Annual Report for Fiscal Year Ending 01-31, 2024 (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."

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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. engaged in 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.

Development-Stage Status

Although we describe a long-term business strategy involving regenerative medicine technologies, as of January 31, 2024:

	·	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.

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Results of Operation

For the year ended January 31, 2024 compared to year ended January 31, 2023

		Year Ended January 31, 2024				Year Ended January 31, 2023
Revenues		$	-			$	-
Cost of Goods Sold			-				3,333,000
Gross (Loss) Profit			-				(3,333,000	)
Operating Expenses			1,118,562				844,836
(Loss) Income from Operations			(1,118,562	)			(4,177,836	)
Other Income			-				8,059
(Loss) Income Before Income Taxes			(1,118,562	)			(4,169,777
Provision for Income Taxes			-				5,381	)
Net (Loss) Income		$	(1,118,562	)		$	(4,164,396
Basic and Diluted EPS		$	(0.01	)			(0.02
Weighted Average Shares Outstanding			207,030,030				206,521,427

Revenue

We generated no revenue during the fiscal years ended January 31, 2024 and 2023, respectively. We are currently focusing on restructuring our product strategy and developing long-term partnerships rather than pursuing short-term sales.

Cost of Goods Sold

Cost of goods sold was $0 in fiscal 2024 compared with $3,333,000 in fiscal 2023. The decrease is due to our lack of inventory purchases and sales.

Gross (Loss )/Profit

Our gross loss was $0 for the year ended January 31, 2024, compared to $3,333,000 for the year ended January 31, 2023, a decrease of $3,333,000, or 100%. The decrease in loss was primarily the result of the absence of sales and purchases of product in fiscal 2024 compared to 2023.

Operating Expenses

Operating expenses were $1,118,562 for the year ended January 31, 2024, compared with $844,836 for the prior fiscal year, an increase of $237,726, or 32.4%. The increase primarily reflects higher professional-service fees and general administrative costs, expenses for rent, consulting, and compliance associated with our public-company status. We continue to carefully manage overhead while maintaining core research and corporate functions.

Other Income

Our other income $0 for the year ended January 31, 2024 compared with $8,059 in the prior fiscal year, a decrease of $8,059, or 100.0%. The decrease is due to a reduction in non-operating income, which was a one-time occurrence in 2023.

Provision for Income Taxes

We have no income tax provision for the year ended January 31, 2024 compared to our income tax expense of $5,381 in the prior fiscal year, a decrease of $5,381, or 100.0%. The variance primarily reflects adjustments to deferred tax items.

Net Loss

Our net loss was $1,118,562 for the year ended January 31, 2024, compared with net income of $4,164,396 for the year ended January 31, 2023, a decrease of $3,045,834, or 73.1%. The decrease is primarily due to the decrease in cost of goods sold and a reduction in administrative expenses.

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Liquidity and Capital Resources

Overview

For the fiscal year ended January 31, 2024, we generated a net loss of $1,118,562 compared to a net loss of $4,164,396 for the fiscal year ended January 31, 2023. Although we significantly reduced our net loss year over year, operating cash flow remained negative in both periods.

Our liquidity remains constrained, with cash on hand of $13 at January 31, 2024, compared to $29,656 at January 31, 2023. We do not have any cash equivalents.

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.

Operating Activities

Net cash used in operating activities was $34,920 for the year ended January 31, 2024, compared to $77,556 for the year ended January 31, 2023.

Operating cash flows were primarily impacted by $1,118,562 in net loss offset by non-cash adjustments totaling $356,406, which is comprised of depreciation of $15,062, impairment of equipment of $10,499, non-cash lease expense of $166,030, and stock-based compensation of $164,865.

Working capital was increased by a reduction in accounts receivable of $380,000, an increase in accounts payable and other payables of $283,938, and advances from related party of $205,523. These were offset by an increase in prepaid expenses of $27,422 and a reduction in operating lease liability of $169,647.

The significant reduction in accounts receivable reflects improved collections and/or reduced credit sales during the period. The increase in accounts payable and related-party advances indicates continued reliance on vendor financing and related-party support to fund operations.

Net cash used in operating activities of $77,556 in fiscal 2023 was driven by a net loss of $4,164,396, offset by a working capital improvement from accounts receivable of $2,538,390, an increase in accounts payable and other payables of $1,179,417, stock-based compensation of $190,365, and non-cash lease expenses of $204,273.

The operating cash used in fiscal 2023 was materially lower than the net loss due to substantial reductions in receivables and increases in payables, suggesting working capital compression rather than operating profitability.

Investing Activities

We had no investing cash flows during fiscal 2024 or 2023. We expect future investing activities once we obtain funding.

Financing Activities

Net cash provided by financing activities was $5,277 in fiscal 2024, compared to no financing cash inflows in fiscal 2023.

Our financing inflow in fiscal 2024 consisted entirely of advances from a related party. We did not raise capital from third-party debt or equity issuances during either fiscal year.

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We expect to continue to rely on related-party funding, 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.

We experienced a net decrease in cash of $29,643 and $77,556 in fiscal 2024 and 2023, respectively. Cash at January 31, 2024 was $13, representing a critically low liquidity position.

Material Trends and Uncertainty

The primary liquidity drivers during the periods presented were working capital fluctuations rather than operational cash generation. The reduction in accounts receivable in both periods significantly mitigated operating cash burn; however, this source of liquidity is non-recurring and cannot be relied upon in future periods.

Future cash requirements will depend on:

	·	Revenue growth and collection cycles;
	·	Ability to control operating expenses;
	·	Lease obligations;
	·	Vendor payment terms; and
	·	Access to capital markets or private financing.

Capital Requirements and Liquidity Outlook

We do not currently maintain committed credit facilities, institutional debt financing, or significant cash reserves. We believe that our existing cash resources will not be sufficient to fund operations for the next twelve months without additional financing. To meet our capital needs, we plan to seek related-party advances, additional equity issuances, 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. Failure to secure additional capital could materially adversely affect our business, financial condition, and ability to continue as a going concern.

Going Concern

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America ("GAAP"), which contemplate continuation of the Company as a going concern. As of January 31, 2024, the Company had cash of $13, total current assets of $23,627, and total current liabilities of $3,487,531, resulting in a working capital deficit of $3,463,904. The Company incurred a net loss of $1,118,562 and negative cash flows from operating activities of $34,920 for the year ended January 31, 2024. The Company also has an accumulated deficit of $4,506,581 as of January 31, 2024.

The Company's minimal cash balance, recurring operating losses, and significant working capital raise substantial doubt about its' ability to continue as a going concern within one year after the financial statements are issued. The Company has historically financed its operations through advances from related parties and equity issuances. Management plans to continue seeking additional capital through equity financing, strategic partnerships, and related-party support in order to fund operating expenses and meet its obligations as they become due. However, there can be no assurance that such financing will be available on acceptable terms, or at all.

See "Risk Factors - Substantial doubt exists regarding our ability to continue as a going concern."

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.

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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.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses, and related disclosures. The Company's significant accounting policies are described in Note 4 to the financial statements. Management considers the following policies to be critical because they involve significant judgments and assumptions, and because different assumptions could materially affect the Company's financial condition or 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 fair value of financial instruments.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") ordinarily requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. However, for the fiscal year ended January 31, 2024, our operations and financial statement items did not require the use of any significant estimates or assumptions. All amounts presented are based on actual, readily determinable values, and no material judgments or estimation methodologies were applied.

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.

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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 maturities of these instruments.

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.

Material Commitments

None.

Purchase of Significant Equipment

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