AiXin Life International, Inc 10-K for FY2025
AiXin Life International, Inc. (AIXN)
About this 10-K
AiXin Life International, Inc filed this 10-K on May 15, 2026, covering the fiscal year ended December 31, 2025 (FY2025).
Headline figures
Fiscal year ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $665.79K
- up 673.1% from $86.12K a year earlier
- Net loss
- $2.04M
- compared with a net loss of $2.77M a year earlier
- Diluted EPS
- -$0.08
- compared with -$0.11 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
OF 1934
FOR
THE FISCAL YEAR ENDED
or
For the transition period from ______ to_______
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2025
Commission
File Number:
(Exact name of registrant as specified in its charter)
| (State or Other Jurisdiction | IRS Employer | |
| of Incorporation) | Identification Number |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
(Title of class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
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by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. (Check one):
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller
reporting company | ||
| Emerging
growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
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by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
As
of June 30, 2025, the aggregate market value of our common stock held by non-affiliates was $
As of May 12, 2026, we had outstanding shares of common stock.
DOCUMENTS
INCORPORATED BY REFERENCE:
AIXIN LIFE INTERNATIONAL, INC.
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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on forward-looking statements. Forward-looking statements include, among other things, statements relating to:
| ● | our goals and strategies; | |
| ● | our future business development, financial condition and results of operations; | |
| ● | our expectations regarding demand for, and market acceptance of, our products; | |
| ● | our expectations regarding keeping and strengthening our relationships with merchants, manufacturers and end-users; and | |
| ● | general economic and business conditions in the regions where we provide our services. |
Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference and filed as exhibits to the report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.
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PART I
| Item 1 | Business. |
Overview
As used in this report, unless the context requires otherwise, all references to “AiXin Colorado” refer to AiXin Life International, Inc., a Colorado holding company, and references to “Aixin Life,” we,” “us,” “our,” the “Registrant,” the “Company” or “our Company” are to AiXin Colorado and its subsidiaries*.
We are a Colorado holding company and conduct substantially all of our operations through our operating companies established in the People’s Republic of China, or the PRC. Our focus is on providing health and wellness products to the growing middle class in China. We currently develop, manufacture, market and sell premium-quality healthcare, nutritional products and wellness supplements, including herbs and greens, traditional Chinese remedies, functional products, such as weight management products, probiotics, foods and drinks. We offer our products and those of clients for which we provide marketing services, through a diversified, omni-channel business model which generates revenues through retail and wholesale product sales, through company-owned pharmacies, direct marketing and online activities.
Through our subsidiary, AixinZhonghong, we offer nutritional products through a direct marketing team, at large scale entertainment style events which we organize for the benefit of our clients and more recently, through online activities. AixinZhonghong also provides marketing and distribution services to other manufacturers and suppliers of healthcare products. We have a proactive approach to marketing, reaching out to customers to provide information as to how to live a healthy lifestyle. We believe this approach is ideally suited to marketing health and wellness products as sales of these products are strengthened by ongoing personal contact and support, coaching and education of clients, as to the benefits of a healthy and active lifestyle.
In September 2021 we completed the acquisition of nine pharmacies located in Chengdu. We currently operate pharmacies at eight locations. We utilize these pharmacies to distribute our health and wellness products and serve as learning centers for our clients along with their traditional business. We intend to seek to continue to expand our chain of pharmacies and to use these outlets as part of our overall marketing strategy. As part of our marketing efforts, we will educate the employees at our pharmacies as to the benefits of our health and wellness products so they can closely work with our clients.
In September 2022, we acquired Yunnan Runcangsheng which engages in the research, development, manufacture and wholesale distribution of health and wellness products. Yunnan Runcangsheng operates a 2,946 square meter production facility, including, R&D centers, extraction facilities, preparation workshops and a warehouse. Yunnan Runcangsheng has more than 30 brand names under which it distributes products and maintains and operates planting facilities where it grows some of the key ingredients used in its products. Many of the products it has developed are specifically targeted to alleviate ailments associated with the increasingly competitive and pressured lifestyle of Chinese people, such as hypertension and obesity, which result from a more pressured yet sedentary lifestyle, symptoms associated with changing eating habits and the presence of environmental toxins that are becoming more widespread through the use of western style pesticides and fertilizers. When we entered into the agreement to acquire Yunnan Runcangsheng we began to distribute its products through our distribution channels and continue to do so.
On February 6, 2024, we entered into a lease with respect to a hotel located in Bandzhuyuan Town, Xindu District, Chengdu City. The term of the lease commenced February 29, 2024 and expires April 15, 2034. The lease grants us the right to occupy various areas within the hotel, covering approximately 18,000 square meters, including the first-floor lobby, external shops (subject to the rights of the current occupants), the second and third floors, portions of the fourth floor including the restaurant and tea shop, and the fifth through eighteenth floors comprised mainly of guest rooms, underground and ground-level parking lots, and all hotel facilities and equipment. Effective March 31, 2024, we terminated the lease for the hotel located in Jinniu District, Chengdu which we acquired in July 2021.
We intend to look for additional opportunities to profit from the growing healthcare market in China. Though currently we are not party to any agreements, we will explore, among other opportunities, expanding our product line through internal research and acquiring complementary products from third parties, acquiring additional pharmacies and other retail outlets and operating nursing homes and possibly clinics which provide medical care to clients.
* Our “Chinese Operating Companies” are Chengdu AiXinZhonghong Biological Technology Co., Ltd, (“AiXinZhonghong”), Chengdu AiXin Shangyan Hotel Management Co. Ltd. (“AiXin Hotel”), Chengdu Aixintang Tang Hai Chuan Hai Chuan Da Pharmacy Co., Ltd (which together with certain affiliated entities is referred to as “Chengdu Aixintang Pharmacies”), and Yunnan Runcangsheng Technology Co., Ltd. (“Runcangsheng).” The Chinese Operating Companies are wholly owned through an intermediary company established in Hong Kong named HK AiXin International Group Co., Limited (“AiXin HK” and collectively with our Chinese Operating Companies our “PRC Subsidiaries”), which is owned by an intermediary company AiXin (BVI) International Group, Ltd., (“AiXin BVI”) established in the British Virgin Islands. We are not a Chinese operating company. We are a holding company and do not directly own any substantive business operations in China. Therefore, you will not directly hold any equity interests in our Chinese Subsidiaries Companies, AiXin BVI or AiXin HK.
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Business Objectives
Key elements of our strategy are detailed below:
Leading brand of nutritional supplements. Our primary goal is to develop recognized brand names with a reputation as a provider of quality health and wellness products which deliver demonstrable benefits to our customers. Our objective is to provide members of the growing Chinese middle class with the information necessary to maintain a healthy lifestyle and to offer them a broad and deep mix of products whether the customer is looking to treat a specific health-related issue, maintain their overall wellness or improve their performance. Our premium, value-added offerings will include both proprietary branded products and other branded products provided by third parties to meet needs not met by our in-house products.
We believe that by offering a variety of branded exclusive products and a wide range of merchandise, and close customer support and services, we will be able to differentiate our Company from competitors and effectively compete against other food, drug and mass channel players, specialty stores, independent vitamin, supplement and natural food shops and online retailers. We further believe that if we succeed in developing and maintaining a positive reputation, we will be able to offer additional products and services to our clients.
Product development and innovation. With the acquisition of Yunnan Runcangsheng we have the facilities and, more importantly, knowledgeable, experienced personnel, to develop high-quality, innovative health foods and nutritional supplements that will be offered by our direct marketing team and available through our company-owned pharmacies, our website and, as demand grows other, select marketplaces and wholesale partners. To the extent desirable we will grow some of the key ingredients in our products. When we choose to use ingredients of third parties, they will be rigorously tested before they are added to our products, undergoing multiple quality checks to ensure that they meet our high standards for purity, composition and absence of contaminants.
We believe our capability to innovate and respond to customer needs by designing new products gives us a significant competitive advantage. At Yunnan Runcangsheng we directly employ scientists, nutritionists, formulators, and quality control experts who work at our research and manufacturing facilities.
A differentiated customer experience. One of the key differentiators to our marketing strategy is the continued development of well-trained team members that work closely with customers. We will provide our team members with training and education focused on the benefits of a healthy lifestyle, the advantages of our products and solution-based selling. We will also maintain and make available to our team members databases of our customers’ purchasing patterns. With their knowledge of the available products our team members can engage customers in conversation, access the customer’s purchasing history through our database, share product information and testimonials and recommend solutions and help customers add complimentary products and build wellness regimens. We operate in a highly personalized, aspirational sector and believe that health food and nutritional supplement consumer often desires and seeks out product expertise and knowledgeable customer service.
We have developed loyalty programs to reward customers and incentivize them to introduce our products to their friends. A number of our customers in fact act as independent marketers, buying products from us and distributing them to others at a profit. We intend to continue to use loyalty programs to develop and maintain a large and loyal customer base, provide targeted offers and information, and connect with our customers on a regular basis. We will harness data generated by these programs to better understand customers’ buying behaviors and needs, so we can deliver a more rewarding experience, encourage our customers to introduce our products to their friends and make well-informed decisions about the direction of our business.
As we grow and develop our customer base, we can use our hotel as a site for educational seminars, conferences and marketing events featuring well known experts in the wellness sector. These events can be used to increase customer loyalty and to educate our team members as to the benefits of a healthy life style and our products so they can better serve our customers by guiding them to products that meet their needs.
Omni-channel development. We believe our diversified, omni-channel model, which includes company-owned offices open to clients, pharmacies, direct marketing by our team members, individually and at large scale company sponsored marketing events, wholesale locations and online activities, can differentiate us from many of our competitors, particularly those that rely exclusively on online marketing efforts. Our strategy is to give consumers a seamless, integrated experience across digital, mobile and in-store channels and in every interaction with us and our products.
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Through our website and in conversations with our well-trained team members, customers can research our products and purchase them online or at one of our local pharmacies or sales offices. We believe our physical store base provides a competitive advantage, allowing customers to experience our products and get expert advice from our team members.
Our omni-channel model can enhance the customer experience and increase the value of a customer to us and we will implement strategies to blend our digital, online and in-store platforms, always stressing the availability and benefits of a conversation with one of our team members. These initiatives will include increased cross-channel marketing, online and in-store subscription services, giving customers the option of picking up online purchases at our stores, delivering products purchased via e-commerce directly from stores, and providing educational content, information and advice online, at our pharmacies or through a personal visit by one of our team members.
Vertical Integration. We believe that our multi-channel distribution model, combined with our research, development and manufacturing capabilities offers us a unique advantage over our competitors. The daily feedback received from interactions between our team members and customers will be monitored to recognize what our customers want and rapidly develop products to meet their desires. Instead of simply responding to trends in the market, we will seek to bring new topical products to the market before they are generally available.
Products
Our pharmacies offer a wide variety of personal healthcare products and traditional Chinese remedies in addition to our health and wellness products. The primary products currently distributed by us, including those of Yunnan Runcangsheng, include rhino king, colostrum powder derived from goat’s milk, tong li ke, ganmaoling granules, amoxicillin capsules, loratadine tablets, and fuyang granules.
Marketing
Our target customer is the growing population of middle- and upper-class Chinese who are willing to devote increasing amounts to healthcare products as their incomes grow. We believe that as this group grows, becomes more affluent and adopts a more western sedentary life-style and diet, it will experience obesity, hypertension, heart disease, back pain and some of the negative symptoms common in developed countries. Our marketing efforts include proactively approaching these customers through person-to-person marketing and by hosting educational and informative events, which we believe is ideally suited to marketing our products and those of our clients for which we perform advertising services because sales of health and wellness products and supplements are strengthened by ongoing personal contact and support, coaching and education towards how to achieve a healthy and active lifestyle.
We currently market our products through our pharmacies, at large scale marketing events which feature popular local entertainers, at our offices which customers are encouraged to use for social gatherings, at wholesale and online. Key to our marketing efforts are the members of our marketing team who make themselves available to individual customers and work with such customers to develop a healthy well balanced dietary regimen. As part of our educational efforts, we distribute informational videos to our clients on-line and make multiple posts on social media daily. Off-line, in addition to distributing products through our pharmacies, we utilize person-to-person marketing to promote and sell products. These personal marketing efforts include hosting educational events and allowing customers to utilize our facilities for social gatherings.
In addition to our marketing efforts, through our loyalty program we encourage our customers to distribute our products to others. Our program for increasing the number of clients interested in reselling the products we offer and for developing new clients who demonstrate the ability to sell our products to others, is to provide them with compensation, in the form of quantity purchase discounts and other incentives, such as free meals, travel or vacations.
We offer our clients a customer satisfaction guarantee. Our sales policy allows for the return of unopened products for cash after deducting certain service and transaction fees. As an alternative to returning a product, customers can exchange a product for another of the same value.
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Manufacturing
As a result of the acquisition of Yunnan Runcangsheng, we now have a 2,946 square meter manufacturing center inclusive of office space, R&D centers, extraction workshops, preparation workshops, traditional Chinese medicine decoction pieces workshops and storage areas. The activities include research and development, extraction and intensive processing of traditional Chinese medicines and processing to incorporate active ingredients into tablets, capsules, granules and pills according to market demand and product attributes. The facility was designed and constructed and is operated in compliance with applicable national health food and pharmaceutical standards (GMP) and has achieved ISO quality system certification and HACCP food safety system certification.
Raw Materials
The raw materials used in products we manufacture are generally readily available, subject to fluctuations in price due to supply and demand issues. We do not look to enter into long term contracts with any of our suppliers as the materials we need shifts as demand for our products changes.
Intellectual Property
We believe that we need to develop well recognized brand names and, when possible, obtain patents covering products we develop, their formulae or the processes by which they are manufactured. Runcangsheng has received patents on certain manufacturing processes and has used multiple brand names for its products. Given the early stage of Runcangsheng’s development and the limited historical operations of AiXinZhonghong, our products and brand names have yet to achieve the widespread recognition we envision. See, “Item 1A. Risk Factors – Risks Associated with Our Company - Our ability to adequately protect our trade names, trademarks and patents could have an impact on our brand images and ability to penetrate new markets.”
Competition
The category of nutritional products is very competitive and there are various channels through which such products are marketed to consumers, including direct selling, through the internet, through specialty retailers, pharmacies and discount channels of food, drug and mass merchandisers. We seek to differentiate ourselves by being familiar with our clients and providing a personalized sales experience and focusing on after-sale services where sales employees focus on the consultative sales process through product education and the frequent contact and support that many sales employees have with the clients. From a competitive standpoint, there are many providers and sales outlets of nutritional products in China. We believe that none have effectively combined the product, personal coaching, education and the product access provided by our sales employees and, further, that these efforts are compounded by the peer pressure our clients generate through our organized group sales presentations.
Employees
As of May 7, 2026, we had approximately 116 employees allocated amongst the functions set forth below.
| Function | Number of employees | |||
| Administration | 26 | |||
| Finance | 13 | |||
| Manufacturing | 16 | |||
| Marketing | 57 | |||
| R&D | 4 | |||
We believe that we maintain a good working relationship with our employees, and to date we have not experienced any significant labor disputes.
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Government Regulations
We are subject to numerous regulations applicable to businesses generally, including regulations relating to working conditions, employee compensation and the maintenance of welfare plans, environmental regulation and truth in advertising. In addition, the manufacture and distribution of nutritional products is subject to many laws, governmental regulations, administrative determinations and guidance. Such laws, regulations and other constraints exist at the national, provincial and local levels, including regulations pertaining to: (1) the formulation, manufacturing, packaging, labeling, distribution, importation, sale and storage of products; (2) product claims and advertising, including direct claims and advertising by us, as well as claims and advertising by manufacturers and distributors of the products we offer, for which we may be held responsible; and (3) taxes. As a distributor, we are subject to only a portion of these laws and regulations. We believe that we are fully compliant with those applicable to our activities.
Prior to commencing manufacture or distribution of a product, the manufacturer or distributor may be required to obtain an approval, license or certification from the national, provincial or local government in China. Although we attempt to determine whether all regulatory requirements have been met, we cannot monitor the manufacture of products we acquire for distribution from third parties and cannot be certain that all applicable regulations are satisfied. Moreover, even if we were to determine that a manufacturer or distributor had the requisite license or certification at the beginning of a relationship, we might not become aware if it were to forfeit any regulatory approvals or fail to adhere to applicable requirements.
Dietary supplements are subject to regulation by the China Food and Drug Administration. China has highly restrictive nutritional supplement product regulations. Products marketed as “health foods” are subject to extensive laboratory and clinical analysis by government authorities, and the product registration process in China generally takes one to two years, but may be substantially longer. We market both “health foods” and “general foods.” For products we distribute on behalf of or acquired from others, we are not in a position to obtain any required license, though we may be held liable if we were to distribute a product which had not been properly tested and registered with the authorities. There is some risk associated with the common practice in China of marketing a product as a “general food” while seeking “health food” classification. If government officials feel the categorization of a product distributed by us is inconsistent with product claims, ingredients or function, this could end or limit our ability to market such products.
As the middle class has grown, the number of manufacturers and distributors of nutritional supplements in China has dramatically increased. Many of these have often ignored applicable laws and distributed adulterated or inferior products. We believe this has created a marketing opportunity which we have tried to exploit as a trusted source of products on which our clients can rely. To the extent our reputation results from reviewing and testing products prior to distributing them, and then distributing only products determined to be safe, it is incumbent upon us to ensure that the manufacturers and distributors upon which we rely are trustworthy. A failure by any of these third parties could cause substantial damage to our reputation, business and financial results.
Direct selling and multi-level marketing are two forms of marketing regulated by various national, provincial and local government agencies in China. These laws and regulations are generally intended to prevent fraudulent or deceptive schemes, including “pyramid” schemes, which compensate participants primarily for recruiting additional participants without significant emphasis on product sales to consumers.
Under PRC regulations, “direct selling” refers to a type of business mode in which a company recruits door-to-door salesmen to sell products directly to ultimate consumers outside the companies’ fixed places of business. Businesses engaged in “direct selling” are required to obtain a license from the PRC government. A direct selling company is required to provide vocational training for, and conduct an examination of, any sales promoter it recruits, and obtain a certificate for each sales promoter after the sales promoter has passed the examination. A direct selling company is also required, when commencing operations, to deposit RMB20 million ($2.9 million) in a special account with a designated bank, which deposit is adjusted on a monthly basis to equal 15% of the operator’s sales from direct selling products up to RMB0.1 billion ($14.5 million).
We do not engage in direct selling activities subject to regulations prevalent in China since we do not employ sales personnel engaged in door-to-door sales outside our place of business.
Under PRC regulations, “multi-level marketing” refers to marketing, promotional and sales activities whereby organizers or operators take in new members and compensate each member based upon the number of new members introduced by such member, directly or indirectly, or based upon the level of sales generated by the members introduced by such member. The regulations also prohibit an organizer from requiring new members to deposit a sum of money as a condition to membership or requiring that members recruit additional members to establish a multi-level relationship. PRC regulations distinguish direct selling from multi-level marketing in that all direct sellers are normally trained by the direct selling company and any direct seller is not allowed to develop new followers or form multiple levels.
We are not in the direct selling category or multi-level marketing category since (i) we do not pay salaries or commissions to our member distributors, who decide as a matter of personal preference whether to introduce our products to relatives or friends based on their own personal experience of usage and/or trust of our company’s products; (ii) we do not require individuals to deposit a sum of money to become a member; and (iii) we do not pay members to recruit individuals to join in or to form a multi-level relationship.
Nevertheless, the laws and regulations governing direct selling and multi-level marketing may be modified or reinterpreted from time to time, which may cause us to change our business model. Regulations are subject to discretionary interpretation by regulators and governmental authorities. There is often ambiguity and uncertainty with respect to the implication of direct selling and anti-pyramiding laws and regulations.
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| Item 1A. | Risk Factors |
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.
Risks Associated with Our Company
We incurred net losses in 2025 and 2024 and may not be able to continue to operate as a going concern.
We incurred a net loss of $2,042,463 and $2,768,341 for the years ended December 31, 2025 and 2024, respectively, and used net cash in operating activities of $2,034,331 and $1,628,834 for the years ended December 31, 2025 and 2024, respectively. We had a working capital deficit of $7,476,418 as of December 31, 2025. These facts and conditions raise substantial doubt about our ability to continue as a going concern. From January 1, 2025 through December 31, 2025, our cash and cash equivalents decreased from $62,310 to $20,751 mainly due to cash outflows from operating activities.
Unless we are able to consistently increase our revenues and generate positive cash flows from operations, we will continue to depend upon further issuances of debt, equity or other financings to fund ongoing operations. We may continue to incur additional operating losses and we cannot assure you that we will continue as a going concern.
We operate in a highly competitive industry and our failure to compete effectively could adversely affect our market share, revenues and growth prospects.
The market for health and wellness products is large, highly fragmented and intensely competitive. Current and prospective participants include specialty retailers, supermarkets, drugstores, mass merchants, multi-level marketing organizations, online merchants, mail-order companies and a variety of other smaller participants. The market is also highly sensitive to the introduction of new products, which may rapidly gain consumer acceptance. We compete for sales with heavily advertised brands manufactured by large pharmaceutical and food companies, as well as other brands, some of which have greater market presence, name recognition and financial, marketing and other resources, including some competitors that may spend more aggressively on advertising and promotional activities than we do. Further, the ability of consumers to compare prices on a real-time basis through the use of smartphones and digital technology puts additional pressure on us to maintain competitive pricing. We compete in multiple product categories and sales channels, including pharmaceutical stores, wholesale to specialty store formats, direct marketing and increasingly internet-based and direct-sell retailers and vendors. Many factors affect the extent to which competition could affect our results, including as it relates to pricing, quality, assortment, marketing, promotions and advertising, service, locations, capital expenditures, category share and reputation, any of which could have a material effect on our results of operations. If we fail to compete effectively, we may lose business to other retailers.
We have a limited operating history on which to judge our performance and assess our prospects for future success.
We first entered the health and wellness business in December 2017 when we acquired AiXin BVI, which at that time owned all of the equity of AiXin Zhonghong, then engaged in the distribution of health and wellness foods. Consequently, we have a limited operating history on which to evaluate our prospects in the health and wellness industry. We may fail to continue our growth. You should not consider our historical growth and expansion of our business through acquisitions as indicative of our ability to grow in the future.
Our acquisition of Yunnan Runcangsheng is subject to uncertainties and risks.
There is no assurance that we will realize the benefits anticipated from our acquisition of Yunnan Runcangsheng. The process of combining the operations of Yunnan Runcangsheng with our existing operations could have a material adverse effect on us and our financial condition.
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Our future expansion plans are subject to uncertainties and risks.
We intend to seek to expand our operations through acquisitions. The implementation of such plan requires us to integrate any newly acquired business and its management teams. If we fail to effectively and efficiently implement our plan for acquisitions, we may not be successful in achieving profitable results. Even if we effectively and efficiently implement our future plans, there may be other unexpected events or factors that prevent us from achieving success. Our management has limited experience in effecting a rapid expansion and in managing larger operations. Our business, financial condition, results of operations and growth prospects may be materially and adversely affected if our future expansion plans fail to achieve positive results.
Failure to effectively anticipate consumer preferences could negatively impact the demand for our products and our ability to generate revenues and the market price of our common stock.
Our success depends on our ability to anticipate and respond in a timely manner to changing consumer demand, consumer preferences, and shopping patterns regarding health and wellness products. Consumer preferences cannot be predicted with certainty and are subject to continual change and evolution. Additionally, our customers may have expectations about how they shop in stores or through online activities or more generally engage with businesses across different channels or media (through online and other digital or mobile channels or particular forms of social media), which may change over time which may make it more difficult for us to adapt to rapid changes in consumer preferences.
Our sales may decline significantly if we misjudge the market for our new products, which may result in significant inventory markdowns and lower margins, missed opportunities for other products, or inventory write-downs, and could have a negative impact on our reputation and profitability.
Resources devoted to product innovation may not yield new products that achieve commercial success.
Our ability to develop new and innovative products or identify and acquire new and innovative products from third-party vendors, depends on, among other factors, our ability to understand evolving market trends and translate our insights into identifying, and then designing and manufacturing or otherwise obtaining, commercially successful new products. If we are unable to do so, our customer relationships and product sales could be harmed significantly. The health and wellness industry is characterized by rapid and frequent changes in demand for products. Our failure to accurately predict these trends could harm our customer relationships and cause us to fail to grow our revenues. The development of new and innovative products requires significant investment in research and development and testing of new ingredients, formulas and possibly new production processes. The research and development process entails considerable uncertainty. Products may appear promising in development but fail to reach market within the expected time frame, or at all. Further, products also may fail to achieve commercial success. There is no guarantee that our development teams will be able to successfully respond to competitive products that could render some of our offerings obsolete.
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If we do not successfully develop and maintain a robust omni-channel experience for our customers, our business and results of operations could be materially and adversely affected.
Omni-channel retailing where customers are accessed through various coordinated channels, is rapidly evolving, and we must keep pace with changing customer expectations and new developments by our competitors. The growing middle class in China is increasingly seeking relevant information regarding healthy lifestyles and products that promote a healthy life. In addition, customers are increasingly shopping for products online instead of in traditional brick-and-mortar shopping centers and retail locations. As part of our omni-channel strategy, we anticipate the need to continue making investments in technology and to provide ready means for our customers to access the information and products they want in a comfortable environment. If we are unable to make, improve, or develop relevant channels to interact with customers in a timely manner, our ability to compete and our business and results of operations could be materially and adversely affected. In addition, if our online activities or our other customer-facing technology systems do not function as designed or we are unable to effectively blend our digital, online and in-store platforms, we may experience a loss of customer confidence, lost sales, or data security breaches, any of which could materially and adversely affect our business and results of operations.
The operation of our hotel is subject to the business, financial and operating risks inherent to the hospitality industry, any of which could reduce the revenues derived at our hotel.
The operation of a hotel is subject to a number of business, financial and operating risks inherent to the hospitality industry. These include significant competition from multiple hospitality providers in which compete for the business of our guests; the financial condition of the owner of the property on which our hotel is situated; decreases in business and leisure travel; changes in operating costs, including employee compensation and benefits, energy, insurance, food and beverage and other supplies; increases in costs due to inflation or other factors that may not be fully offset by increases in revenues in our business, as well as increases in overall prices and the prices of our offerings due to inflation, which could weaken consumer demand for travel and the products and services we offer and adversely affect our revenues; changes in taxes and governmental regulations that influence or increase our operating costs; the costs and administrative burdens associated with complying with applicable laws and regulations; significant increases in cost for health care coverage for employees and potential government regulation with respect to health care coverage; shortages of labor or labor disruptions; changes in the desirability of the region in which our hotel is located; changes in the supply and demand for hotel services, including rooms, food and beverage and other products and services; and the costs required for climate change initiatives, including those resulting from regulatory changes or stakeholder or customer expectations.
Any of these factors could increase our costs or limit or reduce the prices we are able to charge hotel customers for hospitality products and services or otherwise affect our ability to maintain our hotel. As a result, any of these factors can reduce our revenues and limit opportunities for growth.
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We may incur material product liability claims, or experience product recalls, which could increase our costs and adversely affect our sales and margin, reputation, revenues and operating income.
As a retailer, distributor and manufacturer of products for human consumption, we are subject to product liability claims if the use of our products is alleged to result in injury. The products that we sell consist of minerals, herbs, supplements and other ingredients that are classified as foods or dietary supplements. The products that we sell could contain contaminated substances, and some of the products we sell contain ingredients that do not have long histories of human consumption. Previously unknown adverse reactions resulting from human consumption of these ingredients could occur.
In addition, third-party manufacturers produce many of the products we sell. We rely on these manufacturers to ensure the integrity of their ingredients and formulations. As a distributor of products manufactured by third parties, we may also be liable for various product liability claims for products we do not manufacture. Our ultimate liability for these products that are manufactured by third parties depends on a number of factors, including our contractual relationship with the vendor, the creditworthiness of the vendor and any insurance that we have. Therefore, we may be unable to adequately protect ourselves against claims with respect to products manufactured by a third-party.
We may be subject to product liability claims, including, among others, that our products include inadequate instructions for use or inadequate warnings concerning possible side effects and interactions with other substances. Product liability claims could significantly damage our reputation and consumer confidence in our products, regardless of the merits or outcomes of such claims. Our litigation expenses could increase as well, which also could have a material adverse effect on our results of operations even if a product liability claim is unsuccessful or is not fully pursued.
We may be subject to product recalls, withdrawals or seizures if any of the products we manufacture or sell are believed to be adulterated, cause injury or illness or if we are alleged to have violated governmental regulations in the manufacturing, labeling, promotion, sale or distribution of such products. A significant recall, withdrawal or seizure of any of the products may require significant management attention, would likely result in substantial and unexpected costs and may materially and adversely affect our business, financial condition or results of operations. Furthermore, a recall, withdrawal or seizure of any of the products that we sell may adversely affect consumer confidence in our brands and thus decrease consumer demand for such products.
If we fail to develop and protect our brand names and reputation, we may not attract and retain new customers, which could adversely affect our revenues and financial performance.
We will invest significant resources to promote our brand names to obtain favourable public recognition for us and our products. If we do not achieve the reputation we envision, we may not be able to attract and retain a significant customer base, which could in turn, adversely affect our revenues, profitability and the market price of our common stock.
Our ability to adequately protect our trade names and trademarks could have an impact on our brand images and ability to penetrate new markets.
We believe that trade names and trademarks will be an important aspect of our business and an essential element of our strategy. We have applied for the registration of many of our trade names, trademarks and patents in China. Some of these applications have been granted and some of these registrations are currently pending approval from the corresponding departments. There can be no assurance that we will obtain such registrations or that the registrations we obtain will prevent the imitation of our products or infringement of our intellectual property rights by others. In particular, the laws of the PRC may not protect proprietary rights to the same extent as the laws of the U.S. Claims that others are infringing our intellectual property would be costly and would divert the attention of management and key personnel. Our failure to successfully protect our trademarks could diminish the value and effectiveness of our past and future marketing efforts and could cause customer confusion. This could in turn adversely affect our revenues, profitability and the market price of our common stock.
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Unfavourable publicity about us or consumer perception of our products, , including the nutritional supplements we distribute, the ingredients they contain and any similar products distributed by other companies could cause fluctuations in our operating results and could have a material adverse effect on our reputation, the demand for our products and our ability to generate revenues and the market price of our common stock.
We are highly dependent upon consumer perception of the safety and quality of our products, including our nutritional supplements, and the ingredients they contain, as well as that of similar products distributed by other companies. Consumer perception of products and the ingredients they contain can be significantly influenced by scientific research, national media attention and other publicity, including that generated via social media. A research report or publicity related to our products and the ingredients they contain that is perceived by our consumers as less favourable or that questions earlier favourable research or publicity could have a material adverse effect on our ability to generate revenues. Adverse publicity, in the form of published scientific research or otherwise, whether or not accurate, that associates consumption of our products or the ingredients they contain or similar products distributed by other companies with illness or other adverse effects, that questions the benefits of our or similar products, or that claims that such products are ineffective could have a material adverse effect on our reputation, the demand for our products, our ability to generate revenues and the market price of our common stock.
We may be subject to health or advertising claims related to our customers.
Our products do are not medical treatments and we do not provide or medical advice, and we do not engage physicians or nurses to monitor the progress of our customers. A customer who uses our products and experiences health problems could allege or bring a lawsuit against us on the basis that those problems were caused or worsened by using our products. Further, customers who allege that they were deceived by any statements that we made in advertising or labeling could bring a lawsuit against us under consumer protection laws. We may ultimately be unsuccessful in defending ourselves against such claims. Also, defending ourselves against such claims, regardless of their merit and ultimate outcome, may be lengthy and costly, and could adversely affect our brand image, customer loyalty and results of operations.
We rely on third parties to provide us with nutritional supplements, fulfillment, customer service and Internet and networking services, the loss of any of which could cause our revenue, earnings or reputation to suffer.
In addition to the nutritional supplements we manufacture, we rely on third parties to supply us with additional nutritional supplements we sell. We do not know if our vendors sell the same products under different brands or provides their supplements to other parties under private label brands. In each of these instances, sales of the same product under different brands could cause us to lose revenues and adversely impact our abilities to market our products. While we believe we could locate replacement suppliers for all supplements we acquire from third parties, it would likely take time to engage replacement suppliers which could adversely impact our revenues and there are no assurances our costs would not increase to a level which makes the product unattractive to our customers.
We depend on the services of key executives and other skilled professionals and our ability to attract, train and retain highly qualified associates. Any failure to attract or retain such individuals could affect our business strategy and adversely impact our performance and results of operations.
Our senior executives are instrumental in setting our strategic direction, operating our business, identifying, recruiting and training personnel, identifying opportunities, designing new products and arranging necessary financing. In addition, other key employees below the executive level, with deep knowledge of our business, are critical to the execution and success of our strategy. We must attract, train and retain a growing number of qualified individuals.
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Losing the services of any of these groups of individuals could adversely affect our business and we may be unable to identify candidates of sufficient experience and capabilities in a timely fashion or at all, which could negatively impact our business and operations. Further, our ability to control labor and benefit costs is subject to numerous external factors, including regulatory changes, prevailing wage rates, and healthcare and other insurance costs. We compete with other retail and non-retail businesses for these store and field associates and invest significant resources in training and motivating them. There is no assurance that we will be able to attract or retain qualified store and field associates in the future, which could have a material adverse effect on our business, financial condition and results of operations.
Compliance with new and existing laws and governmental regulations could increase our costs significantly and adversely affect our results of operations.
The processing, formulation, safety, manufacturing, packaging, labeling, advertising and distribution of our products and the operation of our hotel are subject to numerous Chinese laws and regulations as well as laws and regulations imposed by provincial and local governments and agencies and require that we maintain certain licenses and permits. Government regulations may prevent or delay the introduction, or require the reformulation, of our products, which could result in lost revenues and increased costs to us. The failure to maintain appropriate licenses for the operation of our hotel, including those related to the distribution of food and beverages could have a material effect on our results of operations. Manufacturers and distributors of health and wellness products and dietary supplements and dietary ingredients are prohibited from marketing products that are adulterated or misbranded, and the governing agencies may take enforcement action against any adulterated or misbranded health and wellness product or dietary supplement on the market. If we violate applicable regulatory requirements, we may be subject to enforcement actions against us, which could have a material adverse effect on our business, prospects, financial condition, and results of operations. The government may not accept the evidence of safety for any new product or ingredient we may wish to market, may determine that a particular product or ingredient presents an unacceptable health risk based on reported serious adverse events or other information, and may determine that a particular claim or statement of efficacy or nutritional value that we use to support the marketing of a product is not substantiated, or is an unauthorized version of a “health claim.” Any of these actions could prevent us from marketing particular products or making certain claims or statements with respect to those products. We could also be required to remove a particular product from the market. Any future recall or removal would result in costs to us, including lost revenues from any products that we are required to remove from the market, any of which could be material. Any product recalls or removals could also lead to an increased risk of litigation and liability, substantial costs, and reduced growth prospects.
Additional or more stringent laws and regulations of health and wellness products have been considered from time to time. These developments could require reformulation of some products to meet new standards, recalls or discontinuance of some products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of some products, additional or different labeling, additional scientific substantiation, or other new requirements. Any of these developments could increase our costs significantly. In addition, regulators’ evolving interpretation of existing laws could have similar effects.
We depend upon a limited number of suppliers for certain raw materials and any disruption to our timely receipt of raw materials and inventory could adversely impact sales and operations or increase our transportation costs, which would decrease our profits.
We depend upon a limited number of suppliers for the raw materials necessary to produce certain of our products. Unexpected delays in the deliveries of raw materials from our vendors or inventories or increases in transportation costs (including through increased fuel costs) could significantly decrease our ability to make sales and earn profits. We must maintain sufficient levels of raw materials and inventories to operate our business successfully. However, we also must guard against accumulating excess inventory. If we fail to anticipate accurately either the market for the merchandise we offer or our customers’ purchasing habits, we may be forced to rely on markdowns or promotional sales to dispose of excess or slow moving inventory, which could have a material adverse effect on our business, financial condition, and results of operations.
In addition, sales of adulterated products received from third parties could result in a product liability judgment or a widespread product recall that may negatively impact our sales and profitability for a period of time depending on product availability, competition reaction and consumer attitudes. Even if the product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertions could adversely impact our reputation with existing and potential customers and our brand image.
Natural disasters (whether or not caused by climate change), unusually adverse weather conditions, pandemic outbreaks and terrorist acts in China and the response of the Chinese governments to such occurrences, could impair our ability to purchase, receive or replenish inventory or raw materials or cause customer traffic to decline, all of which could result in lost sales and otherwise adversely affect our financial performance.
The occurrence of one or more natural disasters, such as hurricanes, fires, floods and earthquakes (whether or not caused by climate change), unusually adverse weather conditions, pandemic outbreaks or terrorist acts in China and the response of the Chinese government to such occurrences, could adversely affect our operations and financial performance. To the extent these events result in the closure of one or more of our pharmacies, manufacturing facility or our corporate headquarters, or impact one or more of our key suppliers, our operations and financial performance could be materially adversely affected through lost sales. Such events could also cause a disruption in travel making it difficult for consumers to order our products. In addition, these events could result in increases in fuel (or other energy) prices or a fuel shortage, the temporary lack of an adequate work force in a market, the temporary or long-term disruption in the supply of products from some suppliers, the temporary disruption in the transport of goods, the temporary reduction in the availability of products in our stores, expiration of inventory and disruption to our information systems.
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We rely on third parties for the vast majority of our computing, storage, and other services related to our business. Any disruption of or interference with our use of the services of these third parties would negatively affect our operations and could seriously harm our business.
We rely upon third parties, including cloud based platforms and services, to process and store information and for online interactions with our customers. Any transition of the cloud services currently provided by the parties we rely upon to other platforms or to another cloud provider could be difficult to implement and would cause us to incur significant time and expense. Given this, any significant disruption of or interference with the cloud based services utilized by us, whether temporary, regular, or prolonged, would negatively impact our operations and our business would be seriously harmed.
As we increase the amount of personal and user data we store and process, we may become subject to complex and evolving laws, regulations, executive actions, rules, contractual obligations, policies, and other obligations regarding privacy, data protection, content, and other matters. Many of these obligations are subject to change and uncertain interpretations.
Currently, we collect, store, and use limited amounts of personal data and other sensitive information. As our business grows and we increase the amount of such data collect, store and use, we will become subject to a variety of laws, regulations, industry standards, policies, contractual requirements, executive actions, and other obligations relating to privacy, security, and data protection which are becoming increasingly stringent and subject to rapid change and uncertain interpretation. Preparing for and complying with these obligations could require us to devote significant resources. These obligations may necessitate changes to our services, information technologies, systems, and practices. In addition, these obligations may require us to change our business model.
Cyber attacks could have a disruptive effect on our business.
From time to time we and our third-party service providers experience cyber attacks, attempted and actual breaches of our or their information technology systems and networks or similar events, which could result in a loss of sensitive business or customer information, systems interruption or the disruption of our operations. The techniques that are used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and may be difficult to detect for long periods of time, we are accordingly unable to anticipate and prevent all data security incidents.
Even if we are fully compliant with legal standards and contractual or other requirements, we still may not be able to prevent security breaches involving sensitive data. The sophistication of efforts by hackers to gain unauthorized access to information systems has continued to increase in recent years and may continue to do so. Breaches, thefts, losses or fraudulent uses of customer, employee or company data could cause consumers to lose confidence in the security of our websites, mobile applications, point of sale systems and other information technology systems and, as a result of this loss in confidence, choose not to purchase from us. Such security breaches also could expose us to risks of data loss, business disruption, litigation, fines, regulatory charges and other costs or liabilities, any of which could adversely affect our business.
Our business and our ability to raise capital may be materially adversely affected by global geopolitical conditions resulting from the ongoing Russia-Ukraine conflict, the Israel-Hamas conflict, the conflict in Iran and the disruption in the oil markets, and other recent actions undertaken by the United States, such as the imposition of tariffs and the response of China and other nations thereto.
Global markets are experiencing volatility and disruption as a result of the geopolitical instability resulting from the ongoing Russia-Ukraine conflict, the Israel-Hamas conflict, the conflict in Iran and the disruption to the oil markets and other recent actions undertaken by the United States, such as the imposition of tariffs and the response of China and other nations thereto. The invasion of Ukraine by Russia, the Israel-Hamas conflict, the conflict in Iran and the disruption to the oil markets and other recent actions undertaken and threatened by the United States and the resulting measures that have been taken, and could be taken in the future, by China, NATO, the United States, the United Kingdom, the European Union, Israel and other countries have created global security concerns that could have a lasting impact on regional and global economies and financial markets. Although the length and impact of the ongoing conflicts are highly unpredictable, they could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. Additionally, any resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets.
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Any of the abovementioned factors, or any other negative impact on the global economy, capital markets or other geopolitical conditions resulting from such actions, could adversely affect our business or disrupt the capital markets, impacting our ability to raise capital. The extent and duration of the ongoing conflicts, resulting sanctions and any related market disruptions are impossible to predict, but could be substantial, particularly if current or new sanctions continue for an extended period of time or if geopolitical tensions result in expanded military operations on a global scale. Any such disruptions may also have the effect of heightening many of the other risks described in this section. If these disruptions or other matters of global concern continue for an extensive period of time, our business may be materially adversely affected.
We may be impacted by our ability to attract, develop and retain qualified associates and manage labor-related costs.
We believe one of our competitive advantages is providing a positive, engaging and satisfying experience for each customer, which requires us to have highly trained and engaged associates. Our success depends in part upon our ability to attract, develop and retain a sufficient number of qualified associates to enable us to grow our customer base. The turnover rate in the health and wellness industry is generally high, and qualified individuals of the requisite caliber and number needed may be in short supply. Competition for such qualified individuals or changes in labor laws could require us to incur higher labor costs. Our inability to recruit a sufficient number of qualified individuals may delay the expansion of our customer base and our growth. Significant increases in associate turnover rates or significant increases in labor-related costs could have a material adverse effect on our results of operations, financial condition and cash flows.
Our insurance may not be sufficient.
We carry insurance that we consider adequate in regard to the nature of the covered risks and the costs of coverage. We are not fully insured against all possible risks, nor are all such risks insurable.
Our business depends on the continued contributions made by Mr. Quanzhong Lin, our key executive officer. The loss of his services may result in a severe impediment to our business.
Our success is dependent upon the continued contributions made by our CEO and President, Mr. Quanzhong Lin. The Company has no “Key Man” insurance to cover the resulting losses in the event that any of our officer or directors should die or resign.
If Mr. Lin cannot serve the Company or is no longer willing to do so, the Company may not be able to find alternatives in a timely manner or at all. This would likely result in a severe damage to our business operations and would have an adverse material impact on our financial position and operational results. To continue as a viable operation, the Company may have to recruit and train replacement personnel at a higher cost.
Should Mr. Lin fail to obtain conclusive written evidence from the local authorities stating that the criminal investigation against him has been terminated, he may be forced to resign from his positions in the Company.
In October 2023, a number of individuals accused Quanzhong Lin, our Chairman and Chief Executive Officer, acting through Sichuan Aixin Investment Co., Ltd. and Chengdu Aixin E-commerce Co., Ltd., entities controlled by Mr. Lin, of raising funds illegally. Mr. Lin has been orally advised that the investigation against him has been terminated and that no charges will be filed against him. Nevertheless, if Mr. Lin is unable to obtain conclusive written evidence from the local authorities stating that the criminal investigation against him has been terminated and that no charges will be brought against him, he may be forced to resign from his positions in the Company.
Our key executive does not devote his full business time to our operations.
Our President and Chief Executive Officer, Mr. Quanzhong Lin, is involved in a number of businesses and does not devote all of his working time to our business. Our positive reputation in Chengdu is derived from the standing of Mr. Lin in the Chengdu business community. If Mr. Lin does not devote sufficient time to our business, our operations could suffer which would have an adverse material impact on our financial position and operational results.
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Some of the other businesses engaged in by Mr. Lin could be deemed competitive with aspects of our business. Should such other businesses prove more successful than ours, Mr. Lin could choose to focus his attention on such businesses which could cause him to fail to devote sufficient attention to our business and our operations could suffer and our financial conditions and results of operations may be materially and adversely affected
Our principal shareholder is not familiar with American business practices.
Mr. Quanzhong Lin, our founder and principal shareholder, is a citizen of the PRC and an active entrepreneur in Chengdu. Mr. Lin is not familiar with American business practices and is heavily influenced by the business culture in the PRC. There is a certain level of respect and prestige associated with being the Chinese principal of a company which is publicly traded in the U.S. Mr. Lin’s motivation for causing the business of AiXinZhongdong to become a part of a U.S. publicly-traded company may differ from those of American entrepreneurs and his values may cause him to operate the business differently than would an American entrepreneur which could have a material adverse effect on our results of operations, financial condition and cash flows
We may be adversely impacted by certain compliance or legal matters.
We, along with third parties with which we do business, are subject to complex compliance and litigation risks. The cost of defending against claims that might be brought against us or the ultimate resolution of such claims, whether by settlement or adverse court decision, may harm our business. Further, potential claimants may be encouraged to bring lawsuits based on a settlement from us or adverse court decisions against us. We cannot currently assess the likely outcome of such suits, but if the outcome were negative, it could have a material adverse effect on our reputation, results of operations, financial condition and cash flows.
In addition, we may be impacted by litigation trends, including class action lawsuits involving consumers and shareholders, that could have a material adverse effect on our reputation, the market price of our common stock, results of operations, financial condition and cash flows.
Failure to make adequate contributions to various employee benefits plans as required by PRC regulations may subject us to penalties.
Companies operating in China are required to participate in various government sponsored employee benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentage of salaries, including bonuses and allowances, of employees up to a maximum amount specified by the local government from time to time at locations where they operate their businesses. The requirement of employee benefit plans has not been implemented consistently by the local governments in China given the different levels of economic development in different locations. Employers that fail to make adequate social insurance and housing provident fund contributions may be subject to late payment fees, fines and sanctions. If the relevant PRC authorities determine that we need to make supplemental contributions or that we are subject to late payment fees, fines or other legal sanctions, such as order of timely rectification, in relation to our failure to make social insurance and housing fund contributions in full for our employees, our business and financial condition may be adversely affected.
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Our common stock may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors. The delisting of our common stock or the threat of their being delisted, may materially and adversely affect the value of your investment.
The HFCAA was enacted on December 18, 2020. The HFCAA, as amended by the Accelerating Holding Foreign Companies Accountable Act, states if the SEC determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for two consecutive years beginning in 2021, the SEC shall prohibit the securities of such company from being traded on a national securities exchange or in the over the counter trading market in the U.S.
On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. A company will be required to comply with these rules if the SEC identifies it as having a “non-inspection” year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCAA, including the listing and trading prohibition requirements described above. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions. On December 16, 2021, the PCAOB issued a Determination Report which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (i) China, and (ii) Hong Kong. On August 26, 2022, the CSRC, the Ministry of Finance of the PRC, and the PCAOB signed a Statement of Protocol, or the Protocol, governing inspections and investigations of audit firms based in China and Hong Kong. Pursuant to the Protocol, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. Notwithstanding the foregoing, if the PCAOB is not able to inspect and investigate completely our auditor’s work papers in China, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading of our securities may be prohibited under the HFCAA.
Our auditor is not headquartered in China or Hong Kong and was not identified in this report as a firm subject to the PCAOB’s determination.
The SEC may propose additional rules or guidance that could impact us if our auditor is not subject to PCAOB inspection. For example, on August 6, 2020, the President’s Working Group on Financial Markets, or the PWG, issued the Report on Protecting United States Investors from Significant Risks from Chinese Companies to the then President of the United States. This report recommended the SEC implement five recommendations to address companies from jurisdictions that do not provide the PCAOB with sufficient access to fulfil its statutory mandate. Some of the concepts of these recommendations were implemented with the enactment of the HFCAA. However, some of the recommendations were more stringent than the HFCAA. For example, if a company’s auditor was not subject to PCAOB inspection, the report recommended that the transition period before a company would be delisted would end on January 1, 2022.
The SEC has announced that the SEC staff is preparing a consolidated proposal for the rules regarding the implementation of the HFCAA and to address the recommendations in the PWG report. The implications of possible additional regulation in addition to the requirements of the HFCAA and what was recently adopted on December 2, 2021 are uncertain. While we understand that there has been dialogue among the CSRC, the SEC and the PCAOB regarding the inspection of PCAOB-registered accounting firms in China, there can be no assurance that we will be able to comply with requirements imposed by U.S. regulators. Such uncertainty could cause the market price of our common stock to be materially and adversely affected.
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A joint statement by the SEC and the Public Company Accounting Oversight Board (United States), or the “PCAOB,” the newly enacted “Holding Foreign Companies Accountable Act” and the “Accelerating Holding Foreign Companies Accountable Act” all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to the market for our common stock.
On April 21, 2020, the SEC and the PCAOB released a joint statement highlighting the risks associated with investing in companies based in or having substantial operations in emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.
On December 18, 2020, the HFCAA was signed and became law. This legislation requires certain issuers of securities to establish that they are not owned or controlled by a foreign government. Specifically, an issuer must make this certification if the PCAOB is unable to audit specified reports because the issuer has retained a foreign public accounting firm not subject to inspection by the PCAOB. Furthermore, if the PCAOB is unable to inspect the issuer’s public accounting firm for three consecutive years, the issuer’s securities are banned from trading on a national exchange or through other methods. On December 29, 2022, the AHFCAA was enacted, which amended the HFCAA by decreasing the number of non-inspection years from three years to two, thus reducing the time period before our common stock may be prohibited from trading or delisted if the PCAOB were to determine that it could not inspect our auditor.
On March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the HFCAA. The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction. The SEC will implement a process for identifying such a registrant and any such identified registrant will be required to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction, and will also require disclosure in the registrant’s annual report regarding the audit arrangements of, and governmental influence on, such a registrant.
On September 22, 2021, the PCAOB adopted rules to create a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether it is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.
On December 2, 2021, the SEC issued amendments to finalize the interim final rules previously adopted in March 2021 to implement the submission and disclosure requirements in the HFCAA. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in a foreign jurisdiction.
On December 16, 2021, the PCAOB issued a Determination Report which found that the PCAOB was then unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the People’s Republic of China, because of a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. The PCAOB has made such designations as mandated under the HFCAA. Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms and thus are at risk of such suspensions in the future.
On August 26, 2022, the CSRC, the Ministry of Finance of the PRC, and the PCAOB signed a Statement of Protocol, or the Protocol, governing inspections and investigations of audit firms based in China and Hong Kong. Pursuant to the Protocol, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB will consider the need to issue a new determination. Notwithstanding the foregoing, if the PCAOB is not able to inspect and investigate completely our auditor’s work papers in China, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading of our securities may be prohibited under the HFCAA.
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Our auditor, YCM CPA INC. (“YCM CPA”), an independent public accounting firm registered with the PCAOB, and an auditor of publicly traded companies in the U.S., is subject to laws in the U.S. pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Our auditor is based in the United States and has been inspected by the PCAOB on a regular basis, with the last inspection in 2025. Our auditor is not headquartered in mainland China or Hong Kong and was not identified as a firm subject to the determinations announced by the PCAOB on December 16, 2021. Nevertheless, should the PCAOB be unable to fully conduct inspection of our auditor’s work papers in China, it will make it difficult to evaluate the effectiveness of our auditor’s audit procedures or equity control procedures. Investors may consequently lose confidence in our reported financial information and procedures or quality of the financial statements, which would adversely affect us and our securities. Moreover, if trading in our securities is prohibited under the HFCAA in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, if our securities were then traded on an exchange, that exchange may determine to delist our securities.
There are uncertainties under the PRC Securities Law relating to the procedures and requisite timing for the U.S. securities regulatory agencies to conduct investigations and collect evidence within the territory of the PRC.
On December 28, 2019, the newly amended Securities Law of the PRC (the “PRC Securities Law”) was promulgated, which became effective on March 1, 2020. According to Article 177 of the PRC Securities Law (“Article 177”), the securities regulatory authority of the State Council may establish a regulatory cooperation mechanism with securities regulatory authorities of another country or region for the implementation of cross-border supervision and administration. Article 177 further provides that overseas securities regulatory authorities shall not engage in activities pertaining to investigations or evidence collection directly conducted within the territories of the PRC, and that no Chinese entities or individuals shall provide documents and information in connection with securities business activities to any organizations and/or persons aboard without the prior consent of the securities regulatory authority of the State Council and the competent departments of the State Council.
Article 177 is only applicable where the activities of overseas authorities constitute a direct investigation or evidence collection by such authorities within the territory of the PRC. Our principal business operation is conducted in the PRC. In the event that the U.S. securities regulatory agencies carry out an investigation on us such as an enforcement action by the Department of Justice, the SEC or other authorities, such agencies’ activities will constitute conducting an investigation or collecting evidence directly within the territory of the PRC and accordingly fall within the scope of Article 177. In that case, the U.S. securities regulatory agencies may have to consider establishing cross-border cooperation with the securities regulatory authority of the PRC by way of judicial assistance, diplomatic channels or establishing a regulatory cooperation mechanism with the securities regulatory authority of the PRC. However, there is no assurance that the U.S. securities regulatory agencies will succeed in establishing such cross-border cooperation in this particular case and/or establish such cooperation in a timely manner.
There have not been implementing rules or regulations regarding the application of Article 177, it remains unclear as to how it will be interpreted, implemented or applied by the Chinese Securities Regulatory Commission or other relevant government authorities. As such, there are uncertainties as to the procedures and requisite timing for the U.S. securities regulatory agencies to conduct investigations and collect evidence within the territory of the PRC. If the U.S. securities regulatory agencies are unable to conduct such investigations, there exists a risk that they may determine to suspend or de-register our registration with the SEC and may also delist our securities from the Nasdaq Capital Market or other applicable trading market within the US.
We could be subject to conflicting demands placed upon us by regulatory authorities in the United States and the PRC which could result in disciplinary actions if not resolved.
Article 26 of the Trial Measures issued by the CSRC on February 17, 2023 came into effect on March 31, 2023. Article 26 provides that if an overseas securities regulatory agency intends to conduct an investigation and collect evidence regarding an overseas offering or listing activities by a domestic company, and request assistance of the CSRC under relevant cross-border securities regulatory cooperation agreements, the CSRC may provide necessary assistance in accordance with the laws of the PRC. Any domestic entity or individual intending to provide documents and materials requested by an overseas securities regulatory agency in connection with an investigation may not provide such information without prior approval from the CSRC and competent authorities under the State Council. In addition, Article 11 of the Provisions on Strengthening Confidentiality and Archives Administration in Respect of Overseas Issuance and Listing of Securities by Domestic Enterprises which was jointly issued by the CSRC, the Ministry of Finance, the State Secrecy Administration and the State Archives Bureau on February 24, 2023 came into effect on March 31, 2023, and provides that, when an overseas securities regulator and the relevant competent authorities intends to conduct inspections or investigations to collect evidence from a domestic enterprise and any domestic securities firms and securities service agencies providing services regarding the overseas offering and listing activities of the domestic enterprise, the inspection or investigation shall be carried out under the appropriate cross-border regulatory cooperation agreement, and the CSRC or the relevant authorities shall provide the requisite assistance pursuant to the bilateral and multilateral cooperation mechanism. Further, any domestic company, securities firm and securities service agency shall obtain the consent of the CSRC or the relevant administrative authorities prior to cooperating in an inspection or investigation carried out by an overseas securities regulator or relevant administrative authorities or providing documents and materials for cooperating in the inspection or investigation.
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As this regulation has recently been adopted, clarifying regulations have not been issued and companies in China and their counsel generally have little experience in assessing when permission must be obtained before releasing information to a foreign regulatory agency. If the Company were to provide information to any securities regulatory agency in violation of Article 26 or Article 11, it would be subject to fines and, if the information were deemed a state secret, government work secret or might jeopardize the national security of China or the public interest, as provided in the Confidentiality and Archives Provisions, it could cause the Company or the individuals responsible for the disclosure to be subject to criminal investigation. Likewise, if the Company refuses to provide information requested by any U.S. securities regulatory agency in circumstances that the Company believes would have caused it to violate Article 26 or Article 11, it will be subject in the United States to fines, penalties. While detailed interpretation of or implementation rules under Article 177, of Article 26 and Article 11 have yet to be promulgated, the inability of an overseas securities regulator to directly conduct an investigation or evidence collection activities within China may further increase difficulties that you may face in protecting your interests.
We are exposed to liabilities relating to environmental protection and safety laws and regulations.
Our operations are subject to comprehensive and frequently changing laws and regulations relating to environmental protection and health and safety. The discharge of waste and pollutants from our manufacturing operations into the environment may give rise to liabilities that may require us to incur costs to remedy such discharge. If we violate such laws or regulations, we may be required to implement corrective actions and could be subject to civil or criminal fines or penalties or other sanctions.
However, we cannot assure you that any environmental laws adopted in the future will not materially increase our operating costs and other expenses. We cannot assure you that we will not have to make significant capital or operating expenditures in the future in order to comply with existing or new laws and regulations or that we will comply with applicable environmental laws at all times. Such violations or liability could have a material adverse effect on our business, financial condition and results of operations.
We require additional financing and our operations could be curtailed if we are unable to obtain required additional financing when needed.
We need to obtain additional debt or equity financing to fund the immediate development of Yunnan Runcangsheng and future capital expenditures. The issuance of additional equity securities may result in dilution to the holders of our outstanding shares of capital stock. Additional debt financing may include conditions that would restrict our freedom to operate our business, such as conditions that:
| ● | limit our ability to pay dividends or require us to seek consent for the payment of dividends; | |
| ● | increase our vulnerability to general adverse economic and industry conditions; | |
| ● | require us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow to fund capital expenditures, working capital and other general corporate purposes; and | |
| ● | limit our flexibility in planning for, or reacting to, changes in our business and our industry. |
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We cannot guarantee that we will be able to obtain any additional financing on terms that are acceptable to us, or at all.
General Risks Associated with Business Operations in China
The PRC government has significant oversight and discretion over the conduct of a PRC company’s business operations or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, and may intervene with or influence our operations, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or become worthless, as the government deems appropriate to further regulatory, political and societal goals.
The PRC government may intervene or influence our operations at any time, which could result in a material change in our operations and/or the value of our common stock. For example, the PRC government has recently published new policies that significantly affected certain industries such as the education and internet industries, and we cannot rule out the possibility that the PRC government will release regulations or policies regarding any industry that could adversely affect the business, financial condition and results of operations of our company. Furthermore, the PRC government has also recently indicated an intent to exert more oversight and control over securities offerings and other capital markets activities that are conducted overseas and foreign investment in China-based companies. Any such action, once taken by the PRC government, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or in extreme cases, become worthless.
The PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity (“VIE”) structures, adopting new measures to extend the scope of cybersecurity reviews and expanding anti-monopoly enforcement efforts. These statements and regulatory actions have yet to have an impact on our daily business operations, the ability to accept foreign investments or list our securities on a U.S. or other foreign exchange. Since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our daily business operation, the ability to accept foreign investments and list our securities on an U.S. or other foreign exchange.
The CSRC has released draft rules for China-based companies seeking to conduct initial public offerings in foreign markets. The Chinese government may exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer our common stock to investors and could cause the value of our common stock to significantly decline or become worthless.
On December 24, 2021, the CSRC released the Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments) (the “Administrative Provisions”) and the Measures for the Overseas Issuance of Securities and Listing Record-Filings by Domestic Enterprises (Draft for Comments) (the “Measures”). The Administrative Provisions and Measures lay out the filing regulation arrangement for both direct and indirect overseas listing and clarify the determination criteria for indirect overseas listing in overseas markets. The Administrative Provisions and Measures, if enacted, may subject us to additional compliance requirements in the future. Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer our common stock, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our common stock shares to significantly decline in value or become worthless.
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The CSRC has released the Trial Measures requiring Chinese domestic companies to complete filings with the CSRC if they complete an overseas offering and listing of their securities.
The Trial Measures, regulations for the filing-based administration of direct and indirect overseas securities offerings and listings by domestic companies incorporated in Mainland China went into effect on March 31, 2023. We anticipate that as a domestic Chinese operating company with securities listed in the U. S., we will be required to make filings pursuant to the Trial Measures. Any filings we make in accordance with the Trial Measures will provide the Chinese Government with information regarding our operations. Reviewing information we provide may cause the PRC government to exert oversight and control over our operations, securities offerings and other capital markets activities. Any such action could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or in extreme cases, become worthless.
The CSRC has released Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Enterprises which may limit the activities of or disclosures made by companies in the PRC which, directly or indirectly, list their securities overseas.
The Confidentiality and Archives Provisions, which went into effect March 31, 2023, require, among other items, that PRC domestic enterprises seeking to offer and list securities in overseas markets, establish an archival system which will maintain the confidentiality of information in accordance with applicable laws and regulations. Further, if a PRC domestic enterprise plans, directly or indirectly, to release documents or provide material that contain state secrets or government work secrets, or that will jeopardize national security or the public interest, it must strictly comply with all relevant governmental procedures and obtain approval of the appropriate regulatory before doing so. Although we are subject to the Confidentiality and Archives Provisions, we believe that none of the documents or materials we intend to provide to parties outside of the PRC contains materials that would require us to make any filing or obtain any approval of a Chinese regulatory authority. Nevertheless, the determination of whether information contains state secrets, government work secrets or jeopardizes national security or the public interest is subjective and any failure or perceived failure by us or our subsidiaries to comply with the confidentiality and archive administration requirements under the Confidentiality and Archives Provisions could cause us to be referred for criminal investigation and held liable for such violations by the authorities in China. Further, PRC regulatory authorities could use these regulations to limit our disclosures or interfere with our operations. Any determination that we have violated the Confidentiality and Archives Provisions or use of these provisions to limit our disclosures could cause the value of our common stock to significantly decline in value or become worthless.
You may have difficulty in effecting service of legal process or bringing actions in China against us or our management based on foreign laws.
We are a Colorado holding company which conducts our operations in China through wholly owned subsidiaries with direct equity ownership and most of our assets are and will be located outside the United States. Almost all of our operations will be conducted in China. In addition, nearly all of our officers and directors, including Quanzhong Lin, Qiyu Jiang, Huiliang Jiao and Xiaowen Zheng are PRC nationals and residents of China and all of their assets are located outside the United States. Christopher Lee, our remaining director, resides outside of the United States for a significant portion of time. As a result, it may be difficult for you to effect service of process upon us or our directors and officers inside China or to bring actions against us or our management in China.
Shareholder claims that are common in the United States, including securities law class actions and fraud claims, generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the local authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such regulatory cooperation with the securities regulatory authorities in the Unities States have not been efficient in the absence of mutual and practical cooperation mechanism. According to Article 177 of the PRC Securities Law which became effective in March 2020, no overseas securities regulator is allowed to directly conduct an investigation or evidence collection activities within the territory of the PRC. Accordingly, without the consent of the competent PRC securities regulators and relevant authorities, no organization or individual may provide the documents and materials relating to securities business activities to overseas parties outside of the PRC.
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You may have difficulty in enforcing foreign judgements in China against us or our management.
China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States and many other countries and regions. Even judgements from countries that have an enforcement treaty with China are often not enforceable in China. Therefore, recognition and enforcement in China of judgments of a court in any non-PRC jurisdiction in relation to any matter not subject to a binding arbitration provision may be difficult or impossible. It may also be difficult for you to enforce U.S. courts judgments based on violations of the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, since most of them are residents of the PRC and those who are not residents of the PRC reside outside of the United States for all or a significant portion of time. In addition, there is uncertainty as to whether the courts of China would recognize or enforce judgments of U.S. courts.
Foreign exchange fluctuations may affect our business.
The functional currency utilized by our PRC Subsidiaries is the RMB and we accept payment for our products in RMB. Therefore, foreign exchange fluctuations may influence our business in unpredictable ways.
The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the PRC government. It is difficult to predict how market forces or PRC or U.S. government policy, including the imposition of tariffs, any interest rate increases or decreases by the Federal Reserve or the PRC equivalent, may impact the exchange rate between the Renminbi and the U.S. dollar in the future. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, including from the U.S. government, which has threatened to label China as a “currency manipulator,” which could result in greater fluctuation of the Renminbi against the U.S. dollar.
A substantial percentage of our revenues and costs are denominated in Renminbi, and a significant portion of our assets are also denominated in Renminbi. We are a holding company and we rely on dividends, loans and other distributions on equity paid by our operating subsidiaries in China. Any significant fluctuations in the value of the Renminbi may materially and adversely affect our liquidity and cash flows. Appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount we would receive. Conversely, to the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive.
Inflation could pose a risk to our business.
Inflation is an important factor that must be considered as we move forward. A change in the rate of inflation could influence the profits that we generate from our business. When the rate of inflation rises, the operational costs of running our company would increase, such as labor costs, raw materials and public utilities, affecting our ability to provide our services at competitive prices. An increase in the rate of inflation would force our clients to search for other service providers, causing us to lose business and revenue.
Changes in the policies, regulations, rules and the enforcement of laws of the PRC government may be quick with little advance notice and could have a significant impact upon the business we may be able to conduct in the PRC and the profitability of such business.
The PRC’s economy is in a transition from a planned economy to a market-oriented economy subject to five-year and annual plans adopted by the central government that set national economic development goals. Policies of the PRC government can have significant effects on the economic conditions of the PRC. The PRC government has confirmed that economic development will follow the model of a market economy. Under this direction, we believe that the PRC will continue to strengthen its economic and trading relationships with foreign countries and business development in the PRC will follow market forces. While we believe that this trend will continue, we cannot assure you that this will be the case. Changes in policies, regulations, rules and the enforcement of laws by the PRC government, which changes may be quick with little advance notice, could adversely affect our interests by. Although the PRC government has been pursuing economic reform policies for more than two decades, we cannot assure you that the government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting the PRC’s political, economic and social environment.
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There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.
Most of our operations are conducted in the PRC and are governed by PRC laws, rules and regulations. Our PRC Subsidiaries are subject to laws, rules and regulations applicable to foreign investment in China. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value.
In 1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economic matters in general. However, China has not developed a fully integrated legal system, and recently enacted laws, rules and regulations may not sufficiently cover all aspects of economic activities in China or may be subject to significant degree of interpretation by PRC regulatory agencies and courts. In particular, because these laws, rules and regulations are relatively new, and because of the limited number of published decisions and the non-precedential nature of these decisions, and because the laws, rules and regulations often give the relevant regulator significant discretion in how to enforce them, the interpretation and enforcement of these laws, rules and regulations involve uncertainties and can be inconsistent and unpredictable. Therefore, it is possible that our existing operations may be found not to be in full compliance with relevant laws and regulations. In addition, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, and which may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until after the occurrence of the violation.
Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. These uncertainties may impede our ability to enforce the contracts we have entered into and could materially and adversely affect our business, financial condition and results of operations.
PRC regulations regarding acquisitions impose significant regulatory approval and review requirements, which could make it more difficult for us to pursue growth through acquisitions.
Under the PRC Anti-Monopoly Law, companies undertaking acquisitions relating to businesses in China must notify the anti-monopoly enforcement agency in advance of any transaction where the parties’ revenues in the China market exceed certain thresholds and the buyer would obtain control of, or decisive influence over, the other party. In addition, on August 8, 2006, six PRC regulatory agencies, including the MOFCOM, the State-Owned Assets Supervision and Administration Commission, the State Administration of Taxation, the SAIC, the China Securities Regulatory Commission, or the CSRC, and the State Administration of Foreign Exchange, or SAFE, jointly adopted Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which came into effect on September 8, 2006 and was amended on June 22, 2009. Under the M&A Rules, the approval of MOFCOM must be obtained in circumstances where overseas companies established or controlled by PRC enterprises or residents acquire domestic companies affiliated with such PRC enterprises or residents. Applicable PRC laws, rules and regulations also require certain merger and acquisition transactions to be subject to security review.
Our business may be subject to a variety of PRC laws and other obligations regarding cybersecurity and data protection.
Our business may be subject to PRC laws relating to the collection, use, sharing, retention, security, and transfer of confidential and private information, such as personal information and other data. These laws continue to develop, and the PRC government may adopt other rules and regulations in the future. Non-compliance could result in penalties or other significant legal liabilities.
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Pursuant to the PRC Cybersecurity Law, which was promulgated by the Standing Committee of the National People’s Congress on November 7, 2016 and took effect on June 1, 2017, personal information and important data collected and generated by a critical information infrastructure operator in the course of its operations in China must be stored in China, and if a critical information infrastructure operator purchases internet products and services that affects or may affect national security, it should be subject to cybersecurity review by the Cyberspace Administration of China (“CAC”). Due to the lack of further interpretations, the exact scope of “critical information infrastructure operator” remains unclear.
On December 28, 2021, twelve Chinese government agencies jointly promulgated the Measures for Cybersecurity Review, which became effective February 15, 2022, set forth the cybersecurity review mechanism for critical information infrastructure operators, and provided that critical information infrastructure operators who intend to purchase internet products and services that affect or may affect national security shall be subject to a cybersecurity review. On June 10, 2021, the Standing Committee of the National People’s Congress promulgated the PRC Data Security Law, which took effect in September 2021. The Data Security Law provides for a security review procedure for data activities that may affect national security. Moreover, the State Internet Information Office issued the Measures of Cybersecurity Review (Revised Draft for Comments, not yet effective) on July 10, 2021, which requires operators with personal information of more than 1 million users who want to list abroad to file a cybersecurity review with the CAC. Furthermore, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Severe and Lawful Crackdown on Illegal Securities Activities, which was available to the public on July 6, 2021. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision of overseas listings by China-based companies. These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection. As these laws, opinions and the draft measures were recently issued, official guidance and interpretation of these remain unclear in several respects at this time, and the PRC government authorities have wide discretion in the interpretation and enforcement of these laws, opinions and draft measures. Therefore, it is uncertain whether the future regulatory changes would impose additional restrictions on our business
The Data Security Law also sets forth the data security protection obligations for entities and individuals handling personal data, including that no entity or individual may acquire such data by stealing or other illegal means, and the collection and use of such data should not exceed the necessary limits. The costs of compliance with, and other burdens imposed by, PRC Cybersecurity Law and any other cybersecurity and related laws may limit the utility of our internet sales channel of distribution and could have an adverse impact on our business. Further, if the enacted version of the Measures for Cybersecurity Review mandates clearance of cybersecurity review and other specific actions to be completed by companies like us, we face uncertainties as to whether such clearance can be timely obtained, or at all.
There remains uncertainty as to how the Draft Measures will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Draft Measures. If any such new laws, regulations, rules, or implementation and interpretation comes into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us.
We cannot assure you that PRC regulatory agencies, including the CAC, would take the same view as we do, and there is no assurance that we can fully or timely comply with such laws. In the event that we are subject to any mandatory cybersecurity review and other specific actions required by the CAC, we face uncertainty as to whether any clearance or other required actions can be timely completed, or at all. Given such uncertainty, we may be further required to shut down our website, or face other penalties, which could materially and adversely affect our business, financial condition, and results of operations.
PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC Subsidiaries to liability or penalties, limit our ability to inject capital into our PRC Subsidiaries or limit our PRC Subsidiaries’ ability to increase their registered capital or distribute profits.
SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, on July 4, 2014. SAFE Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.” SAFE Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as changes in capital contributed by PRC individuals, share transfers or exchanges, mergers, divisions or other material events. In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC Subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC Subsidiaries. Moreover, failure to comply with the various SAFE registration requirements could result in liability under PRC law for evasion of foreign exchange controls.
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As we have little control over the registration procedures, we cannot assure you of the outcome of such registration, and we cannot assure you that any of our shareholders who are PRC residents will submit the required registration or amend or update their registration as required under Circular 37 and the Notice of the State Administration of Foreign Exchange on Further Simplifying and Improving the Foreign Exchange Administration Policies for Direct Investment [Hui Fa (2015) No.13] issued by SAFE with effect from June 1, 2015, or SAFE Notice 13, in a timely manner or at all. In addition, we may not be aware of the identities of all of our beneficial owners who are PRC residents. We do not have control over our beneficial owners and cannot assure you that all of our PRC-resident beneficial owners will comply with SAFE Circular 37 and subsequent implementation rules. The failure of our current and future beneficial owners who are PRC residents to register or amend their SAFE registrations in a timely manner pursuant to SAFE Circular 37 and subsequent implementation rules, may subject the beneficial owners or our PRC Subsidiaries to fines and legal sanctions. On February 13, 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1, 2015. Pursuant to SAFE Notice 13, entities and individuals are required to apply for foreign exchange registration of foreign direct investment and overseas direct investment, including those required under the SAFE Circular 37, with designated domestic banks, instead of SAFE. The designated domestic banks will directly review the applications and conduct the registration.
Furthermore, since it is unclear how the new SAFE regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant PRC government authorities, we cannot predict how these regulations will affect our business operations or future strategy. Failure to register or comply with relevant requirements may also limit our ability to contribute additional capital to our PRC Subsidiaries and limit our PRC Subsidiaries’ ability to distribute dividends to our company. These risks may have a material adverse effect on our business, financial condition and results of operations.
We may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, and we may therefore be subject to PRC income tax on our global income.
Under the PRC Enterprise Income Tax Law and its implementing rules, both of which came into effect on January 1, 2008, enterprises established under the laws of jurisdictions outside of China with “de facto management bodies” located in China may be considered PRC tax resident enterprises for tax purposes and may be subject to the PRC enterprise income tax at the rate of 25% on their global income. “De facto management body” refers to a managing body that exercises substantive and overall management and control over the production and business, personnel, accounting books and assets of an enterprise. The State Administration of Taxation issued the Notice Regarding the Determination of Chinese-Controlled Offshore-Incorporated Enterprises as PRC Tax Resident Enterprises on the basis of de facto management bodies, or Circular 82, on April 22, 2009. Circular 82 provides certain specific criteria for determining whether the “de facto management body” of a Chinese-controlled offshore-incorporated enterprise is located in China. Although Circular 82 only applies to offshore enterprises controlled by PRC enterprises, not those controlled by foreign enterprises or individuals, the determining criteria set forth in Circular 82 may reflect the State Administration of Taxation’s general position on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises. If we, AiXin Colorado and AiXin BVI, were to be considered a PRC resident enterprise, we would be subject to PRC enterprise income tax at the rate of 25% on our global income. In such case, our profitability and cash flow may be materially reduced as a result of our global income being taxed under the Enterprise Income Tax Law. We believe that none of our entities outside of China is a PRC resident enterprise for PRC tax purposes. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.”
Restrictions on currency exchange may limit our ability to utilize our PRC revenue effectively.
We are a holding company with no material operations of our own. We conduct substantially all of our operations through the operating companies established in the PRC. Substantially all of our revenue is denominated in Renminbi. The Renminbi is currently convertible under the “current account,” which includes dividends, trade and service-related foreign exchange transactions, but requires approval from or registration with appropriate government authorities or designated banks under the “capital account,” which includes foreign direct investment and loans, including loans we may secure from our onshore subsidiaries. The relevant PRC governmental authorities or the local bank may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions.
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Since 2016, PRC governmental authorities have imposed more stringent restrictions on outbound capital flows, including heightened scrutiny over “irrational” overseas investments for certain industries, as well as over four kinds of “abnormal” offshore investments, which are:
● investments through enterprises established for only a few months without substantive operation;
● investments with amounts far exceeding the registered capital of the onshore parent and not supported by its business performance shown on financial statements;
● investments in targets which are unrelated to an onshore parent’s main business; and
● investments with abnormal sources of Renminbi funding suspected to be involved in illegal transfer of assets or illegal operation of underground banking.
On January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, which tightened the authenticity and compliance verification of cross-border transactions and cross-border capital flow, including requiring banks to verify board resolutions, tax filing forms and audited financial statements before wiring foreign invested enterprises’ foreign exchange dividend distribution of over US$50,000. In addition, the Outbound Investment Sensitive Industry Catalogue (2018) lists certain sensitive industries that are subject to NDRC pre-approval requirements prior to remitting investment funds offshore, which subjects us to increased approval requirements and restrictions should we have overseas investments. Since a significant amount of our PRC revenue is denominated in Renminbi, any existing and future restrictions on currency exchange may limit our ability to utilize revenue generated in Renminbi to fund our business activities outside of the PRC, make investments, service any debt we may incur outside of China or pay dividends in foreign currencies to our shareholders.
Fluctuations in foreign exchange rates will impact our reported results.
The functional currency utilized by our PRC Subsidiaries is the RMB. Our financial results are reported in U.S. Dollars. Therefore, foreign exchange fluctuations will impact the reporting of our financial results and significant fluctuations in the value of the RMB relative to the U.S. Dollar may materially and adversely affect our financial results as reported in our filings with the SEC. Such variations in our perceived operating results may increase the volatility in the market for our common stock.
The disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC.
We are subject to the regulations of the SEC and our reports and other filings with the SEC are subject to SEC review in accordance with the rules and regulations promulgated by the SEC under the Securities Act and the Exchange Act. Our SEC reports and other disclosure and public pronouncements are not subject to the review or scrutiny of any PRC regulatory authority. For example, the disclosure in our SEC reports and other filings are not subject to the review by China Securities Regulatory Commission, a PRC regulator that is responsible for oversight of the capital markets in China. Accordingly, you should review our SEC reports, filings and our other public pronouncements with the understanding that no local regulator has done any review of us, our SEC reports, other filings or any of our other public pronouncements.
Introduction of new laws or changes to existing laws by the PRC government may adversely affect our business.
The PRC legal system is a codified legal system made up of written laws, regulations, circulars, administrative directives and internal guidelines. Unlike common law jurisdictions like the U.S., decided cases (which may be taken as reference) do not form part of the legal structure of the PRC and thus have no binding effect on subsequent cases with similar issues and fact patterns. Furthermore, in line with its transformation from a centrally-planned economy to a more free market-oriented economy, the PRC government is still in the process of developing a comprehensive set of laws and regulations. As the legal system in the PRC is still evolving, laws and regulations or the interpretation of the same may be subject to further changes. For example, the PRC government may impose more stringent environmental regulations which would affect our ability to comply with, or our costs to comply with, such regulations. Such changes, if implemented, may adversely affect our business operations and may reduce our profitability.
Risks Relating to Our Holding Company Structure
Substantial uncertainties exist with respect to the interpretation and implementation of the newly enacted Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.
On March 15, 2019, the PRC National People’s Congress approved the Foreign Investment Law, which came into effect on January 1, 2020 and replaced existing laws regulating foreign investment in the PRC and become the legal foundation for foreign investment in the PRC. Meanwhile, the Implementation Regulation of the Foreign Investment Law and the Measures for Reporting of Information on Foreign Investment came into effect as of January 1, 2020, which clarified and elaborated the relevant provisions of the Foreign Investment Law. The Foreign Investment Law sets out the basic regulatory framework for foreign investments and proposes to implement a system of pre-entry national treatment with a restricted list for foreign investments, pursuant to which (i) foreign entities and individuals are prohibited from investing in the areas that are not open to foreign investments, (ii) foreign investments in the restricted industries must satisfy certain requirements under the law, and (iii) foreign investments in business sectors outside of the restricted list will be treated equally with domestic investments. The Foreign Investment Law also sets forth necessary mechanisms to facilitate, protect and manage foreign investments and proposes to establish a foreign investment information reporting system, through which foreign investors or foreign-invested enterprises are required to submit initial report, report of changes, report of deregistration and annual report relating to their investments to the Ministry of Commerce, or MOFCOM, or its local branches.
Although our operating structure is legal and permissible under the current Chinese law and regulations, including the Foreign Investment Law, Chinese regulatory authorities could disallow our operating structure, which would likely result in a material change in our operations and/or could cause the value of our common stock to significantly decline or become worthless.
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We may rely on dividends and other distributions on equity paid by our PRC Subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC Subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.
We are a Colorado holding company and we rely on dividends and other distributions on equity paid by our PRC Subsidiaries and loans between us and our PRC Subsidiaries to fund any cash and financing requirements we or any of our PRC Subsidiaries may have, including for the payment of dividends to our investors, the shareholders of AiXin Colorado. Any limitation on the ability of our PRC Subsidiaries to make payments to or transfer funds to us or our other PRC Subsidiaries could have a material and adverse effect on our ability to conduct our business and the ability of our PRC Subsidiaries to conduct their respective businesses. If our PRC Subsidiaries incur debt, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us. Under PRC laws and regulations, our PRC Subsidiaries may pay dividends only out of their respective accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition each of our PRC Subsidiaries is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. Such reserve funds cannot be distributed to us as dividends. At its discretion, each of our PRC Subsidiaries may allocate a portion of its after-tax profits based on PRC accounting standards to an enterprise expansion fund, or a staff welfare and bonus fund.
We have had no transactions that involved the transfer of cash or assets throughout our corporate structure. None of our Chinese Operating Companies has distributed any cash or other assets to AiXin HK, including by way of dividends or interest payments and AiXin Colorado has not transferred any cash or other assets to any of our PRC Subsidiaries. No transfers, dividends or distributions have been made to our investors. To the extent our cash or other assets is in one of our Chinese Operating Companies or AiXin HK, the funds or assets may not be available to fund operations or for use outside of mainland China or Hong Kong including for the payment of dividends to the shareholders of AiXin Life, due to interventions by the governments of PRC or Hong Kong, or the imposition of restrictions and limitations on the ability of the PRC Subsidiaries to use such cash or assets imposed by the government of mainland China or Hong Kong.
The PRC government may continue to strengthen its capital controls, and more restrictions and substantial vetting processes may be put forward by SAFE for cross-border transactions falling under both the current account and the capital account. Any limitation on the ability of our PRC Subsidiaries to pay dividends or make other kinds of payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.
Except for such limitations on our Company’s ability to transfer cash and other assets among our entities currently or hereafter imposed by the governments of the PRC and Hong Kong, there are no limitations on our Company’s ability to transfer cash and other assets through our corporate structure. Our Company does not have any cash management policies with respect to the transfer of cash among our entities other than requirements for the approval of management for transfers in excess of specified amounts and none of our entities is currently party to any debenture, loan or other agreement which imposes restrictions or otherwise limits our Company’s ability to transfer our cash and other assets and we have not adopted any policies that dictate how funds are transferred other than as necessary to comply with applicable laws.
In addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises are incorporated.
PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from making loans or additional capital contributions to our PRC Subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
We are an offshore holding company conducting our operations in China through our PRC Subsidiaries. We may make loans or provide guarantees for the benefit of our PRC Subsidiaries subject to the approval of or registration with governmental authorities and limitations of the amount, or we may make additional capital contributions to our PRC Subsidiaries. Any loans to our PRC Subsidiaries, which are treated as foreign-invested enterprises under PRC law, are subject to foreign exchange loan registrations. In addition, a foreign-invested enterprise, or FIE, shall use its capital pursuant to the principle of authenticity and self-use within its business scope. The capital of an FIE shall not be used for the following purposes: (i) directly or indirectly for payments beyond the business scope of the enterprise or payments prohibited by relevant laws and regulations; (ii) directly or indirectly for investments in securities or investments other than in banks’ principal-secured products unless otherwise provided by relevant laws and regulations; (iii) the granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) paying the expenses related to the purchase of real estate that is not for self-use (except for foreign-invested real estate enterprises).
In light of the requirements imposed by PRC regulations on loans to and direct investments in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans by us to our PRC Subsidiaries or with respect to future capital contributions by us to our PRC Subsidiaries. If we fail to complete such registrations or obtain such approvals, our ability to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
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Risks Related to our Common Stock
There is a limited public market for our common stock and you may not be able to resell our shares at or above the price you paid or at all.
There is a limited public market for our common stock in the OTCQB. On many days during the years ended December 31, 2025, and 2024 and to date in 2026, no shares were traded. We cannot assure you that an active public market for our common stock will develop or that you will be able to resell our shares at or above the price you paid or at all.
The market price of our shares is likely to be highly volatile, which could result in substantial losses to investors.
The trading price of our common stock may be volatile and could fluctuate widely due to factors beyond our control. The trading price for our common stock varied during the twelve-month period ended December 31, 2025, between a high of $0.68 and a low of $0.02. Our stock price is likely to continue to be volatile and subject to significant price and volume fluctuations. This may happen because of the broad market and industry factors, like the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have securities publicly traded in the United States. The securities of some companies with operations in China and securities publicly traded in the United States have experienced significant volatility, including price declines in connection with their initial public offerings. The trading performance of these Chinese companies’ securities after their offerings may affect the attitudes of investors toward Chinese companies publicly traded in the United States, including those of investors based in China, in general and consequently may impact the trading performance of our common stock, regardless of our actual operating performance. Such volatility in the price of our common stock including any stock-run up, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our common stock.
In addition to market and industry factors, the trading price and volume of our common stock may be highly volatile due to factors specific to our operations, including the following:
| ● | variations in our actual and perceived operating results; |
| ● | news regarding gains or losses of customers or partners by us or our competitors; |
| ● | news regarding gains or losses of key personnel by us or our competitors; |
| ● | announcements of competitive developments, acquisitions or strategic alliances in our industry by us or our competitors; |
| ● | changes in earnings estimates or buy/sell recommendations by financial analysts; |
| ● | potential litigation; |
| ● | the imposition of fines or penalties related to our activities in the PRC and failure to comply with applicable rules and regulations; |
| ● | general market conditions or other developments affecting us or our industry; and |
| ● | the operating and stock price performance of other companies, other industries and other events or factors beyond our control. |
In addition, the stock market has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of particular companies. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. This litigation, if instituted against us, could result in very substantial costs, divert our management’s attention and resources, and harm our business, operating results and financial condition. In addition, recent fluctuations in the financial and capital markets have resulted in volatility in securities prices.
Military or other conflicts in Ukraine, the Middle East, Iran or elsewhere and increased geopolitical tensions may lead to increased volume and price volatility for publicly traded securities which could adversely impact the price of our common stock.
Military or other conflicts in Ukraine, the Middle East or elsewhere and increased geopolitical tensions may lead to increased volume and price volatility for publicly traded securities, or affect the operations or financial condition of companies, and lead to national, regional or international economic disruptions and economic uncertainty, any of which could adversely impact the price of our common stock.
The sale or availability for sale of substantial amounts of our common stock could adversely affect its market price.
Sales of substantial amounts of our common stock in the public market or the perception that these sales could occur, could adversely affect the market price of our common stock and could materially impair our ability to raise capital through equity offerings in the future. Shares held by our existing shareholders may be sold in the public market in the future subject to the restrictions in Rule 144 under the Securities Act. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our common stock.
If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding our common stock, the market price for our common stock and trading volume could decline.
The trading market for our common stock will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade our common stock, the market price for our common stock would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our common stock to decline.
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Because we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our common stock for return on your investment.
To date, we have not paid dividends on our common stock. We currently intend to retain all of our available funds and any future earnings to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our common stock as a source for dividend income.
Our board of directors has complete discretion as to whether to distribute dividends. The timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our common stock will likely depend entirely upon any future price appreciation of our common stock. There is no guarantee that our common stock will appreciate in value or even maintain the price at which you purchased our common stock and you may even lose your entire investment.
Our CEO has substantial influence over our company. His interests may not be aligned with the interests of our other shareholders, and he could prevent or cause a change of control or other transactions.
Quanzhong Lin, our Chairman of the Board of Directors and Chief Executive Officer, beneficially owns an aggregate of approximately 58% of our outstanding common stock. Accordingly, Mr. Lin could have significant influence in determining the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations, the appointment of directors and other significant corporate actions. Mr. Lin will also have the power to prevent or cause a change in control. Without the consent of Mr. Lin, we may be prevented from entering into transactions that could be beneficial to us or our minority shareholders. In addition, Mr. Lin could violate his fiduciary duties by diverting business opportunities from us to himself or others. The interests of Mr. Lin may differ from the interests of our other shareholders. The concentration in the ownership of our common stock shares may cause a material decline in the value of our common stock.
| Item 1B. | Unresolved Staff Comments |
No disclosure is required pursuant to this item.
| Item 1C. | Cybersecurity Policy |
Our overall strategy in combatting cybersecurity risks includes a variety of measures, including:
| ● | the use of antivirus software, virtual private networks, email security, as well as other software and system-wide measures such as multi-factor authorization to prevent and detect data intrusions; |
| ● | deployment of updates and patches as they become available from our software suppliers and consultants and maintaining the current versions of major software to reduce the exposure to vulnerabilities; |
| ● | the use of third-party services to conduct mandatory online training for all employees regarding identifying and avoiding cyber-security risks; |
| ● | the review of the security procedures used by third parties that may host or otherwise have access to our systems; |
| ● | the deployment of third-party cyber-security experts to perform penetration testing on our internal and external networks and systems in an effort to identify potential vulnerabilities; and
consideration
of the cybersecurity risks posed by interacting with current and potential |
We
are
Day-to day management of cybersecurity threats is conducted by our Information Technology department in conjunction with outside service providers, which is charged with identifying and reporting threats to senior management. On a quarterly basis, cybersecurity is reviewed by our Chief Executive Officer and Chief Financial Officer, who are expected to report to the Audit Committee.
Board Oversight
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| Item 2. | Properties. |
All of our pharmacies operate at locations leased from a third party pursuant to a short term lease at a market rate rent. In addition to the pharmacies, we maintain our administrative offices in leased remises in Chengdu.
Yunnan Runcangsheng operates a 2,946 square meter production facility, including, R&D centers, extraction facilities, preparation workshops and a warehouse. Yunnan Runcangsheng operates planting facilities where it grows some of the key ingredients used in its products. In November 2025 the Company entered into a three year lease for this property at an annual rent of $44,720.
The term of our lease with respect to our hotel located in Bandzhuyuan Town, Xindu District, Chengdu City, commenced February 29, 2024 and expires April 15, 2034. The lease grants us the right to occupy various areas within the hotel, covering approximately 18,000 square meters, including the first-floor lobby, external shops (subject to the rights of the current occupants), second to fourth floors, fifth to eighteenth floors (inclusive of meeting rooms and part of the dining rooms), underground and ground-level parking lots, and all hotel facilities and equipment.
| Item 3 | Legal Proceedings. |
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
In December 2020, Jian Yiao (the “Plaintiff”) filed a complaint against Chengdu Aixintang Pharmacy Co., Ltd. (“Aixintang Pharmacy”) in Zhangjiagang People’s Court in Jiangsu Province. The complaint alleges that Mr. Yiao is entitled to $392,305 (RMB2,500,000) from Aixintang Pharmacy for breaching a purchase agreement entered in March 2020 (the “Purchase Agreement”). Aixintang Pharmacy claimed that the Purchase Agreement was the result of a forgery by an employee, and that Aixintang Pharmacy did not enter the Purchase Agreement. The Court determined that Aixintang Pharmacy breached the Purchase Agreement by not delivering the products ordered and ordered Aixintang Pharmacy to pay $392,305 (RMB2,500,000) to the Plaintiff. In December 2020, Aixintang Pharmacy filed a motion in the Jiangsu Suzhou Intermediate People’s Court against the verdict.
In February 2021, the judge in the Jiangsu Suzhou Intermediate People’s Court denied Aixintang Pharmacy’s motion and upheld the judgment from the first trial. In March 2021, Aixintang Pharmacy filed another motion to the Jiangsu High People’s Court on the basis that the Purchase Agreement was forged. In February 2022, Aixintang Pharmacy filed an appeal in Jiangsu High People’s Court against the judgment reached by Jiangsu Suzhou Intermediate People’s Court in February 2021. In September 2022, the Court rejected the Defendant’s motion and upheld the judgment rendered in the second trial.
On August 30, 2024, Zhangjiagang People’s Court in Jiangsu Province issued a Notice of Case Closure, stating the Judgement for this case was fully executed and the plaintiff has received the full execution amount as of August 30, 2024.
The incident which is the subject to the above lawsuit occurred before Aixintang Pharmacy was acquired by the Company. In November 2021, Mr. Lin agreed to indemnify the Company against any losses arising from this legal proceeding.
| Item 4 | Mine Safety Disclosures. |
Not applicable
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PART II
| Item 5 | Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities. |
Market Information
Our common stock is quoted on OTCQB under the symbol “AIXN.”
Trading in stocks on the OTCQB is often thin and is characterized by wide fluctuations in trading prices due to many factors that may have little to do with a company’s operations or business prospects. We cannot assure you that there will be a market for our common stock in the future.
The following table sets forth the high and low trading prices of one share of our common stock for each fiscal quarter during the two most recent fiscal years. Over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Our common stock trades on a limited, sporadic and volatile basis.
| Year ended December 31, 2025 | Low | High | ||||||
| First Quarter | $ | 0.018 | $ | 0.042 | ||||
| Second Quarter | 0.042 | 0.51 | ||||||
| Third Quarter | 0.1030 | 0.631 | ||||||
| Fourth Quarter | 0.1640 | 0.678 | ||||||
| Year ended December 31, 2024 | Low | High | ||||||
| First Quarter | $ | 0.27 | $ | 1.02 | ||||
| Second Quarter | 0.22 | 0.67 | ||||||
| Third Quarter | 0.27 | 0.66 | ||||||
| Fourth Quarter | 0.02 | 0.55 | ||||||
Holders
As of May 12, 2026, there were approximately 650 record holders of our common stock.
Issuer Purchases of Equity Securities
None.
Transfer Agent
The transfer agent for the common stock is Securities Transfer Corporation. The transfer agent’s address is 2901 N. Dallas Parkway, Suite 380, Plano Texas 75093, and its telephone number is +1 (469) 633-0101.
Dividend Policy
No cash dividends were paid on our shares of common stock since we acquired AiXin BVI. Payment of dividends in the future will depend upon our earnings, growth, capital requirements, and other factors, which our board of directors may deem relevant. We do not foresee declaring any cash dividends on our common stock in the foreseeable future.
Securities Authorized for Issuance under Equity Compensation Plans
In 2019 we adopted the 2019 Equity Incentive Plan (the “2019 Plan”), which authorizes the issuance of shares of common stock for grants of stock options, stock appreciation rights, restricted stock, stock units, bonus stock, dividend equivalents, other stock related awards and performance awards that may be settled in cash, stock, or other property. The 2019 Plan authorizes the issuance of up to 625,000 shares.
We adopted the 2019 Plan to provide a means by which employees, directors, and consultants of our Company and those of our subsidiaries and other designated affiliates, which we refer to together as our affiliates, may be given an opportunity to purchase our common stock, to assist in retaining the services of such persons, to secure and retain the services of persons capable of filling such positions, and to provide incentives for such persons to exert maximum efforts for our success and the success of our affiliates.
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The following table sets forth information about the common stock available for issuance under compensatory plans and arrangements as of December 31, 2024.
| Plan Category | (a) Number of securities to be issued upon exercise of outstanding options | (b) exercise price of outstanding | I under equity Compensation securities | |||||||
| Equity compensation plan approved by security holders | None | — | 331,250 | |||||||
| Equity compensation plans not approved by security holders | None | — | None | |||||||
| Total | None | — | 331,250 | |||||||
Penny Stock Regulations
The SEC has regulations which generally define so-called “penny stocks” to be equity securities that have a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. Our common stock is a “penny stock” and is subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market, thus possibly making it more difficult for us to raise additional capital.
For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in penny stock, of a disclosure schedule required by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.
There can be no assurance that our common stock will qualify for exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.
Recent Sales of Unregistered Equity Securities
During the fourth quarter of 2025, we did not have any sales of equity securities in transactions that were not registered under the Securities Act of 1933, as amended, that have not been previously reported in a report filed pursuant to the Exchange Act.
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| Item 7 | Management’s Discussion And Analysis Of Financial Condition And Results Of Operations. |
The following discussion should be read in conjunction with our consolidated audited financial statements and related notes thereto and other financial information appearing elsewhere in this report. In addition to historical information, the following discussion contains forward-looking statements. Where possible, we have tried to identify these forward-looking statements by using words such as “anticipate,” “believe,” “intends,” or similar expressions. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. As a result of many factors, including those factors set forth in the “Risk Factors” section of this report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in this report.
Overview
In December 2017, we completed a “reverse” acquisition whereby we acquired all of the outstanding shares of AiXin (BVI) International Group Co., Ltd. a British Virgin Islands corporation (“AiXin BVI”). As a result, AiXin BVI became our wholly-owned subsidiary, and through AiXin BVI we now own all of the outstanding shares of HK AiXin International Group Co., Limited, a Hong Kong limited company (“AiXin HK”), which in turn owns all of the outstanding shares of Chengdu AiXinZhongHong Biological Technology Co., Ltd., a Chinese limited company (“AiXinZhongHong”), which began distributing nutritional products in 2013.
In September 2021, we completed the acquisition of nine pharmacies located in Chengdu by acquiring the entities which owned the pharmacies. We currently operate pharmacies at 8 locations.
On September 30, 2022, we acquired all of the outstanding equity of Yunnan Runcangsheng Technology Co., Ltd (“Runcangsheng”). Runcangsheng was established in April 2020, and is headquartered in Luquan Yi and Miao Autonomous County, Kunming City, Yunnan Province.
Runcangsheng operates a 2,946 square meter production facility, which houses R&D centers, extraction facilities, preparation workshops and a warehouse. Runcangsheng has more than 30 sub brands and is focused on promoting a healthy lifestyle through the use of foods believed to promote well-being, health foods, modernized versions of traditional Chinese medical products and plant extracts. Runcangsheng cultivates many of the raw materials used in its products, compounds the materials into easy to transport and use pre-packaged foods and distributes the products at the wholesale level. As life-styles in China evolve, work pressures increase and the ingestion of meats and other western style foods increases, Runcangsheng seeks to design and market products intended to combat the increase in obesity, hypertension, insomnia and physical ailments associated with such changes. The acquisition of Runcangsheng will enable us to operate as a vertically integrated company, capable of formulating the kinds of health foods and other nutritional products and supplements suitable for our clients and marketing those products through our distribution channels.
In addition to our acquisitions in the health and nutritional sector, in July 2021, we completed the acquisition of a hotel located in the Jinniu District, Chengdu City, by acquiring the entity which operated the hotel. Effective March 31, 2024, we terminated our lease for this hotel. In the termination agreement we and the landlord agreed to release each other from any claims and the landlord agreed to return the security deposit.
On February 6, 2024, we entered into a lease with respect to a hotel located in Bandzhuyuan Town, Xindu District, Chengdu City. The term of the lease commenced February 29, 2024 and expires April 15, 2034. The Lease grants us the right to occupy various areas within the hotel, covering approximately 18,000 square meters, including the first-floor lobby, external shops (subject to the rights of the current occupants), the second and third floors, portions of the fourth floor including the restaurant and tea shop, and the fifth through eighteenth floors comprised mainly of guest rooms, underground and ground-level parking lots, and all hotel facilities and equipment. References to hotel revenues and operating costs below are with respect to the hotel we previously occupied in the Jinniu District of Chengdu.
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We intend to look for additional opportunities to profit from the growing healthcare market in China. Though currently we are not party to any agreements, we will explore, among other opportunities, expanding our product line through internal research and acquiring complementary products from third parties, acquiring additional pharmacies and other retail outlets and operating nursing homes and possibly clinics which provide medical care to clients.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, our ability to operate profitably, to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements.
We incurred a net loss of $2,042,463 and $2,768,341 for the years ended December 31, 2025 and 2024, respectively, and used net cash in operating activities of $2,034,331 and $1,628,834 for the years ended December 31, 2025 and 2024, respectively. We had a working capital deficit of $7,476,418 as of December 31, 2025. These facts and conditions raise substantial doubt about our ability to continue as a going concern. From January 1, 2025 through December 31, 2025, our cash and cash equivalents decreased from $62,310 to $20,751 mainly due to cash outflows from operating activities.
We believe that we have developed a liquidity plan, summarized below, that, if executed successfully, should provide sufficient liquidity to meet our obligations as they become due for a reasonable period of time, and allow the development of our core business. The plan includes:
● Gaining positive cash-inflow from operating activities through continuous cost reductions and the sales of higher margin products.
● Raising cash through loans from related parties and potential equity offerings.
While our management believes that the measures in our liquidity plan including those described above will be adequate to satisfy our liquidity requirements for the twelve months after the date of the financial statements contained in this Report are issued, there is no assurance that the liquidity plan will be successfully implemented. Failure to successfully implement the liquidity plan may have a material adverse effect on our business, results of operations and financial position, and may adversely affect our ability to continue as a going concern. The consolidated financial statements included in this Report do not include any adjustments related to the recoverability and classification of recorded assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern.
Our Business
We are focused on providing health and wellness products to the growing middle class in China. We currently develop, manufacture, market and sell premium-quality healthcare, nutritional products and wellness supplements, including herbs and greens, traditional Chinese remedies, functional products, such as weight management tools, probiotics, foods and drinks. We offer products manufactured by us and those purchased from third parties through a diversified, omni-channel business model which generates revenues through retail and wholesale product sales, through company-owned pharmacies, direct marketing and e-commerce. Our marketing approach emphasizes proactively approaching customers such as by hosting marketing events for clients, which we believe is ideally suited to marketing the products we offer because sales of healthcare, nutritional products and supplements are strengthened by ongoing personal contact and support, coaching and education among the Company and our clients towards how to achieve a healthy and active lifestyle.
We believe the competitive strengths that will enable us to grow in the health and wellness market include our ability to design and manufacture products that are responsive to consumers’ needs as the life style of China’s middle class evolves, our coordinated omni-channel distribution network where we enable consumers to obtain the information they need to improve their lifestyle on our website, at our pharmacies and through individual meetings with our team members.
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Our ability to operate profitably and generate positive cash flow will be determined by our ability to attract a large and loyal customer base and provide the information and products they need cost effectively. Our revenue will largely be determined by our ability to achieve and maintain a strong brand name and company image, the volume of products we sell and the prices we can charge for such products, which will require that we compete effectively. Our costs will largely be determined by the cost of raw materials and acquired inventory, the labor used to design and manufacture products, and the costs incurred to deliver these products to the consumer.
We intend to build a reputation as a provider of premium health and wellness products that seeks to improve our customers health and well-being. Our objective is to offer a broad and deep mix of products for consumers interested in living well, whether they are looking to treat a health-related issue or simply maintain their overall wellness. Our premium, value-added offerings include both proprietary products developed and manufactured by us as well as products acquired from or sold on behalf of third parties. We believe our range of products and ability to develop new products, combined with the customer support and service we offer, differentiate us and allow us to effectively compete against food, drug and mass channel players, specialty stores, independent vitamin, supplement and natural food shops and online retailers. There is no assurance that we will achieve our business objectives.
Segment Information
We operate as four operating and reporting segments. Operating segments are defined as components of a business that can earn revenue and incur expenses and for which discrete financial information is evaluated regularly by the chief operating decision maker (CODM) in deciding how to allocate resources and assess performance. Our CODM, our Chief Executive Officer, allocates resources and assesses performance based upon the performance of each of the operating segments discussed below which are differentiated based upon the nature of the products and services offered, whether the segment manufactures products and the manner in which its products are offered to third parties.
Results of Operations
Years ended December 31, 2025 and 2024
The following table sets forth the results of our operations for the periods indicated as a percentage of net revenue, certain columns may not add due to rounding:
| Years Ended December 31, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| $ | % of Revenue | $ | % of Revenue | |||||||||||||
| Revenue | $ | 1,489,427 | 100 | % | $ | 3,824,301 | 100 | % | ||||||||
| Operating costs and expenses | 4,009,977 | 269 | % | 6,412,492 | 168 | % | ||||||||||
| Loss from operations | (2,520,550 | ) | (169 | )% | (2,588,191 | ) | (68 | )% | ||||||||
| Non-operating (expenses) income, net | 478,478 | 32 | % | (179,622 | ) | (5 | )% | |||||||||
| Loss before income tax | (2,042,072 | ) | (137 | )% | (2,767,813 | ) | (72 | )% | ||||||||
| Income tax expense | 391 | - | % | 528 | - | % | ||||||||||
| Net loss | $ | (2,042,463 | ) | (137 | )% | $ | (2,768,341 | ) | (72 | )% | ||||||
The following table shows the Company’s operations by business segment for the years ended December 31, 2025 and 2024.
| For the Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Net revenue | ||||||||
| Direct sales | $ | 171,949 | $ | 504,097 | ||||
| Pharmacy | 107,198 | 822,958 | ||||||
| Hotel | 408,581 | 585,634 | ||||||
| Manufacture and sale | 801,699 | 1,911,612 | ||||||
| Total revenues, net | $ | 1,489,427 | $ | 3,824,301 | ||||
| Operating costs and expenses | ||||||||
| Direct sales | ||||||||
| Cost of sales | $ | 44,101 | $ | 173,950 | ||||
| Operating expenses | 962,910 | 1,815,052 | ||||||
| Pharmacy | ||||||||
| Cost of sales | 59,085 | 262,276 | ||||||
| Operating expenses | 287,428 | 366,707 | ||||||
| Hotel | ||||||||
| Hotel operating costs | 1,082,538 | 1,447,599 | ||||||
| Operating expenses | 315,370 | 272,153 | ||||||
| Manufacture and sale | ||||||||
| Cost of sales | 764,635 | 1,331,138 | ||||||
| Operating expenses | 493,910 | 743,617 | ||||||
| Total operating costs and expenses | $ | 4,009,977 | $ | 6,412,492 | ||||
| Income (loss) from operations | ||||||||
| Direct sales | $ | (835,062 | ) | $ | (1,484,905 | ) | ||
| Pharmacy | (239,315 | ) | 193,976 | |||||
| Hotel | (989,327 | ) | (1,134,119 | ) | ||||
| Manufacture and sale | (456,846 | ) | (163,143 | ) | ||||
| Loss from operations | $ | (2,520,550 | ) | $ | (2,588,191 | ) | ||
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Revenue
Revenue was $1,489,427 in the year ended December 31, 2025, compared to $3,824,301 in 2024, a decrease of $2,334,874 or 61%. For the year ended December 31, 2025, we had $1,080,846 in product revenues, a decrease of $2,157,821 from 2024 in which product revenues were $3,238,667. Of our product revenues in 2025, $171,949 were from direct sales, a decrease of $332,148 or 66% from 2024, $107,198 were from sales at our pharmacies, a decrease of $715,760 or 87% from 2024, and $801,699 from sales by manufacture and sales, a decrease of $1,109,913 or 58% from 2024. In 2025, we had hotel revenue of $408,581, a decrease of $177,053 or 30% from 2024.
Direct Sales
Our direct products sales revenue was $171,949 for the year ended December 31, 2025, compared with $504,097 in the same period of 2024, representing a decrease of $332,148 or 66%. Our direct sales revenue as a percentage of our total revenue was 12% for 2025, compared to 13% for 2024. The decrease in direct sales revenue was mainly due to the economic downturn as marketing and promotional activities became more challenging compared to last year.
Pharmacy
Our pharmacy revenue was $107,198 for the year ended December 31, 2025, compared with $822,958 in the same period of 2024, representing a decrease of $715,760 or 87%. Our pharmacy revenue as a percentage of our total revenue was 7% for 2025, compared to 22% for 2024. The decrease in revenue was mainly due to the economic downturn as marketing and that promotional activities did not generate anticipated revenues, as well as the convenience of online shopping leading to decreased sales in physical stores.
Hotel
Our hotel revenue was $408,581 for the year ended December 31, 2025, compared with $585,634 for the same period of 2024, representing a decrease of $177,053 or 30%. Our hotel revenue as a percentage of our total revenue was 27% for 2025, compared to 15% for 2024. Our hotel revenue decreased by $177,053 due to the economic downturn and the slowdown in the catering industry.
Manufacture and Sale
Our manufacture and sales revenues were $801,699 for the year ended December 31, 2025, compared with $1,911,612 for the same period of 2024, representing a decrease of $1,109,913 or 58%. Our manufacture and sales revenue as a percentage of total revenue was 54% for the year ended December 31, 2025, compared to 50% for the same period of 2024. The decrease in manufacture and sales revenue was mainly due to the economic downturn as marketing and promotional activities become more challenging compared to last year.
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Operating Costs and Expenses
Cost of Sales
Cost of sales was $867,821 for the year ended December 31, 2025, compared to $1,767,364 for 2024, a decrease of $899,543 or 51%. The decrease in cost of sales was attributable to the decrease in sales.
Direct sales
The cost of sales for our direct sales was $44,101 for 2025, compared with $173,950 for 2024, representing a decrease of $129,849 or 75%. The cost of sales for direct sales as a percentage of our direct sales was 26% for the year ended December 31, 2025, compared to 35% for the same period of 2024. The decrease in cost of sales was attributable to the decrease in sales.
Pharmacy
The cost of sales at our pharmacies was $59,085 for 2025, compared with $262,276 for 2024, representing a decrease of $203,191 or 77%. The cost of sales at our pharmacies as a percentage of pharmacy product sales was 55% for the year ended December 31, 2025, compared to 32% for the same period of 2024. The decrease in cost of sales was mainly due to the decrease in sales. Moreover, certain promotional activities, such as price discounts, caused an increase in percentage of our revenues represented by the cost of goods sold.
Manufacture and Sale
The cost of sales at our manufacture and sales segment was $764,635 for 2025, compared with $1,331,138 for 2024, representing a decrease of $566,503 or 43%. The cost of sales for our manufacture and sale segment as a percentage of sales was 95% for 2025, compared to 70% for 2024. The primary reason for the decrease in cost of sales was due to decreased sales.
Hotel Operating Costs
Hotel operating costs were $1,082,538 and $1,447,599 for the years ended December 31, 2025 and 2024, respectively, representing a decrease of $365,061 or 25%. The primary reason for the decrease in hotel operating costs was due to decreased revenue.
Operating Expenses
Operating expenses were $2,059,618 for the year ended December 31, 2025, compared to $3,197,529 for 2024, a decrease of $1,137,911 or 36%.
The decrease in operating expenses was primarily attributable to the decrease in general and administrative expenses during the year ended December 31, 2025, was primarily due to stock compensation expense decreased by $301,127, decreased R&D expense by $266,412, decreased professional expense by $231,738, decreased payroll expense by $89,128, which was partly offset by increased bad debts expense by $40,841.
The decrease in selling expenses during the year ended December 31, 2025 was primarily due to decreased travel cost by $181,900, decreased rent expense by $38,986 and decreased payroll expense by $63,257.
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Loss from Operations
Loss from operations was $2,520,550 in the year ended December 31, 2025, compared to $2,588,191 in 2024, a decrease of $67,641 or 3%. The decrease in our loss from operations for 2025 was due to the decreased loss in direct sales of $649,843 and in our hotel segment of $144,791, partially offset by the increased loss in in our manufacture and sales segment of $293,704 and our pharmacy segment of by $433,290.
Non-operating Income (Loss)
Non-operating income was $478,478 for the year ended December 31, 2025, compared to a non-operating loss of $179,622 for 2024. For the year ended December 31, 2025, we had gains from forgiveness of other payable of $467,695 and other income of $29,372, partly offset by interest expense of $18,589. For the year ended December 31, 2024, we had interest expense of $76,613 and other expenses of $103,009.
Income Tax Expense
Income tax expense was $391 and $528 for the years ended December 31, 2025 and 2024, respectively
Net Loss
Our net loss for the year ended December 31, 2025 was $2,042,463, compared to a net loss of $2,768,341 for 2024, a decrease of $725,878 or 26%. The decrease in our net loss was mainly due to decreased operating costs and expenses, which was partly offset by decreased sales, as described above.
Liquidity, Capital Resources
During the year ended December 31, 2025, we used $2,034,331 in operations. As of December 31, 2025, cash and cash equivalents were $20,751, compared to $62,310 as of December 31, 2024. At December 31, 2025, we had a working capital deficit of $7,476,418.
The following is a summary of cash provided by or used in each of the indicated types of activities during the years ended December 31, 2025 and 2024, respectively.
| December 31, 2025 | December 31, 2024 | |||||||
| Net cash used in operating activities | $ | (2,034,331 | ) | $ | (1,628,834 | ) | ||
| Net cash used in investing activities | $ | (13,045 | ) | $ | (195,235 | ) | ||
| Net cash provided by financing activities | $ | 1,994,344 | $ | 1,426,442 | ||||
Net cash used in operating activities
For the year ended December 31, 2025, net cash used in operating activities was $2,034,331. This reflects our net loss of $2,042,463, adjusted by non-cash related expenses including depreciation and amortization expense of $156,830, a bad debt provision of $18,724, loss on disposal of fixed assets of $86,522, a reversal of inventory of $14,223, gain from sale of leasehold improvement of $ 467,695, and operating lease expenses of $298,778, and then decreased by a net change in working capital of $70,804. The cash outflow from changes in working capital items mainly resulted from an increase in advances to suppliers from related party of $11,057, an increase in payments of accounts payable including payment to related party of $299,605, a decrease in outstanding taxes payable of $68,331, a decrease in outstanding accrued liabilities and other payables of $19,947, payments of lease liabilities of $216,631, and payment of lease liabilities to related party of $7,943, partly offset by cash inflow from a decrease in accounts receivables of $76,491, a decrease in accounts receivables from related party of $212,843, a decrease in other receivables and prepaid expenses of $24,214, a decrease in advance to suppliers of $34,371, a decrease in inventory of $110,187, a decrease in security deposit of 2,883, an increase in unearned revenue of $ 53,925 and an increase in unearned revenue from related party of $37,796.
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For the year ended December 31, 2024, net cash used in operating activities was $1,628,834. This reflects our net loss of $2,768,341, adjusted by non-cash related expenses including depreciation and amortization expense of $321,282, a bad debt reversal of $22,415, an inventory impairment of $12,229, operating lease expenses of $542,675, a loss on disposal of fixed assets of $63,105, interest income of $24,867 and stock-based compensation of $301,127, and then decreased by a net change in working capital of $53,629. The cash outflow from changes in working capital items mainly resulted from an increase in accounts receivables from related parties of $431,703, an increase in inventory of $88,249, a decrease in unearned revenue of $40,971, payments of lease liabilities of $395,878, and payment of lease liability related parties of $7,959, partly offset by cash inflows from accounts receivable of $226,110, a reduction in from advances to suppliers of $112,748, a reduction in security deposits of $79,274, cash inflow from other receivables and prepaid expense of $38,729, increases in accrued liabilities and other payables of $28,304,an increase in taxes payable of $22,730, and an increase in accounts payable (including accounts payable to related parties) of $403,236.
Net cash used in investing activities
For the years ended December 31, 2025 and 2024, net cash used in investing activities was $13,045 and $195,235, respectively. For the year ended December 31, 2025, net cash used in investing activities included $13,045 for the purchase of fixed assets. For the year ended December 30, 2024, net cash used in investing activities included $241,661 for the purchase of fixed assets, and $2,779 purchase of an intangible asset, which was partly offset by cash received on disposal of fixed assets of $24,338 and repayment received from loans to third party of $24,867.
Net cash provided by financing activities
For the years ended December 31, 2025 and 2024, net cash provided by financing activities was $1,994,344 and $1,426,442, respectively. For the year ended December 31, 2025, net cash provided by financing activities was the result of proceeds from advances from related parties of $3,748,205 and proceeds from loan of $83,478, which was partly offset by repayments of loans due related parties of $1,092,205 and repayment of a government grant of $745,134. For the year ended December 31, 2024, net cash provided by financing activities was the result of proceeds from advances from related parties of $2,347,095, which was partly offset by repayments of loans due related parties of $753,991 and repayment of a government grant of $166,662.
Runcangsheng generated $28,207 in income for the year ended December 31, 2025. It is likely that we will require additional capital to achieve its short-term operational goals and long-range business plans. Further, we may need additional capital to maintain our other businesses. We may also have to raise additional financing as our working capital requirements are expected to increase in line with the growth of our business. In the past we have funded our operations through proceeds from private placements of equity and advances from our principal shareholder. Should we require capital to fund our business, we intend to finance our business by raising additional capital or, when available, borrowing additional funds. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders and could cause the price of our common stock to decrease. 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.
We are subject to all of the substantial risks inherent in the development of a new business enterprise within extremely competitive industries. Due to the absence of a long-standing operating history and the emerging nature of the markets in which we compete, we anticipate operating losses until we can successfully implement our business strategy. Our revenue model is new and evolving, and we cannot be certain that it will be successful. The potential profitability of our business model is unproven. We may never achieve profitable operations. Our future operating results depend on many factors, including demand for our products, the level of competition, and the ability of our officers to manage our business and growth. As a result of the emerging nature of the market in which we compete, we may incur operating losses until such time as we can develop a substantial and stable revenue base. Additional development expenses may delay or negatively impact our ability to generate profits. Accordingly, we cannot assure you that our business model will be successful or that we can sustain revenue growth, achieve or sustain profitability, or continue as a going concern.
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Our ability to obtain funds through the issuance of debt or equity is dependent upon the state of the financial markets at such time as we may seek to raise funds. The state of the capital market markets may be adversely impacted by various risks and uncertainties, including, but not limited to future and current impacts of global events such as pandemics, the war in the Ukraine, the conflict in Palestine, shifts in international alliances and actions by certain governments, such as the imposition of tariffs, and the responses of other governments thereto, increases in inflation and other risks detailed herein.
Impact of Inflation
Our results of operations may be affected by inflation, particularly rising prices for products and other operating costs if we cannot pass such increases along to our customers in the form of higher prices for our products and services. Generally, we are not party to long term contracts and our inventory turns multiple times per year and we anticipate that we will be able to increase prices on products to reflect increases in the cost of inventory.
Contractual Obligations
We have no long-term fixed contractual obligations or commitments other than leases that are disclosed in the notes to our consolidated financial statements.
Contingencies
Our operations are conducted in the PRC and are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments in China and foreign currency exchange rates. Our results may be adversely affected by changes in PRC government policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad and rates and methods of taxation, among other things.
Our sales, purchases and expense transactions in China are denominated in RMB and all of our assets and liabilities in China are also denominated in RMB. The RMB is not freely convertible into foreign currencies under the current PRC law. In China, foreign exchange transactions are required by law to be transacted only by authorized financial institutions. Remittances in currencies other than RMB may require certain supporting documentation in order to affect the remittance.
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| Item 7A | Quantitative And Qualitative Disclosures About Market Risk. |
This item does not apply to smaller reporting companies.
| Item 8 | Financial Statements And Supplementary Data. |
Our financial statements appear beginning on page F-1, immediately following the signature page of this report.
| Item 9 | Changes In And Disagreements With Accountants On Accounting And Financial Disclosure. |
On January 7, 2025, we were informed by KCCW Accountancy Corp. (“KCCW”) of its decision to resign from its position as the Company’s independent registered principal accounting firm, effective January 7, 2025. KCCW had been the Company’s independent registered principal accounting firm since November 19, 2019 and issued a report on the Company’s financial statements for the years ended December 31, 2023 and 2022, which did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to audit scope or accounting principles, except to indicate that there was substantial doubt about the Company’s ability to continue as a going concern.
During the years ended December 31, 2023 and 2022 and the subsequent interim periods through January 7, 2025 (i) the Company has not had any disagreements with KCCW on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to KCCW’s satisfaction, would have caused it to make reference thereto in its reports on the Company’s financial statements for such periods, and (ii) there were no reportable events, as defined in Item 304(a)(1)(v) of Regulation S-K.
Prior to its resignation from its position as the independent registered principal accounting firm of the Company, KCCW Certified Public Accountants (“KCCW”), advised the Company in writing of the need to restate the consolidated financial statements of the Company for the year ended December 31, 2021 (the “2021 Financial Statements”) to present the results of operations for the year ended December 31, 2021, as though the acquisitions of (i) Chengdu Aixin Shangyan Hotel Management Co., Ltd. and (ii) Chengdu Aixintang Pharmacy Co., Ltd. and certain affiliated entities, each of which operates a pharmacy (together, “Aixintang Pharmacies”) had occurred at the beginning of the period. In addition to the necessary adjustments to the 2021 Financial Statements, the comparative financial statements and financial information for prior years included in the 2021 Financial Statements needed to be restated to reflect the retroactive adjustment of the financial data of previously separate entities under common control that are combined. In addition, the Company needed to corrected the financial statement presentation of the capital contribution from a major shareholder during the year ended December 31, 2021.
| Item 9A | Controls And Procedures. |
Disclosure Controls and Procedures
Management of AiXin Life International, Inc. is responsible for maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. In addition, the disclosure controls and procedures must ensure that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial and other required disclosures.
At December 31, 2025, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based on their evaluation of our disclosure controls and procedures, they concluded that at December 31, 2025, such disclosure controls and procedures were not effective. This was due to our limited resources, including the absence of a financial staff with accounting and financial expertise and knowledge of the regulations of the Securities and Exchange Commission, and deficiencies in the design or operation of our internal control over financial reporting, including the lack of a fully automated accounting system and incomplete documentation of controls and procedures, that adversely affected our disclosure controls and that may be considered to be “material weaknesses.”
We submitted a plan to remediate certain of the deficiencies in our financial reporting system and recently hired a Chief Financial Officer with public company experience. We have directed this individual to review our financial systems and procedures and to implement procedures and recommend upgrades to our systems designed to remediate the material weakness in our internal accounting functions. However, the material weakness will not be considered remediated until the necessary system upgrades and the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
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Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; (iii) provide reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and (iv) provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because changes in conditions may occur or the degree of compliance with the policies or procedures may deteriorate.
Our management conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer of the effectiveness of our internal control over financial reporting as of December 31, 2025. This evaluation was based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, Internal Control-Integrated Framework. Based upon such assessment, our Chief Executive Officer and Chief Financial Officer have concluded that due to the absence of a financial staff with accounting and financial expertise and certain deficiencies in the design or operation of our internal control over financial reporting, our internal controls over financial reporting were not effective as of December 31, 2025.
This report shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. The rules of the SEC do not require an attestation of the Management’s report by our registered public accounting firm in this annual report.
Changes in Internal Controls
There have been no changes in our internal control over financial reporting that occurred during our fiscal year ended December 31, 2025 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting. We believe we have improved the capabilities of our accounting staff through the appointment of Xiaowen Zheng as our Chief Financial Officer but, as discussed above, we need to take additional steps to eliminate the material deficiencies in our disclosure controls and procedures.
| Item 9B. | Other Information |
| Item 9C. | Disclosure Regarding Foreign Jurisdictions That Prevent Inspections |
Not applicable
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PART III
| Item 10 | Directors And Executive Officers And Corporate Governance. |
The following table sets forth the names and ages of all directors and executive officers as of the end of the last fiscal year and on the date of this report:
| Name | Age | Position | ||
| Quanzhong Lin | 46 | Director, Chairman, President and Chief Executive Officer | ||
| Xinliang Li a/k/a Christopher Lee (1) (2) (3) | 53 | Director | ||
| Huiliang Jiao (1) (2) (3) | 50 | Director | ||
| Qiyu Jiang | 40 | Director | ||
| Xiaowen Zheng (4) | 39 | Chief Financial Officer |
| (1) | Member of the Audit Committee |
| (2) | Member of the Compensation Committee |
| (3) | Member of the Nominating and Corporate Governance Committee Xiaowen Zheng was appointed to the position of Chief Financial Officer January 7, 2025. Tiangfeng Li served as our Chief Financial Officer from December 1, 2022, until January 5, 2025. |
Quanzhong Lin has served as a director, Chairman, President and Chief Executive Officer of our Company since February 2, 2017. Mr. Lin is a highly active entrepreneur in China, and currently serves as Chairman of AiXin Company Group, a diversified company which he founded in 2008. In addition to AiXin Company Group, Mr. Lin has founded a number of companies located in Chengdu City, Sichuan Province, China, engaged in various types of business, including pharmacies, retail outlets, hotel management services and global tourism.
In 2009, Mr. Lin founded QingBaiJiangJinWanXiang Daily Necessities store, predecessor to AiXinZhonghong Biotechnology Co., Ltd. From 2010 to 2013, Mr. Lin opened branches in Xindu and Xinjin district, officially entering the Chengdu market.
In September 2013, Mr. Lin founded Chengdu AiXin E-Commerce Company Ltd., which in the following twelve months opened branches in cities and counties including Huayuan and Wenjiang district, and Mianyang and Jianyang city. In April 2015, AiXin E-commerce Co., Ltd. changed its name to Chengdu AiXinZhonghong Biotechnology Co., Ltd., whose shares became listed on the Shanghai Stock Exchange (Ticker Symbol: 207448) in October 2015; and during 2015, AiXinZhonghong opened branches in Dujiangyan City, and Chongzhou City.
In 2023 a number of individuals accused Mr. Lin, acting through Sichuan Aixin Investment Co., Ltd. and Chengdu Aixin E-commerce Co., Ltd., entities controlled by Mr. Lin of raising funds illegally. At the urging of the claimants, the Chengdu Public Security Bureau Jinjiang District Branch initiated a criminal investigation into the matter and charges were lodged against Mr. Lin and Chengdu Aixin Zhonghong Biological Technology Co., Ltd. In 2024 Mr. Lin entered into a settlement agreement with the claimants. Chengdu Public Security Bureau Jinjiang District Branch has determined to withdraw the actions and relevant withdrawal procedures are in process. For additional, details regarding these proceedings see the description under “Legal Proceedings” above.
Xinliang Li a/k/a Christopher Lee was appointed as a Member of the Board of Directors of the Company on February 5, 2021. Mr. Lee has served as Chief Financial Officer of Semileds Corporation since September 2015. Mr. Lee joined Semileds Corporation in September 2014 and from November 2014 until his appointment as Chief Financial Officer, Mr. Lee was the interim Chief Financial Officer of Semileds Corporation. Semileds develops, manufactures and sells high performance light emitting diodes and is currently listed on The Nasdaq Stock Market. Mr. Lee has over 20 years of experience in accounting and finance, including US GAAP, PCAOB standards and SEC rules and regulations. Mr. Lee was a partner of KEDP CPA Group from August 2009 to June 2011 and a self-employed accountant from July 2011 to August 2014. Mr. Lee holds a BS degree in accounting from Ohio State University and a MS degree in business taxation from Golden Gate University and is licensed as a Certified Public Accountant (CPA) in the United States.
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Huiliang Jiao was elected to the Board of Directors of our Company on December 1, 2022. Mr. Jiao received his degree from China Pharmaceutical University in 1997 where he majored in Pharmacy. Mr. Jiao joined Yunnan Runcangsheng Technology Co., Ltd. in April 2020, most recently serving as Chief Executive Officer. Mr. Jiao served as the general manager of Yunnan Shengshengyuan Technology Co., Ltd. from June 2016 until he joined Runcangsheng. From January 2007 until May 2016, Mr. Jiao was the general manager of Yunnan Shengcaofeng Biotechnology Co., Ltd. Throughout his career Mr. Jiao has been involved in the research and development of new products intended to improve individuals’ health and well-being, with an emphasis on functional products comprised of natural plants, foods and supplements intended to address obesity and other chronic conditions. He was named as an inventor on more than forty patents relating to the composition and manufacture of health foods. In addition to the development of health foods, Mr. Jiao has participated in the design and maintenance of production systems intended to meet the latest manufacturing standards.
Qiyu Jiang was appointed to our Board of Directors April 15, 2026. Mr. Jiang graduated from the INSEEC Paris School of Business in March 2015. Mr. Jiang became a Chartered Financial Analyst Level I Candidate in June 2024 and received a Legal Professional Qualification Certificate in August 2021. From October 2017 to March 2022, Mr. Jiang served as an Executive Director of Jiujiang Gongqingcheng Dishi Investment Management Co., Ltd., where he was responsible for providing legal opinions for product issuances and filings on behalf of private fund management clients and participated in equity investment project negotiations. Mr. Jiang established himself as an independent professional options trader in May 2022 and continues to engage in options trading. Mr. Jiang is fluent in Mandarin, French and English
Xiaowen Zheng, was appointed to the position of Chief Financial Officer of our Company effective January 7, 2025. Mr. Zheng also serves as Chief Financial Officer of our subsidiaries. Mr. Zheng is an accomplished financial executive with extensive experience in accounting, taxation, and financial management across various industries. Mr. Zheng served as Financial Manager of Chengdu Aixin Zhonghong Biological Technology Co., Ltd., a subsidiary of the Company, since March 2023. From January 2022 to February 2023, Mr. Zheng served as the Financial Director for Sichuan Minghoutian Information Technology Co., Ltd., an information technology company, where he led the company’s financial operations, including internal management, accounting, taxation, and securing external financing. From November 2017 to December 2021, Mr. Zheng held the position of Financial Manager at Sichuan Huianrong Information Technology Co., Ltd., a technology company, overseeing the financial department’s operations and advancing the company’s enterprise restructuring initiatives to prepare the organization for scalability. From May 2009 to November 2017, Mr. Zheng gained his expertise in accounting and tax compliance through roles as an accountant at Sichuan Jinguang Chemicals Co., Ltd. and Hutchison (China) Trading Co., Ltd., and as an Accounting Supervisor at Sichuan Creativity Information Technology Co., Ltd., where he specialized in audits, tax management, and financial analysis, streamlining reporting processes and ensuring compliance. Mr. Zheng holds a Bachelor of Science degree in Accounting from Panzhihua University. Mr. Zheng, 39 years old, is a Certified Tax Agent, Senior Management Accountant, and holds certifications in securities, all accredited by organizations in China.
There are no family relationships among any of our officers and directors.
Directors hold office until the next annual meeting of shareholders and until their successors have been duly elected and qualified. Officers are elected by the board of directors and hold office until the earliest of their death, resignation or removal from office.
Independence
Our board of directors has determined that each of Christopher Lee, Qiyu Jiang and Huiliang Jiao satisfies the definition of “independent director” in accordance with Rule 5605(a)(2) of the Marketplace Rules of The Nasdaq Stock Market, Inc. and Section 10(A)(m)(3) of the Securities Exchange Act of 1934, as amended.
Board Committees
Our board of directors has established standing committees in connection with the discharge of its responsibilities. These committees include an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Our board of directors has adopted written charters for each of these committees. Copies of the charters are available on our website. Our board of directors may establish other committees as it deems necessary or appropriate from time to time.
Audit Committee. Our Audit Committee consists of Messrs. Lee, Jiao and Jiang, each of whom is independent. The Audit Committee assists the Board of Directors oversight of (i) the integrity of financial statements, (ii) our compliance with legal and regulatory requirements, (iii) the independent auditor’s qualifications and independence, and (iv) the performance of our internal audit function and independent auditor and prepares the report that the SEC requires to be included in our annual proxy statement. The Audit Committee operates under a written charter. Mr. Lee is the Chairman of our Audit Committee.
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The Board of Directors determined that Mr. Lee possesses accounting or related financial management experience that qualifies him as financially sophisticated within the meaning of Rule 4350(d)(2)(A) of the Nasdaq Marketplace Rules and that he is an “audit committee financial expert” as defined by the rules and regulations of the SEC.
According to its charter, the Audit Committee shall consist of at least three members, each of whom shall be a non-employee director who has been determined by the Board to meet the independence requirements of Nasdaq, and also Rule 10A-3(b)(1) of the SEC, subject to the exemptions provided in Rule 10A-3(c). We do not have a website containing a copy of the Audit Committee Charter. The Audit Committee Charter describes the primary functions of the Audit Committee, including the following:
| ● | Oversee the Company’s accounting and financial reporting processes; | |
| ● | Oversee audits of the Company’s financial statements; | |
| ● | Discuss policies with respect to risk assessment and risk management, and discuss the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures; | |
| ● | Review and discuss with management the Company’s audited financial statements and review with management and the Company’s independent registered public accounting firm the Company’s financial statements prior to the filing with the SEC of any report containing such financial statements. | |
| ● | Recommend to the board that the Company’s audited financial statements be included in its annual report on Form 10-K for the last fiscal year; | |
| ● | Meet separately, periodically, with management, with the Company’s internal auditors (or other personnel responsible for the internal audit function) and with the Company’s independent registered public accounting firm; | |
| ● | Be directly responsible for the appointment, compensation, retention and oversight of the work of any independent registered public accounting firm engaged to prepare or issue an audit report for the Company; | |
| ● | Take, or recommend that the board take, appropriate action to oversee and ensure the independence of the Company’s independent registered public accounting firm; and | |
| ● | Review major changes to the Company’s auditing and accounting principles and practices as suggested by the Company’s independent registered public accounting firm, internal auditors or management. |
Nominating and Corporate Governance Committee
The purpose of the Nominating and Corporate Governance Committee is to assist the Board of Directors in identifying qualified individuals to become members of our Board of Directors, in determining the composition of the Board of Directors and in monitoring the process to assess Board effectiveness. Each of Messrs. Lee, Jiao and Jiang are members of the Nominating and Corporate Governance Committee. Mr. serves as Chairman of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee operates under a written charter.
| ● | Our Nominating and Corporate Governance Committee has, among the others, the following authority and responsibilities: | |
| ● | To determine and recommend to the Board, the criteria to be considered in selecting nominees for the director; | |
| ● | To identify and screen candidate consistent with such criteria and consider any candidates recommended by our stockholders pursuant to the procedures described in our proxy statement or in accordance with applicable laws, rules and regulations and provisions of our charter documents. | |
| ● | To select and approve the nominees for director to be submitted to a stockholder vote at the annual meeting of stockholders. |
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Compensation Committee
The Compensation Committee is responsible for overseeing and, as appropriate, making recommendations to the Board of Directors regarding the annual salaries and other compensation of our executive officers and general employees and other policies, and for providing assistance and recommendations with respect to our compensation policies and practices. Each of Messrs. Lee, Jiao and Jiang are members of the Compensation Committee. The Compensation Committee operates under a written charter. Mr. Jiao is the Chairman of Compensation Committee.
Our Compensation Committee has, among the others, the following responsibilities and authority.
| ● | The compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser. | |
| ● | The compensation committee shall be directly responsible for the appointment, compensation and oversight of the work of any compensation consultant, legal counsel and other adviser retained by the compensation committee or said group. | |
| ● | The Company must provide for appropriate funding, as determined by the compensation committee, for payment of reasonable compensation to a compensation consultant, legal counsel or any other adviser retained by the compensation committee or said group. |
| ● | The compensation committee select, or receive advice from, a compensation consultant, legal counsel or other adviser to the compensation committee or said group, other than in-house legal counsel, only after conducting an independence assessment with respect to the adviser as provided for in the Exchange Act. |
Board Meetings; Leadership Structure and Risk Oversight
Mr. Quanzhong Lin holds the positions of chief executive officer and chairman of the board of the Company. The board believes that Mr. Lin’s services as both chief executive officer and chairman of the board is in the best interest of the Company and its shareholders. Mr. Lin is a well-recognized successful entrepreneur in Chengdu. He possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing the Company in its business and is thus best positioned to develop agendas that ensure that the Board’s time and attention are focused on the most critical matters relating to the business of the Company. His combined role enables decisive leadership, ensures clear accountability, and enhances the Company’s ability to communicate its message and strategy clearly and consistently to the Company’s shareholders, employees and customers.
The board has not designated a lead director. Given the limited number of directors comprising the Board, the independent directors call and plan their executive sessions collaboratively and, between meetings of the Board, communicate with management and one another directly. Under these circumstances, the directors believe designating a lead director to take on responsibility for functions in which they all currently participate might detract from rather than enhance performance of their responsibilities as directors.
Management is responsible for assessing and managing risk, subject to oversight by the board of directors. The board oversees our risk management policies and risk appetite, including operational risks and risks relating to our business strategy and transactions. Various committees of the board assist the board in this oversight responsibility in their respective areas of expertise.
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Compensation of Directors
The following table sets forth certain information regarding the compensation paid to, earned by or accrued for, our directors during the fiscal year ended December 31, 2025.
| DIRECTOR COMPENSATION | ||||||||||||||||||||||||||||
| Name | Fees Earned In
Cash | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Non-Qualified Deferred Compensation Earnings ($) | All
Other Compensation ($) | Total ($) | |||||||||||||||||||||
| Quanzhong Lin | $ | 20,488 | — | — | — | — | 0 | $ | 20,488 | |||||||||||||||||||
| Christopher Lee | $ | 9,600 | $ | 9,600 | ||||||||||||||||||||||||
| Huiliang Jiao | $ | 12,000 | — | — | — | — | — | $ | 12,000 | |||||||||||||||||||
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.
Our Board of Directors has determined that Christopher Lee, Huiliang Jiao and Qiyu Jiang are “independent directors” within the meaning of NASDAQ Marketplace Rule 5605(a)(2) and Section 10(A)(m)(3) of the Exchange Act.
Board Meetings; Committees and Membership
Our Board of Directors did not meet in formal session during 2024 though it regularly took action by written consent after the directors consulted with each other as to the actions to be taken.
We maintain the following committees of the Board of Directors: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each committee is comprised entirely of directors who are “independent” within the meaning of NASDAQ Marketplace Rule 5605(a)(2). Each committee acts pursuant to a separate written charter, and each such charter has been adopted and approved by the Board of Directors. Copies of the committee charters were filed as Exhibits to our Report on Form 8-K filed on September 25, 2020.
Audit Committee
Our Audit Committee consists of Messrs. Lee, Jiao and Jiang, each of whom is independent. The Audit Committee assists the Board of Directors oversight of (i) the integrity of financial statements, (ii) our compliance with legal and regulatory requirements, (iii) the independent auditor’s qualifications and independence, and (iv) the performance of our internal audit function and independent auditor and prepares the report that the SEC requires to be included in our annual proxy statement. The Audit Committee operates under a written charter. Mr. Lee is the Chairman of our Audit Committee.
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The Board of Directors determined that Mr. Lee possesses accounting or related financial management experience that qualifies him as financially sophisticated within the meaning of Rule 4350(d)(2)(A) of the Nasdaq Marketplace Rules and that he is an “audit committee financial expert” as defined by the rules and regulations of the SEC.
Nominating and Corporate Governance Committee
The purpose of the Nominating and Corporate Governance Committee is to assist the Board of Directors in identifying qualified individuals to become members of our Board of Directors, in determining the composition of the Board of Directors and in monitoring the process to assess Board effectiveness. Each of Messrs. Lee, Jiao and Jiang are members of the Nominating and Corporate Governance Committee. Mr. Jiang serves as Chairman of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee operates under a written charter.
| ● | Our Nominating and Corporate Governance Committee has, among the others, the following authority and responsibilities: | |
| ● | To determine and recommend to the Board, the criteria to be considered in selecting nominees for the director; | |
| ● | To identify and screen candidate consistent with such criteria and consider any candidates recommended by our stockholders pursuant to the procedures described in our proxy statement or in accordance with applicable laws, rules and regulations and provisions of our charter documents. | |
| ● | To select and approve the nominees for director to be submitted to a stockholder vote at the annual meeting of stockholders. |
Compensation Committee
The Compensation Committee is responsible for overseeing and, as appropriate, making recommendations to the Board of Directors regarding the annual salaries and other compensation of our executive officers and general employees and other policies, and for providing assistance and recommendations with respect to our compensation policies and practices. Each of Messrs. Lee, Jiao and Jiang are members of the Compensation Committee. The Compensation Committee operates under a written charter. Mr. Jiao is the Chairman of Compensation Committee.
Our Compensation Committee has, among the others, the following responsibilities and authority.
| ● | The compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser. | |
| ● | The compensation committee shall be directly responsible for the appointment, compensation and oversight of the work of any compensation consultant, legal counsel and other adviser retained by the compensation committee or said group. | |
| ● | The Company must provide for appropriate funding, as determined by the compensation committee, for payment of reasonable compensation to a compensation consultant, legal counsel or any other adviser retained by the compensation committee or said group. | |
| ● | The compensation committee select, or receive advice from, a compensation consultant, legal counsel or other adviser to the compensation committee or said group, other than in-house legal counsel, only after conducting an independence assessment with respect to the adviser as provided for in the Exchange Act. |
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Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to, among other persons, members of our board of directors, our Company’s officers including our Chief Executive Officer, employees, consultants and advisors. A copy of the Code of Business Conduct and Ethics was filed as an exhibit to our report on Form 8-K filed on September 25, 2020, and is available on the SEC’s website, www.sec.gov.
Shareholder Communications
Shareholders may communicate with the board of directors and individual directors by submitting their communications in writing to the Company’s Corporate Secretary at Hongxing International Business Building 2, 14th FL, No. 69 Qingyun South Ave., Jinjiang District, Chengdu City, Sichuan Province, China. Any communications received that are directed to the board of directors will be processed by the Corporate Secretary and distributed promptly to the board of directors or individual directors, as appropriate. If it is unclear from the communication received whether it was intended or appropriate for the Board, the Corporate Secretary will (subject to any applicable regulatory requirements) use his business judgment to determine whether such communications should be conveyed to the board of directors.
| Item 11 | Executive Compensation. |
The following table sets forth certain information about compensation paid, earned or accrued for services by each individual who served as our chief executive officer and chief financial officer for services rendered in all capacities during the two years ended December 31, 2025. No other executive officer of our Company or other individual received total annual salary and bonus compensation in excess of $100,000 for the year ended December 31, 2025.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Total ($) | ||||||||||||
| Quanzhong Lin, President(1) | 2024 | 20,100 | 20,100 | |||||||||||||
| 2025 | 20,488 | 20,488 | ||||||||||||||
| Xiaowen Zheng, Chief Financial Officer (2) | 2024 | $ | 24,500 | $ | $ | 24,500 | ||||||||||
(1) Amounts attributed to Mr. Lin represent amounts paid as President and CEO of AiXinZhonghong.
(2) Amounts attributed to Mr. Zheng represent amounts paid by the Company’s subsidiary, Chengdu Aixin Zhonghong Biological Technology Co., Ltd.
Mr. Lin does not have an employment agreement with the Company.
Xiaowen Zheng was appointed as our Chief Financial Officer effective January 7, 2025. Mr. Zheng entered into a labor contract with the Company’s subsidiary, Chengdu Aixin Zhonghong Biological Technology Co., Ltd., dated January 6, 2025. The initial term of the contract is from January 6, 2025 to June 30, 2026, subject to certain conditions for termination and certain exceptions provided under the PRC Labor Contract Law. Mr. Zheng is entitled to a fixed annual base salary of RMB 180,000 (approximately $24,568) plus bonuses.
Narrative Disclosure to Summary Compensation Table
There are no annuity, pension or retirement benefits proposed to be paid to the officer or director or employees in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the Company or any of its subsidiaries, if any.
Stock Option Plan
In 2019 we adopted the 2019 Equity Incentive Plan (the “2019 Plan”), which authorizes the issuance of shares of common stock for grants of stock options, stock appreciation rights, restricted stock, stock units, bonus stock, dividend equivalents, other stock related awards and performance awards that may be settled in cash, stock, or other property. The 2019 Plan authorizes the issuance of up to 625,000 shares.
We adopted the 2019 Plan to provide a means by which employees, directors, and consultants of our Company and those of our subsidiaries and other designated affiliates, which we refer to together as our affiliates, may be given an opportunity to purchase our common stock, to assist in retaining the services of such persons, to secure and retain the services of persons capable of filling such positions, and to provide incentives for such persons to exert maximum efforts for our success and the success of our affiliates. The material features of the 2019 Plan are outlined below. This summary is qualified in its entirety by reference to the complete text of the 2019 Plan which has been filed with the SEC.
Grants of Plan-Based Awards
None of our executive officers was granted any options or equity awards during 2025 or held any options or other equity awards as of the date hereof.
Outstanding Equity Awards
There are no outstanding equity awards granted pursuant to the 2019 Equity Incentive Plan.
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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
The following table sets forth, as of May 12, 2026, certain information concerning the beneficial ownership of our common stock by (i) each stockholder known by us to own beneficially five percent or more of our outstanding common stock; (ii) each director; (iii) each named executive officer; and (iv) all of our executive officers and directors as a group, and their percentage ownership and voting power. There were ● shares of our common stock outstanding as of April 26, 2025.
The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security which such person has the right to acquire sole or shared voting or investment power within sixty (60) days through the conversion or exercise of any convertible security, warrant, option, or other right. More than one (1) person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within sixty (60) days, by the sum of the number of shares outstanding as of such date including the number of such shares which such person has the right to acquire. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown.
| Name of Shareholder (1) | Amount and Nature of Beneficial Ownership | Percent of Common Stock | ||||||
| Directors and Executive Officers: | ||||||||
| Quanzhong Lin, Chairman and CEO | 14,534,676 | 58.14 | % | |||||
| Christopher Lee, Director | 0 | - | ||||||
| Huiliang Jiao, Director | 0 | - | ||||||
| Qiyu Jiang | 0 | - | ||||||
| Xiaowen Zheng, CFO | 0 | - | ||||||
| All directors and executive officers as a group (five persons) | 14,534,676 | 58.14 | % | |||||
| (1) | The address of each beneficial owner is c/o AiXin Life International, Inc., Hongxing International Business Building 2, 14th FL, No. 69 Qingyun South Ave., Jinjiang District, Chengdu City, Sichuan Province, China |
| Item 13 | Certain Relationships And Related Transactions, And Director Independence. |
Transactions with Related Persons
The following includes a summary of transactions since January 1, 2025 and certain ongoing transactions, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.
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From time to time we have borrowed money from, loaned money to, sold products on credit to, purchased products on credit from and prepaid for certain assets or services from related parties. Set forth below are the accounts receivable due from and the accounts payable due to the named related parties as of the dates indicated.
Accounts receivable – related parties
Accounts receivable – related party consisted of the following as of the periods indicated:
| December 31, 2025 | December 31, 2024 | |||||||
| Chengdu Lisheng Huiren Pharmacy Co., Ltd. | $ | 151,386 | $ | 144,331 | ||||
| Chengdu Cigu Foshou Pharmacy Co., Ltd. | - | 22 | ||||||
| Sichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. | 24,115 | 22,632 | ||||||
| Sichuan Yunxitang Pharmacy Co., Ltd. | - | 868 | ||||||
| Shengcaofeng Health Industry (Yunnan) Co., Ltd. | - | 137,010 | ||||||
| Chengdu Aixin International Travel Service Co., Ltd. | 143,380 | 210,224 | ||||||
| Total | $ | 318,881 | $ | 515,087 | ||||
Each of the entities listed above is controlled by Mr. Quanzhong Lin our Chairman, CEO and major shareholder except for Shengcaofeng Health Industry (Yunnan) Co., Ltd, which is owned by Huiliang Jiao, one of our Directors. Xiaoyan Zhou is the wife of Huiliang Jiao, the Company’s Director.
Sales revenue – related party
Sales revenue – related party consisted of the following for the periods indicated:
| Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Sichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. | $ | 3,706 | $ | 22,513 | ||||
| Chengdu Aixin International Travel Service Co., Ltd. | 4,676 | 3,258 | ||||||
| Chengdu Lisheng Huirentang Pharmacy Co., Ltd | 785 | 60,223 | ||||||
| Shengcaofeng Health Industry (Yunnan) Co., Ltd. | 656,621 | - | ||||||
| Yuefu Restaurant | - | 128 | ||||||
| Total | $ | 665,788 | $ | 86,122 | ||||
The related party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder of Aixin Life), except for Shengcaofeng Health Industry (Yunnan) Co., Ltd, which is owned by Huiliang Jiao, a Director of the Company.
Advances to suppliers– related parties
Advances to suppliers – related parties consisted of the following as of the periods indicated:
| December 31, 2025 | December 31, 2024 | |||||||
| Sichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. | $ | 8,957 | $ | - | ||||
| Sichuan Yunxitang Pharmacy Co., Ltd. | 860 | - | ||||||
| Chengdu Heshengyuan Pharmacy Co., Ltd. | 103 | - | ||||||
| Chengdu Cigu Foshou Pharmacy Co., Ltd. | 1,444 | - | ||||||
| Total | $ | 11,364 | $ | - | ||||
The related party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder of Aixin Life).
Accounts payable – related parties
Accounts payable – related party consisted of the following as of the periods indicated:
| December 31, 2025 | December 31, 2024 | |||||||
| Sichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. | $ | 57,136 | $ | 75,474 | ||||
| Shengcaofeng Health Industry (Yunnan) Co., Ltd. | - | 1,206 | ||||||
| Sichuan Yunxitang Pharmacy Co., Ltd. | 111 | 370 | ||||||
| Chengdu Heshengyuan Pharmacy Co., Ltd. | 2,426 | 1,529 | ||||||
| Chengdu Cigu Foshou Pharmacy Co., Ltd. | 699 | 4,349 | ||||||
| Total | $ | 60,372 | $ | 82,928 | ||||
The related party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder of Aixin Life), except for Shengcaofeng Health Industry (Yunnan) Co., Ltd, which is owned by Huiliang Jiao, a Director of the Company.
Purchase – related party
Purchase – related party consisted of the following for the periods indicated:
| Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Sichuan Yunxitang Pharmacy Co., Ltd | $ | 127 | $ | 806 | ||||
| Sichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. | 50,878 | 229,959 | ||||||
| Chengdu Heshengyuan Pharmacy Co., Ltd. | 1,796 | 1,913 | ||||||
| Chengdu Cigu Foshou Pharmacy Co., Ltd. | 502 | 4,881 | ||||||
| Chengdu Aixin International Travel Service Co., Ltd. | - | 114,789 | ||||||
| Yunnan Shengcaofeng Biotechnology Co., Ltd | - | 1,223 | ||||||
| Total | $ | 53,303 | $ | 353,571 | ||||
The related party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder of Aixin Life), except for Yunan Shengcaofeng Biotechnology Co., Ltd, which is owned by Huiliang Jiao, a Director of the Company.
Unearned revenue - related party
As of December 31, 2025 and 2024, unearned revenue - related party consisted of $36,833 and nil advance payment from Shengcaofeng Health Industry (Yunnan) Co., Ltd, which is owned by Huiliang Jiao, a Director of the Company and $2,014 and nil advance payment from Chengdu Aixin Yuefu Catering Management Co., Ltd, which is owned by Quanzhong Lin, the CEO of the Company.
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Due from related parties
| December 31, 2025 | December 31, 2024 | |||||||
| Chengdu WenJiang Aixin Nanjiang Pharmacy Co., Ltd. | $ | - | $ | 547 | ||||
| Chengdu Fuxiangtang Pharmacy Co., Ltd. | - | 82 | ||||||
| Chengdu Heshengyuan Pharmacy Co., Ltd. | 286 | - | ||||||
| Chengdu Wenjiang District Heneng Hupu Pharmacy Co., Ltd. | - | 685 | ||||||
| Sichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. | 54,260 | - | ||||||
| Chengdu Cigu Foshou Pharmacy Co., Ltd. | 6,540 | - | ||||||
| Sichuan Aixin Investment Co. Ltd. | 286 | 274 | ||||||
| Chengdu Lisheng Huiren Pharmacy Co., Ltd. | 6,600 | 1,132 | ||||||
| Mianyang Aixin Cunshan Pharmacy | 5,064 | - | ||||||
| Sichuan Yunxitang Pharmacy Co., Ltd | 443 | - | ||||||
| Xiaoyan Zhou | - | 2,055 | ||||||
| Huiliang Jiao | - | 49,009 | ||||||
| Total | $ | 73,479 | $ | 53,784 | ||||
Due to related parties
Due to related parties consisted of the following as of the periods indicated:
| December 31, 2025 | December 31, 2024 | |||||||
| Quanzhong Lin | $ | 5,257,326 | $ | 2,952,403 | ||||
| Huiliang Jiao | 367,830 | - | ||||||
| Mianyang Aixin Cunshan Pharmacy Co. Ltd. | - | 121 | ||||||
| Xiaoyan Zhou | 15,015 | - | ||||||
| Sichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. | 33,695 | - | ||||||
| Chengdu Aixin International Travel Service Co., Ltd. | 5,165 | 4,948 | ||||||
| Chengdu Cigu Foshou Pharmacy Co., Ltd. | 1,079 | - | ||||||
| Runcangsheng Health Industry (Yunnan) Co., Ltd. | 135,848 | - | ||||||
| Total | $ | 5,815,958 | $ | 2,957,472 | ||||
The amounts due from related parties and due to related parties described above were for working capital purposes, payable on demand, and bear no interest. The related party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder of Aixin Life). Mr. Huiliang Jiao is a Director of the Company. Xiaoyan Zhou is the wife of Huiliang Jiao.
The amounts due from related parties and due to related parties described above are the result of loans for working capital purposes, payable on demand, and bear no interest. The related party entities listed above are controlled by Mr. Quanzhong Lin, except for Yunnan Shengcaofeng Biotechnology Co., Ltd (“Shengcaofeng”), which is owned by Huiliang Jiao. Yirong Shen was a major shareholder of Aixin Shangyan Hotel prior to our acquisition of the hotel and currently serves as the supervisor of Aixin Shangyan Hotel. Tianfeng Li previously served as our CFO.
Office leases
In May 2014, the Company entered a lease with Quanzhong Lin for an office. The lease was recently renewed for a term expiring May 28, 2028 at a monthly rent of RMB 5,000 ($704), payable quarterly. The future annual minimum lease payments at December 31, 2025 are $8,448, $8,448, and $3,520 for each of the years ended December 31, 2026, 2027 and 2028, respectively.
Runcangsheng leases an office from Xiaoyan Zhou, wife of Huiliang Jiao, a director of our Company. The initial term of the lease expired in February 2023 when it was renewed for a term expiring February 28, 2026 with monthly rent of RMB 5,000 ($690). The lease was converted to an annual contract starting from January 1, 2024.
| Item 14 | Principal Accountant Fees And Services. |
The following is a summary of the fees billed to us by YCM CPA INC. for professional services rendered for services as our registered independent public accountants for the fiscal years ended December 31, 2025 and December 31, 2024:
| Fiscal year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Audit Fees | $ | 290,000 | $ | 170,000 | ||||
| Audit Related Fees | - | - | ||||||
| Tax Fees | - | - | ||||||
| All Other Fees | - | - | ||||||
| $ | 290,000 | $ | 170,000 | |||||
The following is a summary of the fees billed to us by KCCW Accountancy Corp. for professional services rendered for services as our registered independent public accountants for the fiscal year ended December 31, 2024 :
Year Ended December 31, 2024 | ||||
| Audit Fees | $ | 150,000 | ||
| Audit Related Fees | - | |||
| Tax Fees | - | |||
| All Other Fees | - | |||
| Fees | $ | 150,000 | ||
Audit Fees. Consists of fees billed for professional services rendered for the audit of our financial statements and review of interim financial statements included in quarterly reports and services that are normally provided in connection with statutory and regulatory filings or engagements.
Audit Related Fees. Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees”.
Tax Fees. Consists of fees billed for professional services for tax compliance, tax advice and tax planning. These services include preparation of federal and state income tax returns.
All Other Fees. Consists of fees for product and services other than the services reported above.
Board of Directors’ Pre-Approval Policies
Our Board of Directors’ policy is to pre-approve all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit related services, tax services, and other services. Pre-approval is generally provided for up to one year, and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent auditors and management are required to periodically report to the board of directors regarding the extent of services provided by the independent auditors in accordance with this pre-approval and the fees for the services performed to date. The board of directors may also pre-approve particular services on a case-by-case basis.
Our Board of Directors reviewed our audited financial statements contained in our Annual Report on Form 10-K for the 2025 fiscal year. The board of directors also has been advised of the matters required to be discussed pursuant to PCAOB Rule 3526 (Communication with Audit Committees Concerning Independence), which includes, among other items, matters related to the conduct of the audit of our financial statements.
Our Board of Directors considered whether the provision of services other than audit services is compatible with maintaining auditor independence. Based on the review and discussions referred to above, the board of directors has determined that the audited financial statements be included in our Annual Report on Form 10-K for our 2024 fiscal year for filing with the SEC.
| 54 |
PART IV
| ITEM 15 | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. |
| 1. | Consolidated Financial Statements of Aixin Life International, Inc. for the years ended December 31, 2025 and 2024. |
| 2. | Financial Statement Schedules. |
All schedules are omitted because they are not applicable or not required or because the required information is included in the Financial Statements or the Notes thereto.
| 3. | Exhibits. The following exhibits are filed as part of, or incorporated by reference into, this Annual Report: |
| 55 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: May 15, 2026 | By: | /s/ Quanzhong Lin |
Quanzhong Lin Chief Executive Officer (Principal Executive Officer | ||
| By: | /s/ Xiaowen Zheng | |
Xiaowen Zheng Chief Financial Officer (Principal Financial Officer) |
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on May 15, 2026.
| Signature | Title | |
| /s/ Quanzhong Lin | Chief Executive Officer and a Director | |
| Quanzhong Lin | (Principal Executive Officer) | |
| /s/ Xiaowen Zheng | Chief Financial Officer | |
| Xiaowen Zheng | (Principal Financial Officer) | |
| /s/ Huiliang Jiao | Director | |
| Huiliang Jiao | ||
| Director | ||
| Christopher Lee | ||
| /s/ Onyu Jiang | Director | |
| Onyu Jiang |
| 56 |
| Report of Independent Registered Public Accounting Firm (PCAOB ID 6781) | F-2 |
| Report of Independent Registered Public Accounting Firm (PCAOB ID 2851) | |
| Financial Statements: | |
| Consolidated Balance Sheets as of December 31, 2025 and 2024 | F-4 |
| Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2025 and 2024 | F-5 |
| Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2025 and 2024 | F-6 |
| Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024 | F-7 |
| Notes to Consolidated Financial Statements | F-8 |
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of AiXin Life International, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of AiXin Life International, Inc. and its subsidiaries (collectively, the “Company”) as of December 31, 2025 and 2024 and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ deficit, and cash flows for the years ended December 31, 2025 and 2024 and the related notes (collectively referred to as the “financial statements”).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024 and the results of its operations and its cash flow for years ended December 31, 2025 and 2024 in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company had a working capital deficit as of December 31, 2025 and a net loss and negative cash flows from operations for the year ended December 31, 2025. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. These consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audits provide a reasonable basis for our opinion.
| F-2 |
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition for Product Sales
Description of the Matter
As described in Note 2 to the consolidated financial statements, the Company recognizes revenue across multiple operating segments, including direct sales, hotel operations, pharmacies, and manufacturing. We identified revenue recognition related to product sales as a critical audit matter due to the decentralized nature of the transactions and the potential for timing discrepancies. Given the volume of transactions and the extent of judgment required, evaluating the timing and amount of revenue recognition was especially challenging and required significant audit effort.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to revenue recognition for product sales included:
| ● | Obtaining an understanding of the Company’s revenue recognition policies for product sales and relevant internal controls over revenue recognition. | |
| ● | Assessing the identification of performance obligations, evaluating terms of customer arrangements, and inspecting signed delivery notes to confirm that products were delivered to and accepted by customers. | |
| ● | Tracing customer communication records and verifying cash remittances to Company bank accounts. | |
| ● | Performing cutoff testing to confirm proper timing of revenue recognition. | |
| ● | Performing analytical procedures to identify unusual fluctuations or anomalies in sales volume or timing. | |
| ● | Assessing the adequacy of financial statement disclosures regarding revenue recognition policies. |
/s/
We have served as the Company’s auditor since 2025.
PCAOB
ID
May 15, 2026
| F-3 |
AIXIN LIFE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Accounts receivable - related parties | ||||||||
| Accounts receivable | ||||||||
| Other receivables and prepaid expenses | ||||||||
| Advances to suppliers | ||||||||
| Advances to suppliers - related parties | ||||||||
| Advances to suppliers | ||||||||
| Inventory, net | ||||||||
| Due from related parties | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Long term prepaid expenses | ||||||||
| Operating lease right-of-use assets | ||||||||
| Operating lease right-of-use assets - related parties | ||||||||
| Operating lease right-of-use assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable - related parties | ||||||||
| Accounts payable | ||||||||
| Unearned revenue | ||||||||
| Unearned revenue - related party | ||||||||
| Unearned revenue | ||||||||
| Taxes payable | ||||||||
| Accrued liabilities and other payables | ||||||||
| Government grant | ||||||||
| Short term loan | ||||||||
| Operating lease liabilities | ||||||||
| Operating lease liabilities - related parties | ||||||||
| Operating lease liabilities | ||||||||
| Due to related parties | ||||||||
| Total current liabilities | ||||||||
| Operating lease liabilities - non-current | ||||||||
| Operating lease liabilities - non-current - related parties | ||||||||
| Operating lease liabilities - non-current | ||||||||
| Total liabilities | ||||||||
| Stockholders’ deficit | ||||||||
| Undesignated preferred stock, $ par value, shares authorized, issued and outstanding | ||||||||
| Common stock, par value $ per share, shares authorized; shares issued and outstanding as of December 31, 2025 and 2024 | ||||||||
| Additional paid in capital | ||||||||
| Statutory reserve | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
AIXIN LIFE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| 2025 | 2024 | |||||||
| Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Sales revenue | ||||||||
| Direct sales | $ | $ | ||||||
| Pharmacies | ||||||||
| Hotel | ||||||||
| Manufacture and sale | ||||||||
| Total revenue, net | ||||||||
| Operating costs and expenses | ||||||||
| Cost of sales | ||||||||
| Hotel operating costs | ||||||||
| Selling expenses | ||||||||
| General and administrative | ||||||||
| Stock-based compensation | ||||||||
| Total operating costs and expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Non-operating income (expenses) | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Gain from sale of leasehold improvement | ||||||||
| Other income (expense) | ( | ) | ||||||
| Total non-operating income (expenses), net | ( | ) | ||||||
| Loss before income tax | ( | ) | ( | ) | ||||
| Income tax expense | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Other comprehensive items | ||||||||
| Foreign currency translation gain (loss) | ( | ) | ||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Loss per share of common stock - basic and diluted | $ | ) | $ | ) | ||||
| Weighted average shares outstanding | ||||||||
The accompanying notes are an integral part of these financial statements.
| F-5 |
AIXIN LIFE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
| Shares | Amount | capital | reserves | deficit | income | Total | ||||||||||||||||||||||
| Common Stock | Additional paid in | Statutory | Accumulated | Accumulated other comprehensive | ||||||||||||||||||||||||
| Shares | Amount | capital | reserves | deficit | income (loss) | Total | ||||||||||||||||||||||
| Balance at December 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation loss | - | |||||||||||||||||||||||||||
| Balance at December 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance at December 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
| F-6 |
AIXIN LIFE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| 2025 | 2024 | |||||||
| Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments required to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Bad debts provision (reversal) | ( | ) | ||||||
| Loss on disposal of fixed assets | ||||||||
| (Reversal of) provision for inventory reserve | ( | ) | ||||||
| Gain from sale of leasehold improvement | ( | ) | ||||||
| Interest income | ( | ) | ||||||
| Operating lease expense | ||||||||
| Stock based compensation | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Accounts receivable - related parties | ( | ) | ||||||
| Other receivables and prepaid expenses | ||||||||
| Advances to suppliers | ||||||||
| Advances to suppliers - related parties | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Security deposit | ||||||||
| Accounts payable | ( | ) | ||||||
| Accounts payable - related parties | ( | ) | ||||||
| Unearned revenue | ( | ) | ||||||
| Unearned revenue - related party | ||||||||
| Taxes payable | ( | ) | ||||||
| Accrued liabilities and other payables | ( | ) | ||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Operating lease liability - related parties | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Repayment received from loans to third party | ||||||||
| Cash received on disposal of fixed assets | ||||||||
| Purchase of intangible asset | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Advance from related parties | ||||||||
| Repayment to related parties | ( | ) | ( | ) | ||||
| Repayment of government grant | ( | ) | ( | ) | ||||
| Proceeds from loan | ||||||||
| Net cash provided by financing activities | ||||||||
| EFFECT OF EXCHANGE RATE CHANGE ON CASH | ( | ) | ||||||
| NET DECREASE IN CASH | ( | ) | ( | ) | ||||
| CASH, BEGINNING OF PERIOD | ||||||||
| CASH, END OF PERIOD | $ | $ | ||||||
| - | - | |||||||
| Supplemental Cash flow data: | ||||||||
| Income tax paid | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
| Supplemental disclosure of noncash activities: | ||||||||
| Right-of-use assets obtained in exchange for operating lease liabilities | $ | $ | ||||||
| Termination of Right-of-use asset and operating lease liability | $ | $ | ||||||
| Sale of Leasehold Improvement | $ | $ | ||||||
| Specification settlement of Property and equipment | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| F-7 |
AIXIN LIFE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Aixin
Life International, Inc. (the “Company” or “Aixin Life” or “we”) was incorporated under the laws
of the State of Colorado on December 30, 1987. On February 2, 2017, Mr. Quanzhong Lin (Mr. Lin) purchased
On
December 12, 2017, pursuant to a Share Exchange Agreement, in consideration for all of the outstanding shares of AiXin (BVI) International
Group Co., Ltd. a British Virgin Islands corporation (“AiXin BVI”), the Company issued to Mr. Lin, the sole stockholder of
AiXin BVI, shares of common stock then representing
As a result of the Share Exchange, AiXin BVI became the Company’s wholly-owned subsidiary, and the Company owns all of the outstanding shares of HK AiXin International Group Co., Limited, a Hong Kong limited company (“AiXin HK”), which in turn owns all of the outstanding shares of Chengdu AiXinZhonghong Biological Technology Co., Ltd., a Chinese limited company (“AiXinZhonghong”), which markets and sells premium-quality nutritional products in China.
AiXin BVI was incorporated on September 21, 2017 as a holding company and AiXin HK was established in Hong Kong on February 25, 2016 as an intermediate holding company. AiXinZhonghong was established in the People’s Republic of China (“PRC”) on March 4, 2013, and on May 27, 2017, the local government of the PRC issued a certificate of approval regarding the foreign ownership of AiXinZhonghong by AiXin HK. Neither AiXin BVI nor AiXin HK had operations prior to December 12, 2017.
For accounting purposes, the acquisition of AiXin BVI was accounted for as a reverse acquisition and treated as a recapitalization of the Company effected by a share exchange, with AiXin BVI as the accounting acquirer. Since neither AiXin BVI nor AiXin HK had operations prior to December 12, 2017, the historical consolidated financial statements of AiXinZhonghong are now the historical consolidated financial statements of the Company. The assets and liabilities of AiXinZhonghong were brought forward at their book value and no goodwill was recognized.
Effective February 1, 2018, the Company changed its name to AiXin Life International, Inc. (“Aixin Life”).
The Company, through its indirectly owned subsidiary, AiXinZhonghong, develops and distributes consumer products by offering a line of nutritional products. The Company sells the products through exhibition events, conferences, and person-to-person marketing. The Company’s business mainly focuses on a proactive approach to its customers such as hosting events for clients, which it believes is ideally suited to marketing its products because sales of nutrition products are strengthened by ongoing personal contact and support, coaching and education of its clients, as to the benefits of a healthy and active lifestyle.
On
May 25, 2021, AiXin HK entered into an Equity Transfer Agreement (the “Hotel Purchase Agreement”) with Chengdu Aixin Shangyan
Hotel Management Co., Ltd (“Aixin Shangyan Hotel”), and its two shareholders Quanzhong Lin and Yirong Shen (“Transferor”).
Pursuant to the Hotel Purchase Agreement, Aixin Life purchased
| F-8 |
On
June 2, 2021, AiXin HK entered into an Equity Transfer Agreement (the “Pharmacies Purchase Agreement”) with Chengdu Aixintang
Pharmacy Co., Ltd. and certain affiliated entities, each of which operates a pharmacy (together, “Aixintang Pharmacies”)
and its three shareholders, Quanzhong Lin, Ting Li and Xiao Ling Li (“Transferor”). Mr. Lin owned in excess of
On
July 19, 2022, AiXin HK entered into an Equity Transfer Agreement with Yunnan Shengshengyuan Technology Co., Ltd, (“Yunnan Shengshengyuan”)
and Yun Chen (together, the “Sellers”), the shareholders of Yunnan Runcangsheng Technology Company Ltd. (“Runcangsheng”).
Yunnan Shengshengyuan owns in excess of
On
February 17, 2023, the Company effected a
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to operate profitably, to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements.
The
Company incurred a net loss of $
Management believes that it has developed a liquidity plan, summarized below, that, if executed successfully, should provide sufficient liquidity to meet the Company’s obligations as they become due for a reasonable period of time, and allow the development of its core business. The plan includes:
● Gaining positive cash-inflow from operating activities through continuous cost reductions and the sales of higher margin products.
● Raising cash through loans from related parties and potential equity offerings.
| F-9 |
While the Company’s management believes that the measures in its liquidity plan including those described above will be adequate to satisfy its liquidity requirements for the twelve months after the date that these financial statements are issued, there is no assurance that the liquidity plan will be successfully implemented. Failure to successfully implement the liquidity plan may have a material adverse effect on the Company’s business, results of operations and financial position, and may adversely affect its ability to continue as a going concern. These consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The accompanying consolidated financial statements are prepared in conformity with U.S. Generally Accepted Accounting Principles (“US GAAP”). The functional currency of AiXinZhonghong, Aixin Shangyan Hotel, Aixintang Pharmacies, and Runcangsheng is the Chinese Renminbi (“RMB”). The accompanying consolidated financial statements are translated from RMB and presented in U.S. dollars (“USD”).
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, AiXin HK, AiXinZhonghong, Aixin Shangyan Hotel, Aixintang Pharmacies, and Runcangsheng. Intercompany transactions and accounts were eliminated in consolidation.
Global Uncertainties
The Company’s liquidity may be adversely impacted by various risks and uncertainties, including, but not limited to future and current impacts of global events such as a widespread health crisis, the continuation of the war in the Ukraine or the conflict in Palestine, the outbreak of another conflict or the expansion of the conflict in Palestine to other countries, the ongoing tensions between the United States and China, the Russian Federation and certain countries in the Middle East, increases in inflation, and other risks detailed in the Company’s Annual Report on Form 10-K or other reports filed with the Securities and Exchange Commission.
While the invasion of Ukraine, the conflict in Palestine and responses thereto have not interrupted the Company’s operations, these or future developments which disrupt the international financial markets could make it difficult to access debt and equity capital on attractive terms, if at all, and impact the Company’s ability to fund business activities, including proposed acquisitions.
Use of Estimates
In preparing consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period.
Significant estimates required by management, include the recoverability of long-lived assets, allowance for doubtful accounts, and the reserve for obsolete and slow-moving inventories. Actual results could differ from those estimates.
Cash and Cash Equivalents
For
financial statement purposes, the Company considers all highly liquid investments with an original maturity of three months or less to
be cash and cash equivalents. The Company has cash on hand and deposits in accounts maintained with state-owned banks within the PRC.
Cash in state-owned banks is covered by insurance up to RMB
| F-10 |
Restricted Cash
Restricted cash consist of cash deposited with banks in conjunction with borrowings from banks. Restriction on the use of such as is imposed by the banks and remains effective throughout the terms of the bank borrowings. Restricted cash is classified as current asset on the Company’s consolidated balance sheet as all the balance is expected to be released to cash within the next 12 months from December 31, 2025. The restricted cash was cash maintained in temporarily frozen bank accounts held by Aixintang Pharmacy and its branches by the court for a judgement against Aixintang Pharmacy (see Note 17 – litigation).
Credit Losses
The Company’s policy is to maintain an allowance for potential credit losses on accounts receivable. The Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit losses on financial instruments later codified as Accounting Standard codification (“ASC”) 326 (“ASC 326”), on January 1, 2023. The guidance introduces a revised approach to the recognition and measurement of credit losses, emphasizing an updated model based on expected losses rather than incurred losses. There was no significant impact on the date of adoption of ASC 326.
Under ASC 326, accounts receivable are recorded at the invoiced amount, net of allowance for expected credit losses. The Company’s primary allowance for credit losses is the allowance for doubtful accounts. The allowance for doubtful accounts reduces the accounts receivable balance to the estimated net realizable value. The Company used a combination of method Aging schedule and Roll-rate method to assess the reasonability and adequacy of current allowance.
In establishing any required allowance, management considers historical losses adjusted for current market conditions, the Company’s customers’ financial condition, the amount of any receivables in dispute, the current receivables aging, current payment terms and expectations of forward-looking loss estimates.
All provisions for the allowance for doubtful accounts are included as a component of general and administrative expenses on the accompanying consolidated statements of operations and comprehensive loss. Accounts receivable deemed uncollectible are charged against the allowance for credit losses when identified. Subsequent recoveries of amounts previously written off are credited to earnings in the period recovered.
Accounts Receivable
The
Company’s policy is to maintain an allowance for potential credit losses on accounts receivable. Management reviews the composition
of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends
and changes in customer payment patterns to evaluate the adequacy of these reserves. In practice, companies generally provide a high-level, aggregated description of payment terms, such as payment
is generally due upon delivery or shortly thereafter. As of December 31, 2025 and 2024, the bad debt allowance
was $
The following table summarizes the activity related to the Company’s accounts receivable allowance for doubtful accounts for the years ended December 31, 2025 and 2024:
SCHEDULE OF ACCOUNTS RECEIVABLE ALLOWANCE FOR DOUBTFUL ACCOUNTS
| 2025 | 2024 | |||||||
| For the years ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Provision for (Reversal of) bad debts | ( | ) | ||||||
| Effect of translation | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
| F-11 |
Inventories
Inventories
are stated at net realizable value using weighted average method. Costs include the cost of raw materials, freight, direct labor and
related production overhead. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision
for diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less
any costs to complete and sell products. The Company evaluates inventories on a quarterly basis for its net realizable value adjustments,
and reduces the carrying value of those inventories that are obsolete or in excess of the forecasted usage to their estimated net realizable
value based on various factors including aging, expiration dates, as applicable, taking into consideration historical and expected future
product sales. The Company recorded inventory impairment (reserve) of $(
Cost of Goods Sold
Cost of goods sold represents the direct costs incurred in the production or procurement of goods sold during the reporting period. Such costs primarily include raw materials, direct labor, and manufacturing overhead directly attributable to the production of finished goods. For retail or merchandising operations, cost of goods sold consists primarily of the purchase price of inventory, including freight-in and other costs necessary to bring inventory to a saleable condition.
Hotel Operating Costs
Hotel operating costs represent the direct and indirect expenses associated with the operation of hotel properties during the reporting period. These costs typically include payroll and related employee benefits for on-property staff, room operations, food and beverage costs, housekeeping, utilities, maintenance and repairs, property-level administrative expenses, and other costs necessary to operate and maintain hotel facilities.
Property and Equipment
Property
and equipment are stated at cost, less accumulated depreciation, and impairment losses, if any. Major repairs and betterments that significantly
extend original useful lives or improve productivity are capitalized and depreciated over the period benefited. Maintenance and repairs
are expensed as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation
are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided
using the straight-line method for substantially all assets with
SCHEDULE OF PROPERTY AND EQUIPMENT ESTIMATED LIVES
| Office furniture | ||
| Electronic equipment | ||
| Machinery | ||
| Leasehold improvements | ||
| Vehicles |
| F-12 |
Impairment of Long-Lived Assets
Long-lived assets, which include property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, but at least annually.
Recoverability of long-lived assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by it. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds its fair value. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. Based on its review, the Company believes that, as of December 31, 2025 and 2024, there were no significant impairments of its long-lived assets.
Income Taxes
Income taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The Company follows Accounting Standards Codification (“ASC”) Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures.
Under ASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statement of income.
At December 31, 2025 and 2024, the Company did not take any uncertain positions that would necessitate recording a tax related liability.
Revenue Recognition
Revenue from sale of goods under Topic 606 is recognized in a manner that reasonably reflects the delivery of the Company’s products and services to customers in return for expected consideration and includes the following elements:
| ● | executed contract(s) with customers that the Company believes is legally enforceable; |
| F-13 |
| ● | identification of performance obligation in the respective contract; | |
| ● | determination of the transaction price for each performance obligation in the respective contract; | |
| ● | allocation of the transaction price to each performance obligation; and | |
| ● | recognition of revenue only when the Company satisfies each performance obligation. |
Disaggregation of Revenue
For the years ended December 31, 2025 and 2024, the Company disaggregate revenue into four revenue streams, consisting of direct product sales, pharmacies sales, hotel and manufacture sales as the following table:
SCHEDULE OF DISAGGREGATION OF REVENUE
Year Ended December 31, 2025 | Year Ended December 31, 2024 | |||||||
| Direct Product Sales | $ | |||||||
| Pharmacies Sales | ||||||||
| Hotel | ||||||||
| Manufacture and Sale: | ||||||||
| Total Revenues | $ | $ | ||||||
| F-14 |
The Company’s revenue recognition policies for its various operating segments are as follows:
Direct Sales
The Company’s revenue from direct sales of products is recognized when goods are delivered to the customer and no other obligation exists. The Company does not provide unconditional return or other concessions to customers. The Company’s sales policy allows for the return of unopened products for cash after deducting certain service and transaction fees. As an alternative to the product return option, customers have the option of asking for an exchange for products with the same value. The Company estimates expected product returns based on historical experience, contractual terms, applicable statutory return rights, and subsequent return activity. Historically, returns have been insignificant, and no material refund liability or sales return allowance was recorded as of December 31, 2025 and 2024.
Sales
revenue of AiXin Zhonghong represents the invoiced value of goods, net of value-added taxes (“VAT”). All of the Company’s
products sold in China are subject to the PRC VAT of
Hotel
Hotel
revenues are primarily derived from the rental of rooms, food and beverage sales and other ancillary goods and services, including but
not limited to souvenir, parking and conference reservation. Each of these products and services represents a distinct performance obligation
and, in exchange for these services, the Company receives fixed amounts based on published rates or negotiated contracts. Payment is
due in full at the time when the services are rendered or the goods are provided. Room rental revenue is recognized on a daily basis
when rooms are occupied. Food and beverage revenue and other goods and services revenue are recognized when they have been delivered
or rendered to the guests as the respective performance obligations are satisfied. All of the hotel’s goods sold in China are subject
to the PRC VAT of
Pharmacy
The
Company’s retail drugstores (Aixintang Pharmacies) recognize revenue at the time the customer takes possession of the merchandise.
For pharmacy sales, each prescription claim is its own arrangement with the customer and is a performance obligation. Aixintang Pharmacies
generally receives payments from customers as it satisfies its performance obligations. Sales of drugs reimbursed by local government
medical insurance agencies and receivables from these agencies are recognized when a customer pays for the drugs at a store, the receivables
are usually collected within three months, and the Company has not experienced a payment default from any local government medical insurance
agency. The Company records a receivable when it has an unconditional right to receive payment and only the passage of time is required
before payment is due. Sales revenue represents the invoiced value of goods, net of VAT. Aixintang Pharmacies’ products sold in
China are subject to the PRC VAT of
Manufacture and Sale
The
Company’s subsidiary Runcangsheng recognizes revenue at the time products are shipped as this satisfies its performance obligation.
The Company records a receivable for its sales when it has an unconditional right to receive payment and only the passage of time is
required before payment is due. Sales revenue represents the invoiced value of goods, net of value-added taxes (“VAT”). All
of Runcangsheng’s products sold in China are subject to the PRC VAT of
Unearned Revenue
The Company’s unearned revenue primarily consists of advances received from customers for the purchase of products prior to the delivery of goods, and for the rental of hotel rooms prior to the delivery of service. The delivery of products and room rental services is based upon contract terms and customer demand, normally within one year.
| F-15 |
Concentration of Credit Risk
The operations of the Company are in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, and by the general state of the PRC economy.
The
Company has cash on hand and demand deposits in accounts maintained with state-owned banks within the PRC. Cash in state-owned banks
is covered by insurance up to RMB
The Company has not experienced any losses in such accounts and believes they are not exposed to any risks on its cash in these bank accounts.
During
the year ended December 31, 2025, the Company had one customer that accounted for
During
the year ended December 31, 2024, the Company had two customers that accounted for
During the year ended December 31, 2025, the Company had two major suppliers that accounted for over 10% of its total purchases.
SCHEDULE OF CONCENTRATION OF RISK BY RISK FACTORS
| Supplier | Net purchases for the year ended December 31, 2025 | % of total purchase | ||||||
| A | $ | % | ||||||
| D | % | |||||||
During the year ended December 31, 2024, the Company had three major suppliers that accounted for over 10% of its total purchases.
| Supplier | Net purchases for the year ended December 31, 2024 | % of total purchase | ||||||
| A | $ | % | ||||||
| B | % | |||||||
| C* | % | |||||||
| * |
| F-16 |
Leases
The Company determines if an arrangement is a lease at inception under Financial Accounting Standards Board (“FASB”) ASC Topic 842, Right of Use Assets (“ROU”) and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of its leases do not provide an implicit rate, it uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. ROU assets are adjusted for prepayments and accrued lease payments. ROU assets also reflect any lease payments made prior to commencement and are recorded net of any lease incentives received. The Company’s lease terms may include options to extend or terminate the lease and such options are considered when determining the value of an ROU asset when it is reasonably certain that the Company will exercise such options.
ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets.
ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. The Company recognized no impairment of ROU assets as of December 31, 2025 and 2024. Operating leases are included in operating lease ROU and operating lease liabilities (current and non-current), on the consolidated balance sheets.
Statement of Cash Flows
In accordance with ASC Topic 230, “Statement of Cash Flows,” cash flows from the Company’s operations are calculated based on the local currencies using the average translation rates. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.
Fair Value of Financial Instruments
The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accrued liabilities and accounts payable, approximate their fair value due to their short maturities. FASB ASC Topic 825, “Financial Instruments,” requires disclosure of the fair value of financial instruments held by the Company. Unless otherwise disclosed, the fair value of the Company’s cash, accounts receivable, inventories, advances to suppliers, prepaid expenses and other current assets, accounts payable, unearned revenue accrued expenses and other current liabilities, taxes payable and due to related parties, approximate the fair value of the respective assets and liabilities as of December 31, 2025 and 2024 based upon the short-term nature of the assets and liabilities.
Fair Value Measurements and Disclosures
ASC Topic 820, “Fair Value Measurements and Disclosures,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels are defined as follow:
| ● | Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| F-17 |
| ● | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | |
| ● | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
As of December 31, 2025 and 2024, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value.
Foreign Currency Translation and Comprehensive Income (Loss)
The functional currency of the Company is RMB. For financial reporting purposes, RMB is translated into USD as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet dates. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period.
Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive income”. Gains and losses resulting from foreign currency transactions are included in income. There was no significant fluctuation in the exchange rate for the conversion of RMB to USD after the balance sheet date.
The Company uses FASB ASC Topic 220, “Comprehensive Income”. Comprehensive loss is comprised of net loss and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. Comprehensive income (loss) for the years ended December 31, 2025 and 2024 consisted of net income (loss) and foreign currency translation adjustments.
Translation of amounts from RMB into USD has been made at the following exchange rates as of December 31, 2025 and 2024 and for the years ended December 31, 2025 and 2024.
SCHEDULE OF FOREIGN CURRENCY TRANSLATION
| December 31, 2025 | December 31, 2024 | |||||||
| Period/year-end RMB:USD exchange rate | ||||||||
| Period/annual average RMB:USD exchange rate | ||||||||
| Exchange rate | ||||||||
Basic income (loss) per share is computed on the basis of the weighted average number of common shares outstanding during the period.
Dilution is computed by applying the treasury stock method for options and warrants. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
As of December 31, 2025 and 2024, the Company did not have any potentially dilutive instruments.
| F-18 |
The Company periodically grants stock options, warrants and awards to employees and non-employees in non-capital raising transactions as compensation for services rendered. The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation—Stock Compensation. Under the Company’s equity incentive plan, stock awards and other share-based payments are granted to employees, directors, and consultants as compensation for services rendered. Stock-based compensation cost is measured on the grant date based on the fair value of the shares awarded and is recognized as expense on a straight-line basis over the service period. The fair value of common stock granted is determined using the closing market price of the Company’s common stock on the grant date. Stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the employees and non-employees, option, warrant and award grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.
Segment Reporting
ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s chief operating decision maker organizes segments within the Company for making operating decisions assessing performance and allocating resources. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.
The
Company manages its business as
The following table shows the Company’s operations by business segment for years ended December 31, 2025 and 2024.
SCHEDULE OF SEGMENTS INFORMATION
| 2025 | 20214 | |||||||
| For the Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Net revenue | ||||||||
| Direct sales | $ | $ | ||||||
| Pharmacy | ||||||||
| Hotel | ||||||||
| Manufacture and sale | ||||||||
| Total revenues, net | $ | $ | ||||||
| Operating costs and expenses | ||||||||
| Direct sales | ||||||||
| Cost of sales | $ | $ | ||||||
| Operating expenses | ||||||||
| Pharmacy | ||||||||
| Cost of sales | ||||||||
| Operating expenses | ||||||||
| Hotel | ||||||||
| Hotel operating costs | ||||||||
| Operating expenses | ||||||||
| Manufacture and sale | ||||||||
| Cost of sales | ||||||||
| Operating expenses | ||||||||
| Total operating costs and expenses | $ | $ | ||||||
| Income (loss) from operations | ||||||||
| Direct sales | $ | ( | ) | $ | ( | ) | ||
| Pharmacy | ( | ) | ||||||
| Hotel | ( | ) | ( | ) | ||||
| Manufacture and sale | ( | ) | ( | ) | ||||
| Loss from operations | $ | ( | ) | $ | ( | ) | ||
| F-19 |
The following table shows the Company’s assets by business segment as of December 31, 2025 and 2024.
| Segment assets | As of December 31, 2025 | As of December 31, 2024 | ||||||
| Direct sales | $ | $ | ||||||
| Pharmacy | ||||||||
| Hotel | ||||||||
| Manufacture and sale | ||||||||
| Total assets | $ | $ | ||||||
New Accounting Pronouncements
Recently Adopted Accounting Standards
ln December 2023, the FASB issued Accounting Standards Update No.2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3)income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company adopted the ASU in 2025. The adoption did not have a material impact on the financial statements.
In March 2025, the FASB issued ASU 2025-02—Liabilities (405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 122. The amendments in this Update are effective immediately and on a fully retrospective basis to annual periods beginning after December 15, 2024. The Company adopted the ASU in 2025. The adoption did not have a material impact on the financial statements.
Recently Issued But Not Yet Adopted Accounting Pronouncements
In October 2023, the FASB issued ASU No. 2023-06, “Disclosure Improvements — Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” The ASU amends the disclosure or presentation requirements related to various subtopics in the FASB ASC. The ASU was issued in response to the SEC’s August 2018 final amendments in Release No. 33-10532, Disclosure Update and Simplification that updated and simplified disclosure requirements that the SEC believed were duplicative, overlapping, or outdated. The guidance in ASU 2023-06 is intended to align GAAP requirements with those of the SEC and to facilitate the application of GAAP for all entities. The amendments introduced by ASU 2023-06 are effective if the SEC removes the related disclosure or presentation requirement from its existing regulations by June 30, 2027. If, by June 30, 2027, the SEC has not removed the applicable requirements from its existing regulations, the pending content of the associated amendment will be removed from the ASC and will not become effective for any entities. Early adoption is permitted. The adoption of ASU 2023-06 is not expected to have a material impact on the Company’s consolidated financial statements or related disclosures.
On November 4, 2024, the FASB issued an ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024 03”) to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions (such as cost of sales; selling, general, and administrative expenses; and research and development). The amendments in the ASU require disclosure in the notes to financial statements of specified information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity: 1.Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)–(e). 2. Include certain amounts that are already required to be disclosed under current generally accepted accounting principles in the same tabular disclosure as the other disaggregation requirements. 3. Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. 4) Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. In January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date (“ASU 2025-01”). The amendments, as clarified by ASU 2025-01, are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of the ASU or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its consolidated financial statement presentation or disclosures.
| F-20 |
In January 2025, the FASB issued ASU 2025-01 Income Statement-Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40). The FASB issued ASU 2024-03 on November 4, 2024-03 states that the amendments are effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Following the issuance of ASU 2024-03, the FASB was asked to clarify the initial effective date for entities that do not have an annual reporting period that ends on December 31 (referred to as non-calendar year-end entities). Because of how the effective date guidance was written, a non-calendar year-end entity may have concluded that it would be required to initially adopt the disclosure requirements in ASU 2024-03 in an interim reporting period, rather than in annual reporting period. The FASB’s intent in the basis for conclusions of ASU 2024-03 is clear that all public business entities should initially adopt the disclosure requirements in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact that the adoption of ASU 2025-01 will have on its consolidated financial statement presentation or disclosures.
The Company’s management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.
3. OTHER RECEIVABLES AND PREPAID EXPENSES
Other receivables and prepaid expenses consisted of the following at December 31, 2025 and 2024:
SCHEDULE OF OTHER RECEIVABLES AND PREPAID EXPENSES
| December 31, 2025 | December 31, 2024 | |||||||
| Deposits | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Employees’ social insurance | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
| Less: bad debt allowance | ||||||||
| Total other receivables and prepaid expenses, net | $ | $ | ||||||
| Long-term prepaid expenses | $ | $ | ||||||
Others primarily consist of temporary advances , amounts paid on behalf of employees for housing-related expenses, and petty cash funds for operational purposes.
| F-21 |
4. ADVANCES TO SUPPLIERS
The Company had advances to suppliers of $ and $ as of December 31, 2025 and 2024, respectively. Advances to suppliers primarily include prepayments for products and equipment expected to be delivered subsequent to balance sheet dates. Due to their short-term nature, advances to suppliers are usually satisfied within 12 months.
5. INVENTORIES
Inventories consisted of the following at December 31, 2025 and 2024:
SCHEDULE OF INVENTORIES
| December 31, 2025 | December 31, 2024 | |||||||
| Raw material | $ | $ | ||||||
| Drugs, pharmaceutical and nutritional products | ||||||||
| Food and beverage, hotel supplies and consumables | ||||||||
| Total | ||||||||
| Less: reserve for inventory | ||||||||
| Total inventories, net | $ | $ | ||||||
Provision
for inventory reserve for the years ended December 31, 2025 and 2024 was $(
6. PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following at December 31, 2025 and 2024:
SCHEDULE OF PROPERTY AND EQUIPMENT
| December 31, 2025 | December 31, 2024 | |||||||
| Vehicles | $ | $ | ||||||
| Office equipment | ||||||||
| Machinery equipment | ||||||||
| Leasehold improvements | ||||||||
| Total | ||||||||
| Property and equipment, gross | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
During
the year, the Company entered into a settlement agreement with the vendor of certain equipment after identifying that certain materials
and specifications associated with the equipment did not meet contractual requirements. As part of the settlement, the vendor agreed
to reduce outstanding amounts payable by approximately $
Depreciation
expense for the years ended December 31, 2025 and 2024 was $
| F-22 |
7. INTANGIBLE ASSETS, NET
Intangible asset consisted of the following at December 31, 2025 and 2024:
SCHEDULE OF INTANGIBLE ASSET
| December 31, 2025 | December 31, 2024 | |||||||
| Software | $ | $ | ||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Intangible asset, net | $ | $ | ||||||
Amortization
expense for the years ended December 31, 2025 and 2024 was $
8. TAXES PAYABLE
Taxes payable consisted of the following at December 31, 2025 and 2024:
SCHEDULE OF TAX PAYABLE
| December 31, 2025 | December 31, 2024 | |||||||
| Value-added | $ | $ | ||||||
| Income | ||||||||
| City construction | ||||||||
| Education | ||||||||
| Other tax payable | ||||||||
| Taxes payable | $ | $ | ||||||
9. ACCRUED LIABILITIES AND OTHER PAYABLES
Accrued liabilities and other payables consisted of the following at December 31, 2025 and 2024:
SCHEDULE OF ACCRUED LIABILITIES AND OTHER PAYABLES
| December 31, 2025 | December 31, 2024 | |||||||
| Accrued employees’ social insurance | $ | $ | ||||||
| Accrued payroll and commission | ||||||||
| Construction payable | ||||||||
| Accrued professional fees | ||||||||
| Other payables | ||||||||
| Total | $ | $ | ||||||
| F-23 |
10. GOVERNMENT GRANT
On
December 1, 2021, the Company and Luquan Yizu Miaozu Autonomous County People’s Government (“the People’s Government”)
entered a cooperation agreement with a term of
11. SHORT TERM LOAN
On
November 7, 2025, the Company entered into a short-term loan with Bank of Communications Co., Ltd. for a principal amount of $
12. LEASE
AiXinZhonghong
leases its office. The lease has a remaining lease term of approximately
Aixin
Shangyan Hotel leases its hotel premises under an operating lease arrangement. The lease has a remaining lease terms of approximately
Aixintang
Pharmacies lease retail pharmacy stores under operating lease arrangements, with remaining lease terms of
Balance sheet information related to the Company’s leases is presented below:
SCHEDULE OF OPERATING LEASE LIABILITIES
December 31, 2025 | December 31, 2024 | |||||||
| Operating Leases | ||||||||
| Operating lease right-of-use assets-third party | $ | $ | ||||||
| Operating lease right-of-use assets-related party | ||||||||
| Total operating lease right-of-use assets | $ | $ | ||||||
| Operating lease liabilities – current-third party | ||||||||
| Operating lease liabilities – current-related party | ||||||||
| Total operating lease liabilities-current | ||||||||
| Operating lease liability – non-current-third party | ||||||||
| Operating lease liability – non-current-related party | ||||||||
| Total operating lease liabilities-non-current | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
| F-24 |
The following provides details of the Company’s lease expenses:
SCHEDULE OF OPERATING LEASE EXPENSES
| 2025 | 2024 | |||||||
| Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating lease expenses | $ | $ | ||||||
Other information related to leases is presented below:
SCHEDULE OF OTHER INFORMATION RELATED LEASES
| Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash Paid for Amounts Included In Measurement of Liabilities: | ||||||||
| Operating cash flows from operating leases | $ | $ | ||||||
| Weighted Average Remaining Lease Term As of December 31, 2025 and December 31, 2024: | ||||||||
| Operating leases | ||||||||
| Weighted Average Discount Rate: | ||||||||
| Operating leases | % | % | ||||||
| F-25 |
As of December 31, 2025, the five-year maturity of the Company’s operating lease liabilities was as following:
SCHEDULE OF MATURITIES OF LEASE LIABILITIES
| For the year ending December 31: | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total lease liabilities |
13. RELATED PARTY TRANSACTIONS
Accounts receivable – related parties
Accounts receivable – related party consisted of the following as of the periods indicated:
SCHEDULE OF ACCOUNTS RECEIVABLE - RELATED PARTY
| December 31, 2025 | December 31, 2024 | |||||||
| Chengdu Lisheng Huiren Pharmacy Co., Ltd. | $ | $ | ||||||
| Chengdu Cigu Foshou Pharmacy Co., Ltd. | ||||||||
| Sichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. | ||||||||
| Sichuan Yunxitang Pharmacy Co., Ltd. | ||||||||
| Shengcaofeng Health Industry (Yunnan) Co., Ltd. | ||||||||
| Chengdu Aixin International Travel Service Co., Ltd. | ||||||||
| Total | $ | $ | ||||||
| Accounts receivable - related party | $ | $ | ||||||
The related party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder of Aixin Life), except for Shengcaofeng Health Industry (Yunnan) Co., Ltd, which is owned by Huiliang Jiao, a Director of the Company.
| F-26 |
Sales revenue – related party
Sales revenue – related party consisted of the following for the periods indicated:
SCHEDULE OF SALES REVENUE RELATED PARTY
| 2025 | 2024 | |||||||
| Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Sichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. | $ | $ | ||||||
| Chengdu Aixin International Travel Service Co., Ltd. | ||||||||
| Chengdu Lisheng Huirentang Pharmacy Co., Ltd | ||||||||
| Shengcaofeng Health Industry (Yunnan) Co., Ltd. | ||||||||
| Yuefu Restaurant | ||||||||
| Total | $ | $ | ||||||
| Sales revenue - related party | $ | $ | ||||||
The related party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder of Aixin Life), except for Shengcaofeng Health Industry (Yunnan) Co., Ltd, which is owned by Huiliang Jiao, a Director of the Company.
Purchase – related party
Purchase – related party consisted of the following for the periods indicated:
SCHEDULE OF PURCHASE RELATED PARTY
| 2025 | 2024 | |||||||
| Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Sichuan Yunxitang Pharmacy Co., Ltd | $ | $ | ||||||
| Sichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. | ||||||||
| Chengdu Heshengyuan Pharmacy Co., Ltd. | ||||||||
| Chengdu Cigu Foshou Pharmacy Co., Ltd. | ||||||||
| Chengdu Aixin International Travel Service Co., Ltd. | ||||||||
| Yunnan Shengcaofeng Biotechnology Co., Ltd | ||||||||
| Total | $ | $ | ||||||
| Purchase - related party | $ | $ | ||||||
The related party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder of Aixin Life), except for Yunan Shengcaofeng Biotechnology Co., Ltd, which is owned by Huiliang Jiao, a Director of the Company.
| F-27 |
Accounts payable – related parties
Accounts payable – related party consisted of the following as of the periods indicated:
SCHEDULE OF ACCOUNTS PAYABLE - RELATED PARTY
| December 31, 2025 | December 31, 2024 | |||||||
| Sichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. | $ | $ | ||||||
| Shengcaofeng Health Industry (Yunnan) Co., Ltd. | ||||||||
| Sichuan Yunxitang Pharmacy Co., Ltd. | ||||||||
| Chengdu Heshengyuan Pharmacy Co., Ltd. | ||||||||
| Chengdu Cigu Foshou Pharmacy Co., Ltd. | ||||||||
| Total | $ | $ | ||||||
The related party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder of Aixin Life), except for Shengcaofeng Health Industry (Yunnan) Co., Ltd, which is owned by Huiliang Jiao, a Director of the Company.
Advances to suppliers– related parties
Advances to suppliers – related parties consisted of the following as of the periods indicated:
SCHEDULE OF ADVANCES TO SUPPLIERS - RELATED PARTY
| December 31, 2025 | December 31, 2024 | |||||||
| Sichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. | $ | $ | ||||||
| Sichuan Yunxitang Pharmacy Co., Ltd. | ||||||||
| Chengdu Heshengyuan Pharmacy Co., Ltd. | ||||||||
| Chengdu Cigu Foshou Pharmacy Co., Ltd. | ||||||||
| Total | $ | $ | ||||||
| Advance from suppliers | $ | $ | ||||||
The related party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder of Aixin Life).
Unearned revenue - related party
As
of December 31, 2025 and 2024, unearned revenue - related party consisted of $
| F-28 |
Due from related parties
Due from related parties consisted of the following as of the periods indicated:
SCHEDULE OF RELATED PARTY TRANSACTIONS
| December 31, 2025 | December 31, 2024 | |||||||
| Chengdu WenJiang Aixin Nanjiang Pharmacy Co., Ltd. | $ | $ | ||||||
| Chengdu Fuxiangtang Pharmacy Co., Ltd. | ||||||||
| Chengdu Heshengyuan Pharmacy Co., Ltd. | ||||||||
| Chengdu Wenjiang District Heneng Hupu Pharmacy Co., Ltd. | ||||||||
| Sichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. | ||||||||
| Chengdu Cigu Foshou Pharmacy Co., Ltd. | ||||||||
| Sichuan Aixin Investment Co. Ltd. | ||||||||
| Chengdu Lisheng Huiren Pharmacy Co., Ltd. | ||||||||
| Mianyang Aixin Cunshan Pharmacy | ||||||||
| Sichuan Yunxitang Pharmacy Co., Ltd | ||||||||
| Xiaoyan Zhou | ||||||||
| Huiliang Jiao | ||||||||
| Total | $ | $ | ||||||
| Due from related parties | $ | $ | ||||||
Due to related parties
Due to related parties consisted of the following as of the periods indicated:
| December 31, 2025 | December 31, 2024 | |||||||
| Quanzhong Lin | $ | $ | ||||||
| Huiliang Jiao | ||||||||
| Mianyang Aixin Cunshan Pharmacy Co. Ltd. | ||||||||
| Xiaoyan Zhou | ||||||||
| Sichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. | ||||||||
| Chengdu Aixin International Travel Service Co., Ltd. | ||||||||
| Chengdu Cigu Foshou Pharmacy Co., Ltd. | ||||||||
| Runcangsheng Health Industry (Yunnan) Co., Ltd. | ||||||||
| Total | $ | $ | ||||||
| Due to related parties | $ | $ | ||||||
The amounts due from related parties and due to related parties described above were for working capital purposes, payable on demand, and bear no interest. The related party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder of Aixin Life). Mr. Huiliang Jiao is a Director of the Company. Xiaoyan Zhou is the wife of Huiliang Jiao.
| F-29 |
14. INCOME TAXES
The Company was incorporated in the United States of America (“USA”) and has operations in one tax jurisdiction, i.e. the PRC. The Company generated substantially all of its sales from its operations in the PRC for the year ended December 31, 2025 and 2024, and recorded an income tax provision for each of the periods.
PRC
Under
the Enterprise Income Tax (“EIT”) Law of the PRC, domestic enterprises and Foreign Investment Enterprises (the “FIE”)
are usually subject to a unified
The current PRC EIT Law imposes a 10% withholding income tax for dividends distributed by foreign invested enterprises to their immediate holding companies outside the PRC. A lower withholding tax rate will be applied if there is a tax treaty arrangement between the PRC and the jurisdiction of the foreign holding company. Distributions to holding companies in Hong Kong that satisfy certain requirements specified by the PRC tax authorities, for example, will be subject to a 5% withholding tax rate. The Company did not benefit from this tax incentive during the reporting period.
The
Company’s subsidiaries in mainland China are subject to the statutory rate of
The components of the provision for income taxes for the years ended December 31, 2025 and 2024 consisted of the following:
SCHEDULE OF COMPONENTS OF THE PROVISION FOR INCOME TAXES
| For the Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Current: | ||||||||
| China | $ | $ | ||||||
| Total current | ||||||||
| Deferred: | ||||||||
| China | ||||||||
| Total deferred | ||||||||
| Total income tax expense | $ | $ | ||||||
| F-30 |
Deferred tax assets as of December 31, 2025 and 2024 consisted of the following:
SCHEDULE OF DEFERRED TAX ASSETS
| December 31, 2025 | December 31, 2024 | |||||||
| Deferred tax assets: | ||||||||
| Allowance for inventory | $ | $ | ||||||
| Allowance for doubtful accounts | ||||||||
| Right of use asset, net | ||||||||
| NOL carry forward | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net | $ | $ | ||||||
The following table reconciles the statutory rates to the Company’s effective tax rate for years ended December 31, 2025 and 2024:
SCHEDULE OF EFFECTIVE INCOME TAX RATE
| 2025 | 2024 | |||||||
| Statutory U.S. federal income tax rate | ( | )% | ( | )% | ||||
| Foreign tax rate differential | ( | )% | ( | )% | ||||
| Permanent difference | % | % | ||||||
| Change in valuation allowances | % | % | ||||||
| Other | ( | )% | % | |||||
| Effective combined tax rate | % | % | ||||||
As
of December 31, 2025, the Company had approximately $
Uncertain Tax Positions
Interest
associated with unrecognized tax benefits are classified as income tax, and penalties are classified in selling, general and administrative
expenses in the statements of operations. For the years ended December 31, 2025 and 2024, the Company had
| F-31 |
15. STOCKHOLDERS’ EQUITY
The Company is authorized to issue shares preferred stock at $ par value per share and shares of common stock at $ par value per share.
As of d December 31, 2025 and 2024, the Company had common shares issued and outstanding, and outstanding shares of preferred stock.
Stock Awards Issued for Services
On
October 22, 2019, the Company granted and issued shares to its employees and contractors under its 2019 Equity Incentive Plan.
The stock awards were valued at $
On
October 24, 2019, the Company granted and issued
shares to its employees and contractors under its 2019 Equity Incentive Plan. The stock awards were valued at $
The stock awards will vest over five () years from the grant date, and the grantee will forfeit a portion of the shares granted (“Shares Granted”) if the grantee is no longer employed by or contracted with the Company. Specifically,
For the years ended December 31, 2025 and 2024, stock-based compensation expenses were and $, respectively.
16. STATUTORY RESERVES
Pursuant to the PRC corporate law, the Company is now only required to maintain one statutory reserve by appropriating from its after-tax profit before declaration or payment of dividends. The statutory reserve represents restricted retained earnings.
Surplus reserve fund
The
Company is required to transfer
The
surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any,
and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion
to their shareholding or by increasing the par value of the shares currently held by them, provided that the remaining reserve balance
after such issue is not less than
| F-32 |
Common welfare fund
Common
welfare fund is a voluntary fund to which the Company can elect to transfer
This fund can only be utilized on capital items for the collective benefit of the Company’s employees, such as construction of dormitories, cafeteria facilities, and other staff welfare facilities. This fund is non-distributable other than upon liquidation.
17. OPERATING CONTINGENCIES
The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.
The Company’s sales, purchases and expenses are denominated in RMB and all of the Company’s assets and liabilities are also denominated in RMB. The RMB is not freely convertible into foreign currencies under the current law. In China, foreign exchange transactions are required by law to be transacted only by authorized financial institutions. Remittances in currencies other than RMB may require certain supporting documentation to affect the remittance.
Litigation
The Company is, from time to time, involved in litigation incidental to the conduct of its business regarding merchandise sold, employment matters, and litigation regarding intellectual property rights.
On August 30, 2024, Zhangjiagang People’s Court in Jiangsu Province issued a Notice of Case Closure, stating the Judgement for this case was fully executed and the plaintiff has received the full execution amount as of August 30, 2024.
In November 2021, the Company and Mr. Quanzhong Lin agreed that Mr. Lin shall assume any losses arising from this legal proceeding. As such, the Company did not accrue contingent losses from this legal proceeding as of December 31, 2024.
The Company believes that the litigation will not have a material adverse effect on its consolidated financial position, results of operations or cash flows.
18. SUBSEQUENT EVENT
The Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through the date the financial statements were issued and determined the Company has the following major subsequent events that need to be disclosed.
Run Cangsheng entered into a loan
agreement for borrowings in the principal amount of $
| F-33 |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (Registration No. 333-229182) (“Registration Statement”) of our report dated May 15, 2026, with respect to the consolidated balance sheets of Aixin Life International, Inc. and its subsidiaries as of December 31, 2025 and 2024, and the related consolidated statements of income and comprehensive loss, changes in stockholders’ deficit and cash flows for the years ended December 31, 2025 and 2024. We also consent to the reference to our firm under the heading “Experts” in such Registration Statement.
/s/ YCM CPA INC.
PCAOB ID 6781
Irvine, California
May 15, 2026
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a) UNDER THE EXCHANGE ACT
I, Quanzhong Lin, certify that:
1. I have reviewed this annual report on Form 10-K of AiXin Life International, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Dated: May 15, 2026 | |
| /s/ Quanzhong Lin | |
| Quanzhong Lin | |
| Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a) UNDER THE EXCHANGE ACT
I, Xiaowen Zheng, certify that:
1. I have reviewed this annual report on Form 10-K of AiXin Life International, Inc.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Dated: May 15, 2026 | |
| /s/ Xiaowen Zheng | |
| Xiaowen Zheng | |
| Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Annual Report of AiXin Life International, Inc., Colorado corporation (the “Company”), on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (the “Report”) Quanzhong Lin, Chief Executive Officer of the Company, does hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. ss. 1350), that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
| Dated: May 15, 2026 | |
| /s/ Quanzhong Lin | |
| Quanzhong Lin | |
| Chief Executive Officer (Principal Executive Officer) |
[A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.]
Exhibit 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Annual Report of AiXin Life International, Inc., a Colorado corporation (the “Company”), on Form 10-K) for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (the “Report”), Xiaowen Zheng, Chief Financial Officer of the Company, does hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. ss. 1350), that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
| Dated: May 15, 2026 | |
| /s/ Xiaowen Zheng | |
Xiaowen Zheng Chief Financial Officer (Principal Financial Officer) |
[A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.]