence in Australia was weak during the fiscal year ended June 30, 2023 and the ability for sales and marketing activities to generate sales has decreased. 38 Operating lease expense For the Years Ended June 30, Change (in US dollars, except percentage) 2023 2022 Amount % Operating lease expense 198,914 213,490 (14,576 ) -6.8 % as percentage of revenue 4.1 % 2.6 % 1.5 % Amortization of right of use asset is refer to the amortization of the finance lease for our office and warehouse.
Operating lease expense For the Years Ended June 30, Change (in US dollars, except percentage) 2024 2023 Amount % Operating lease expense 284,169 198,914 85,255 42.9 % as percentage of revenue 6.4 % 4.1 % 2.2 % Amortization of right of use asset refers to the amortization of the finance lease for our office and warehouse.
General and Administrative Expenses For the Years Ended June 30, Change (in US dollars, except percentage) 2023 2022 Amount % General and administrative expenses 888,141 503,269 384,872 76.5 % as percentage of revenue 18.5 % 6.2 % 12.3 % General and administrative expenses were $888,141 for the fiscal year ended June 30, 2023 and $503,269 for the fiscal year ended June 30, 2022, an increase of $384,872, or 76.5%.
These consulting fees are considered as one-off in nature and may not be recurring in future years. 36 General and Administrative Expenses For the Years Ended June 30, Change (in US dollars, except percentage) 2024 2023 Amount % General and administrative expenses 2,452,954 888,141 1,564,813 176.2 % as percentage of revenue 54.9 % 18.5 % 36.4 % General and administrative expenses were $2,452,954 for the fiscal year ended June 30, 2024 and $888,141 for the fiscal year ended June 30, 2023, an increase of $1,564,813, or 176,2%.
Revenue from licensing customers has decreased by 23.9% or $169,216 to $539,832 in fiscal year ended June 30, 2023 from $709,042 in fiscal year ended June 30, 2022.
The revenue from licensing customers has decreased 72.0%, from $539,832 for the fiscal year ended June 30, 2023, to $151,277 for the fiscal year ended June 30, 2024.
Sale and marketing expenses account for 9.5% and 7.4% of our revenues for the fiscal year ended June 30, 2023 and 2022, respectively.
Sales and marketing expenses account for 7.9% and 9.5% of our revenues for the fiscal year ended June 30, 2024 and 2023, respectively. The decrease is mainly due to the consumer confidence in Australia was weak during the fiscal year ended June 30, 2024, and the ability for sales and marketing activities to generate sales has decreased.
The ratio for cost of goods sold to revenue has slightly dropped mainly because of the change of revenue mix, as relatively more service revenue as a ratio of total revenue was generated in fiscal year June 30, 2023 as compared to June 30, 2022. 37 Gross Profit For the Years Ended June 30, Change (in US dollars, except percentage) 2023 2022 Amount % Gross Profit 2,173,401 3,635,656 (1,462,255 ) -40.2 % Gross Profit Margin 45.3 % 44.6 % 0.7 % Gross profit was $2,173,401 for the fiscal year ended June 30, 2023 and $3,635,656 for the fiscal year ended June 30, 2022, a decrease of $1,462,255, or 40.2%.
Gross Profit For the Years Ended June 30, Change (in US dollars, except percentage) 2024 2023 Amount % Gross Profit 1,585,715 2,173,401 (587,686 ) -27.0 % Gross Profit Margin 35.5 % 45.3 % -9.8 % Gross profit was $1,585,715 for the fiscal year ended June 30, 2024, and $2,173,401 for the fiscal year ended June 30, 2023, a decrease of $587,686, or 27.0%.
The decrease in merchandise revenue was primarily attributable to the following: (i) a 42.6% decrease in sales order from 26,457 in fiscal year June 30, 2022 to 15,189 in the fiscal year June 30, 2023, This was primarily due to inflation and raising of interest rates in Australia, has significantly reduced the disposal income of Australia households and affected the consumers’ sentiment.
They have successfully retained many loyal customers and attract new buyers, but offset by (ii) a decrease of 16.9% in the average revenue per order from $265.72 in fiscal year June 30, 2023 to $220.74 in the fiscal year June 30, 2024, which primarily due to inflation and raising of interest rates in Australia, has significantly reduced the disposal income of Australia households and affected the consumers’ sentiment.
Interest Expense Interest expense was $92,800 for the fiscal year ended June 30, 2023 and $27,419 for the fiscal year ended June 30, 2022, an increase of $65,381, or 238.5%. The increase was a result of the increase in accumulated tax payable to the Australian Taxation Office.
Interest Expense Interest expense was $1,242,140 for the fiscal year ended June 30, 2024 and $92,800 for the fiscal year ended June 30, 2023, an increase of $1,149,340, or 1238.5%. The increase was mainly due to the interest expense in fiscal year ended June 30, 2024 included a debt discount of $1,108,088.
Inflation The amounts presented in our consolidated financial statements do not provide for the effect of inflation on our operations or financial position.
Inflation The amounts presented in our consolidated financial statements do not provide for the effect of inflation on our operations or financial position. The net operating profit shown would be smaller than reported if the effects of inflation was reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.
All of these three items are not related to our ordinary operations. If we take out the effect of these extraordinary items, the normalized net loss would be $533,860 for the fiscal year ended June 30, 2023 and a normalized net income of $968,411 for the fiscal year ended June 30, 2022, a decrease of $1,502,271 or 155.1%. 5B.
If we take out the effect of these extraordinary items, the normalized net loss would be $2,419,322 for the fiscal year ended June 30, 2024, an increase of $1,885,462 or 353.2% as compared to the fiscal year ended June 30, 2023.
Subject to future cashflow and funding, we may rent a bigger office and warehouse in the foreseeable future to support our business expansion. 35 Results of Operations Comparison of the Fiscal Years Ended June 30, 2023 and 2022 The following table summarizes the results of our operations during the fiscal years ended June 30, 2023 and 2022, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such years.
The increase is mainly due to the expiration of the previous rental agreement, and the rental cost pursuant to the new lease agreement is relatively higher. 33 Results of Operations Comparisons of the Fiscal Years Ended June 30, 2024 and 2023 The following table summarizes the results of our operations during the fiscal years ended June 30, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such years.
Comprehensive loss was $1,620,457 for the fiscal year ended June 30, 2023 and $54,347 for the fiscal year ended June 30, 2023, a difference of $1,566,110.
Net loss and comprehensive loss Net loss was $9,312,145 and $1,593,394 for the fiscal year ended June 30, 2024 and 2023 respectively, an increase of $7,718,751, or 4.8 times. Comprehensive loss was $9,325,818 for the fiscal year ended June 30, 2024 and $1,620,457 for the fiscal year ended June 30, 2023, a difference of $7,705,361.
The service revenue has decreased 16.1%, from $7,246,588 for the fiscal year ended June 30, 2022, to $4,036,047 for the fiscal year ended June 30, 2023. The decrease was due to the management has temporarily suspended the overseas expansions recently, because the market sentiments are negatively affected by the inflations and the rising in interest rate in the global market.
The decrease was due to the fact management has strategically postponed the overseas expansions in this area, as the market sentiments are negatively affected by the inflations and the high interest rate in the global market.
It accounts for 4.1% and 2.6% of revenue for the fiscal year ended June 30, 2023 and 2022 respectively. The absolute amount were $198,914 and $213,490 for the fiscal year ended June 30, 2023 and 2022, respectively, which is relatively stable.
The absolute amounts were $284,169 and $198,914 for the fiscal years ended June 30, 2024 and 2023, respectively.
Investing Activities There were no investing activities for the year ended June 30, 2023. Net cash used in investing activities for the year ended June 30, 2022 was $465,295 versus $775,791 for year ended June 30, 2021.
Investing Activities The cash used in investing activating for the fiscal year ended June 30, 2024 represents an investment in note receivables of $2,500,000. There is no investing activity for the year ended June 30, 2023.
Cost of goods sold Cost of goods sold were $2,625,821 for the fiscal year ended June 30, 2023 and $4,520,078 for the fiscal year ended June 30, 2022, a decrease of $1,894,257, or 41.9%. Cost of goods sold consist primarily of the merchandise costs, the freight costs, and also other related purchase costs like the custom duties.
Cost of goods sold consist primarily of the merchandise costs, the freight costs, and also other related purchase costs like the custom duties. The increase was in line with the increase in our sales orders of merchandise revenues.
This small change in gross profit margin was mainly due to the small changes in sales mixes between merchandise revenues and service revenue. Operating Expenses Our operating expenses consist of personnel expenses, general and administrative expenses, sale and marketing expenses, amortization of right of use asset, and depreciation expenses.
The drop in gross profit margin was because management has lowered the selling prices strategically in general to cope with the economic conditions in Australia. Operating Expenses Our operating expenses consist of personnel expenses, consulting fees, licensing fees, general and administrative expenses, sales and marketing expenses, operating lease expenses, and depreciation expenses.
Removed
Recent Developments As part of the Company’s international expansion strategy, in November 2021, GD entered a licensing agreement with an Asian-based fitness operator, named Js & Je Company Limited, to expand its footprint into South-East Asia by supplying fitness equipment and providing a one-stop solution to fast growing gyms and fitness studios both offline and virtually, including site selection, studio designing and built-out, pre-opening and ongoing training and support.
Added
Pursuant to the Purchase Agreement, the Company issued to Flying Height a three-year 8% senior unsecured convertible promissory note in the principal amount of $3,600,000, with an 8% original issue discount (the “Note”) and, as additional consideration for the purchase of the Note, a stock purchase warrant to purchase 5,645,455 Ordinary Shares (the “Warrant”), for the funding amount of $3,312,000.
Removed
GD has collected licensing fees in the fiscal year ended June 30, 2022 and 2023 and the management plans to continue exploring the business opportunities of fitness sector in Indonesia, Singapore, Malaysia and China. The licensing arrangement has a five-year period with an option at GD’s discretion to renew for additional three years to 2029.
Added
The proceeds from the sale of the Note and Warrant shall be used by the Company for general working capital.
Removed
Impact of COVID-19 On January 30, 2020, The World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spread globally beyond its point of origin.
Added
Pursuant to the Note, Flying Height may convert all or any part of the remaining outstanding principal amount of the Note and unpaid interest on the date of conversion into fully paid and non-assessable Ordinary Shares, at any time after the issuance of the Note until the later of (i) January 15, 2027, the maturity date of the Note and (ii) the date of payment upon any event of default.
Removed
In March 2020, WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve as of the date of this annual report.
Added
The conversion price of the Note is equal to the lowest closing price for the Company’s Ordinary Shares as reported on The Nasdaq Capital Market during the five (5) trading days immediately preceding the date of conversion, provided, however, that the Conversion Price shall not be lower than $0.80 per share (the “Floor Price”).
Removed
As such, it is uncertain as to the full magnitude that the pandemic will have on our financial condition, liquidity, and future results of operations. Management is actively monitoring the global situation and its impact on our financial condition, liquidity, operations, suppliers, industry, and workforce.
Added
The Conversion Price and the Floor Price are subject to equitable adjustments for stock splits, stock dividends, combinations, recapitalization, reclassifications, extraordinary distributions and similar events.
Removed
The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change, and we do not yet know the full extent of potential delays or impacts on our business, financing or out-bound investment.
Added
In addition to voluntary conversion rights of Flying Height, the Company will have the right, but not the obligation, at any time after six months following the date of the issuance of the Note, to require Flying Height to convert the outstanding principal amount of the Note and unpaid interest into Ordinary Shares if the closing price per share of Ordinary Shares exceeds $10.00 per share as reported on The Nasdaq Capital Market.
Removed
Despite the consumer confidences in Australia is week recently, but the management has devoted a lot of marketing efforts in promoting our products and have successfully retained many loyal customers. Our service revenue consists of licensing, management consultant income, and some agency fee for distributing other miscellaneous items. All these revenues were generated outside of the Australian market.
Added
The Warrant entitles Flying Height to purchase up to 5,645,455 Ordinary Shares of the Company, commencing on January 15, 2024, the date of the issuance of the Warrant, and ending on the date that is sixty (60) months from the date of the issuance of the Warrant at an exercise price of $1.056 per share, subject to customary adjustments.
Removed
Apart from this provision, in fact the general administrative expenses in the fiscal year June 30, 2023, has dropped by $44,529 as compare to the previous fiscal year, and this was due to the efforts by the management to save costs.
Added
The Warrant includes a cashless exercise option. The issuances of the Note and Warrant were, and, upon conversion of the Note and exercise of the Warrant to Ordinary Shares, will be, exempt from registration requirements in reliance upon Section 4(a)(2) the Securities Act, and/or Rule 506(b) of Regulation D and/or Regulation S, as promulgated by the SEC thereunder.
Removed
Nevertheless, we expect that the absolute amount of our general and administrative expenses will increase in the foreseeable future as we expect to expand our business geographically and also adding extra warehouse spaces to support our business expansion. Our sale and marketing expenses consist primarily of advertising and marketing expenses on various online platforms.
Added
At the time of their issuance, the Note and the Warrant were deemed to be restricted securities for purposes of the Act and will bear restrictive legends to that effect.
Removed
Going forward we will continue to expand our business and we expect that our overall sale and marketing expenses, including but not limited to, advertising expenses and brand promotion expenses, will increase in the future as our business further grows. Operating lease expense is refer to the amortization of the finance lease for our office and warehouse.
Added
On January 19, 2024, Flying Height converted the Note in full and, on March 19, 2024, Flying Height exercised the Warrant via cashless exercise in full, for the aggregate of 8,983,636 Ordinary Shares.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

27 edited+6 added−4 removed40 unchanged
Biggest changeWe also achieved gender diversity by having 2 female directors. Our board of directors is well balanced and diversified in alignment with our business development and strategy objectives. Committees of our Board of Directors We established an audit committee, a compensation committee and a nominating and corporate governance committee under our board of directors after our IPO.
Biggest changeOur board of directors is well balanced and diversified in alignment with our business development and strategy objectives. 43 Board Diversity Matrix (As of the date of this annual report) Country of Principal Executive Offices: Australia Foreign Private Issuer Yes Disclosure Prohibited Under Home Country Law No Total Number of Directors 5 Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors 2 3 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 3 LGBTQ+ 0 Did not Disclose Demographic Background 0 Committees of our Board of Directors We established an audit committee, a compensation committee and a nominating and corporate governance committee under our board of directors after our IPO.
Our Audit Committee shall perform several functions, including: ● evaluates the independence and performance of, and assesses the qualifications of, our independent auditor, and engages such independent auditor; 44 ● approves the plan and fees for the annual audit, quarterly reviews, tax and other audit-related services, and approves in advance any non-audit service to be provided by the independent auditor; ● monitors the independence of the independent auditor and the rotation of partners of the independent auditor on our engagement team as required by law; ● reviews the financial statements to be included in our Annual Report on Form 20-F and Quarterly Reports on Form 6-K and reviews with management and the independent auditors the results of the annual audit and reviews of our quarterly financial statements; ● oversees all aspects our systems of internal accounting control and corporate governance functions on behalf of the board; ● reviews and approves in advance any proposed related-party transactions and report to the full Board on any approved transactions; and ● provides oversight assistance in connection with legal, ethical and risk management compliance programs established by management and the Board, including Sarbanes-Oxley Act implementation, and makes recommendations to the Board regarding corporate governance issues and policy decisions.
Our Audit Committee shall perform several functions, including: ● evaluates the independence and performance of, and assesses the qualifications of, our independent auditor, and engages such independent auditor; ● approves the plan and fees for the annual audit, quarterly reviews, tax and other audit-related services, and approves in advance any non-audit service to be provided by the independent auditor; ● monitors the independence of the independent auditor and the rotation of partners of the independent auditor on our engagement team as required by law; ● reviews the financial statements to be included in our Annual Report on Form 20-F and Quarterly Reports on Form 6-K and reviews with management and the independent auditors the results of the annual audit and reviews of our quarterly financial statements; ● oversees all aspects our systems of internal accounting control and corporate governance functions on behalf of the board; ● reviews and approves in advance any proposed related-party transactions and report to the full Board on any approved transactions; and ● provides oversight assistance in connection with legal, ethical and risk management compliance programs established by management and the Board, including Sarbanes-Oxley Act implementation, and makes recommendations to the Board regarding corporate governance issues and policy decisions.
Mr. Ross brings nearly 30 years of experience in legal transactions and legal compliance. Since December 2018, he has served as General Counsel to Tandy Leather Factory, Inc., overseeing all legal and legal compliance matters for the specialty retailer. Since September 2015, he has also provided freelance legal services to companies in a variety of industries.
Ross brings nearly 30 years of experience in legal transactions and legal compliance. Since December 2018, he has served as General Counsel to Tandy Leather Factory, Inc., overseeing all legal and legal compliance matters for the specialty retailer. Since September 2015, he has also provided freelance legal services to companies in a variety of industries.
In accordance with the Compensation Committee’s Charter, the Compensation Committee shall be responsible for overseeing and making recommendations to the Board regarding the salaries and other compensation of our executive officers and general employees and providing assistance and recommendations with respect to our compensation policies and practices. Nominating and Governance Committee Lawrence W. Leighton, Jun Wu, and Daniel J.
In accordance with the Compensation Committee’s Charter, the Compensation Committee shall be responsible for overseeing and making recommendations to the Board regarding the salaries and other compensation of our executive officers and general employees and providing assistance and recommendations with respect to our compensation policies and practices. 44 Nominating and Governance Committee Lawrence W. Leighton, Jun Wu, and Daniel J.
However, even if a director discloses his interest and is therefore permitted to vote, he must still comply with his duty to act bona fide in the best interest of our company.
However, even if a director discloses his interest and is therefore permitted to vote, he must still comply with his duty to act bona fide in the best interest of our company. 6D.
Subject to making appropriate disclosures to the board of directors in accordance with our memorandum and articles of association, a director may vote with respect to any contract, proposed contract, or arrangement in which he or she is interested, in voting in respect of any such matter, such director should take into account his or her director’s duties.
Subject to making appropriate disclosures to the board of directors in accordance with our amended and restated memorandum and articles of association, a director may vote with respect to any contract, proposed contract, or arrangement in which he or she is interested, in voting in respect of any such matter, such director should take into account his or her director’s duties.
Unless otherwise indicated in the footnotes, the address for each beneficial owner is in the care of the Company at 23-25 Mangrove Lane, Taren Point, NSW 2229 Australia. As of the date of this annual report, we have 271 shareholders of record.
Unless otherwise indicated in the footnotes, the address for each beneficial owner is in the care of the Company at 23-25 Mangrove Lane, Taren Point, NSW 2229 Australia. As of the date of this annual report, we have three shareholders of record.
Ross 55 Independent Director The following is a brief biography of each of our executive officers and directors: Yinying Lu has served as our Chief Executive Officer since October 23, 2023 and as our director since April 2022.
Ross 56 Independent Director The following is a brief biography of each of our executive officers and directors: Yinying Lu has served as our Chief Executive Officer since October 23, 2023 and as our director since April 2022.
Wu has previous experience from March 2007 to December 2013 as a senior analyst, account manager, and investment banking associate with JP Morgan Australia, FNZ Australia, and UBS AG, respectively. Mr. Wu holds a Bachelor of Commerce degree in Marketing from Macquarie University and is RG146 compliant. Daniel J. Ross has served as an independent director since August 2023 .
Wu has previous experience from March 2007 to December 2013 as a senior analyst, account manager, and investment banking associate with JP Morgan Australia, FNZ Australia, and UBS AG, respectively. Mr. Wu holds a Bachelor of Commerce degree in Marketing from Macquarie University and is RG146 compliant. Lawrence W. Leighton has served as an independent director since August 2023. Mr.
He received his B.S.E. degree from Princeton University and an M.B.A. from Harvard Business School. Due to his strong experience in investment banking, mergers and acquisitions, and international finance, we believe Mr. Leighton is well-qualified to serve as a director. Jun Wu has served as an independent director since August 2023. Since November 2020, Mr.
He received his B.S.E. degree from Princeton University and an M.B.A. from Harvard Business School. Due to his strong experience in investment banking, mergers and acquisitions, and international finance, we believe Mr. Leighton is well-qualified to serve as a director Daniel J. Ross has served as an independent director since August 2023. Mr.
Share ownership The following table sets forth information with respect to beneficial ownership of our Ordinary Shares as of the date of this annual report by: ● Each person who is known by us to beneficially own more than 5% of our outstanding Ordinary Shares; ● Each of our director, director nominees and named executive officers; and ● All directors and named executive officers as a group.
Share ownership The following table sets forth information with respect to beneficial ownership of our Ordinary Shares as of November 15, 2024: ● Each person who is known by us to beneficially own more than 5% of our outstanding Ordinary Shares; ● Each of our director, director nominees and named executive officers; and ● All directors and named executive officers as a group.
All of our employees and contractors are located in Sydney, Australia. Our employees are not represented by a labor organization or covered by a collective bargaining agreement. We have not experienced any work stoppages. We believe that we maintain a good working relationship with our employees, and we have not experienced any major labor disputes. 46 6E.
Our employees are not represented by a labor organization or covered by a collective bargaining agreement. We have not experienced any work stoppages. We believe that we maintain a good working relationship with our employees, and we have not experienced any major labor disputes. 6E.
Leighton 2023 - - Jun Wu 2023 - - Daniel J. Ross 2023 - - - - - - - 43 On February 7, 2022, we entered into an employment agreement with Jamarson Kong, who joined GD as Chief Financial Officer. Pursuant to the employment agreement, he shall receive an annual salary of AUD150,000, exclusive of superannuation.
On February 7, 2022, we entered into an employment agreement with Jamarson Kong, who joined GD as Chief Financial Officer. Pursuant to the employment agreement, he shall receive an annual salary of AUD150,000, exclusive of superannuation. Mr.
Ms. Zhao holds a Master of Information System and a Master of Information and Communication Technology from the University of Wollongong and a Bachelor of Computer Science degree from Guangdong Polytechnic Normal University. 42 Lawrence W. Leighton has served as an independent director since August 2023. Mr.
Ms. Zhao holds a Master of Information System and a Master of Information and Communication Technology from the University of Wollongong and a Bachelor of Computer Science degree from Guangdong Polytechnic Normal University. 41 Jun Wu has served as an independent director since August 2023. Since November 2020, Mr.
Although we will require board approval of any such waiver, we may choose not to disclose the waiver in the manner set forth in the Nasdaq rules, as permitted by the foreign private issuer exemption. 45 Furthermore, Nasdaq Rule 5615(a)(3) provides that a foreign private issuer, such as us, may rely on our home country corporate governance practices in lieu of certain of the rules in the Nasdaq Rule 5600 Series and Rule 5250(d), provided that we nevertheless comply with Nasdaq’s Notification of Non-compliance requirement (Rule 5625), the Voting Rights requirement (Rule 5640) and that we have an audit committee that satisfies Rule 5605(c)(3), consisting of committee members that meet the independence requirements of Rule 5605(c)(2)(A)(ii).
Furthermore, Nasdaq Rule 5615(a)(3) provides that a foreign private issuer, such as us, may rely on our home country corporate governance practices in lieu of certain of the rules in the Nasdaq Rule 5600 Series and Rule 5250(d), provided that we nevertheless comply with Nasdaq’s Notification of Non-compliance requirement (Rule 5625), the Voting Rights requirement (Rule 5640) and that we have an audit committee that satisfies Rule 5605(c)(3), consisting of committee members that meet the independence requirements of Rule 5605(c)(2)(A)(ii).
Our memorandum and articles of association provide that a director must disclose the nature and extent of any material interests or duty in any contract or arrangement, provided that the required notice has been given to the other directors, a director may vote at a meeting of directors on any resolution concerning a matter in which that director has an interest or duty, whether directly or indirectly and may be counted in the quorum at such meeting.
This can be done by way of permission granted in the amended and restated memorandum and articles of association or alternatively by shareholder approval at general meetings. 45 Our amended and restated memorandum and articles of association provide that a director must disclose the nature and extent of any material interests or duty in any contract or arrangement, provided that the required notice has been given to the other directors, a director may vote at a meeting of directors on any resolution concerning a matter in which that director has an interest or duty, whether directly or indirectly and may be counted in the quorum at such meeting.
Lu was compensated $95,411 in salary and $10,972 in annuities, pensions and retirement benefits for services as a director of GD. For the fiscal year ended June 30, 2023, Ms. Lu was compensated $92,969 in salary and $9,762 in annuities, pensions and retirement benefits for services as a director of GD.
For the fiscal year ended June 30, 2023, Ms. Lu was compensated $92,969 in salary and $9,762 in annuities, pensions and retirement benefits for services as a director of GD. For the fiscal year ended June 30, 2024, Ms. Lu was compensated $110,012 in salary and $13,751 in annuities, pensions and retirement benefits for services as a director of GD.
Name Age Position(s) Yinying Lu 42 Chief Executive Officer and Director Jamarson Kong 44 Chief Financial Officer Jieting Zhao 44 Director Lawrence W. Leighton 89 Independent Director Jun Wu 38 Independent Director Daniel J.
Name Age Position(s) Yinying Lu 43 Chief Executive Officer and Director Jamarson Kong 45 Chief Financial Officer Jieting Zhao 45 Director Jun Wu 39 Independent Director Lawrence W. Leighton 90 Independent Director Daniel J.
As of the date of this annual report, the Company is authorized to issue 500,000,000 Ordinary Shares with a par value $0.0001 each. The number and percentage of Ordinary Shares beneficially owned are 11,120,000 Ordinary Shares issued and outstanding including 3,000,000 Ordinary Shares sold in our recent IPO.
As of the date of this annual report, the Company is authorized to issue 500,000,000 Ordinary Shares with a par value $0.0001 each. The number and percentage of Ordinary Shares beneficially owned are 20,123,386 Ordinary Shares issued and outstanding as of the date of this annual report.
However, in some instances what would otherwise be a breach of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors. This can be done by way of permission granted in the memorandum and articles of association or alternatively by shareholder approval at general meetings.
However, in some instances what would otherwise be a breach of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors.
Ordinary Shares Beneficially Owned Percentage of Votes Held Number Percent Percent Directors and Executive Officers: Jieting Zhao (1) 6,440,000 57.9 % 57.9 % Jamarson Kong - - - YinYing Lu - - - Guy Adrian Robertson - - - Lawrence W. Leighton - - - Jun Wu - - - Daniel J.
Ordinary Shares Beneficially Owned Percentage of Votes Held Number Percent Percent Directors and Executive Officers: YinYing Lu - - % - % Jamarson Kong - - - Jieting Zhao (1) 6,440,000 32.0 % 32.0 % Lawrence W. Leighton Jun Wu - - - Daniel J. Ross - - - 5% Shareholders: SKMA Capital and Investment Ltd.
Compensation The following table sets forth certain information with respect to compensation for the year ended June 30, 2023 earned by or paid to our executive officers and directors.
Compensation The following table sets forth certain information with respect to compensation for the year ended June 30, 2024 earned by or paid to our principal executive officer, our principal financial officer, and our other most highly compensated executive officers (the “named executive officers”).
Ross - - - 5% Shareholders: SKMA Capital and Investment Ltd. (1) 6,440,000 57.9 % 57.9 % (1) These Ordinary Shares are held by SKMA Capital and Investment Ltd, a company incorporated under the laws of the British Virgin Islands (“SKMA”).
(1) 6,440,000 32.0 % 32.0 % Flying Height Consulting Services Limited (2) 8,983,636 44.7 % 44.7 % (1) These Ordinary Shares are held by SKMA Capital and Investment Ltd, a company incorporated under the laws of the British Virgin Islands (“SKMA”).
For the fiscal years ended June 30, 2022 and 2023, we did not compensate any other executive directors for their services other than to reimburse them for out-of-pocket expenses incurred in connection with their attendance at meetings of the board of directors. Equity Compensation Plan Information We have not adopted any equity compensation plans.
Kong’s main responsibilities include but are not limited to general duties of the Chief Financial Officer, ensuring effective internal controls, and compliance with all relevant accounting and financial regulations. 42 For the fiscal year ended June 30, 2023, we did not compensate any other executive directors for their services other than to reimburse them for out-of-pocket expenses incurred in connection with their attendance at meetings of the board of directors.
Employees As of June 30, 2023, we have a total of 14 employees with 11 full-time employees, 2 part-time employee, and 1 casual employees — 3 employees serve as management, 5 employees serve as sales and marketing, 3 employees serve as warehouse management, 2 employees serve as procurement and logistics, and 1 employee serves as general administration.
Employees As of June 30, 2024, we have a total of 15 employees and all of them are full-time employees—5 employees serve as management, 5 employees serve as sales and marketing, 4 employees serve as warehouse management, and 1 employees serve as procurement and logistics. All of our employees and contractors are located in Sydney, Australia.
Compensation of Directors and Executive Officers For the fiscal year ended June 30, 2021, Yinying Lu was compensated $98,356 in salary and $11,311 in annuities, pensions and retirement benefits for services as a director of GD. For the fiscal year ended June 30, 2022, Ms.
Name and Principal Position Year Salary ($) Bonus ($) Share Awards ($) Option Awards ($) Deferred Compensation Earnings Other Total ($) Yinying Lu, CEO 2024 110,012 - - - - - 110,012 Jamarson Kong, CFO 2024 101,642 - - - - - 101,642 For the fiscal year ended June 30, 2022, Yinying Lu was compensated $95,411 in salary and $10,972 in annuities, pensions and retirement benefits for services as a director of GD.
Kong’s main responsibilities include but are not limited to general duties of the Chief Financial Officer, ensuring effective internal controls, and compliance with all relevant accounting and financial regulations. 6C. Board Practices Board of Directors Our board of directors consists of five (5) directors, comprising two (2) directors and three (3) independent directors.
Board Practices Board of Directors Our board of directors consists of five (5) directors, comprising two (2) directors and three (3) independent directors.
Removed
Name and Principal Position Year Salary ($) Bonus ($) Share Awards ($) Option Awards ($) Deferred Compensation Earnings Other Total ($) Guy Adrian Robertson, CEO, Director 2023 $ 55,339 - - - - - $ 55,339 Jamarson Kong, CFO 2023 $ 100,616 - - - - - $ 100,616 Jieting Zhao 2023 - - Yinying Lu 2023 $ 92,969 $ 92,969 Lawrence W.
Added
For the fiscal year ended June 30, 2024, we have also compensated our executive director Ms. Jieting Zhao a director fee of $26,667. Equity Compensation Plan Information We have not adopted any equity compensation plans. Outstanding Equity Awards at Fiscal Year-End As of June 30, 2024, we had no outstanding equity awards. 6C.
Removed
The employment agreement has a three-month probation period, during which either party can terminate the agreement with one week’s notice or payment in lieu of notice. After such three-month probation period, Mr.
Added
We also achieved gender and demographic background diversity by having 2 female directors and 3 directors who are underrepresented individuals in our home country jurisdiction.
Removed
Outstanding Equity Awards at Fiscal Year-End As of June 30, 2023, we had no outstanding equity awards. 6D.
Added
Although we will require board approval of any such waiver, we may choose not to disclose the waiver in the manner set forth in the Nasdaq rules, as permitted by the foreign private issuer exemption.
Removed
Since Jieting Zhao is the 100% owner of SKMA, she is deemed as the beneficial owner of these securities. 6E. Disclosure of a registrant’s action to recover erroneously awarded compensation Not applicable.
Added
Since Jieting Zhao is the 100% owner of SKMA, she is deemed as the beneficial owner of these securities. 46 (2) On January 15, 2024, the Company entered into the Private Placement Purchase Agreement with Flying Height Consulting Services Limited (“Flying Height”), pursuant to which the Company issued to Flying Height a three-year 8% senior secured convertible promissory note in the principal amount of $3,600,000, with an 8% original discount and a stock purchase warrant to purchase 5,645,455 Ordinary Shares.
Added
On January 19, 2024, Flying Height converted the full amount of the promissory note, and, on March 19, 2024, Flying Height exercised the stock purchase warrant in full via cashless exercise, for an aggregate of 8,983,636 ordinary shares.
Added
The address of Flying Height is Flat/Rm 7022, Block D, 7/F, Tak Wing Ind Building 3, Tsun Wen Road, Tuen Mun NT, Hong Kong. 6F. Disclosure of a registrant’s action to recover erroneously awarded compensation Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

1 edited+1 added−1 removed5 unchanged
Biggest changeRelated party transactions Except as set forth below, there have been no transactions or loans between the company and (a) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, the company; (b) associates; (c) individuals owning, directly or indirectly, an interest in the voting power of the company that gives them significant influence over the company, and close members of any such individual’s family; (d) key management personnel, that is, those persons having authority and responsibility for planning, directing and controlling the activities of the company, including directors and senior management of companies and close members of such individuals’ families; and (e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence. 47 On March 10, 2020, GD, our operating subsidiary, entered into a loan agreement with Ansa Group Limited (“Ansa”), pursuant to which Ansa was indebted to GD in the principal amount of $3,000,000, bearing 0% interest per annual.
Biggest changeRelated party transactions Except as set forth below, there have been no transactions or loans between the company and (a) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, the company; (b) associates; (c) individuals owning, directly or indirectly, an interest in the voting power of the company that gives them significant influence over the company, and close members of any such individual’s family; (d) key management personnel, that is, those persons having authority and responsibility for planning, directing and controlling the activities of the company, including directors and senior management of companies and close members of such individuals’ families; and (e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence.
Removed
The outstanding loan amount as at June 30, 2020, June 20, 2021, and December 31, 2021 were $300,896, $1,076,687, and $1,041,091, respectively. Subsequent to December 31, 2021, the balance due from the related party was collected in full.
Added
Ansa Group Limited (“Ansa”) has provided short term financings to our operating subsidiary GD occasionally. The outstanding balances were $38,808 and $24,386, respectively, as at June 30, 2024 and 2023.