Annual Report for Fiscal Year Ending 01-31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated due to various factors, including those set forth above under "Risk Factors." Also, see "Special Note Regarding Forward-Looking Statements."

Forward-Looking Statements

This Annual Report contains forward-looking statements. These statements relate to future events or our future financial performance. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

As used in this annual report, the terms "we," "us," "our," or "the Company," mean VitaSpring Biomedical Co., Ltd., unless otherwise indicated.

All dollar amounts refer to US dollars unless otherwise indicated.

Overview

We are a development-stage biomedical and nutraceutical company focused on cell-based technologies for regenerative and preventative health applications. We are focused on the research, development, and commercialization of products that promote wellness and a healthy lifestyle. We began limited operations in 2019 and underwent a change of ownership effective January 21, 2020, resulting in a new management team and strategic direction. In connection with this ownership change, we filed a Certificate of Amendment to our Articles of Incorporation to change our corporate name to VitaSpring Biomedical Co. Ltd., which became effective on April 21, 2020, following clearance by the Financial Industry Regulatory Authority ("FINRA").

As of the date of this filing, we have not commenced principal revenue-generating operations and have generated limited revenues since inception. Our operations have been limited to organizational activities, administrative functions, and preparation for future service offerings. We currently have no full-time employees other than our sole executive officer and director.

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Development-Stage Status

Although we describe a long-term business strategy involving regenerative medicine technologies, as of January 31, 2025:

	·	We were not engaged in commercial manufacturing or distribution.
	·	We were not conducting clinical trials.
	·	We had not incurred research and development expenses.
	·	We had not obtained FDA or other regulatory approvals.

Our ability to transition to operational status will require substantial additional capital and regulatory compliance infrastructure.

Results of Operation

For the year ended January 31, 2025, compared to year ended January 31, 2024

		Years ended
		January 31
		2025				2024				Changes
Revenues		$	-			$	-			$	-
Operating expenses			679,914				1,118,562				(438,648	)
Loss from operations			(679,914	)			(1,118,562	)			438,648
Provision for income taxes			(95,008	)			-				(95,008	)
Net loss		$	(774,922	)		$	(1,118,562	)		$	343,640

Revenue

We generated no revenue during the fiscal years ended January 31, 2025, and 2024, respectively. We are currently focusing on restructuring our product strategy and developing long-term partnerships rather than pursuing short-term sales.

Operating Expenses

Operating expenses were $679,914 for the year ended January 31, 2025, compared with $1,118,562 for the prior fiscal year. For the years ended January 31, 2025, and 2024, the operating expenses were primarily attributed to professional fees of $180,700 and $283,070, stock-based compensation of $109,911 and $164,865, lease expenses of $99,171 and $255,210, payroll expenses of $252,041 and $138,730, depreciation of $9,957 and $15,062, impairment of equipment of $0 and $10,449 and general and administrative expenses of $28,134 and $251,176, respectively.

Provision for Income Taxes

We did not record a current income tax provision on our operating losses for the years ended January 31, 2025 and 2024, due to our net operating loss position and a full valuation allowance against deferred tax assets. However, during the year ended January 31, 2025, we recognized $95,008 in interest and penalties on historical income tax obligations relating to fiscal year 2022. In accordance with ASC 740-10-45, these amounts are classified as income tax expense in our statement of operations.

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Net Loss

We had a net loss of $774,922 for the year ended January 31, 2025, compared to $1,118,562 for the year ended January 31, 2024. The decrease in net loss of $343,640 was due to a reduction in operating expenses of $438,648 offset by provision for income taxes of $95,008.

Liquidity and Capital Resources

Overview

We have funded our activities primarily through equity issuances and shareholder advances and continue to rely on external funding and available cash balances to meet our working-capital needs. We believe that additional capital will be required to support operations over the next twelve months.

We are exploring potential sources of financing, including private placements of equity or debt securities and strategic partnerships. There is no assurance that additional funding will be available on acceptable terms. If we cannot secure sufficient financing, we may need to delay or scale back parts of our business plan as our current cash resources will not be sufficient to fund planned operations for the next twelve months without additional capital. The continuation of our business depends on our ability to raise funds and generate future revenue.

The following table summarizes our changes in working capital deficiency as of January 31, 2025, and 2024:

		January 31				January 31,
		2025				2024				Change
Current assets		$	272			$	23,627			$	(23,355	)
Current liabilities		$	4,029,578			$	3,487,531			$	542,047
Working capital (deficiency)		$	(4,029,306	)		$	(3,463,904	)		$	(565,402	)

As of January 31, 2025, and 2024, current assets were comprised of $272 and $13 in cash and $0 and $23,614 in deposits, respectively.

As of January 31, 2025, and 2024, current liabilities were comprised of $2,411,000 and $2,411,000 in accounts payable - related party, $494,751 and $339,001 in accounts payable and other payables, $313,722 and $218,714 in income tax payable, $0 and $93,334 in operating lease liabilities and $810,105 and $425,482 in advances from related parties, respectively.

Our working capital deficiency increased by $565,402, or 16.32%, to $4,029,306 as of January 31, 2025, compared to working capital deficiency of $3,463,904 as of January 31, 2024. The increase was primarily due to an increase in advances from related parties, accounts payable and other payable and increase in income tax payable, offset by a decrease in operating lease liabilities and current assets. The advances paid directly by related parties on our behalf for operating expenses are reflected as operating activities, while cash proceeds received directly from related parties are classified as financing activities. A substantial portion of our liabilities consist of obligations to related parties that are unsecured, non-interest-bearing, and payable on demand, with no formal repayment terms. Given our current financial condition, there can be no assurance that we will be able to continue operations absent additional capital. We may be required to significantly curtail or cease operations if financing is not obtained in the near term.

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The income tax payable balance primarily relates to historical tax liabilities, and no current income tax expense was recognized due to our net operating loss position and full valuation allowance. During the year ended January 31, 2025, we recognized $95,008 interest and penalty payable related to fiscal year 2022.

Cash Flow Data

The following table summarizes our cash flows for the years ended January 31, 2025, and 2024:

		Years ended
		January 31
		2025				2024				Change
Cash used in operating activities		$	(14,675	)		$	(34,920	)		$	20,245
Cash provided by financing activity		$	14,934			$	5,277			$	9,657
Net change in cash		$	259			$	(29,643	)		$	29,902

We have funded our activities primarily through shareholder advances, which were discretionary and not subject to a written agreement. We continue to rely on external funding and available cash balances to meet our working-capital needs. Management believes that additional capital will be required to support operations over the next twelve months.

We expect to continue to require additional capital to support operations, research, and regulatory initiatives. Management is exploring potential sources of financing, including private placements of equity or debt securities and strategic partnerships. There is no assurance that additional funding will be available on acceptable terms. If we cannot secure sufficient financing, we may need to delay or scale back parts of our business plan.

We believe our current cash resources will not be sufficient to fund planned operations for the next twelve months without additional capital. The continuation of our business depends on our ability to raise funds and generate future revenue.

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities. For the year ended January 31, 2025, net cash flows used in operating activities was $14,675, consisting of a net loss of $774,922, reduced by depreciation expense of $9,957, non-cash lease expenses of $89,652, stock-based compensation of $109,911, advances from related party for operating expenses of $369,689, income tax expenses payable of $95,008 and reduced by a net change in working capital of $86,030.

For the year ended January 31, 2024, net cash flows used in operating activities was $34,920, consisting of a net loss of $1,118,562, reduced by depreciation expenses of $15,062, impairment of equipment of $10,449, non-cash lease expenses of $166,030, stock-based compensation of $164,865, advances from related party for operating expenses of $205,523, accounts receivable of $380,000 and reduced by a net change in working capital of $141,713.

Cash Flows from Investing Activities

We had no investing activities during the years ended January 31, 2025, and 2024.

Cash Flows from Financing Activity

During the years ended January 31, 2025, and 2024, we had financing inflow of $14,934 and $5,277 from advances from related party, respectively.

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We expect to continue to rely on equity financing and, where available, strategic partnerships or grants to meet our capital needs. Our ability to raise additional capital will depend on market conditions, investor interest, and our progress in commercializing our stem-cell and biomedical technologies.

Capital Requirements and Liquidity Outlook

We have incurred losses and negative cash flow from operations. We believe that our current cash resources are not sufficient to fund our operations for the next twelve months without additional financing. To meet our capital needs, we plan to seek additional equity or debt financing and may also pursue strategic partnerships or licensing opportunities. There is no assurance that such financing will be available on favorable terms or at all. If we cannot obtain adequate funding, we may need to delay, scale back, or discontinue some of our business activities.

Going Concern

We evaluate our ability to continue as a going concern in accordance with ASC 205-40, Presentation of Financial Statements - Going Concern. This evaluation requires us to assess whether conditions or events raise substantial doubt about our ability to meet our obligations as they become due during the twelve months following the issuance of these financial statements. As discussed in Note 2 to the financial statements, the Company has limited liquidity and substantial obligations that may be payable on demand.

Our financial statements have been prepared assuming we will continue as a going concern. As of January 31, 2025, we had a net loss of $774,922, an accumulated deficit of $5,281,503, a working capital deficiency of $4,029,306, and negative operating cash flows of $14,675, which is due to our limited operations. These factors raise substantial doubt about our ability to continue as a going concern within one year from the issuance of these financial statements.

Our ability to continue as a going concern depends upon our ability to obtain additional funding, restructuring advances from related parties, and implement a business plan that generates sustainable revenues. There can be no assurance that we will be successful in these efforts. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be unable to continue as a going concern. Management's plans include seeking additional equity financing, negotiating extensions of related-party obligations, and reducing discretionary operating expenditures.

Off-Balance Sheet Arrangements

As of the date of this Annual Report, we do not have any 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 that are material to investors.

Plan of Operation and Funding

We expect that working capital requirements will continue to be funded through a combination of related-party advances and issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.

Without further related-party advances or equity issuances, our cash flows are not expected to be adequate to fund our operations over the next twelve months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and related-party advances. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with a start-up business and (ii) marketing expenses. We intend to finance these expenses with further issuances of securities, and related-party advances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

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Critical Accounting Policies and Estimates

Use of Estimates

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of financial statements requires management to make estimates and assumptions, including, but not limited to, stock-based compensation, lease liabilities, and going concern assessment. Our significant accounting policies are described in Note 3 to the financial statements. We consider the following policies and estimates to be critical because they involve significant judgments and assumptions and could materially affect our financial condition and results of operations. Critical estimates are those estimates that in accordance with U.S. GAAP, involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial statements. Management has determined that our most critical accounting estimates are those relating to stock-based compensation, lease accounting, and going concern assessment.

Significant estimates and assumptions reflected in the financial statements for the years ended January 31, 2025 and 2024, include, but are not limited to:

Allowance for Credit Losses

We evaluate financial assets measured at amortized cost, including accounts receivable, for expected credit losses under ASC 326. The estimate incorporates historical loss experience, current economic conditions, and reasonable and supportable forecasts. Changes in these factors could materially affect the allowance recorded.

Lease Accounting

Under ASC 842, we recognize right-of-use assets and lease liabilities for operating leases. When the implicit rate in a lease is not readily determinable, we estimate an incremental borrowing rate based on available market information and our credit profile. Changes in assumptions regarding discount rates could impact lease liabilities and related expenses.

Stock-Based Compensation

We account for equity-based awards under ASC 718. The fair value of equity awards is measured at the grant date and recognized over the requisite service period. The determination of fair value may require management to make assumptions regarding expected term, volatility, and other valuation inputs, as applicable.

Going Concern Assessment

In accordance with ASC 205-40, we evaluate whether conditions or events raise substantial doubt about our ability to continue as a going concern within one year from the issuance date of the financial statements. This assessment requires management to evaluate liquidity, forecasted cash flows, and the availability of financing or related-party support. As discussed in Note 2 of the financial statements, the Company has limited liquidity and substantial obligations that may be payable on demand.

Because these estimates require management judgment, actual results could differ materially from those estimates.

Income Taxes and Deferred Tax Assets

We account for income taxes using the liability method under ASC 740. Deferred tax assets are recognized for temporary differences between financial statement and tax bases of assets and liabilities. A valuation allowance is established when it is more likely than not that all or part of a deferred tax asset will not be realized. Determining the amount of valuation allowance requires significant judgment in estimating future taxable income, applicable tax strategies, and the expected timing of reversals of temporary differences.

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Fair Value of Financial Instruments

The Company follows ASU 2022-03, ASC Subtopic "Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions" ("ASC 820"), which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The carrying amounts shown of the Company's financial instruments including cash and cash equivalents and accounts payable approximate fair value due to the short-term maturity of these instruments.

Material Commitments

None.

Purchase of Significant Equipment

We do not intend to purchase any significant equipment during the next twelve months.