Business Context and Reporting Period
Company: Big Tree Cloud Holdings Ltd (DSY)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended June 30, 2025
Business Overview: The Company is a Cayman Islands holding company operating primarily in China through subsidiaries. It focuses on the development, production, and sales of personal care products, specifically feminine hygiene products (sterilized pads, menstrual pants) and hygiene materials (non-woven fabrics). In August 2024, the Company sold its manufacturing facilities to become an asset-light entity, relying on third-party manufacturers. The Company is listed on the Nasdaq Global Market under the symbol "DSY."
Key Financial Metrics
| Metric (USD) | Fiscal Year 2025 | Fiscal Year 2024 | Fiscal Year 2023 |
|---|---|---|---|
| Net Revenue | $2.56 million | $7.32 million | $6.29 million |
| Gross Profit | $0.82 million | $4.90 million | $3.63 million |
| Gross Margin | 32.2% | 66.9% | 57.7% |
| Operating Loss | $(38.21) million | $(0.03) million | $0.67 million (Profit) |
| Net Loss | $(32.53) million | $0.64 million (Income) | $0.28 million (Income) |
| Cash and Cash Equivalents (End of Period) | $1.68 million | $0.75 million | $3.19 million |
| Operating Cash Flow | $(6.49) million | $(1.51) million | $8.81 million |
| Total Assets | $11.0 million | $9.0 million | N/A |
| Total Liabilities | $9.86 million | $13.55 million | N/A |
| Shareholders' Equity | $1.12 million | $(4.58) million | N/A |
Material Changes vs. Prior Period
- Revenue Decline: Net revenue decreased by 65.1% to $2.56 million. This was driven by a 79.7% drop in sales of feminine hygiene and body care products due to the disposal of a key manufacturing facility in September 2024 and a strategic decision to phase out accessory products. Partially offset by $1.3 million in new revenue from hygiene materials (non-woven fabrics).
- Operating Loss Expansion: The Company swung from a near-break-even operating loss of $0.03 million in 2024 to a significant operating loss of $38.21 million in 2025. This was primarily caused by a $34.2 million non-cash share-based compensation expense recorded for distributors and employees.
- Gross Margin Compression: Gross margin fell from 66.9% to 32.2%, attributed to the lower margin profile of the new hygiene materials product line compared to the discontinued accessory and hygiene product mix.
- Disposal of Subsidiaries: The Company recognized a gain of $4.8 million from the disposal of Dongguan Dashuyun Daily Necessities Co., Ltd. in September 2024. Additionally, a 51% stake in Guangdong Yunjia Innovative Materials Co., Ltd. was sold in September 2025 (subsequent event).
Guidance, Outlook, Risks, and Unusual Items
- Going Concern Uncertainty: The independent auditor has raised substantial doubt about the Company's ability to continue as a going concern due to the net loss of $32.5 million, negative operating cash flow of $6.5 million, and an accumulated deficit of $37.4 million as of June 30, 2025.
- Liquidity and Financing: To address liquidity needs, the Company secured a strategic capital increase of approximately $4.2 million in May 2025 and closed a registered direct offering in September 2025 raising approximately $4.5 million in net proceeds. Management believes these funds are sufficient for the next 12 months.
- Internal Control Weaknesses: Management identified two material weaknesses in internal control over financial reporting: (1) lack of sufficient accounting personnel with U.S. GAAP expertise, and (2) lack of robust period-end financial reporting policies. Remediation plans include hiring qualified staff and implementing training.
- Strategic Shift: The Company is transitioning to an asset-light model, selling manufacturing assets and focusing on R&D for advanced hygiene materials and brand expansion.
- Customer Concentration: For FY2025, four customers accounted for approximately 35%, 15%, 11%, and 10% of total revenue, respectively. One customer accounted for 41% of revenue in FY2024.
- Regulatory Risks: Significant risks exist regarding PRC regulations on foreign investment, data security, cybersecurity reviews, and the potential for the Company to be deemed a PRC tax resident enterprise.
Investor Verification Checklist
- Going Concern Status: Verify the sufficiency of the $4.5 million raised in the September 2025 offering to cover the $6.5 million annual operating cash burn and the $37.4 million accumulated deficit.
- Share-Based Compensation: Confirm the valuation methodology and vesting terms for the $34.2 million share-based compensation expense, which was the primary driver of the operating loss.
- Revenue Sustainability: Assess the long-term viability of the new hygiene materials product line (non-woven fabrics) which replaced the core feminine hygiene revenue stream.
- Internal Controls: Monitor the progress of remediation efforts for the identified material weaknesses in internal controls over financial reporting.
- Customer Concentration: Evaluate the risk associated with the top four customers representing 71% of FY2025 revenue.
- Subsequent Events: Review the impact of the September 2025 disposal of Guangdong Yunjia and the registered direct offering on the balance sheet and future operations.