BYAH — H1 2026 Financial Report Analysis

Overview

Park Ha Biological Technology (Nasdaq: BYAH) sells "Park Ha"-branded skincare for sensitive and problem skin in China, through its own stores in Wuxi and a network of franchised shops, mostly in Jiangsu Province. Its fiscal year ends October 31, so this report covers the first half of fiscal 2026: the six months ended April 30, 2026. The company files as a foreign private issuer, so there are no quarterly 10-Qs; this half-year report, furnished on a Form 6-K on July 24, 2026, is its only interim filing. Figures are in US dollars as reported, and the statements are unaudited.

Revenue was flat at $1.26 million (+1.5%), but what sits underneath it changed a lot. Sales of products to shoppers who aren't franchisees nearly tripled, while franchise fees fell 35% because the franchise network shrank from 39 shops to 21 in a year. The net loss shrank from $19.8 million to $0.92 million, but that is not a turnaround: last year's figure contained a one-time $19.95 million non-cash stock award to insiders. Without that charge, the business went from a small operating profit to a loss of almost $1 million, as spending on marketing, staff, R&D and bad-loan provisions grew much faster than sales.

At a glance

• Net loss of $0.92 million vs $19.8 million a year ago — almost all of the improvement comes from not repeating a $19.95 million stock award. Before that charge, last year's half made a $0.23 million operating profit; this year's lost $0.96 million.
• Franchisees down from 39 to 21 — franchise fees fell 35% to $0.54 million. Franchise fees used to bring in two-thirds of revenue; now they bring in 43%.
• Share count up 7.3x in six months (from 0.68 million to 4.92 million, after adjusting for a 1-for-50 reverse split) — mostly from warrants exercised without cash. Two more share sales and a second reverse split (1-for-8) followed after the period ended.

Key metrics

Loss per share is restated for the February 2026 1-for-50 reverse split. It is not yet adjusted for the separate 1-for-8 reverse split that took effect in August 2026; on that basis this half's loss would be about $2.64 per share. "n/m" = not meaningful.

Where the revenue came from

The business has two parts. It sells skincare products, both to individual shoppers and to its franchisees for resale. It also charges franchise fees, which franchisees pay to use the Park Ha name and get training and marketing support. The company spreads each fee evenly over the contract, which usually runs one year.

• Product sales to non-franchisees rose 188%, to $600,022. The company puts this down to "rising brand awareness" and "the continuous expansion of our non-franchise outlets." This is now the largest single source of revenue (48% of the total, up from 17%). Selling and marketing spending rose 144% over the same period, so a good part of this growth was paid for.
• Product sales to franchisees fell 41%, to $116,083, which the filing says was "primarily attributable to fewer franchise stores."
• Franchise fees fell 35%, to $541,584. The network had 45 franchisees at the start of fiscal 2025, 22 at the start of fiscal 2026 and 21 by April 30, 2026. No franchisee signed up during the half. The company describes the cuts as an "adjustment and upgrade" of the franchise model, with stricter entry rules and the dropping of franchisees that failed to meet them. It also says the latest departure was a franchisee that chose not to renew.

Gross margin (the share of revenue left after the direct cost of the goods and services sold) is unusually high at 96%. That is because franchise fees cost almost nothing to deliver ($1,015 of cost this half), and products sold in the company's own stores carried a 95% margin.

Where the costs went

Total operating expenses were $2.17 million, or 1.7 times revenue. Leaving out last year's stock award, they rose 130%:

• Selling and marketing: $560,577 (+144%). More pay for a larger store and sales staff (+$97,258), more promotion (+$174,077) and advertising (+$11,937), and higher depreciation (+$38,894), according to the filing.
• General and administrative: $1.19 million, down from $20.6 million. Last year's figure included the $19.95 million award: 3,000,000 shares (counted before the reverse splits) granted on March 5, 2025, fully vested immediately, and valued at $6.65 each. Without it, G&A rose about 74%, from $682,549.
• Research and development: $138,618 (+431%), mostly $90,000 of R&D work paid to outside firms.
• Expected credit losses: $286,048, up from $7,883. This is money set aside for loans to franchisees that may not be repaid. See below.

What the headline numbers hide

• The 95% smaller loss is entirely a comparison effect. The $19.95 million stock award didn't use any cash, and it didn't happen again this year. Without it, last year's half produced a $234,403 operating profit (a 19% operating margin), and this half produced a $962,547 operating loss. The underlying business got worse, not better.
• Loans to franchisees are going bad. The company lends franchisees money interest-free (for stock, equipment or day-to-day running costs), to be repaid within 180 days. At April 30, $1.42 million was owed. Of that, $835,616 (59%) was past due, and $826,095 was still past due when the report was issued. The provision for losses on these loans more than doubled in six months, to $534,173. Even so, the company lent franchisees another $573,647 during the half, more than the $541,584 it earned from them in franchise fees, while collecting $462,943 in repayments. When a company keeps paying out money to a shrinking group of franchisees whose existing loans are mostly overdue, it raises the question of how much of the franchise-fee income will actually turn into cash.
• Cash conversion is better than the loss, for reasons that won't repeat. Operating cash flow was −$113,727, compared with a net loss of −$918,282. The gap comes mainly from non-cash items (the $286,048 credit-loss provision and $95,282 of depreciation) and from collecting most of the accounts receivable: these fell from $255,844 to $16,768. That one-off collection can't happen again.
• Taxes payable keep growing. The balance sheet shows $1.51 million of taxes payable, up from $1.38 million in October. The cash-flow statement reports zero income tax paid in both half-years. The filing doesn't explain when this balance will be settled.
• Where the cash went. Cash fell from $3.79 million to $0.63 million, mostly because $5.03 million was moved into bank deposits that mature in one to three months. Counted together, cash and those deposits came to $5.66 million. About $2.24 million of that came from the January 2026 share sale, not from the business.
• Dilution is the dominant story for shareholders. The January 2026 offering sold shares at $0.112 each (before the reverse split) and came with warrants exercisable for no cash. Holders exercised 3.79 million of those (split-adjusted) during the half. Weighted average shares were 5.2 times last year's. Because there were so many more shares, the loss per share improved more (99%) than the loss itself did (95%).
• Related parties: small amounts. Amounts owed to or by insiders are minor: $769 due from the CEO and COO for working-capital advances, and nothing due to them. That's a clean result for a small China-based company.
• Corporate structure is changing. On May 8, 2026, the board decided to wind down the three beauty salons the company controlled through contracts rather than ownership (a "VIE" structure), and to move their assets to Park Ha Jiangsu. Six new fully-owned Wuxi subsidiaries were set up between May and July. The filing doesn't say what effect this will have on revenue.
• Store count is unclear. The filing describes Park Ha Jiangsu as running "three stores" in one place and "six physical stores" in another, so the size of the directly operated network isn't clear.

Takeaway: The 95% narrower loss comes from an accounting comparison, not from a recovery. Without last year's one-time stock award, Park Ha went from a $0.23 million operating profit to a $0.96 million loss on flat revenue. It is also paying for that loss by issuing new shares much faster than the business is growing: the share count rose more than sevenfold in six months, and two more share sales and a second reverse split followed after the period ended.

After the period ended

The filing's subsequent-events note and later 6-Ks show more of the same:

• June 15, 2026: a registered offering of 1,333,332 shares (including pre-funded warrants) at $1.50, for net proceeds of $1.74 million.
• July 13, 2026: shareholders approved raising the votes on each founder-held Class B share from 20 to 100. They also gave the board authority, for three years, to consolidate shares at ratios of up to 5,000-for-1.
• August 3, 2026: a private placement of 10,000,000 shares (before the reverse split) with warrants, at $0.18 each (about $1.8 million gross). The company also issued 2,400,000 shares under a new 2026 Share Incentive Plan. A 1-for-8 reverse split was then scheduled to take effect on August 6, 2026.
• September 1, 2026: the company dismissed its auditor, WWC, P.C., and appointed HTL International, LLC. The company says there were no disagreements with WWC and no reportable events.
• September 11, 2026: another private placement of 1,080,000 shares at $2.75 (about $2.97 million gross), with five-year warrants covering 1,845,452 shares at $1.10.

Outlook

Management gives no revenue or earnings guidance. The filing only says the company plans to "expand our marketing and sales team," and that it believes its funds will cover working-capital needs for at least 12 months.

Our view: the second half will probably look worse on paper than the first. The 2,400,000 shares issued under the 2026 incentive plan in August will likely be booked as stock compensation in the second half, as the 2025 grants were. That could again outweigh the operating loss in the full-year numbers. Two things in the operating business are worth watching in the fiscal 2026 annual report (Form 20-F, expected around late February 2027, and the first audit by the new auditor):

1. Whether product sales to non-franchisees keep growing fast enough to make up for the shrinking franchise network.
2. Whether overdue franchisee loans are finally written off, or keep piling up behind a growing provision.

Until operating cash flow turns positive without a one-off receivables collection, the company's main source of funding is the capital markets, and existing shareholders are the ones bearing the cost.