AIXN 10-Q
AiXin Life International, Inc. (AIXN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark one)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission
file number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
(Address of principal executive offices)
(Issuer’s telephone number)
Securities Registered Pursuant to Section 12(g) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of each Exchange on which Registered | ||
| OTCQB |
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.
Indicate 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 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.
| 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) ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date: As of August 19, 2025, there were outstanding
AIXIN LIFE INTERNATIONAL, INC.
FORM 10-Q
June 30, 2025
INDEX
| 2 |
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This report contains forward-looking statements. These 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.
Use of Certain Defined Terms
Except where the context otherwise requires and for the purposes of this report only:
the “Company,” “we,” “us,” and “our” refer to AiXin Life International., Inc. (“AiXin”) and its subsidiaries.
“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
“Hong Kong” refers to the Hong Kong Special Administrative Region of the People’s Republic of China;
“PRC,” “China,” and “Chinese,” refer to the People’s Republic of China (excluding Hong Kong and Taiwan);
“Renminbi” and “RMB” refer to the legal currency of China;
“Securities Act” refers to the Securities Act of 1933, as amended; and
“US dollars,” “dollars” and “$” refer to the legal currency of the United States.
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PART I - FINANCIAL INFORMATION
AIXIN LIFE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| As of June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Accounts receivable - related parties | ||||||||
| Other receivables and prepaid expenses | ||||||||
| Advances to suppliers | ||||||||
Prepaid expenses – related parties | ||||||||
| 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 | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable - related parties | ||||||||
| Unearned revenue | ||||||||
| Unearned revenue - related party | ||||||||
| Taxes payable | ||||||||
| Accrued liabilities and other payables | ||||||||
| Government grant | ||||||||
| Operating lease liabilities | ||||||||
| Due to related parties | ||||||||
| Total current liabilities | ||||||||
| Operating lease liabilities - non-current | ||||||||
| Total liabilities | ||||||||
| Stockholders’ deficit | ||||||||
| Preferred stock, $ par value, shares authorized, issued or outstanding as of June 30, 2025 and December 31, 2024 | ||||||||
| Common stock, par value $ per share, shares authorized; shares issued or outstanding as of June 30, 2025 and December 31, 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 unaudited condensed consolidated financial statements
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AIXIN LIFE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 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 expenses | ||||||||||||||||
| Stock-based compensation | ||||||||||||||||
| Total operating costs and expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Non-operating (expenses) income | ||||||||||||||||
| Interest income (expense) | ( | ) | ( | ) | ||||||||||||
| Other income | ||||||||||||||||
| Other expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total non-operating (expenses) income, 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 unaudited condensed consolidated financial statements
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AIXIN LIFE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
(UNAUDITED)
| Common Stock | Additional paid in | Statutory | Accumulated | Accumulated other comprehensive | ||||||||||||||||||||||||
| Shares | Amount | capital | reserves | deficit | income | Total | ||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance at March 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024
(UNAUDITED)
| Common Stock | Additional paid in | Statutory | Accumulated | Accumulated other comprehensive | ||||||||||||||||||||||||
| Shares | Amount | capital | reserves | deficit | income | Total | ||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation gain | - | |||||||||||||||||||||||||||
| Balance at March 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation gain | - | |||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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AIXIN LIFE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Six Months Ended June 30, | ||||||||
| 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 (gain) on disposal of fixed assets | ( | ) | ||||||
| Inventory impairment | ||||||||
| Operating lease expense | ||||||||
| Stock based compensation | ||||||||
| Government grant income | ( | ) | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Accounts receivable - related parties | ( | ) | ||||||
| Other receivables and prepaid expenses | ( | ) | ||||||
| Advances to suppliers | ( | ) | ||||||
| Prepaid expense - related party | ( | ) | ( | ) | ||||
| 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 | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| 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 | ( | ) | ||||||
| Proceeds from government grant | ||||||||
| Repayment of government grant | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| EFFECT OF EXCHANGE RATE CHANGE ON CASH | ( | ) | ||||||
| NET INCREASE (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 | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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AIXIN LIFE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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
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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 unaudited condensed 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.
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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 unaudited condensed 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 unaudited condensed 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”). Operating results for the three and six months ended June 30, 2025 are not necessarily indicate of the results that may be expected for the period ending December 31, 2025 or any future period. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on the Form 10-K filed with the SEC on May 7, 2025.
The unaudited condensed 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.
Use of Estimates
In preparing unaudited condensed 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 demand deposits in accounts maintained with state-owned banks within the
PRC. Cash in state-owned banks is covered by insurance up to RMB
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. As of June 30, 2025 and December 31, 2024, the bad
debt allowance was $
| 10 |
The following table summarizes the activity related to the Company’s accounts receivable allowance for doubtful accounts for the six months ended June 30, 2025 and 2024:
| For the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Provision for (Reversal of) bad debts | ( | ) | ||||||
| Effect of translation | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
Inventories
Inventories
mainly consist of health supplements, drugs, pharmaceutical and nutritional products, food and beverage, hotel supplies and consumables,
and raw materials. Inventories are valued at the lower of average cost or market, cost being determined on a moving weighted average
method at the end of the month. Management compares the cost of inventories with the net realizable value and an allowance is made for
writing down inventories to market value, if lower. The Company recorded inventory impairment of $
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
| Office furniture | ||||
| Electronic equipment | ||||
| Machinery | ||||
| Leasehold improvements | ||||
| Vehicles |
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 June 30, 2025 and December 31, 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.
| 11 |
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 June 30, 2025 and December 31, 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; | |
| ● | 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. |
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.
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
| 12 |
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.
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 three and six months ended June 30, 2025, the Company had one customer that accounted for
During
the three and six months ended June 30, 2024, the Company had one customer that accounted for
During the three months ended June 30, 2025, the Company had two major suppliers that accounted for over 10% of its total purchases.
| Supplier | Net purchases for the three months ended June 30, 2025 | % of total purchase | ||||||
| A | $ | % | ||||||
| E | % | |||||||
| 13 |
During the six months ended June 30, 2025, the Company had two major suppliers that accounted for over 10% of its total purchases.
| Supplier | Net purchases for the six months ended June 30, 2025 | % of total purchase | ||||||
| A | $ | % | ||||||
| D | % | |||||||
During the three months ended June 30, 2024, the Company had two major suppliers that accounted for over 10% of its total purchases.
| Supplier | Net purchases for the three months ended June 30, 2024 | % of total purchase | ||||||
| A | $ | % | ||||||
| B* | % | |||||||
During the six months ended June 30, 2024, the Company had two major suppliers that accounted for over 10% of its total purchases.
| Supplier | Net purchases for the six months ended June 30, 2024 |
% of total purchase |
||||||
| A | $ | % | ||||||
| B* | % | |||||||
| * |
| 14 |
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 June 30, 2025 and December 31, 2024. Operating leases are included in operating lease ROU and operating lease liabilities (current and non-current), on the unaudited condensed 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 unaudited condensed consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the unaudited condensed 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 June 30, 2025 and December 31, 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. | |
| ● | 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. |
| 15 |
As of June 30, 2025 and December 31, 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 three and six months ended June 30, 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 June 30, 2025 and December 31, 2024 and for the six months ended June 30, 2025 and 2024.
| June 30, 2025 | June 30, 2024 | December 31, 2024 | ||||||||||
| Period/year-end RMB:USD exchange rate | ||||||||||||
| Period/annual average RMB:USD 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 June 30, 2025 and December 31, 2024, the Company did not have any potentially dilutive instruments.
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.
| 16 |
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 the three months ended June 30, 2025 and 2024.
| For the Three Months Ended June 30, | ||||||||
| 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 | $ | ( | ) | $ | ( | ) | ||
| 17 |
The following table shows the Company’s operations by business segment for the six months ended June 30, 2025 and 2024.
| For the Six Months Ended June 30, | ||||||||
| 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 | $ | ( |
) | $ | ( | ) | ||
The following table shows the Company’s assets by business segment as of June 30, 2025 and December 31, 2024.
| Segment assets | As of June 30, 2025 | As of December 31, 2024 | ||||||
| Direct sales | $ | $ | ||||||
| Pharmacy | ||||||||
| Hotel | ||||||||
| Manufacture and sale | ||||||||
| Total assets | $ | $ | ||||||
| 18 |
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.
| 19 |
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 June 30, 2025 and December 31, 2024:
| June 30, 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 | $ | $ | ||||||
4. ADVANCES TO SUPPLIERS
The
Company had advances to suppliers of $
5. INVENTORIES
Inventories consisted of the following at June 30, 2025 and December 31, 2024:
| June 30, 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 | $ | $ | ||||||
| 20 |
6. PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following at June 30, 2025 and December 31, 2024:
| June 30, 2025 | December 31, 2024 | |||||||
| Vehicles | $ | $ | ||||||
| Office equipment | ||||||||
| Machinery equipment | ||||||||
| Leasehold improvements | ||||||||
| Total | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation
expense for the three months ended March 31, 2025 and 2024 was $
Depreciation
expense for the six months ended June 30, 2025 and 2024 was $
7. INTANGIBLE ASSETS, NET
Intangible asset consisted of the following at June 30, 2025 and December 31, 2024:
| June 30, 2025 | December 31, 2024 | |||||||
| Software | $ | $ | ||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Intangible asset, net | $ | $ | ||||||
Amortization expense for the three
months ended June 30, 2025 and 2024 was $
8. TAXES PAYABLE
Taxes payable consisted of the following at June 30, 2025 and December 31, 2024:
| June 30, 2025 | December 31, 2024 | |||||||
| Value-added | $ | $ | ||||||
| Income | ||||||||
| City construction | ||||||||
| Education | ||||||||
| Other tax payable | ||||||||
| Taxes payable | $ | $ | ||||||
| 21 |
9. ACCRUED LIABILITIES AND OTHER PAYABLES
Accrued liabilities and other payables consisted of the following at June 30, 2025 and December 31, 2024:
| June 30, 2025 | December 31, 2024 | |||||||
| Accrued employees’ social insurance | $ | $ | ||||||
| Accrued payroll and commission | ||||||||
| Construction payable | ||||||||
| Accrued professional fees | ||||||||
| Other payables | ||||||||
| Total | $ | $ | ||||||
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. 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:
| June 30, 2025 | December 31, 2024 | |||||||
| Operating Leases | ||||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| Operating lease liabilities – current | ||||||||
| Operating lease liability – non-current | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
The following provides details of the Company’s lease expenses:
| Three Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Operating lease expenses | $ | $ | ||||||
| Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Operating lease expenses | $ | $ | ||||||
| 22 |
Other information related to leases is presented below:
| Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash Paid for Amounts Included In Measurement of Liabilities: | ||||||||
| Operating cash flows from operating leases | $ | $ | ||||||
| Weighted Average Remaining Lease Term As of June 30, 2025 and June 30, 2024: | ||||||||
| Operating leases | ||||||||
| Weighted Average Discount Rate: | ||||||||
| Operating leases | % | % | ||||||
As of June 30, 2025, the five-year maturity of the Company’s operating lease liabilities was as following:
| For the year ending June 30: | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Less: imputed interest | ( |
) | ||
| Total lease liabilities | ||||
| Less: current portion | ( |
) | ||
| Lease liabilities – non-current portion | $ | |||
12. RELATED PARTY TRANSACTIONS
Accounts receivable – related parties
Accounts receivable – related party consisted of the following as of the periods indicated:
| June 30, 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 | $ | $ | ||||||
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.
| 23 |
Sales revenue – related party
Sales revenue – related party consisted of the following for the periods indicated:
| Three Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Shengcaofeng Health Industry (Yunnan) Co., Ltd | ||||||||
| Chengdu Aixin International Travel Service Co., Ltd | ||||||||
| Total | $ | $ | ||||||
| Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Sichuan Aixintang Xinfu Pharmacy Chain Co., Ltd | $ | $ | ||||||
| Shengcaofeng Health Industry (Yunnan) Co., Ltd | ||||||||
| Chengdu Lisheng Huiren Pharmacy Co., Ltd. | ||||||||
| Chengdu Aixin International Travel Service 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.
Purchase – related party
Purchase – related party consisted of the following for the periods indicated:
| Three Months Ended June 30, | ||||||||
| 2025 | 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 | $ | $ | ||||||
| Six Months Ended June 30, | ||||||||
| 2025 | 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 | $ | $ | ||||||
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.
| 24 |
Accounts payable – related parties
Accounts payable – related party consisted of the following as of the periods indicated:
| June 30, 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.
Prepaid expenses– related parties
Prepaid expenses – related parties consisted of the following as of the periods indicated:
| June 30, 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 | $ | $ | ||||||
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
Unearned
revenue - related party consisted of $
Due from related parties
Due from related parties consisted of the following as of the periods indicated:
| June 30, 2025 | December 31, 2024 | |||||||
| Chengdu WenJiang Aixin Nanjiang Pharmacy Co., Ltd. | $ | $ | ||||||
| Chengdu Fuxiangtang 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. | ||||||||
| Xiaoyan Zhou | ||||||||
| Huiliang Jiao | ||||||||
| Total | $ | $ | ||||||
Due to related parties
Due to related parties consisted of the following as of the periods indicated:
| June 30, 2025 | December 31, 2024 | |||||||
| Quanzhong Lin | $ | $ | ||||||
| Huiliang Jiao | ||||||||
| Mianyang Aixin Cunshan Pharmacy Co. Ltd. | ||||||||
| Xiaoyan Zhou | ||||||||
| Chengdu Lisheng Huiren Pharmacy Co., Ltd | ||||||||
| Sichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. | ||||||||
| Yuefu Restaurant | ||||||||
| Chengdu Aixin International Travel Service Co., Ltd. | ||||||||
| Total | $ | $ | ||||||
| 25 |
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.
13. 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 three and six months ended June 30, 2025 and 2024, and recorded an income tax provision for each of the periods.
China
has a tax rate of
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 three and six months ended June 30, 2025 and 2024, the Company had
14. 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 June 30, 2025 and December 31, 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 $
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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 three months ended June 30, 2025 and 2024, stock-based compensation expenses were $ and $, respectively. For the six months ended June 30, 2025 and 2024, stock-based compensation expenses were $ and $, respectively.
Capital Contribution
During
the year ended December 31, 2023, the Company received capital contributions in the aggregate amount of $
15. 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
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.
16. 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.
17. 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 no material subsequent events.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited financial statements and the notes to those statements included elsewhere in this Form 10-Q and with the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”). In addition to historical information, the following discussion contains forward-looking statements subject to risks and uncertainties. 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. You should specifically consider the various risk factors identified in our 2024 Form 10-K, that could cause actual results to differ materially from those anticipated in these forward-looking statements.
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 for an aggregate purchase price of RMB 34,635,845, or approximately US$5.31 million. We currently operate pharmacies at 26 locations, including 18 locations operated pursuant to a single chain license.
On September 30, 2022, we acquired all of the outstanding equity of Yunnan Runcangsheng Technology Co., Ltd (“Runcangsheng”) for RMB 31,557,820 (approximately USD$4.4 million), reduced by $116,802 the excess of the estimated net worth of Runcangsheng over its audited net worth as of December 31, 2021. In addition to transferring their respective equity interest in Runcangsheng, both Sellers agreed to forgive any loans due to them from Runcangsheng. Runcangsheng was established in April 2020, and is headquartered in Luquan Yi and Miao Autonomous County, Kunming City, Yunnan Province.
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Runcangsheng operates a 13,000 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.
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.
The Company incurred a net loss of $351,505 and $176,783 for the three months ended June 30, 2025 and 2024, and $1,073,213 and $780,383 for the six months ended June 30, 2025 and 2024, respectively, and used net cash in operating activities of $1,150,477 and $348,330 for the six months ended June 30, 2025 and 2024, respectively. The Company also had a working capital deficit of $6,423,194 as of June 30, 2025. These facts and conditions raise substantial doubt about our ability to continue as a going concern. From January 1, 2025 through June 30, 2025, our cash and cash equivalents decreased from $62,310 to $29,621 mainly due to an increase in cash outflow from operating activities.
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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.
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.
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Results of Operations
Three Months ended June 30, 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:
| Three Months Ended June 30, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| $ | % of Revenue | $ | % of Revenue | |||||||||||||
| Revenue | $ | 460,929 | 100 | % | $ | 1,332,650 | 100 | % | ||||||||
| Operating costs and expenses | 1,271,553 | 276 | % | 1,601,475 | 120 | % | ||||||||||
| Loss from operations | (810,624 | ) | (176 | )% | (268,825 | ) | (20 | )% | ||||||||
| Non-operating income, net | 459,347 | 100 | % | 92,568 | 7 | % | ||||||||||
| Loss before income tax | (351,277 | ) | (76 | )% | (176,257 | ) | (13 | )% | ||||||||
| Income tax expense | 228 | - | % | 526 | - | % | ||||||||||
| Net loss | $ | (351,505 | ) | (76 | )% | $ | (176,783 | ) | (13 | )% | ||||||
The following table shows the Company’s operations by business segment for the three months ended June 30, 2025 and 2024.
| For the Three Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Net revenue | ||||||||
| Direct sales | $ | 31,337 | $ | 357,013 | ||||
| Pharmacy | 26,441 | 256,713 | ||||||
| Hotel | 112,377 | 120,097 | ||||||
| Manufacture and sale | 290,774 | 598,827 | ||||||
| Total revenues, net | $ | 460,929 | $ | 1,332,650 | ||||
| Operating costs and expenses | ||||||||
| Direct sales | ||||||||
| Cost of sales | $ | 1,199 | $ | 27,033 | ||||
| Operating expenses | 462,531 | 417,513 | ||||||
| Pharmacy | ||||||||
| Cost of sales | 17,574 | 71,919 | ||||||
| Operating expenses | 71,155 | 108,194 | ||||||
| Hotel | ||||||||
| Hotel operating costs | 254,383 | 364,110 | ||||||
| Operating expenses | 89,202 | 84,830 | ||||||
| Manufacture and sale | ||||||||
| Cost of sales | 271,902 | 381,137 | ||||||
| Operating expenses | 103,607 | 146,739 | ||||||
| Total operating costs and expenses | $ | 1,271,553 | $ | 1,601,475 | ||||
| Income (loss) from operations | ||||||||
| Direct sales | $ | (432,394 | ) | $ | (87,533 | ) | ||
| Pharmacy | (62,228 | ) | 76,600 | |||||
| Hotel | (231,207 | ) | (328,843 | ) | ||||
| Manufacture and sale | (84,735 | ) | 70,951 | |||||
| Loss from operations | $ | (810,624 | ) | $ | (268,825 | ) | ||
Revenue
Revenue was $460,929 in the three months ended June 30, 2025, compared to $1,332,650 in 2024, a decrease of $871,721 or 65%. For the three months ended June 30, 2025, we had $348,552 in product revenues, a decrease of $864,001 from 2024 in which product revenues were $1,212,553. Of our product revenues in 2025, $31,337 were from direct sales, a decrease of $325,676 or 91% from 2024, $26,441 were from sales at our pharmacies, a decrease of $230,272 or 90% from 2024, and $290,774 from sales by manufacture and sales, a decrease of $308,053 or 51% from 2024. In 2025, we had hotel revenue of $112,377, a decrease of $7,720 or 6% from 2024.
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Direct Sales
Our direct products sales revenue was $31,337 for the three months ended June 30, 2025, compared with $357,013 in the same period of 2024, representing a decrease of $325,676 or 91%. Our direct sales revenue as a percentage of our total revenue was 7% for 2025, compared to 27% 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 $26,441 for the three months ended June 30, 2025, compared with $256,713 in the same period of 2024, representing a decrease of $230,272 or 90%. Our pharmacy revenue as a percentage of our total revenue was 6% for 2025, compared to 19% for 2024. The decrease in revenue was mainly due to the economic downturn as marketing and 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 $112,377 for the three months ended June 30, 2025, compared with $120,097 for the same period of 2024, representing a decrease of $7,720 or 6%. Our hotel revenue as a percentage of our total revenue was 24% for 2025, compared to 9% for 2024. Our hotel revenue decreased by $7,720 due to the economic downturn and the slowdown in the catering industry.
Manufacture and Sale
Our manufacture and sales revenues were $290,774 for the three months ended June 30, 2025, compared with $598,827 for the same period of 2024, representing a decrease of $308,053 or 51%. Our manufacture and sales revenue as a percentage of total revenue was 63% for the three months ended June 30, 2025, compared to 45% 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.
Operating Costs and Expenses
Cost of Sales
Cost of sales was $290,675 for the three months ended June 30, 2025, compared to $480,089 for 2024, a decrease of $189,414 or 39%. The decrease in cost of sales was attributable to the decrease in sales.
Direct sales
The cost of sales for our direct sales was $1,199 for 2025, compared with $27,033 for 2024, representing a decrease of $25,834 or 96%. The cost of sales for direct sales as a percentage of our direct sales was 4% for the three months ended June 30, 2025, compared to 8% for the same period of 2024. The decrease in cost of sales was primarily driven by the decrease in sales.
Pharmacy
The cost of sales at our pharmacies was $17,574 for 2025, compared with $71,919 for 2024, representing a decrease of $54,345 or 76%. The cost of sales at our pharmacies as a percentage of pharmacy product sales was 66% for the three months ended June 30, 2025, compared to 28% 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.
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Manufacture and Sale
The cost of sales at our manufacture and sales segment was $271,902 for 2025, compared with $381,137 for 2024, representing a decrease of $109,235 or 29%. The cost of sales for our manufacture and sale segment as a percentage of sales was 94% for 2025, compared to 64% for 2024. The primary reason for the decrease in cost of sales was due to decreased sales.
Hotel Operating Costs
Hotel operating costs were $254,383 and $364,110 for three months ended June 30, 2025 and 2024, respectively, representing a decrease of $109,727 or 30%.
Operating Expenses
Operating expenses were $726,496 for the three months ended June 30, 2025, compared to $757,276 for 2024, a decrease of $30,781 or 4%. The decrease in operating expenses was mainly due to the decreased stock-based compensation expense and decreased depreciation expense.
Loss from Operations
Loss from operations was $810,624 in the three months ended June 30, 2025, compared to $268,825 in 2024, an increase of $541,799 or 202%. The increase in our loss from operations for 2025 was due to the increased losses in our pharmacy segment of approximately $138,888, increased losses in direct sales of $344,861 and in our manufacture and sales segment of $155,686, partially offset by decreased losses in our hotel segment of by $97,636.
Non-operating Income
Non-operating income was $459,347 for the three months ended June 30, 2025, compared to $92,568 for 2024. For the three months ended June 30, 2025, we had interest expense of $3,926 and other income of $463,273 which mainly consist of gain on disposal of fixed assets. For the three months ended June 30, 2024, we had interest income of $197 and other income of $95,386 mainly government grant income of $86,209, partly offset by other expenses of $3,015.
Income Tax Expense
Income tax expense was $228 and $526 for the three months ended June 30, 2025 and 2024, respectively, decrease of $298 or 57%.
Net Loss
Our net loss for the three months ended June 30, 2025 was $351,505, compared to a net loss of $176,783 for 2024, an increase of $174,722 or 99%. The increase in our net loss was mainly due to decreased sales which was partly offset by increased other income.
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Six Months ended June 30, 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:
| Six Months Ended June 30, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| $ | % of Revenue | $ | % of Revenue | |||||||||||||
| Revenue | $ | 859,760 | 100 | % | $ | 2,184,209 | 100 | % | ||||||||
| Operating costs and expenses | 2,352,869 | 274 | % | 3,074,280 | 141 | % | ||||||||||
| Loss from operations | (1,493,109 | ) | (174 | )% | (890,071 | ) | (41 | )% | ||||||||
| Non-operating income , net | 420,945 | 49 | % | 110,214 | 5 | % | ||||||||||
| Loss before income tax | (1,072,164 | ) | (125 | )% | (779,857 | ) | (36 | )% | ||||||||
| Income tax expense | 1,049 | - | % | 526 | - | % | ||||||||||
| Net loss | $ | (1,073,213 | ) | (125 | )% | $ | (780,383 | ) | (36 | )% | ||||||
The following table shows the Company’s operations by business segment for the six months ended June 30, 2025 and 2024.
| For the Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Net revenue | ||||||||
| Direct sales | $ | 51,968 | $ | 522,762 | ||||
| Pharmacy | 62,407 | 497,831 | ||||||
| Hotel | 193,083 | 274,562 | ||||||
| Manufacture and sale | 552,302 | 889,054 | ||||||
| Total revenues, net | 859,760 | 2,184,209 | ||||||
| Operating costs and expenses | ||||||||
| Direct sales | ||||||||
| Cost of sales | $ | 6,967 | $ | 46,741 | ||||
| Operating expenses | 651,099 | 789,569 | ||||||
| Pharmacy | ||||||||
| Cost of sales | 41,625 | 152,093 | ||||||
| Operating expenses | 155,294 | 219,064 | ||||||
| Hotel | ||||||||
| Hotel operating costs | 525,202 | 825,189 | ||||||
| Operating expenses | 149,971 | 156,707 | ||||||
| Manufacture and sale | ||||||||
| Cost of sales | 555,083 | 609,066 | ||||||
| Operating expenses | 267,628 | 275,851 | ||||||
| Total operating costs and expenses | $ | 2,352,869 | $ | 3,074,280 | ||||
| Income (loss) from operations | ||||||||
| Direct sales | $ | (606,098 | ) | $ | (313,548 | ) | ||
| Pharmacy | (134,512 | ) | 126,674 | |||||
| Hotel | (482,090 | ) | (707,334 | ) | ||||
| Manufacture and sale | (270,409 | ) | 4,137 | |||||
| Loss from operations | $ | (1,493,109 | ) | $ | (890,071 | ) | ||
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Revenue
Revenue was $859,760 in the six months ended June 30, 2025, compared to $2,184,209 in 2024, a decrease of $1,324,449 or 61%. For the six months ended June 30, 2025, we had $666,676 in product revenues a decrease of $1,242,971 from 2024 in which product revenues were $1,909,647. Of our product revenues in 2025, $51,968 were from direct sales, a decrease of $470,794 or 90% from 2024, $62,407 were from sales at our pharmacies, a decrease of $435,424 or 87% from 2024, and $552,302 from sales by manufacture and sales, a decrease of $336,752 or 38% from 2024. In 2025, we had hotel revenue of $193,083, a decrease of $81,479 or 30% from 2024.
Direct Sales
Our direct products sales revenue was $51,968 for the six months ended June 30, 2025, compared with $522,762 in the same period of 2024, representing a decrease of $470,794 or 90%. Our direct sales revenue as a percentage of our total revenue was 6% for 2025, compared to 24% 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 $62,407 for the six months ended June 30, 2025, compared with $497,831 in the same period of 2024, representing a decrease of $435,424 or 87%. Our pharmacy revenue as a percentage of our total revenue was 7% for 2025, compared to 23% for 2024. The decrease in revenue was mainly due to the economic downturn as marketing and 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 $193,083 for the six months ended June 30, 2025, compared with $274,562 for the same period of 2024, representing a decrease of $81,479 or 30%. Our hotel revenue as a percentage of our total revenue was 22% for 2025, compared to 13% for 2024. Our hotel revenue decreased by $81,479 due to the economic downturn and the slowdown in the catering industry.
Manufacture and Sale
Our manufacture and sales revenues were $552,302 for the six months ended June 30, 2025, compared with $889,054 for the same period of 2024, representing a decrease of $336,752 or 38%. Our manufacture and sales revenue as a percentage of total revenue was 64% for the six months ended June 30, 2025, compared to 41% 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.
Operating Costs and Expenses
Cost of Sales
Cost of sales was $603,674 for the six months ended June 30, 2025, compared to $807,900 for 2024, a decrease of $204,226 or 25%. The decrease in cost of sales was attributable to the decrease in sales.
Direct sales
The cost of sales for our direct sales was $6,967 for 2025, compared with $46,741 for 2024, representing a decrease of $39,774 or 85%. The cost of sales for direct sales as a percentage of our direct sales was 13% for the six months ended June 30, 2025, compared to 9% for the same period of 2024. The decrease in cost of sales was primarily driven by the decrease in sales. Additionally, during the six months ended June 30, 2025, we sold a large proportion of low profit margin products compared to the same period in 2024.
Pharmacy
The cost of sales at our pharmacies was $41,625 for 2025, compared with $152,093 for 2024, representing a decrease of $110,468 or 73%. The cost of sales at our pharmacies as a percentage of pharmacy product sales was 67% for the six months ended June 30, 2025, compared to 31% 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.
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Manufacture and Sale
The cost of sales at our manufacture and sales segment was $555,083 for 2025, compared with $609,066 for 2024, representing a decrease of $53,983 or 9%. The cost of sales for our manufacture and sale segment as a percentage of sales was 101% for 2025, compared to 69% for 2024. The primary reason for the increase in cost of sales as a percentage of sales was that fixed and constant costs such as rents and depreciation expense remained same while our manufacture activities decreased due to the Chinese New Year holiday, which led to increased unit cost.
Hotel Operating Costs
Hotel operating costs were $525,202 and $825,189 for six months ended June 30, 2025 and 2024, respectively, representing a decrease of $299,987 or 36%. For 2025, our hotel revenue decreased compared to 2024.
Operating Expenses
Operating expenses were $1,223,992 for the six months ended June 30, 2025, compared to $1,441,191 for 2024, a decrease of $217,199 or 15%. The decrease in operating expenses was mainly due to the decreased stock-based compensation expense and decreased depreciation expense.
Loss from Operations
Loss from operations was $1,493,109 in the six months ended June 30, 2025, compared to $890,071 in 2024, an increase of $603,038 or 68%. The increase in our loss from operations for 2025 was due to the increased losses in our pharmacy segment of approximately $261,186, increased losses in our direct sales of $292,550 and in our manufacture and sales segment of $274,546, partially offset by decreased losses in our hotel segment of $225,244.
Non-operating Income
Non-operating income was $420,945 for the six months ended June 30, 2025, compared to $110,214 for 2024. For the six months ended June 30, 2025, we had other income of $481,102 which mainly consist of gain on disposal of fixed assets, partly offset by interest expense of $9,023 and other expenses of $51,134. For the six months ended June 30, 2024, we had interest income of $311 and other income of $114,188 which was mainly the government grant income of $86,209, partly offset by other expenses of $4,285.
Income Tax Expense
Income tax expense was $1,049 and $526 for the six months ended June 30, 2025 and 2024, respectively, increase of $523 or 99%.
Net Loss
Our net loss for the six months ended June 30, 2025 was $1,073,213, compared to a net loss of $780,383 for 2024, an increase of $292,830 or 38%. The increase in our net loss was mainly due to decreased sales, which was partly offset by decreased operating costs and expenses and increased other income.
Liquidity, Capital Resources
During the six months ended June 30, 2025, we used $1,150,477 in operations. As of June 30, 2025, cash and cash equivalents were $29,621, compared to $62,310 as of December 31, 2024. At June 30, 2025, we had a working capital deficit of $6,423,194.
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The following is a summary of cash provided by or used in each of the indicated types of activities during the six months ended June 30, 2025 and 2024, respectively.
| June 30, 2025 | June 30, 2024 | |||||||
| Net cash used in operating activities | $ | (1,150,477 | ) | $ | (348,330 | ) | ||
| Net cash used in investing activities | $ | (11,227 | ) | $ | (239,967 | ) | ||
| Net cash provided by financing activities | $ | 1,128,327 | $ | 796,550 | ||||
Net cash used in operating activities
For the six months ended June 30, 2025, net cash used in operating activities was $1,150,477. This reflects our net loss of $1,073,213, adjusted by non-cash related expenses including depreciation and amortization expense of $144,888, a bad debt reversal of $4,765, an inventory impairment of $200, gain on disposal of fixed assets of $463,497, operating lease expenses of $125,121, which was partly offset by a net change in working capital of $120,789. The cash inflow from changes in working capital items mainly resulted from a decrease in accounts receivables of $41,743, a decrease in accounts receivables from related party of $82,989, a decrease in other receivables and prepaid expenses of $2,785, a decrease in inventory of $120,672 , and an increase in unearned revenue from related party of $186,050, partly offset by cash outflow from payments of accounts payable including payment to related party of $146,871, a decrease in advances to suppliers of $12,427, a decrease in taxes payable of $30,817, a decrease in accrued liabilities and other payables of $87,529, and payments of lease liabilities of $26,828.
For the six months ended June 30, 2024, net cash used in operating activities was $348,330. This reflects our net loss of $780,383, adjusted by non-cash related expenses including depreciation and amortization expense of $200,828, a bad debt expense of $8,265, an inventory impairment of $582, operating lease expenses of $335,351, loss on disposal of fix assets of $1,143, government grant income of $86,209 and stock-based compensation of $185,770, and then decreased by changes in working capital of $213,677. The cash outflow from changes in working capital mainly resulted from increases in other receivables and prepaid expenses of $33,481, an increase in related party receivables of $99,411, an increase in prepaid expense to related party of $28,318, an increase in inventory of $53,521, and payments of lease liabilities of $549,641, partly offset by cash inflows from accounts receivable of $18,671, cash inflows from advances to suppliers of $143,430, cash inflows from security deposit of $82,952, cash inflows from accounts payable of $115,961, cash inflows from accrued liabilities and other payables of $44,209, cash inflows from taxes payable of $65,236, cash inflows from accounts payable (net of accounts payable to related parties) of $114,213, and cash inflows from unearned revenue of $81,984.
Net cash used in investing activities
For the six months ended June 30, 2025 and 2024, net cash used in investing activities was $11,227 and $239,967, respectively. For the six months ended June 30, 2025, net cash used in investing activities included $11,227 for the purchase of fixed assets. For the six months ended June 30, 2024, net cash used in investing activities included $237,283 for the purchase of fixed assets and $2,772 for the purchase of an intangible assets, which were partly offset by cash received on disposal of fix assets of $88.
Net cash provided by financing activities
For the six months ended June 30, 2025 and 2024, net cash provided by financing activities was $1,128,327 and $796,550, respectively. For the six months ended June 30, 2025, net cash provided by financing activities was the result of proceeds from advances from related parties of $2,301,491, which was partly offset by repayments of loans due related parties of $740,976 and repayment of a government grant of $432,188. For the six months ended June 30, 2024, net cash provided by financing activities was the result of proceeds from advances from related parties of $710,341 and proceeds from a government grant of $86,209.
Runcangsheng generated a $164,847 loss for the six months ended June 30, 2025. It is likely that Runcangsheng 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.
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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.
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 4. 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 we file or submit 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 our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial and other required disclosures.
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 Exchange Act as of June 30, 2025, 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 June 30, 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 deficiencies in the design or operation of our internal control over financial reporting that adversely affected our disclosure controls and that may be considered to be “material weaknesses.” A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
We plan to designate individuals responsible for identifying reportable developments and to implement procedures designed to remediate the material weakness by focusing additional attention and resources in our internal accounting functions. However, the material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Changes in Internal Control over Financial Reporting
There have not been any changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter which is the subject of this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1A. Risk Factors
Reference is made to the risks and uncertainties disclosed in Item 1A (“Risk Factors”) of our 2024 Form 10-K and in the “Risk Factors” section in our registration Statement on Form S-1, as amended on April 15, 2025 (the “Registration Statement”), which are incorporated by reference into this report. Prospective investors are encouraged to consider the risks described in the 2024 Form 10-K, the Registration Statement, Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this report and other information publicly disclosed or contained in documents we file with the Securities and Exchange Commission before purchasing our securities.
Item 6. Exhibits
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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.
| AIXIN LIFE INTERNATIONAL, INC. | ||
| Dated: August 20, 2025 | By: | /s/ Quanzhong Lin |
| Quanzhong Lin | ||
| President and Chief Executive Officer | ||
| (Principal Executive Officer) | ||
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