QDM International Inc. SEC 10-K Report

QDM International Inc., a Florida-based holding company primarily engaged in insurance brokerage through its wholly-owned subsidiary YeeTah in Hong Kong, has released its annual 10-K report. The report highlights significant financial growth, strategic initiatives, and the challenges faced by the company in the fiscal year ended March 31, 2025.

Financial Highlights

• Total Revenue: $8.38 million, increased by approximately $1.5 million or 23.2% from the previous year due to expanded collaboration with insurance partners and incremental revenue from referral fees.
• Gross Profit: $7.32 million, with a gross profit margin increase of approximately 48.8% due to a significant decrease in cost of sales.
• Income from Operations: $5.91 million, reflecting improved operational efficiency and cost management.
• Net Income: $4.82 million, increased by approximately $3.3 million or 208.3% from the previous year, driven by higher revenue and reduced cost of sales.
• Net Income Per Share: Not explicitly stated in the report.

Business Highlights

• Business Overview: QDM is a holding company based in Florida, primarily conducting its insurance brokerage business through its wholly-owned subsidiary, YeeTah, in Hong Kong. YeeTah offers a wide range of insurance products, including life, medical, and general insurance, and provides MPF intermediary services.
• Revenue Segments: The company's revenue is primarily derived from life and medical insurance products, which accounted for approximately 93.5% of net revenues in the fiscal year ended March 31, 2025. General insurance products contributed less than 1.0% of net revenues.
• Customer Base: During the fiscal year ended March 31, 2025, YeeTah serviced 263 customers for life and medical insurance and 36 customers for general insurance. The majority of life and medical insurance customers were from mainland China.
• Geographical Performance: YeeTah operates in Hong Kong, serving both Hong Kong residents and visitors from mainland China. The company does not sell insurance products in mainland China but intends to expand its distribution network by building connections with business partners in Hong Kong and mainland China.
• Sales Units: In the fiscal year ended March 31, 2025, YeeTah had agreements with 21 insurance companies in Hong Kong and offered approximately 489 insurance products to its customers.
• New Business Initiatives: In December 2023, QDM expanded its business model by partnering with a trust company in Hong Kong to refer clients for investment products, generating $540,616 in revenue from this referral business during the fiscal year ended March 31, 2025.
• Competitive Advantages: QDM's competitive strengths include premium customer service, concentrated insurance product offerings, strong relationships with leading insurance companies, an experienced management team, and a commitment to rigorous training and development.
• Growth Strategy: The company aims to expand its distribution network, further participate in the growing life insurance sector in Hong Kong, and strengthen relationships with leading insurance companies to obtain favorable commission rates and exclusive distribution rights.
• Regulatory Environment: QDM operates under the regulatory framework of Hong Kong, with YeeTah being subject to various regulations related to insurance intermediaries, MPF intermediaries, and anti-money laundering measures.
• Future Outlook: QDM plans to grow its business by offering premium services, recruiting talent, and expanding its distribution network through partnerships with business entities in Hong Kong and mainland China.

Strategic Initiatives

• Strategic Initiatives: The company transitioned from a telemedicine provider to an insurance brokerage firm through strategic acquisitions, including the acquisition of QDM BVI and its subsidiary YeeTah. This shift allowed the company to expand its service offerings to include diversified insurance products and retirement protection schemes in Hong Kong. Additionally, the company entered into a collaborative partnership with a trust company in Hong Kong to generate referral revenue from investment products.
• Capital Management: The company undertook several capital management activities, including a forward stock split at a ratio of 10-for-1, increasing the total number of issued and outstanding shares of common stock. It also increased its authorized shares of common and preferred stock. In March 2023, the company raised approximately $2.34 million through the issuance of common stock. Furthermore, the company issued 6,000,000 shares of Series B Preferred Stock to its CEO in exchange for debt cancellation, significantly increasing his voting power to 82.1%.
• Future Outlook: The company plans to continue leveraging its insurance brokerage operations to drive revenue growth, focusing on expanding collaborations with insurance partners and exploring new revenue streams through referral partnerships. The company also aims to maintain compliance with Hong Kong's regulatory requirements for insurance brokers, ensuring sufficient capital and net assets. Additionally, the company does not anticipate paying cash dividends in the near future, opting to retain earnings for business operations and expansion.

Challenges and Risks

• Concentration Risks: The company faces significant risks related to its business and industry, including concentration risks due to dependence on a single or limited number of insurance company partners. Approximately 68.1% of total commissions for the fiscal year ended March 31, 2025, were attributed to one insurance company, highlighting the potential impact of losing a major partner.
• Regulatory Risks: The company is subject to extensive regulations in Hong Kong, and any failure to comply could result in fines or revocation of licenses, adversely affecting operations.
• Competitive Risks: The company faces intense competition in the insurance intermediary industry in Hong Kong, which could lead to loss of customers and negatively impact financial results. The commission revenue is subject to quarterly fluctuations due to seasonality and timing of policy renewals, which are beyond the company's control.
• Political and Economic Risks: Risks related to doing business in Hong Kong include political risks and economic instability, which may impact operations. The PRC government's influence over Hong Kong could lead to changes in regulations that affect the company's business. The enactment of the Law of the PRC on Safeguarding National Security in Hong Kong could also impact operations.
• Data Security Risks: The company may become subject to PRC laws regarding privacy, data security, and cybersecurity, which could result in liability for improper use of personal information. Additionally, the company relies on dividends from its Hong Kong subsidiary, and any restrictions on cash transfers could affect its ability to fund operations.
• Recruitment Challenges: Management has identified the need to attract and retain productive technical representatives as a critical challenge, given the intense competition for such personnel. The company is actively recruiting to strengthen its distribution network.
• Market Risks: The company is exposed to market risks, including fluctuations in commission rates and premiums set by insurance companies, which are influenced by economic, regulatory, and competitive factors. These changes could adversely affect profitability.

SEC Filing: QDM International Inc. [ QDMI ] - 10-K - Jul. 10, 2025