RDGT 20-F
Ridgetech Inc. (RDGT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
OR
For the Fiscal year ended
OR
For the transition period from __________ to __________
Date of event requiring this shell company report ________
Commission file number:
(Exact name of Registrant as specified in its charter)
Not applicable
(Translation of Registrant’s name into English)
Qiantang District, People’s Republic of | ||
| (Jurisdiction of incorporation or organization) | (Address of principal executive offices) |
Qiantang District,
People’s Republic of
Tel:
(Name, telephone, Email and/or facsimile number and address of company contact person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Securities registered or to be registered pursuant to Section 12(g) of the Act:
none
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
none
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or ordinary shares as of the close of the period covered by the annual report.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an “emerging growth company.” See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | ☒ | |
| Emerging growth company | |||||
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.
| International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ | Other ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
In this annual report:
| ● | References to the “Company”, “we”, “our” and “us” are to Ridgetech, Inc., formerly known as China Jo-Jo Drugstores, Inc., a Cayman Islands exempted company, and its predecessor China Jo-Jo Drugstores, Inc., a Nevada corporation, and its consolidated subsidiaries, and any subsidiaries controlled by contract and therefore deemed as variable interest entities under U.S. GAAP; |
| ● | References to “China” or the “PRC” refers to the People’s Republic of China, excluding, for the purposes of this annual report only, Hong Kong, Macau and Taiwan; |
| ● | References to “RMB” and “Renminbi” refer to the legal currency of China; |
| ● | “US$,” “U.S. dollars,” “$,” and “dollars” refer to the legal currency of the United States; |
| ● | References to “variable interest entit[y][ies]” or “VIE[s]” refer to Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiaries of Jiuzhou Pharmacy, collectively as “HJ Group”; | |
| ● | Unless otherwise indicated or the context otherwise requires, all references in this annual report to ordinary shares, share amounts, per share data, share prices, exercise prices, and conversion rates give retroactive effect to the 1-for-150 reverse share split of our ordinary shares that became effective on April 7, 2026. |
Special Note Regarding Forward-looking Statements
This report contains forward-looking statements. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the registrant. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Forward-looking statements include, among other things, the information concerning our possible future results of operations, business and growth strategies, financing plans, expectations that regulatory developments or other matters will or will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, and the benefits and synergies to be obtained from our completed and any future acquisitions, and statements of our goals and objectives, and other similar expressions concerning matters that are not historical facts. Forward-looking statements usually, but not always, contain the words “estimate,” “anticipate,” “believe,” “expect,” or similar expressions, or the negative of those words and expressions, as well as statements in future tense, and are subject to numerous known and unknown risks and uncertainties that are beyond our ability to control or estimate precisely. In evaluating such statements, prospective investors should carefully review various risks and uncertainties identified in this report, including the matters set forth under the captions “Risk Factors” and in the registrant’s other SEC filings. These risks and uncertainties could cause the registrant’s actual results to differ materially from those indicated in, or implied by, the forward-looking statements. The registrant undertakes no obligation to update or publicly announce revisions to any forward-looking statements to reflect future events or developments, except as may be required by law.
Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading “Risks Relating to Our Business” below, as well as those discussed elsewhere in this report. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We file reports with the Securities and Exchange Commission (the “SEC”). You can read and copy any materials we file with the SEC at our internet address at www.ridgetch.com. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that electronically file with or furnish information to, the SEC, including the registrant. The contents of any website references in this report do not form part of this report.
We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, except as may be required by law. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
TABLE OF CONTENTS
i
ii
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE.
Not applicable.
ITEM 3. KEY INFORMATION.
Our Holding Corporate Structure
Ridgetech, Inc., formerly known as China Jo-Jo Drugstores, Inc. (“Ridgetech”, the “Company”, “we”, “our”, or “us”) is not a Chinese operating company but a holding company incorporated in the Cayman Islands. The Cayman Islands holding company has no material operations of its own. The operations are conducted through our operating entities established in the PRC, including, prior to the Restructuring Transactions described below, through the VIEs by contractual arrangements by and among Zhejiang Jiuxin Investment Management Co. Ltd. (“Jiuxin Investment”) and HJ Group. We did not have any equity ownership in the business of the VIEs. Instead, we received the economic benefits of the VIEs, were the primary beneficiary for accounting purposes, and consolidated VIEs’ financial statements through the VIE Agreements to the extent we satisfied the conditions for consolidation of the VIEs under U.S. GAAP. The VIE structure was used to provide contractual exposure to foreign investment in Chinese-based companies where Chinese law prohibits direct foreign investment in the operating companies, and that investors may never directly hold equity interests in the Chinese operating entities. As disclosed further below under Item 4. Information on the Company -History and Development of the Company, on February 28, 2025, the Company acquired all of the issued and outstanding ordinary shares of Ridgeline International Limited (“Ridgeline”) from Mr. Lingtao Kong (the “Acquisition”). Concurrently with the Acquisition, the Company sold all equity in Jiuxin Investment to Mr. Lei Liu, our former Chief Executive Officer and Chairman of the Board, and Ms. Li Qi, a former director of the Company (the “Divestiture,” collectively with the Acquisition, the “Restructuring Transactions”). Following the Restructuring Transactions, the Company no longer has any VIE within its corporate structure.
1
The following diagrams illustrate our corporate structure before the Restructuring Transactions and after the Restructuring Transactions, respectively.
Before the Restructuring Transactions:
2
After the Restructuring Transactions:
3
In October 2025, both Hangzhou Shouantang Bio-technology Co., Ltd. (“Shouantang Bio”) and Hangzhou Kahamadi Bio-technology Co., Ltd. (“Kahamadi Bio”) were dissolved. The diagram below illustrates our corporate structure as of the date of this report.
Our Business Operations in China
We are subject to certain legal and operational risks associated with the operations of our subsidiaries in China. PRC laws and regulations governing our current business operations are sometimes vague and uncertain. The Chinese government has significant authority and may exercise significant oversight and discretion over our ability, as offshore holding company that has most of the operations in China, to conduct our business, accept foreign investments or list on an U.S. or other foreign exchanges, and may intervene in or influence our operations at any time. These risks may result in significant depreciation of the value of our ordinary shares, or a complete hindrance of our ability to offer or continue to offer our securities to investors.
Rules and regulations in China can change quickly with little advance notice. In recent years, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. Since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact of such modified or new laws and regulations will have on our daily business operation, the ability to accept foreign investments and list on an U.S. or other foreign exchange.
Adverse regulatory developments in China may subject us to additional regulatory review, and additional disclosure requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in China may impose additional compliance requirements for companies like us with significant China-based operations, all of which could increase our compliance costs, subject us to additional disclosure requirements. In addition, uncertainties with respect to the PRC legal system could adversely affect us.
4
The recent regulatory developments in China, in particular with respect to restrictions on China-based companies raising capital offshore, may lead to additional regulatory review in China over our financing and capital raising activities in the United States. In addition, we may be subject to industry-wide regulations that may be adopted by the relevant PRC authorities, which may have the effect of limiting our service offerings, restricting the scope of our operations in China, or causing the suspension or termination of our business operations in China entirely, all of which will materially and adversely affect our business, financial condition and results of operations. We may have to adjust, modify, or completely change our business operations in response to adverse regulatory changes or policy developments, and we cannot assure you that any remedial action adopted by us can be completed in a timely, cost-efficient, or liability-free manner or at all.
On July 30, 2021, in response to the recent regulatory developments in China and actions adopted by the PRC government, the Chairman of the SEC issued a statement asking the SEC staff to seek additional disclosures from offshore issuers associated with China-based operating companies before their registration statements will be declared effective. On August 1, 2021, the China Securities Regulatory Commission (the “CSRC”) stated in a statement that it had taken note of the new disclosure requirements announced by the SEC regarding the listings of Chinese companies and the recent regulatory development in China, and that both countries should strengthen communications on regulating China-related issuers. To the best knowledge of this Company, as of the date of this annual report, current Chinese laws and regulations do not forbid us from issuing securities overseas. On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), which took effect on March 31, 2023. The Company will need to file accordingly with the CSRC within 3 working days after any future offering is completed. See “Item 3. Key Information - D. Risk Factors - Adverse regulatory developments in China may subject us to additional regulatory review, and additional disclosure requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in China may impose additional compliance requirements for companies like us with significant China-based operations, all of which could increase our compliance costs, subject us to additional disclosure requirements. In addition, uncertainties with respect to the PRC legal system could adversely affect us” for more details.
Holding Foreign Companies Accountable Act
On May 20, 2020 and on December 2, 2020, the U.S. Senate passed and the U.S. House of Representatives approved the Holding Foreign Companies Accountable Act (“HFCAA”) requiring a foreign company to certify it is not owned or controlled by a foreign government if the Public Company Accounting Oversight Board (the “PCAOB”) is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the Company’s auditors for three consecutive years, the issuer’s securities are prohibited to trade on a U.S. stock exchange. On December 18, 2020, the Holding Foreign Companies Accountable Act was signed into law. The PCAOB issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the PRC because of a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), which was signed into law on December 29, 2022. The AHFCAA amended the HFCAA and reduced the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two. On August 26, 2022, the PCAOB announced and signed a Statement of Protocol (the “Protocol”) with the China Securities Regulatory Commission and the Ministry of Finance of the People’s Republic of China. The Protocol provides the PCAOB with: (1) sole discretion to select the firms, audit engagements and potential violations it inspects and investigates, without any involvement of Chinese authorities; (2) procedures for PCAOB inspectors and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed; (3) direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates. On December 15, 2022, the PCAOB issued a new Determination Report which: (1) vacated the December 16, 2021 Determination Report; and (2) concluded that the PCAOB has been able to conduct inspections and investigations completely in the PRC in 2022. The December 15, 2022 Determination Report cautions, however, that authorities in the PRC might take positions at any time that would prevent the PCAOB from continuing to inspect or investigate completely. As required by the HFCAA, if in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will act expeditiously to consider whether it should issue a new determination. Our auditor is headquartered in Irvine, California and will be inspected by the PCAOB on a regular basis. Our auditor is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess our auditor’s compliance with the applicable professional standards. Please see “Item 3. Key Information - D. Risk Factors - Our auditor, YCM CPA INC., is headquartered in California, and is subject to inspection by the PCAOB on a regular basis. To the extent that our independent registered public accounting firm’s audit documentation related to their audit reports for our company becomes located in China, the PCAOB may not be able to inspect such audit documentation and, as such, you may be deprived of the benefits of such inspection and our ordinary shares could be delisted from the stock exchange pursuant to the Holding Foreign Companies Accountable Act” for more details.
5
Cash Transfer
Our holding company, subsidiaries, and prior to the Restructuring Transactions, the consolidated VIEs, usually operate independently and transfer funds upon capital raising. We raised capital of $17.5 million in our IPO in April 2010. In addition, we raised capital for a total amount of $57.79 million from 2015 to 2026 through various financings. Renovation Investment (Hong Kong) Co., Ltd. (“Renovation”), our Hong Kong intermediate holding subsidiary, received funds from our investors in these financings. Historically, after receiving the proceeds, Renovation typically invested these funds into Jiuxin Investment, a WFOE, which then exchanged the currency of the proceeds from U.S. dollar into Chinese Yuan (“RMB”) upon the approval from local banks, and then distributed the RMB as loans to the operating entities including Jiuzhou Pharmacy, Jiuxin Medicine, Jiuzhou Service and Jiuzhou Clinic, our historical consolidated VIEs. Additionally, Renovation previously lent funds to Jiuxin Investment. As of the date of this annual report, the total amount invested in, and lent to, by the Company to its subsidiaries and historical VIEs are approximately $44.5 million and $8.7 million, respectively. Prior to the Restructuring Transactions, Jiuxin Investment distributed a loan of approximately $24.80 million to Jiuzhou Pharmacy, a loan of approximately $1.21 million to Jiuzhou Service, a loan of approximately $1.00 million to Linjia Medical, and a loan of approximately $0.14 to Shouantang Bio.
Following the Restructuring Transactions, we expect to make equity investments in our subsidiaries rather than providing loans.
Additionally, prior to the Restructuring Transactions, Jiuxin Medicine was the major supplier to Jiuzhou Pharmacy and Jiuzhou Pharmacy transferred funds to pay off the debts owed to Jiuxin Medicine as a result of merchandise purchases. In the last three fiscal years, the annual amount of purchases by Jiuxin Medicine from Jiuzhou Pharmacy ranged from approximately $70 million to $90 million. Prior to the Restructuring Transactions, all the sales and purchases between Jiuxin Medicine and Jiuzhou Pharmacy were eliminated as internal transactions, and the ending balances owed to/from the VIEs were eliminated in the balance sheets. Below are the amounts of purchases by Jiuxin Medicine from Jiuzhou Pharmacy during the interim period of the latest completed fiscal year prior to the Restructuring Transactions as well as the two preceding fiscal years:
| Years | Amount | |||
| Fiscal 2023 | $ | 87,124,074 | ||
| Fiscal 2024 | $ | 76,989,329 | ||
| For the eleven months ended February 28, 2025 | $ | 75,322,378 | ||
Additional transfers between other VIEs and subsidiaries are as below:
| Amount | ||||||||||||||
| Transfer from | Transfer to | 2024 | 2025 | 2026 | ||||||||||
| Renovation | Jiuxin Investment | $ | 3,000,000 | $ | - | $ | - | |||||||
| Jiuxin Investment | Jiuzhou Pharmacy | 692,414 | 6,376,243 | - | ||||||||||
| Jiuxin Investment | Jiuxin Medicine | (131 | ) | - | - | |||||||||
| Jiuxin Investment | Qianhong Agriculture | 3,907 | 2,472 | - | ||||||||||
| Jiuxin Investment | Shouantang Technology | (1,877,272 | ) | (6,717,287 | ) | - | ||||||||
| Jiuzhou Pharmacy | Jiuzhou Service | 3,545 | (32,954 | ) | - | |||||||||
| Renovation | Jiuyi Technology | - | 300,500 | 550,280 | ||||||||||
6
Following the Restructuring Transactions, Jiuxin Medicine signed a three-year supply agreement with Jiuzhou Pharmacy. Jiuxin Medicine has been a major supplier to Jiuzhou Pharmacy and is expected to remain a significant supplier in the near term.
The PRC government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of China. The majority of the Company’s Chinese subsidiaries’ and historically the VIEs’ and their subsidiaries’ income is received in RMB and shortages in foreign currencies may restrict our ability to pay dividends or other payments, or otherwise satisfy our foreign currency denominated obligations, if any. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from The State Administration of the Foreign Exchange (“SAFE”) in the PRC as long as certain procedural requirements are met. Approval from appropriate government authorities is required if Renminbi is converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may, at its discretion, impose restrictions on access to foreign currencies for current account transactions and if this occurs in the future, we may not be able to pay dividends in foreign currencies to our shareholders. To the extent cash or assets in the business is in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of such entities, their subsidiaries, or any consolidated VIEs, by the PRC government to transfer cash or assets.
Enforceability Of Civil Liabilities
We are an exempted company incorporated in the Cayman Islands because of certain benefits associated with being a Cayman Islands exempted company, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions and the availability of professional and support services. However, the Cayman Islands has a less developed body of securities laws as compared to the United States and provides less protection for investors. In addition, Cayman Islands companies do not have standing to sue before the federal courts of the United States.
Substantially all of our assets are located outside the United States. In addition, a majority of our directors and officers, namely, Lingtao Kong, Chairman of the Board of Directors, Ming Zhao, Interim Chief Executive Officer and Chief Financial Officer of the Company, and Caroline Wang, Jiangliang He and Genghua Gu, each a director of the Company, are nationals or residents of jurisdictions other than the United States and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon our company or these persons, or to bring an action against our company or against these persons in the United States, in the event that you believe that your rights have been infringed under the securities laws of the United States or any state in the United States. It may also be difficult for you to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against our company and its officers and directors. We have appointed CT Corporation as our agent to receive service of process in the United States.
There is uncertainty as to whether the courts of the Cayman Islands would (1) recognize or enforce judgments of U.S. courts obtained against our company or its directors or officers, predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States, or (2) entertain original actions brought in the Cayman Islands against our company or its directors or officers, predicated upon the securities laws of the United States or any state in the United States.
7
Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (a) is given by a foreign court of competent jurisdiction, (b) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (c) is final, (d) is not in respect of taxes, a fine or a penalty, (e) is not inconsistent with a Cayman Islands judgement of the same matter, (f) is not impeachable on grounds of fraud, and (g) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands.
It is our understanding that the PRC does not have treaties with the United States and many other countries providing for the reciprocal recognition and enforcement of judgments of courts and that there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of United States courts against our company or the directors or officers of our company predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.
Additionally, it is our understanding that it may be difficult for you to bring an original action against us or against our directors and officers who are nationals or residents of countries other than the United States in a PRC court in the event that you believe that your rights have been infringed under the U.S. federal securities laws, PRC laws, Cayman Islands laws or otherwise because we are incorporated under the laws of the Cayman Islands and it may be difficult for U.S. shareholders, by virtue only of holding our ordinary shares, to establish a connection to the PRC as required by the PRC Civil Procedures Law in order for a PRC court to have jurisdiction.
A. [Reserved.]
B. CAPITALIZATION AND INDEBTEDNESS.
Not applicable.
C. REASONS FOR THE OFFER AND USE OF PROCEEDS.
Not applicable.
D. RISK FACTORS.
You should carefully consider the risks described below together with all of the other information included in this report before making an investment decision with regard to our securities. The statements contained in or incorporated into this report that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our ordinary shares could decline, and you may lose all or part of your investment.
8
Summary of Risk Factors
Risks Relating to Our Business
| ● | We face significant competition, and if we do not compete successfully against existing and new competitors, our revenue and profitability could be materially and adversely affected. | |
| ● | We may not be able to timely identify or otherwise effectively respond to changing customer preferences, and we may fail to optimize our product offering and inventory position. | |
| ● | Our success depends on our ability to establish effective advertising, marketing and promotional programs. | |
| ● | Failure to maintain optimal inventory levels could increase our inventory holding costs or cause us to lose sales, either of which could have a material adverse effect on our business, financial condition and results of operations. | |
| ● | The continued penetration of counterfeit products into the pharmaceutical market in China may damage our reputation and have a material adverse effect on our business, financial condition, results of operations and prospects. |
| ● | We may not able to effectively grow our wholesale business organically and may not realize all of the anticipated benefits from growing through acquisitions. | |
| ● | Our business relies on a limited number of key customers, which may change from year to year, and a loss of one or more of these key customers may adversely affect our operating results. | |
| ● | We may face challenges in recovering accounts receivable from Jiuzhou Pharmacy and associated clinics following the Restructuring Transactions and in maintaining the supply relationship between Jiuxin Medicine and Jiuzhou Pharmacy, which we expect will continue to generate a substantial portion of our revenue in the near term. The loss of this relationship could have a material adverse effect on our business, financial condition, and results of operations. | |
| ● | We face significant challenges in growing and sustaining our wholesale business, including limited bargaining power, pricing volatility, and the need for ongoing investment in platforms, customer acquisition, and management. | |
| ● | The operating results of our wholesale business have fluctuated, and we cannot assure that our strategic initiatives will lead to sustained revenue growth or profitability in the coming years. | |
| ● | We heavily depend on third-party electronic platforms for our online sales, the capacity of which may restrict our growth and the failure of which could adversely affect our business, financial condition and results of operations. | |
| ● | If our online business fails to obtain and maintain the requisite assets, licenses, qualified personnel and approvals required under the complex regulatory environment for Internet-based businesses in China, the business prospects for such business may be materially and adversely affected. | |
| ● | We depend substantially on the continuing efforts of the key personnel, and our business and prospects may be disrupted if we lose their services. | |
| ● | Our operations require a number of permits and licenses in order to carry on their business. | |
| ● | Failure to comply with privacy, data protection and cyber security laws and regulations could have a materially adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences. | |
| ● | Our brand names, trade secrets and other intellectual property are valuable assets. If we are unable to protect them from infringement, our business and prospects may be harmed. | |
| ● | We may be exposed to intellectual property infringement and other claims by third parties which, if successful, could disrupt our business and have a material adverse effect on our financial condition and results of operations. |
9
Risks Related to Our Corporate Structure
| ● | We rely principally on dividends paid by our consolidated operating entities to fund any cash and financing requirements we may have, and any limitation on the ability of our consolidated PRC entities to pay dividends to us could have a material adverse effect on our ability to conduct our business. |
Risks Related to Doing Business in China
| ● | Substantial uncertainties and restrictions with respect to the political and economic policies of the PRC government and PRC laws and regulations could have a significant impact upon the business that we may be able to conduct in the PRC and accordingly on the results of our operations and financial condition. | |
| ● | We may be adversely affected by complexity, uncertainties and changes in Chinese regulation of pharmaceutical wholesale business. | |
| ● | Compliance with China’s Data Security Law, the amended Cyber Security Law, the Personal Information Protection Law, the Measures on Cybersecurity Review, regulations and guidelines relating to the multi-level protection scheme and any other future laws and regulations may entail significant expenses and could materially affect our business. |
| ● | Adverse regulatory developments in China may subject us to additional regulatory review, and additional disclosure requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in China may impose additional compliance requirements for companies like us with significant China-based operations, all of which could increase our compliance costs, subject us to additional disclosure requirements. In addition, uncertainties with respect to the PRC legal system could adversely affect us. | |
| ● | It may be difficult for U.S. regulators, such as the Department of Justice, the SEC, and other authorities, to conduct investigation or collect evidence within China. |
| ● | You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China against us or our management based on United States or other foreign laws. |
| ● | Our management will have broad discretion over the use of the proceeds we receive from our financing activities and might not apply the proceeds in ways that increase the value of your investment. |
| ● | Our subsidiaries are subject to restrictions on making payments to us. |
| ● | Dividends we receive from our subsidiaries located in the PRC may be subject to PRC withholding tax. |
| ● | We face risks related to disease epidemics and other outbreaks. | |
| ● | Failure to comply with the U.S. Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences. | |
| ● | Changes in international trade policies, trade disputes, barriers to trade, the emergence of a trade war and/or other disruptions to international commerce, including between the United States and China, could harm the global economy and may dampen growth in China, our principal place of business. A severe or prolonged downturn in the Chinese or global economy could materially and adversely affect our business and financial condition. |
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| ● | Our auditor, YCM CPA INC., is headquartered in California, and is subject to inspection by the PCAOB on a regular basis. To the extent that our independent registered public accounting firm’s audit documentation related to their audit reports for our company becomes located in China, the PCAOB may not be able to inspect such audit documentation and, as such, you may be deprived of the benefits of such inspection and our ordinary shares could be delisted from the stock exchange pursuant to the Holding Foreign Companies Accountable Act. | |
| ● | The PRC’s labor law restricts our ability to reduce our workforce in the PRC in the event of an economic downturn and may increase our production costs. | |
| ● | We cannot be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the Renminbi, especially with respect to foreign exchange transactions. | |
| ● | Fluctuations in the value of RMB may have a material adverse effect on your investment. | |
| ● | Changes in economic conditions and consumer confidence in China may influence the pharmaceutical industry, consumer preferences and spending patterns | |
| ● | The economy of China had experienced unprecedented growth. This growth has slowed in the recent years, and if the growth of the economy continues to slow or if the economy contracts, our financial condition may be materially and adversely affected. |
Risks Related to an Investment in Our Securities
| ● | We may need additional capital, and the sale of equity securities could result in dilution to our shareholders, while debts may require us to make covenants restricting how we operate. | |
| ● | To date, we have not paid any cash dividends and we do not estimate to distribute any cash dividends in the foreseeable future. | |
| ● | Nasdaq may delist our ordinary shares from trading on the Nasdaq Capital Market for failing to maintain a minimum bid price of $1.00 or for other noncompliance with Nasdaq listing requirements, which could limit investors’ ability to effect transactions in our ordinary shares and subject us to additional trading restrictions. | |
| ● | Although publicly traded, the trading market in our ordinary shares may be substantially less liquid than the average stock quoted on the Nasdaq Capital Market, and such low trading volume may adversely affect the price of our ordinary shares. | |
| ● | The market price for our stock may be volatile, and such volatility may subject us to securities litigation. | |
| ● | Techniques employed by manipulative short sellers in Chinese small-cap stocks may drive down the market price of our ordinary shares. |
| ● | Our Chairman of the Board holds ordinary shares and Series A Preferred Shares that carry 100 votes per share, which enable him to influence many significant corporate actions, and his interests may not align with those of other shareholders. | |
| ● | We have identified material weaknesses in our internal control over financial reporting and concluded that our disclosure controls and procedures were ineffective as of March 31, 2026, which could adversely affect our financial reporting and investor confidence. |
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Risks Relating to Our Business
We face significant competition, and if we do not compete successfully against existing and new competitors, our revenue and profitability could be materially and adversely affected.
The pharmaceutical distribution industry in China is highly competitive, and we expect competition to intensify in the future. Our primary wholesale competitors include regional and national players. In addition, we may be subject to additional competition from new entrants to the industries in China.
Some of our larger competitors may enjoy competitive advantages, such as:
| ● | greater financial and other resources; | |
| ● | larger variety of products; | |
| ● | stronger relations with large pharmaceutical manufacturers; | |
| ● | greater pricing flexibility; | |
| ● | larger economies of scale and purchasing power; | |
| ● | more extensive advertising and marketing efforts; | |
| ● | greater knowledge of local market conditions; | |
| ● | stronger brand recognition; and | |
| ● | larger sales and distribution networks. |
As a result of the aforementioned advantages, we may be unable to offer products similar to, or more desirable than, those offered by our competitors, market our products as effectively as our competitors, or otherwise respond successfully to competitive pressures. As competition increases in the markets in which we operate, a significant increase in general pricing pressures could occur, which could require us to reevaluate our pricing structures to remain competitive. Due to stronger relation with certain pharmaceutical manufacturers, our competitors may be able to offer larger discounts on competing products, and we may not be able to profitably match those discounts. Furthermore, our competitors may offer products that are more attractive to our customers or that render our products uncompetitive. In addition, the timing of the introduction of competing products into the market could affect the market acceptance and market share of our products. Our failure to successfully compete could materially and adversely affect our business, financial condition, results of operation, and prospects.
We may not be able to timely identify or otherwise effectively respond to changing customer preferences, and we may fail to optimize our product offering and inventory position.
The pharmaceutical industry in China is rapidly evolving and is subject to rapidly changing customer preferences that are difficult to predict. Our success depends on our ability to anticipate and identify customer preferences, and adapt our product selection to meet these preferences. In particular, we must optimize our product selection and inventory positions based on sales trends. We cannot provide assurance that our product selection, especially our selection of nutritional supplements and food products, will accurately reflect customer preferences at any given time. If we fail to accurately anticipate either the market for our products or customers’ purchasing habits or fail to respond to customers’ changing preferences promptly and effectively, we may not be able to adapt our product selection to customer preferences or make appropriate adjustments to our inventory positions, which could significantly reduce our revenue and have a material adverse effect on our business, financial condition and results of operations.
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Our success depends on our ability to establish effective advertising, marketing and promotional programs.
Our success depends on our ability to establish effective advertising, marketing and promotional programs, including pricing strategies implemented in response to competitive pressures and/or to drive demand for our products. Our advertisements are designed to promote our brand, our corporate image and the prices of products available for sale. Our pricing strategies and value propositions must be appropriate for our target customers. If we are not able to maintain and increase the awareness of our brand and the products and services we provide, we may not be able to attract and retain customers and our reputation may also suffer. We expect to incur substantial expenses in our marketing and promotional efforts to both attract and retain customers. However, our marketing and promotional activities may be less successful than we anticipate, and may not be effective at building our brand awareness and customer base. In addition, the government may impose restrictions on how marketing and promotional activities can be conducted. We cannot provide assurance that our current and proposed budget for marketing activities will be adequate to support our future growth. Failure to successfully execute our advertising, marketing and promotional programs may result in material decreases in our revenue and profitability.
Failure to maintain optimal inventory levels could increase our inventory holding costs or cause us to lose sales, either of which could have a material adverse effect on our business, financial condition and results of operations.
We need to maintain sufficient inventory levels to operate our wholesale businesses successfully as well as meet customer expectations. However, we must also guard against the risk of accumulating excess inventory. We are exposed to inventory risks as a result of rapid changes in product life cycles, changing consumer preferences, uncertainty of the success of product launches, seasonality, and manufacturer backorders and other vendor-related problems. We cannot provide assurance that we can accurately predict these trends and events and avoid over-stocking or under-stocking products. In addition, demand for products could change significantly between the time product inventory is ordered and the time it is available for sale.
When we begin selling a new product, it is particularly difficult to accurately forecast product demand. The purchase of certain types of inventory may require significant lead-time. As we carry a broad selection of products and maintain significant inventory levels for a substantial portion of our merchandise, we may be unable to sell such inventory in sufficient quantities or during the relevant selling seasons. Carrying excess inventory could increase our inventory holding costs, and failure to have inventory in stock when a customer orders or purchases it could cause us to lose that order or that customer, either of which could have a material adverse effect on our business, financial condition and results of operations.
The continued penetration of counterfeit products into the pharmaceutical market in China may damage our reputation and have a material adverse effect on our business, financial condition, results of operations and prospects.
Counterfeit products have continued to make their way into the Chinese pharmaceutical market. Counterfeit products are generally sold at lower prices compared to their authentic counterparts due to their low production costs, and in some cases may be very similar in appearance to their authentic counterparts. Counterfeit pharmaceuticals may or may not have the same chemical content as their authentic counterparts, and are typically manufactured without proper licenses or approvals as well as fraudulently mislabeled with respect to their content and/or manufacturer. Although China’s central government has been increasingly active in combating counterfeit pharmaceutical and other products, China does not yet have effective regulatory control or an enforcement system over counterfeit pharmaceutical products. Although we have implemented a series of quality control procedures in our procurement process, we cannot provide assurance that we may not be inadvertently selling counterfeit pharmaceutical products. Any unintentional sale of counterfeit products may subject us to negative publicity, fines and/or other administrative penalties, or may even result in litigation against us. Moreover, the increased distribution of counterfeit products and other products in recent years may reinforce the negative image of drug distributors among consumers in China. The continued proliferation of counterfeit products in China could have a material adverse effect on our business financial condition, and results of operation.
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We may not be able to effectively grow our wholesale business organically and may not realize all of the anticipated benefits from growing through acquisitions.
Our wholesale business has experienced significant growth in recent years compared with other businesses; however, to maintain our position in this very competitive market, we need to grow even faster and grab more market share. On February 28, 2025, we completed the acquisition of Ridgeline and its wholly owned subsidiary Allright, which focuses on development of trading on electronic platforms, pursuant to that certain Equity Exchange Agreement with Mr. Lingtao Kong and Ridgeline, concurrently with the divestiture of our retail and online pharmacy businesses. Following the closing of these transactions, we changed our name from “China Jo-Jo Drugstores, Inc.” to “Ridgetech, Inc.”, and we also changed our trading symbol on The Nasdaq Stock Market LLC from “CJJD” to “RDGT”. Effective as of the closing, Mr. Lei Liu and Ms. Li Qi resigned from our board of directors and any other officer positions with us (including Mr. Liu’s role as our Chief Executive Officer), and Mr. Ming Zhao, our Chief Financial Officer, was appointed as our interim Chief Executive Officer to hold such office until a permanent Chief Executive Officer is duly appointed.
We may decide that we need to further grow wholesale business through future acquisitions, which can be expensive and time consuming. There is no assurance that a suitable target can be found in the future or a deal can be reached with a suitable target. If we failed to execute an acquisition, our growth in the wholesale business may be stalled.
Any failure to successfully integrate the business, operations and employees of the acquired companies, including Ridgeline and Allright, or to otherwise realize the anticipated benefits of this and future acquisitions, could harm our results of operations. Our ability to realize these benefits will depend on the timely integration and consolidation of organizations, operations, facilities, procedures, policies, the retention of key employees of the acquired business who are necessary to operate the business, and technologies, and the harmonization of differences in the business cultures between these companies and their personnel. Integration of these businesses will be complex and time-consuming, will involve additional expense and could disrupt our business and divert management’s attention from ongoing business concerns.
In addition, there are substantial risks associated with acquisitions and expansion into new business areas, including the risk that (i) our unfamiliarity with new lines of business may adversely affect the success of such acquisitions, (ii) revenue from such activities might not be sufficient to offset the development, regulatory and other implementation costs, (iii) competing products and services and shifting market preferences might affect the profitability of such activities, and (iv) our internal controls might be inadequate to manage the risks associated with new activities. We may also incur potential dilution of our brand, assumption of known and unknown liabilities, indemnities and potential disputes with the sellers. Any such difficulties could disrupt our ongoing business, distract our management and employees, increase our expenses and adversely affect our results of operations.
Our business relies on a limited number of key customers, which may change from year to year, and a loss of one or more of these key customers may adversely affect our operating results.
On February 28, 2025, the Divestiture was completed. In accordance with ASC 205-20 (Discontinued Operations), the Company determined that Jiuxin Investment’s business qualified as a discontinued operation and has presented it as such in the audited consolidated financial statements. Financial results for discontinued operations are reported separately from continuing operations. After divestiture of Jiuxin Investment, the internal sales to Jiuzhou Pharmacy were not eliminated in the audited consolidated financial statements. For the fiscal year ended March 31, 2026, the Company had one customer that accounted for more than 10% of the Company’s total sales from continuing operations, which was 53.7%. For the fiscal year ended March 31, 2025, the Company had two customers that accounted for more than 10% of the Company’s total sales from continuing operations, which were 67.1% and 18.7%, respectively.
Each of these customers may or may not continue to be a customer of the Company going forward. The loss of any key customers could materially and adversely affect our results of operations until such time, if ever, as we are able to replace such key counterparty. Significant customers in any one period may not continue to be significant customers in other periods. To the extent that we are dependent on any single customer, we are subject to the risks faced by that counterparty to the extent that such risks impede such counterparty’s ability to stay in business with us. See also the risks discussed below in “We may face challenges in recovering accounts receivable from Jiuzhou Pharmacy and associated clinics following the Restructuring Transactions and in maintaining the supply relationship between Jiuxin Medicine and Jiuzhou Pharmacy, which we expect will continue to generate a substantial portion of our revenue in the near term. The loss of this relationship could have a material adverse effect on our business, financial condition, and results of operations.”
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We may face challenges in recovering accounts receivable from Jiuzhou Pharmacy and associated clinics following the Restructuring Transactions and in maintaining the supply relationship between Jiuxin Medicine and Jiuzhou Pharmacy, which we expect will continue to generate a substantial portion of our revenue in the near term. The loss of this relationship could have a material adverse effect on our business, financial condition, and results of operations.
Historically, the Company has conducted its retail business through Jiuxin Investment and its VIEs, including Jiuzhou Pharmacy and associated clinics (collectively, the “Divested Retail Entities”). Wholesale transactions involving pharmaceutical products from Jiuxin Medicine, another subsidiary of the Company, to the Divested Retail Entities have been consolidated within the Company’s group financial statements.
Following the Restructuring Transactions, including the Divestiture, these historical intercompany balances will be reclassified as third-party balances. As of March 31, 2025, the Divested Retail Entities are expected to have accounts payable to the Company totaling $13.6 million. There is a risk that these receivables may not be fully collected, which could adversely impact the Company’s financial position and liquidity.
Additionally, while Jiuxin Medicine and Jiuzhou Pharmacy have entered into a three-year supply agreement pursuant to the Equity Exchange Agreement for Divestiture. Under the terms of the supply agreement, Jiuxin Medicine agrees to supply pharmaceutical products to Jiuzhou Pharmacy at a price no higher than the lowest wholesale price in the area where Jiuzhou Pharmacy (or the applicable branch thereof) is located. The agreement may be terminated by mutual consent or by either party with one month’s prior written notice in the event of a material change to the other party’s business or operations. Additional termination rights apply in cases of material pricing disputes, provision of false information, force majeure, regulatory non-compliance, reputational harm, or product discontinuation.
There is no guarantee that the supply relationship will continue afterwards. Sales to Jiuzhou Pharmacy currently account for over 50% of the Company’s revenue and are expected to remain a significant source of revenue in the near term. Any disruption or termination of this relationship could result in a material loss of revenue from sales to the Divested Retail Entities, further affecting the Company’s financial results and operational stability.
We face significant challenges in growing and sustaining our wholesale business, including limited bargaining power, pricing volatility, and the need for ongoing investment in platforms, customer acquisition, and management.
As a relatively small participant in the pharmaceutical distribution market, we have limited bargaining power with suppliers. Our lower purchase volumes make it challenging to secure favorable pricing, which may negatively affect our gross margins. In addition, the pharmaceutical wholesale market is subject to pricing volatility, and we may be unable to pass rising costs on to customers, further pressuring our margins.
In order to remain competitive in the wholesale business, we need to continue to invest heavily in platform development, which we believe will play a critical role in the wholesale industry going forward. Historically, supplying to our own retail business was a significant part of our wholesale business. In the first quarter of 2025, we undertook the strategic structuring to dispose of our retail pharmacy business, and transition our business focus to wholesale distribution of pharmaceutical products. As a result, we are no longer engaged in any retail pharmacy business, and our wholesale business need to derive its revenue from sales to outside customers. There can be no assurance that we will be able to conduct such transactions on favorable terms. While in connection with Divestiture we entered into a three-year supply agreement with the divested retail business, there is no assurance that such agreement can be renewed on favorable terms.
In addition, to grow the business further, we need to attract and retain more new customers. The wholesale business is relatively new to us and most of our senior management personnel are less experienced in the wholesale business. Even with Mr. Kong joining our senior management team and the addition of other experienced personnel from Ridgeline, it remains important for us to recruit and retain highly experienced management personnel for our wholesale business. The transition away from the retail pharmacy business may also cause short-term operational inefficiencies, impact our brand recognition, and result in adverse market perception, potentially affecting investor confidence and market valuation. The efforts to develop our wholesale business require heavy investment in funding, resources and time of the senior management and there is no guarantee that such efforts would be successful. If these efforts are not successful, our wholesale business may suffer.
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The operating results of our wholesale business have fluctuated, and we cannot assure that our strategic initiatives will lead to sustained revenue growth or profitability in the coming years.
We are generally referred to as a wholesale business, and we currently operate two wholesale segments: (i) offline wholesale distribution and (ii) online platform sales. For the year ended March 31, 2026, our total revenue increased by approximately $12.19 million, or 10.2%, as compared to the year ended March 31, 2025.
Revenue from our offline wholesale business was approximately $117.87 million for the year ended March 31, 2026, representing a decrease of $0.99 million, or 0.8%, compared to the prior year. We had previously provided credit terms to certain offline customers. However, we experienced delayed repayments from several customers. Despite eventual recovery of the outstanding amounts, we decided to discontinue some of our credit sales effective March 2025 as a risk mitigation measure. As a result, the offline wholesale revenue declined.
Revenue from our online platform segment was approximately $14.29 million for the year ended March 31, 2026. The increase in online platform revenue was primarily attributable to the inclusion of a full twelve months of Allright’s revenue in fiscal year 2026, compared to only one month (March 2025) in fiscal year 2025 following the acquisition of Ridgeline on February 28, 2025. Allright distributes pharmaceutical and healthcare products across China through third-party e-commerce platforms and its own online platform.
While the acquisition of Ridgeline contributed to our revenue growth during fiscal year 2026 and may continue to provide additional distribution channels and enhance revenue opportunities, there is no guarantee that these benefits will be realized or that the Restructuring Transactions will improve our overall profitability.
We heavily depend on third-party electronic platforms for our online sales, the capacity of which may restrict our growth and the failure of which could adversely affect our business, financial condition and results of operations.
While we have our own online platform, we remain heavily dependent upon third-party electronic platforms to carry out our online sales. These platforms serve as critical distribution channels, and any limitation in their capacity, changes to their policies, or disruptions in their service could materially impact our ability to reach customers and generate revenue. Any system failure which causes interruptions to the input, retrieval and transmission of data, or increases in service time could disrupt our normal operations.
Although we believe our existing disaster recovery plan that can handle the failure of our computer software and hardware systems, we cannot provide assurance that we can effectively carry out this disaster recovery plan and that we will be able to restore our operation within a sufficiently short time frame to avoid disruption to our business. Moreover, because we do not control the infrastructure or policies of third-party platforms, we are exposed to additional risks beyond our internal IT capabilities. Any failure in our internal systems or those of third-party platforms could have a material adverse effect on our business, financial condition and results of operations. In addition, if the capacity of our systems of the third-party platforms fails to keep pace with the growth of our online business or evolving customer expectations, our ability to grow may be constrained.
If our online business fails to obtain and maintain the requisite assets, licenses, qualified personnel and approvals required under the complex regulatory environment for Internet-based businesses in China, the business prospects for such business may be materially and adversely affected.
Internet-based businesses in China are highly regulated by China’s central government, and numerous regulatory authorities are empowered to issue and implement regulations governing various aspects of these businesses. Our online distribution business is operated by Allright, which is required to obtain and maintain certain assets relevant to its business, such as computers and other electrical equipment, as well as applicable licenses or approvals from different regulatory authorities. These assets and licenses are essential to the operation of an e-commerce business and are generally subject to annual review by the relevant governmental authorities. Furthermore, we may be required to obtain additional licenses. If we fail to obtain or maintain any of the required assets, licenses or approvals, our Internet business may be subject to various penalties, such as confiscation of income, fines, and/or the discontinuation or restriction of its operations. Any such disruption may materially and adversely affect the prospects of our online business.
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We depend substantially on the continuing efforts of the key personnel, and our business and prospects may be severely disrupted if we lose their services.
Our future success is dependent on the continued services of Lingtao Kong and certain managers of the Company (the “Key Personnel”) but we do not maintain key-man insurance. If we lose the services of either of the Key Personnel, we may not be able to locate suitable or qualified replacements, which could severely disrupt our business and prospects. Each of the Key Personnel has entered into confidentiality and non-competition agreements with us. However, if any disputes arise between us and the Key Personnel, we cannot provide assurance, in light of uncertainties associated with the PRC legal system, that any of these agreements can be enforced in China, the jurisdiction in which the Key Personnel reside and hold some of their assets. See “Risks Related to Doing Business in China - You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China against us or our management based on United States or other foreign laws.”
Our operations require a number of permits and licenses in order to carry on their business.
We are required to obtain certain permits and licenses from various PRC governmental authorities, including a Drug Distribution Permit and a GSP certification. We are also required to obtain food hygiene certificates for the distribution of nutritional supplements and food products. We cannot provide any assurance that we can maintain all required licenses, permits and certifications to carry on our business at all times, and from time to time we may have not been in the past, or may not be in the future, in compliance with all such required licenses, permits and certifications. Moreover, these licenses, permits and certifications are subject to periodic renewal and/or reassessment by the relevant PRC governmental authorities and the standards of such renewal or reassessment may change from time to time. We intend to apply for renewal of these licenses, permits and certifications when required by applicable laws and regulations. Any failure by us to obtain and maintain all licenses, permits and certifications necessary to carry on our business at any time could have a material adverse effect on our business, financial condition and results of operations. In addition, any inability to renew any of these licenses, permits and certifications could severely disrupt our business, and prevent us from continuing to carry on our business. Any changes in the standards used by governmental authorities in considering whether to renew or reassess our business licenses, permits and certifications, as well as any enactment of new regulations that may restrict the conduct of our business, may also decrease our revenue and/or increase our costs, materially reducing our profitability and prospects. Furthermore, if the interpretation or implementation of existing laws and regulations changes or if new regulations come into effect requiring us to obtain any additional licenses, permits or certifications that were previously not required to operate our existing businesses, we cannot provide assurance that we can successfully obtain such licenses, permits or certifications.
Failure to comply with privacy, data protection and cyber security laws and regulations could have a materially adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences
The collection, storage, hosting, transfer, processing, disclosure, use, security and retention and destruction of personal information required to provide our services is subject to national and foreign privacy, data protection and cyber security laws. These laws, which are not uniform, generally do one or more of the following: regulate the collection, storage, hosting, transfer (including in some cases, the transfer outside the country of collection), processing, disclosure, use, security and retention and destruction of personal information; require notice to individuals of privacy practices; give individuals certain access and correction rights with respect to their personal information; and regulate the use or disclosure of personal information for secondary purposes such as marketing. Under certain circumstances, some of these laws require us to provide notification to affected individuals, clients, data protection authorities and/or other regulators in the event of a data breach. In many cases, these laws apply not only to third-party transactions, but also to transfers of information among the Company and its subsidiaries.
We believe that providing insights from data, including artificial intelligence and machine learning, will become increasingly important to the value that our solutions and services deliver to our customers. However, the ability to provide data-driven insights may be constrained by current or future regulatory requirements or ethical considerations that could restrict or impose burdensome and costly requirements on our ability to leverage data in innovative ways.
Complying with privacy, data protection and cyber security laws and requirements may result in significant costs to our business and require us to amend certain of our business practices. Further, enforcement actions and investigations by regulatory authorities related to data security incidents and privacy violations continue to increase. The future enactment of more restrictive laws, rules or regulations and/or future enforcement actions or investigations could have a materially adverse impact on us through increased costs or restrictions on our businesses and noncompliance could result in significant regulatory penalties and legal liability and damage our reputation. In addition, data security events and concerns about privacy abuses by other companies are changing consumer and social expectations for enhanced privacy and data protection. As a result, even the perception of noncompliance, whether or not valid, may damage our reputation.
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Our brand names, trade secrets and other intellectual property are valuable assets. If we are unable to protect them from infringement, our business and prospects may be harmed.
We consider our pharmacy brand names to be valuable assets. We may be unable to prevent third parties from using such brand names without authorization, which may adversely affect our business and reputation, including the perceived quality and reliability of our products and services.
We rely on trade secrets to protect our know-how and other proprietary information, including pricing, purchasing, promotional strategies, customer lists and/or suppliers lists. As a result, our employees are required to sign employment agreements that contain confidentiality provisions as a condition of their employment with us. However, trade secrets are difficult to protect. While we believe we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors or advisors may unintentionally or willfully disclose our information to competitors. In addition, confidentiality agreements executed by the aforementioned individuals may not be enforceable or provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure.
If we were to enforce a claim that a third party had illegally obtained and was using our trade secrets, such efforts could be expensive and time-consuming, and the outcome unpredictable. Additionally, if our competitors independently develop information that is equivalent to our trade secrets or other proprietary information, we have little recourse to enforce our rights, and our business and prospects could be harmed.
Litigation may be necessary in the future to enforce our intellectual property rights or to determine the validity and scope of the intellectual property rights of others. However, since the validity, enforceability and scope of protection of intellectual property rights in the PRC are uncertain and still evolving, we may not be successful in prosecuting these cases. In addition, any litigation, proceeding or other efforts to protect our intellectual property rights could result in substantial costs and diversion of our resources, and could seriously harm our business and operating results. Furthermore, the degree of future protection of our proprietary rights is uncertain and may not adequately protect our rights or permit us to gain or keep our competitive advantage. If we are unable to protect our trade names, trade secrets and other propriety information from infringement, our business, financial condition and results of operations may be materially and adversely affected.
We may be exposed to intellectual property infringement and other claims by third parties which, if successful, could disrupt our business and have a material adverse effect on our financial condition and results of operations.
Our success depends, in large part, on our ability to use our proprietary information and know-how without infringing third party intellectual property rights. As litigation becomes more common in China, we face a higher risk of being the subject of claims for intellectual property infringement, invalidity or indemnification relating to other parties’ proprietary rights. Our current or potential competitors, many of whom have substantial resources, may have or may obtain intellectual property protection that will prevent, limit or interfere with our ability to conduct our business in China. Moreover, the defense of intellectual property suits, including trademark infringement suits and related legal and administrative proceedings, can be both costly and time consuming and may significantly divert the efforts and resources of our management personnel. Furthermore, an adverse determination in any such litigation or proceeding to which we may become a party could cause us to:
| ● | pay damage awards; | |
| ● | seek licenses from third parties; | |
| ● | pay ongoing royalties; | |
| ● | redesign our product offerings; or | |
| ● | be restricted by injunctions, |
Each of which could effectively prevent us from pursuing some or all of our business and result in our customers or potential customers deferring or limiting their purchase from our stores, which could have a material adverse effect on our financial condition and results of operations.
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Risks Related to Our Corporate Structure
We rely principally on dividends paid by our consolidated operating entities to fund any cash and financing requirements we may have, and any limitation on the ability of our consolidated PRC entities to pay dividends to us could have a material adverse effect on our ability to conduct our business.
We are a holding company and rely principally on dividends and other distributions paid by the consolidated PRC operating entities for cash requirements, including the funds required to service any debt we may incur, which are passed on to us through Renovation, and prior to the Restructuring Transactions, through Jiuxin Investment. If any of our consolidated operating entities incurs debt in its own name in the future, the instruments governing the debt may restrict dividends or other distributions on our equity interest to us.
Furthermore, applicable PRC laws, rules and regulations permit payment of dividends by our consolidated PRC entities only out of their retained earnings, if any, determined in accordance with PRC accounting standards. Under PRC laws, rules and regulations, our consolidated PRC entities are required to set aside at least ten percent (10%) of their after-tax profit each year, based on PRC accounting standards, into their statutory surplus reserve funds until the accumulative amount of such reserves reaches fifty percent (50%) of their respective registered capital. Also, dividends cannot be distributed before any previous year’s loss has been offset. As a result, our consolidated PRC entities are restricted in their ability to transfer a portion of their net income to us whether in the form of dividends, loans or advances. As of March 31, 2026, our restricted reserves totaled $0. Our restricted reserves are not distributable as cash dividends. Any limitation on the ability of our consolidated operating entities to pay dividends to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends, or otherwise fund and conduct our business.
Risks Related to Doing Business in China
Substantial uncertainties and restrictions with respect to the political and economic policies of the PRC government and PRC laws and regulations could have a significant impact upon the business that we may be able to conduct in the PRC and accordingly on the results of our operations and financial condition.
Our business operations conducted through our PRC operating entities may be adversely affected by the current and future political environment in the PRC. Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. The Chinese government exerts substantial influence and control over the manner in which we must conduct our business activities. Our ability to operate in China may be adversely affected by changes in Chinese laws and regulations. Under the current government leadership, the government of the PRC has been pursuing reform policies which have adversely affected China-based operating companies whose securities are listed in the United States, with significant policies changes being made from time to time without notice. There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our business, or the enforcement and performance of our contractual arrangements. Only after 1979 did the Chinese government begin to promulgate a comprehensive system of laws that regulate economic affairs in general, deal with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade, as well as encourage foreign investment in China. Although the influence of the law has been increasing, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. Also, because these laws and regulations are relatively new, and because of the limited volume of published cases and their lack of force as precedents, interpretation and enforcement of these laws and regulations involve significant uncertainties. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. In addition, there have been constant changes and amendments of laws and regulations over the past 30 years in order to keep up with the rapidly changing society and economy in China. Because government agencies and courts provide interpretations of laws and regulations and decide contractual disputes and issues, their inexperience in adjudicating new business and new polices or regulations in certain less developed areas causes uncertainty and may affect our business. Consequently, we cannot predict the future direction of Chinese legislative activities with respect to either businesses with foreign investment or the effectiveness on enforcement of laws and regulations in China. The uncertainties, including new laws and regulations and changes of existing laws, as well as judicial interpretation by inexperienced officials in the agencies and courts in certain areas, may cause possible problems to foreign investors. Although the PRC government has been pursuing economic reform policies for more than two decades, the PRC government continues to exercise significant control over economic growth in the PRC through the allocation of resources, controlling payments of foreign currency, setting monetary policy and imposing policies that impact particular industries in different ways. We cannot assure you that the PRC government will continue to pursue policies favoring a market oriented economy or that existing policies will not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting political, economic and social life in the PRC. The Chinese government may intervene or influence our operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in our operations and/or the value of the securities being offered. Any adverse changes in Chinese laws and regulations and the Chinese government’s significant oversight and discretion over the conduct of our business could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.
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We may be adversely affected by complexity, uncertainties and changes in Chinese regulation of pharmaceutical wholesale and online sales business.
The Chinese government regulates pharmaceutical wholesale and online sales business, including foreign ownership and requirements for licenses and permits. These laws and regulations are relatively new and evolving, and their interpretation and enforcement involve significant uncertainty. As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be a violation of applicable laws and regulations.
The interpretation and application of existing Chinese laws, regulations and policies and possible new laws, regulations or policies have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, pharmaceutical businesses in China, including our business.
Uncertainties relating to the regulation of pharmaceutical wholesale and online sales business in China also extend to evolving licensing practices, which means that permits, licenses or operations at our company may be subject to challenge. This may disrupt our business or subject us to sanctions, requirements to increase capital, or other conditions or enforcement, which could have harmful effects on us.
Compliance with China’s Data Security Law, the amended Cyber Security Law, the Personal Information Protection Law, the Measures on Cybersecurity Review, regulations and guidelines relating to the multi-level protection scheme and any other future laws and regulations may entail significant expenses and could materially affect our business.
China has implemented and continues to refine rules relating to data protection. China’s Data Security Law took effect in September 2021. The Data Security Law provides that the data processing activities must be conducted based on “data classification and hierarchical protection system” for the purpose of data protection and prohibits entities in China from transferring data stored in China to foreign law enforcement agencies or judicial authorities without prior approval by the Chinese government.
Additionally, China’s Cyber Security Law requires companies to take certain organizational, technical and administrative measures and other necessary measures to ensure the security of their networks and data stored on their networks. Specifically, the Cyber Security Law provides that China adopt a multi-level protection scheme (MLPS), under which network operators are required to perform obligations of security protection to ensure that the network is free from interference, disruption or unauthorized access, and prevent network data from being disclosed, stolen or tampered. Under the MLPS, entities operating information systems must have a thorough assessment of the risks and the conditions of their information and network systems to determine the level to which the entity’s information and network systems belong - from the lowest Level 1 to the highest Level 5 - pursuant to a series of national standards on the grading and implementation of the classified protection of cyber security. The grading result will determine the set of security protection obligations that entities must comply with. Entities classified as Level 2 or above should report the grade to the relevant government authority for examination and approval.
On October 28, 2025, the National People’s Congress Standing Committee adopted the first major amendment to the Cyber Security Law since its original enactment in 2017, which became effective January 1, 2026 (the “Amended CSL”). The Amended CSL strengthens alignment with the Data Security Law and the Personal Information Protection Law, introduces a tiered penalty regime with significantly higher fines for serious violations (up to RMB 2 million, or approximately RMB 10 million for violations affecting critical information infrastructure), broadens individual liability to cover additional categories of responsible personnel, and adds provisions addressing artificial intelligence governance.
The Cyberspace Administration of China (“CAC”) has, in past years, taken enforcement action against Chinese companies in connection with their initial public offerings on U.S. securities exchanges, citing alleged national security risks and improper collection and use of personal information. The Measures on Cybersecurity Review, as revised and currently in effect, require data processing operators in possession of personal information of over one million users to undergo a cybersecurity review before listing their securities in a foreign country.
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It is unclear at the present time how broadly or strictly these requirements will continue to be enforced going forward, and what effect they will have on our business. China’s regulators may impose penalties for non-compliance ranging from fines or suspension of operations, and this could lead to us delisting from the U.S. stock market.
Also, the Personal Information Protection Law released by the National People’s Congress became effective on November 1, 2021. The law creates a comprehensive set of data privacy and protection requirements that apply to the processing of personal information and expands data protection compliance obligations to cover the processing of personal information of persons by organizations and individuals in China, and the processing of personal information of persons in China outside of China if such processing is for purposes of providing products and services to, or analyzing and evaluating the behavior of, persons in China. The law also provides that critical information infrastructure operators and personal information processing entities who process personal information meeting a volume threshold set by Chinese cyberspace regulators are also required to store in China personal information generated or collected in China, and to pass a security assessment administered by Chinese cyberspace regulators for any export of such personal information. The law provides for significant fines for serious violations of up to RMB 50 million or 5% of annual revenues from the prior year, and violations may also be ordered to suspend any related activity by competent authorities.
In addition, the CAC and the State Administration for Market Regulation jointly issued the Measures for the Certification of the Outbound Transfer of Personal Information, effective January 1, 2026, which established a certification mechanism for cross-border transfers of personal information alongside the existing security assessment and standard contract mechanisms.
Interpretation, application and enforcement of these laws, rules and regulations evolve from time to time and their scope may continually change, through new legislation, amendments to existing legislation and changes in enforcement. Compliance with the Cyber Security Law and the Data Security Law could significantly increase the cost to us of providing our service offerings, require significant changes to our operations or even prevent us from providing certain service offerings in jurisdictions in which we currently operate or in which we may operate in the future. Despite our efforts to comply with applicable laws, regulations and other obligations relating to privacy, data protection and information security, it is possible that our practices, offerings or platform could fail to meet all of the requirements imposed on us by the Cyber Security Law, the Data Security Law and/or related implementing regulations. In addition, we cannot guarantee the effectiveness of the measures undertaken and those implemented by our business partners and services providers. Any failure on our part, or on our business partners’ or services providers’ part, to comply with such law or regulations or any other obligations relating to privacy, data protection or information security, or any compromise of security that results in unauthorized access, use or release of personally identifiable information or other data, or the perception or allegation that any of the foregoing types of failure or compromise has occurred, could damage our reputation, discourage new and existing counterparties from contracting with us or result in investigations, fines, suspension or other penalties by Chinese government authorities and private claims or litigation, any of which could materially adversely affect our business, financial condition and results of operations. Even if our practices are not subject to legal challenge, the perception of privacy concerns, whether or not valid, may harm our reputation and brand and adversely affect our business, financial condition and results of operations. Moreover, the legal uncertainty created by the Data Security Law, the related laws or regulations, and evolving Chinese government enforcement actions could materially adversely affect our ability, on favorable terms, to raise capital, including engaging in follow-on offerings of our securities in the U.S. market.
Adverse regulatory developments in China may subject us to additional regulatory review, and additional disclosure requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in China may impose additional compliance requirements for companies like us with significant China-based operations, all of which could increase our compliance costs, subject us to additional disclosure requirements. In addition, uncertainties with respect to the PRC legal system could adversely affect us.
We are subject to rules and regulations by various governing bodies, including, for example, the SEC, which is charged with the protection of investors and the oversight of companies whose securities are publicly traded, and the various regulatory authorities in mainland China and the Cayman Islands, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new and changing laws and regulations have resulted in and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. In addition, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed.
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The recent regulatory developments in China, in particular with respect to restrictions on China-based companies raising capital offshore, may lead to additional regulatory review in China over our financing and capital raising activities in the United States. In addition, we may be subject to industry-wide regulations that may be adopted by the relevant PRC authorities, which may have the effect of limiting our service offerings, restricting the scope of our operations in China, or causing the suspension or termination of our business operations in China entirely, all of which will materially and adversely affect our business, financial condition and results of operations. We may have to adjust, modify, or completely change our business operations in response to adverse regulatory changes or policy developments, and we cannot assure you that any remedial action adopted by us can be completed in a timely, cost-efficient, or liability-free manner or at all.
On July 30, 2021, in response to the recent regulatory developments in China and actions adopted by the PRC government, the Chairman of the SEC issued a statement asking the SEC staff to seek additional disclosures from offshore issuers associated with China-based operating companies before their registration statements will be declared effective. On August 1, 2021, the China Securities Regulatory Commission (the “CSRC”) stated in a statement that it had taken note of the new disclosure requirements announced by the SEC regarding the listings of Chinese companies and the recent regulatory development in China, and that both countries should strengthen communications on regulating China-related issuers. To the best knowledge of this Company, as of the date of this annual report, current Chinese laws and regulations do not forbid us from issuing securities overseas. On December 24, 2021, the CSRC published the Administration of Overseas Securities Offering and Listing by Domestic Companies (the “Draft Administrative Provisions”) and the Administration Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (the “Draft Filing Measures”). The Draft Administrative Provisions and the Draft Filing Measures lay out requirements for filing and include unified regulation management, strengthening regulatory coordination, and cross-border regulatory cooperation. On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), which took effect on March 31, 2023. On the same date, the CSRC circulated Supporting Guidance Rules No. 1 through No. 5, Notes on the Trial Measures, Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and relevant CSRC Answers to Reporter Questions, or collectively, the Guidance Rules and Notice, on CSRC’s official website. The Trial Measures, together with the Guidance Rules and Notice reiterate the basic principles of the Draft Administrative Provisions and Draft Filing Measures and impose substantially the same requirements for the overseas securities offering and listing by domestic enterprises, and clarified and emphasized several aspects, which include but are not limited to: (1) criteria to determine whether an issuer will be required to go through the filing procedures under the Trial Measures; (2) exemptions from immediate filing requirements for issuers including those that have already been listed in foreign securities markets, including U.S. markets, prior to the effective date of the Trial Measures, but these issuers shall still be subject to filing procedures if they conduct refinancing or are involved in other circumstances that require filing with the CSRC; (3) a negative list of types of issuers banned from listing or offering overseas, such as issuers whose affiliates have been recently convicted of bribery and corruption; (4) issuers’ compliance with web security, data security, and other national security laws and regulations; (5) issuers’ filing and reporting obligations, such as obligation to file with the CSRC after it submits an application for initial public offering to overseas regulators, and obligation after offering or listing overseas to file with the CSRC after it completes subsequent offerings and to report to the CSRC material events including change of control or voluntary or forced delisting of the issuer; and (6) the CSRC’s authority to fine both issuers and their relevant shareholders for failure to comply with the Trial Measures, including failure to comply with filing obligations or committing fraud and misrepresentation. Specifically, pursuant to the Trial Measures, our future securities offerings in the Nasdaq Capital Market where we have currently offered and listed shall also be filed with the CSRC within 3 working days after the offering is completed. As the Trial Measures are newly issued, there remain uncertainties regarding its interpretation and implementation. Therefore, we cannot assure you that we will be able to complete the filings for our future offering and fully comply with the relevant new rules on a timely basis, if at all. In addition, we cannot guarantee that we will not be subject to tightened regulatory review and we could be exposed to government interference in China.
Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their nonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties. In addition, the PRC legal system is based in part on government policies and internal rules (some of which are not published on a timely basis or at all) that may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until some time after the violation. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention.
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It may be difficult for U.S. regulators, such as the Department of Justice, the SEC, and other authorities, to conduct investigation or collect evidence within China.
Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigations initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with regulatory authorities in the Unities States – including the SEC and the Department of Justice-may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the PRC territory. While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase the difficulties you face in protecting your interests.
You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China against us or our management based on United States or other foreign laws.
We are a holding company and conduct our business through our subsidiaries and controlled companies in the PRC. In addition, all of our operating assets are located in, and all of our other senior executive officers reside within, China. As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon those of our senior executive officers and directors that do not reside in the United States, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. Moreover, our Chinese counsel has advised us that China does not have treaties with the United States or many other countries providing for the reciprocal recognition and enforcement of judgment of courts. As a result, our public shareholders may face substantially more difficulty in protecting their interests through actions against our management or directors than would shareholders of a corporation with assets and management located in the United States.
Our management will have broad discretion over the use of the proceeds we receive from our financing activities and might not apply the proceeds in ways that increase the value of your investment.
Our management will have broad discretion to use the net proceeds from any offerings we may conduct from time to time, and the shareholders will be relying on the judgment of our management regarding the application of these proceeds. Except as described in our offering books, the net proceeds received by us from our offerings will be added to our general funds and will be used for general corporate purposes. Our management might not apply the net proceeds from offerings of our securities in ways that increase the value of your investment and might not be able to yield a significant return, if any, on any investment of such net proceeds. You may not have the opportunity to influence our decisions on how to use such proceeds.
Our subsidiaries are subject to restrictions on making payments to us.
The Chinese government imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of China. We may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency. Furthermore, if these companies incur debt on their own in the future, the instruments governing the debt may restrict their ability to make payments. If we are unable to receive all of the revenues from our operations, we may be unable to pay dividends on our ordinary shares.
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Dividends we receive from our subsidiaries located in the PRC may be subject to PRC withholding tax.
The Enterprise Income Tax Law (“EIT Law”) provides that a maximum income tax rate of twenty percent (20%) is applicable to dividends payable to non-PRC investors that are “non-resident enterprises,” to the extent such dividends are derived from sources within the PRC. However, the State Council has reduced such rate to ten percent (10%) through the implementation regulations. We are a Cayman Islands holding company and substantially all of our income is derived from our subsidiaries and controlled companies located in the PRC. Therefore, dividends paid to us from China may be subject to the ten percent (10%) income tax if we are considered a “non-resident enterprise” under the EIT Law. If we are required to pay income tax for any dividends we receive from our PRC subsidiaries under the EIT Law and its implementation regulations, it may have a material and adverse effect on our net income and materially reduce the amount of dividends, if any, and we may pay to our shareholders.
We face risks related to disease epidemics and other outbreaks.
The economy, infrastructure and livelihood of the people of the PRC or such other jurisdictions may be materially and adversely affected by acts of God, acts of war and terrorism, natural disasters, riots, epidemics and other disasters which are beyond our control. Our business, financial condition and results of operations may be adversely affected if these events occur.
For example, epidemics threaten people’s lives and may adversely affect their livelihood as well as their living and consumption patterns. The occurrence of an epidemic is beyond our control, and we cannot assure you that the outbreak of coronavirus (including COVID-19), severe acute respiratory syndrome, the H5N1 strain of avian influenza, the H1N1 strain of swine flu, the Zika virus or any other epidemics or pandemics will not happen. Any epidemic or pandemic occurring, such as the most recent outbreak of COVID-19, in the PRC, or even in areas outside of the PRC, may severely affect and restrict the level of economic activity as the government may impose regulatory administrative measures quarantining affected areas or other measures to control the outbreak of the disease, which in turn may adversely affect our business, financial condition and results of operations. Acts of war and terrorism may cause damage or disruption to us or our employees, facilities, markets, suppliers or customers, any of which may adversely impact our revenue, cost, financial condition and results of operations or the trading price of our securities. Potential war or terrorist attacks may also cause uncertainty and cause our business to suffer in ways that we cannot currently predict.
Failure to comply with the U.S. Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.
We are required to comply with the United States Foreign Corrupt Practices Act, which generally prohibits United States companies, including publicly traded companies whose securities are registered with the SEC, from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some that may compete with us, are not subject to these prohibitions, and therefore may have a competitive advantage over us. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices may occur in the PRC. If our competitors engage in these practices, they may receive preferential treatment in the PRC, giving them an advantage in securing business, which would put us at a disadvantage. We cannot provide assurance that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.
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Changes in international trade policies, trade disputes, barriers to trade, the emergence of a trade war and/or other disruptions to international commerce, including between the United States and China, could harm the global economy and may dampen growth in China, our principal place of business. A severe or prolonged downturn in the Chinese or global economy could materially and adversely affect our business and financial condition.
The global macroeconomic environment is facing challenges. Although our business operations do not include selling products outside of China, political uncertainty surrounding international trade disputes, particularly the ongoing tension between the U.S. and China, could damage consumer confidence and decision-making, leading to a material adverse effect on our business.
At various times in recent years, the United States and China have had significant disagreements over political and economic issues. Controversies may continue to arise in the future between the two countries. Any political or trade controversies between the United States and China, whether or not directly related to our business, could reduce the price of our ordinary shares. For example, the United States recently announced changes to U.S. trade policy, including adding new or modifying existing tariffs on imports, in some cases significantly. China imposed its tariffs on good imported from the United States. It remains unclear what additional actions, if any, will be taken by the United States or other governments with respect to international trade agreements, the imposition of tariffs on goods imported into the United States, tax policy related to international commerce, or other trade matters. The impact of these tariffs is subject to a number of factors, including the effective date and duration of such tariffs, changes in the amount, scope and nature of the tariffs in the future, any retaliatory responses to such actions that the target countries may take and any mitigating actions that may become available. While we continue to evaluate the potential impact of the new tariffs on our business, given the volatility and uncertainty regarding the scope and duration of such tariffs and other aspects of U.S. and foreign government trade policies, their ultimate impact on our operations and financial results remains uncertain.
In addition, political instability and military hostilities, including the recent conflict in Israel with Hamas, the ongoing war between uncertain nature, magnitude and duration of the Russia-Ukraine war could lead to significant disruptions in the global economy. The uncertain nature, magnitude and duration and the full economic effect of these events cannot be estimated, but this may impact businesses across the globe both in the short term and the long term with rising commodity prices and demand, rising interest costs to counter inflationary conditions and loss in value of currencies.
Such uncertainty may also limit the access of our PRC subsidiaries to new business opportunities, negatively impacting our PRC subsidiaries’ operations. The current and potential future actions by the U.S. or the PRC that affect trade relations could contribute to global economic instability, which may harm our PRC subsidiaries’ business or financial performance. There have also been concerns on the relationship among China and other Asian countries, which may result in or intensify potential conflicts in relation to territorial disputes. Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any severe or prolonged slowdown in the global or Chinese economy may materially and adversely affect our business, results of operations and financial condition. Any severe or prolonged slowdown in the global or PRC economy may materially and adversely affect our business, results of operations and financial condition.
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Our auditor, YCM CPA INC., is headquartered in California, and is subject to inspection by the PCAOB on a regular basis. To the extent that our independent registered public accounting firm’s audit documentation related to their audit reports for our company becomes located in China, the PCAOB may not be able to inspect such audit documentation and, as such, you may be deprived of the benefits of such inspection and our ordinary shares could be delisted from the stock exchange pursuant to the Holding Foreign Companies Accountable Act.
The Holding Foreign Companies Accountable Act, or the HFCAA, was enacted on December 18, 2020 and was subsequently amended. The HFCAA, as amended, states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for two consecutive years, the SEC shall prohibit our shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
On May 20, 2020 and on December 2, 2020, the U.S. Senate passed and the U.S. House of Representatives approved the Holding Foreign Companies Accountable Act (“HFCAA”) requiring a foreign company to certify it is not owned or controlled by a foreign government if the Public Company Accounting Oversight Board (the “PCAOB”) is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the Company’s auditors for three consecutive years, the issuer’s securities are prohibited to trade on a U.S. stock exchange. On December 18, 2020, the Holding Foreign Companies Accountable Act was signed into law. The PCAOB issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the PRC because of a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), which was signed into law on December 29, 2022. The AHFCAA amended the HFCAA and reduced the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two. On August 26, 2022, the PCAOB announced and signed a Statement of Protocol (the “Protocol”) with the China Securities Regulatory Commission and the Ministry of Finance of the People’s Republic of China. The Protocol provides the PCAOB with: (1) sole discretion to select the firms, audit engagements and potential violations it inspects and investigates, without any involvement of Chinese authorities; (2) procedures for PCAOB inspectors and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed; (3) direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates. On December 15, 2022, the PCAOB issued a new Determination Report which: (1) vacated the December 16, 2021 Determination Report; and (2) concluded that the PCAOB has been able to conduct inspections and investigations completely in the PRC in 2022. The December 15, 2022 Determination Report cautions, however, that authorities in the PRC might take positions at any time that would prevent the PCAOB from continuing to inspect or investigate completely. As required by the HFCAA, if in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will act expeditiously to consider whether it should issue a new determination.
While the HFCAA is not currently applicable to the Company because the Company’s current auditors are subject to PCAOB review, if this changes in the future for any reason, the Company may be subject to the HFCAA. The implications of this regulation if the Company were to become subject to it are uncertain. Such uncertainty could cause the market price of our ordinary shares to be materially and adversely affected, and our securities could be delisted or prohibited from being traded on Nasdaq earlier than would be required by the HFCAA. If our ordinary shares is unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase the ordinary shares when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of our ordinary shares.
Our auditor, the independent registered public accounting firm that issues the audit report for the year ended March 31, 2026 included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Our auditor is headquartered in Irvine, California and has been inspected by the PCAOB in March 2023. In the event that, in the future, either there is any regulatory change or step taken by PRC regulators that does not permit YCM CPA INC. to provide audit documentations located in China or Hong Kong to the PCAOB for inspection or investigation, or the PCAOB expands the scope of the determinations so that our PRC operating entities will be subject to the HFCAA, as the same may be amended, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading of our securities, including “over-the-counter” trading, may be prohibited, under the HFCAA. The recent developments would add uncertainties to our listing and we cannot assure you whether Nasdaq Capital Market or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach, or experience as it relates to our audit.
Further, new laws and regulations or changes in laws and regulations in both the United States and China could affect our ability to list our shares on Nasdaq, which could materially impair the market for and market price of our ordinary shares.
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The PRC’s labor law restricts our ability to reduce our workforce in the PRC in the event of an economic downturn and may increase our production costs.
In June 2007, the National People’s Congress of the PRC enacted new labor law legislation called the Labor Contract Law, which became effective on January 1, 2008 (the “LC Law”). The LC Law formalized workers’ rights concerning overtime hours, pensions, layoffs, employment contracts and the role of trade unions. Considered one of the strictest labor laws in the world, among other things, the LC Law provides for specific standards and procedures for the termination of an employment contract and places the burden of proof on the employer. In addition, the law requires the payment of a statutory severance pay upon the termination of an employment contract in most cases, including the case of the expiration of a fixed-term employment contract. Further, the LC Law requires an employer to conclude an “employment contract without a fixed-term” with any employee who either has worked for the same employer for ten (10) consecutive years or more or has had two (2) consecutive fixed-term contracts with the same employer. An “employment contract without a fixed term” can no longer be terminated on the ground of the expiration of the contract, although it can still be terminated pursuant to the standards and procedures set forth under the new law. Because of the lack of implementing rules for the LC Law and the precedents for the enforcement of such a law, the standards and procedures set forth under the LC Law in relation to the termination of an employment contract have raised concerns among foreign investment enterprises in the PRC that such “employment contract without a fixed term” might in fact become a “lifetime, permanent employment contract.” Finally, under the LC Law, downsizing of either more than twenty (20) people or more than ten percent (10%) of the workforce may occur only under specified circumstances, such as a restructuring undertaken pursuant to the PRC’s Enterprise Bankruptcy Law, or where a company suffers serious difficulties in production and/or business operations, or where there has been a material change in the objective economic circumstances relied upon by the parties at the time of the conclusion of the employment contract, thereby making the performance of such employment contract impossible. To date, there has been very little guidance and precedent as to how such specified circumstances for downsizing will be interpreted and enforced by the relevant PRC authorities. All of our employees working for us exclusively within the PRC are covered by the LC Law and thus, our ability to adjust the size of our operations when necessary in periods of recession or less severe economic downturns may be curtailed. Accordingly, if we face future periods of decline in business activity generally or adverse economic periods specific to our business, the LC Law can be expected to exacerbate the adverse effect of the economic environment on our results of operations and financial condition.
We cannot be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the Renminbi, especially with respect to foreign exchange transactions.
Fluctuations in the value of the Renminbi may have a material and adverse effect on your investment. The change in value of the Renminbi against the U.S. dollar is affected by, among other things, changes in PRC’s political and economic conditions. We receive substantially all of our revenues in RMB. Under our current structure, our income is primarily derived from payments from the PRC operating entities. Shortages in the availability of foreign currency may restrict the ability of our subsidiaries and our PRC affiliated entities to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency denominated obligations. Under existing Chinese foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. However, approval from appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses, such as the repayment of bank loans denominated in foreign currencies. The Chinese government may also, at its discretion, restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay dividends in foreign currencies to our shareholders.
On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, the Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. On November 30, 2015, the Executive Board of the International Monetary Fund (IMF) completed the regular five-year review of the basket of currencies that make up the Special Drawing Right, or the SDR, and decided that with effect from October 1, 2016, Renminbi is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the Euro, the Japanese yen and the British pound. In the fourth quarter of 2016, the Renminbi depreciated significantly in the backdrop of a surging U.S. dollar and persistent capital outflows of China. In 2017, the RMB appreciated approximately 6.3% against the U.S. dollar. In 2018, however, the RMB depreciated approximately 5.7% against the U.S. dollar, and the trend continued in 2019. In 2020 and 2021, the RMB appreciated approximately 8.7% against the U.S. Dollar, but the RMB has sharply depreciated against the U.S. Dollar by 7.8% and 2.9%, respectively, in 2022 and 2023. In 2024 and 2025, the RMB has sharply depreciated against the U.S. Dollar by 5.1% and 0.5%, respectively. In 2026, the RMB appreciated approximately 4.9% against the U.S. Dollar. With the development of the foreign exchange market and progress towards interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce further changes to the exchange rate system and we cannot assure you that the Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces, international relations especially the trade tensions between U.S. and China, or government policies of PRC or U.S. may impact the exchange rate between the Renminbi and the U.S. dollar in the future.
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Fluctuations in the value of RMB may have a material adverse effect on your investment.
The value of RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions. Our revenues, costs, and financial assets are mostly denominated in RMB, while our reporting currency is the U.S. dollar. Accordingly, this may result in gains or losses from currency translation on our financial statements. We rely entirely on fees paid to us by our affiliated entities in China. Therefore, any significant fluctuation in the value of RMB may materially and adversely affect our cash flows, revenues, earnings, financial position, and the value of, and any dividends payable on, our stock in U.S. dollars. For example, an appreciation of RMB against the U.S. dollar would, to the extent that we need to convert U.S. dollars into RMB for such purposes, make any new RMB denominated investments or expenditures more costly to us. An appreciation of RMB against the U.S. dollar would result in foreign currency translation gains for financial reporting purposes when we translate our RMB denominated financial assets into U.S. dollars, as the U.S. dollar is our reporting currency.
In addition, appreciation or depreciation in the value of the Renminbi relative to the U.S. dollar would affect our financial results reported in U.S. dollars without giving effect to any underlying change in our business or results of operations. The income statements of our operations are translated into U.S. dollars at the average exchange rates in each applicable period. To the extent the U.S. dollar strengthens against foreign currencies, the translation of these foreign currencies denominated transactions results in reduced revenue, operating expenses and net income for our international operations. Similarly, to the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign currency denominated transactions results in increased revenue, operating expenses and net income for our international operations. We are also exposed to foreign exchange rate fluctuations as we convert the financial statements of our foreign subsidiaries into U.S. dollars in consolidation. If there is a change in foreign currency exchange rates, the conversion of the foreign subsidiaries’ financial statements into U.S. dollars will lead to a translation gain or loss, which is recorded as a component of other comprehensive income. Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions. While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure at all.
Changes in economic conditions and consumer confidence in China may influence the pharmaceutical industry, consumer preferences and spending patterns.
Our business and revenue growth primarily depend on the size of the pharmaceutical market in China. As a result, our revenue and profitability may be negatively affected by changes in national, regional or local economic conditions and consumer confidence in China. In particular, as we focus on our expansion of our sales in metropolitan markets, where living standards and consumer purchasing power are relatively high, we are especially susceptible to changes in economic conditions, consumer confidence and customer preferences of the urban Chinese population. External factors beyond our control that affect consumer confidence include unemployment rates, levels of personal disposable income, national, regional or local economic conditions, and acts of war or terrorism. Changes in economic conditions and consumer confidence could adversely affect consumer preferences, purchasing power and spending patterns. A decrease in overall consumer spending as a result of changes in economic conditions could adversely affect the front-end and pharmacy sales of our wholesales customers, and in turn, could adversely impact our sales and our profitability. In addition, acts of war or terrorism may cause damage to our facilities, disrupt the supply of the products we offer, or adversely impact consumer demand. Any of these factors could have a material adverse effect on our business, financial condition and results of operations.
The economy of China had experienced unprecedented growth. This growth has slowed in the recent years, and if the growth of the economy continues to slow or if the economy contracts, our financial condition may be materially and adversely affected.
The rapid growth of the Chinese economy had historically resulted in widespread growth opportunities for industries across China. This growth has slowed in the recent years. As a result of the global financial crisis due to COVID-19, and Ukraine War, and the inability of enterprises to gain comparable access to the same amounts of capital available in past years, there may be an adverse effect on the business climate and growth of private enterprises in China. An economic slowdown could have an adverse effect on our sales and may increase our costs. Further, if economic growth continues to slow, and if, in conjunction, inflation continues unchecked, our costs would be likely to increase, and there can be no assurance that we would be able to increase our prices to an extent that would offset the increase in our expenses.
In addition, a tightened labor markets in our geographic region may result in fewer qualified applicants for job openings in our facilities. Further, higher wages, related labor costs and other increasing cost trends may negatively impact our results.
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Risks Related to an Investment in Our Securities
We may need additional capital, and the sale of equity securities could result in dilution to our shareholders, while debts may require us to make covenants restricting how we operate.
We believe that the aggregate amount of our current cash, anticipated cash flow from operations, available borrowings under our existing bank facilities, and personal loans from our principal shareholders should be sufficient to meet our anticipated cash needs for the near future. We may, however, require additional cash resources due to changed business conditions or other future developments. If our resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain credit facilities. For example, on October 30, 2025, we sold 31,200 ordinary shares in a private placement for aggregate gross proceeds of $2,808,000, and issued warrants to purchase up to 78,000 ordinary shares, all of which warrants were cashless exercised on November 21, 2025 for 47,243 ordinary shares. Additionally, on December 29, 2025, we entered into a sales agreement with AC Sunshine Securities LLC pursuant to which the Company may offer and sell, from time to time, ordinary shares having an aggregate offering price of up to $200,000,000 under an at-the-market offering program (the “ATM Program”). On July 11, 2026, we terminated the sales agreement with AC Sunshine Securities LLC, and on July 28, 2026, entered into a new sales agreement with Pacific Century Securities, LLC, which now serves as the sales agent for the ATM Program. As of the date of this report,, we had sold an aggregate of 3,487,171 ordinary shares under the ATM Program for aggregate gross proceeds of $15,279,787. Any additional sales of equity securities, including under the ATM Program or otherwise, could result in substantial dilution to our existing shareholders.
We cannot guarantee that we will be able to obtain any additional financing on terms that are acceptable to us, or at all. Even if we are able to obtain any requisite financing, the incurrence of additional indebtedness would result in increased debt service obligations, and could result in further operating and financing covenants that would restrict our freedom to operate our business, such as conditions that:
| ● | limit our ability to pay dividends or require us to seek consent for the payment of dividends; | |
| ● | increase our vulnerability to general adverse economic and industry conditions; | |
| ● | require us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow to fund capital expenditures, working capital and other general corporate purposes; and | |
| ● | limit our flexibility in planning for, or reacting to, changes in our business and our industry. |
To date, we have not paid any cash dividends and we do not estimate to distribute any cash dividends in the foreseeable future.
We do not anticipate paying cash dividends on our ordinary shares in the foreseeable future and we may not have sufficient funds legally available to pay dividends. Even if the funds are legally available for distribution, we may nevertheless decide not to pay any dividends. We intend to retain all earnings for our operations.
Nasdaq may delist our ordinary shares from trading on the Nasdaq Capital Market for failing to maintain a minimum bid price of $1.00, a minimum market value of listed securities of $5,000,000 or for other noncompliance with Nasdaq listing requirements, which could limit investors’ ability to effect transactions in our ordinary shares and subject us to additional trading restrictions.
In June 2023, Nasdaq notified the Company that it failed to maintain a minimum bid price of $1.00 per share for 30 consecutive trading days under Nasdaq Listing Rules 5550(a)(2) and 5810(c)(3)(A). After a 1-for-20 reverse stock split in March 2024, the Company regained compliance with the bid price rule.
Effective July 22, 2026, Nasdaq implemented a new rule that significantly increases the risk of delisting for companies that fail to maintain the minimum Market Value of Listed Securities (“MVLS”) requirement. Nasdaq listing rules require us to maintain an MVLS of at least $5,000,000. Under the new rule, if our MVLS remains below $5,000,000 for 30 consecutive business days, Nasdaq will issue a staff delisting determination and immediately suspend trading in our securities while commencing delisting proceedings. Unlike the bid price and certain other continued listing deficiencies, this MVLS requirement does not provide a compliance or cure period, and a request for review by a Nasdaq Listing Qualifications Hearings Panel does not automatically stay the trading suspension. Panel review is generally limited to instances of Nasdaq error or, in limited circumstances, an extension of no more than 180 days from the staff delisting determination. The MVLS of our ordinary shares is currently below $5,000,000. If our MVLS remains below $5,000,000 for 30 consecutive business days, we could face an immediate trading suspension and delisting, with little or no opportunity to regain compliance before our ordinary shares are removed from Nasdaq.
We are considering conducting one or more offerings of our securities, including under our ATM Program, in an effort to increase our MVLS above the $5,000,000 threshold. However, there is no guarantee that any such offering will be completed on acceptable terms, or at all, or that any offering we do complete will result in our MVLS increasing sufficiently, or remaining above $5,000,000 for the required 30 consecutive business days, to avoid a staff delisting determination.
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We cannot provide assurance that we will remain compliant with the bid price rule, the MVLS requirement, or other continued listing standards in the future, including those relating to minimum stockholders’ equity and market value of publicly held shares. If Nasdaq delists our ordinary shares from trading on its exchange due to noncompliance, we could face significant material adverse consequences including:
| ● | a limited availability of market quotations for our ordinary shares; | |
| ● | a limited amount of news and analyst coverage for our company; and | |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
Although publicly traded, the trading market in our ordinary shares may be substantially less liquid than the average stock quoted on the Nasdaq Capital Market, and such low trading volume may adversely affect the price of our ordinary shares.
Although our securities has been listed on the Nasdaq Capital Market since April 22, 2010, the historical trading volume of our securities has generally been low. Limited trading volume will subject our ordinary shares to greater price volatility and may make it difficult for you to sell your shares at a price that is attractive to you.
The market price for our stock may be volatile, and such volatility may subject us to securities litigation.
The market price for our stock may be volatile and, when compared to seasoned issuers, subject to wide fluctuations in response to various factors, many of which are beyond our control, including the following:
| ● | actual or anticipated fluctuations in our quarterly operating results; | |
| ● | changes in financial estimates by securities research analysts; |
| ● | conditions in the pharmaceutical wholesale and online sales markets; | |
| ● | changes in the economic performance or market valuations of other pharmaceutical wholesalers and online sales platforms; | |
| ● | announcements by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital commitments; |
| ● | addition or departure of key personnel; | |
| ● | fluctuations of exchange rates between RMB and the U.S. dollar; | |
| ● | intellectual property litigation; and | |
| ● | general economic or political conditions in China. |
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As an illustration of such volatility, the closing price of our ordinary shares during the fifty two (52) weeks preceding the date of this report ranged from a low of $1.14 to a high of $760.49. In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our stock.
In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.
Techniques employed by manipulative short sellers in Chinese small-cap stocks may drive down the market price of our ordinary shares.
Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from the difference in the sale price of the borrowed securities and the purchase price of the replacement shares. As it is therefore in the short seller’s best interests for the price of the stock to decline, there have been incidents of short sellers publishing, or arranging to publish negative opinions in order to create negative market momentum. While traditionally these disclosed shorts have been limited in their ability to access mainstream business media or to otherwise create negative market rumors, the rise of the Internet and technological advancements regarding document creation, videotaping and publication by weblog (“blogging”) have allowed many disclosed shorts to publicly attack a company’s credibility, strategy and veracity by means of so-called research reports that mimic the type of investment analysis performed by large Wall Street firms and independent research analysts. These short attacks have, in the past, resulted in the selling of shares in the market, on occasion on a large scale and broad base. Issuers with business operations based in the PRC, that have limited trading volumes and that are susceptible to higher volatility levels than U.S. domestic large-cap stocks can be particularly vulnerable to such short attacks.
These short seller publications are not regulated by any governmental, self-regulatory organization or other official authority in the U.S., are not subject to the certification requirements imposed by the SEC in Regulation Analyst Certification and, accordingly, the opinions they express may be based on distortion of the actual facts or, in some cases, fabrication of the facts. In light of the limited risks involved in publishing such information, and the enormous profit that can be made from running just one successful short attack, unless the short sellers become subject to significant penalties, it is more likely than not that disclosed shorts will continue to issue such reports.
While we intend to strongly defend our public filings against any such short seller attacks, oftentimes we are constrained, either by principles of freedom of speech, applicable state law (often called Anti-SLAPP statutes), or issues of commercial confidentiality, in the manner in which we can proceed against the relevant short seller. You should be aware that in light of the relative freedom to operate that such persons enjoy - oftentimes blogging from outside the U.S. with little or no assets or identity requirements - should we be targeted for such an attack and the rumors not dismissed by market participants, our stock will likely suffer from a temporary, or possibly long term, decline in market price.
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Our Chairman of the Board holds ordinary shares and Series A Preferred Shares that carry 100 votes per share, which enable him to influence many significant corporate actions, and his interests may not align with those of other shareholders.
On January 31, 2025, we issued 14,834 ordinary shares to Mr. Lingtao Kong in exchange for all of his ownership interests in Ridgeline, which owns 100% of Allright. As a result, Mr. Kong became the beneficial owner of approximately 38% of our outstanding ordinary shares immediately following the closing of the Restructuring Transactions. He was also elected Chairman of our Board following the closing of the Restructuring Transactions.
On July 16, 2026, following approval by the Audit Committee and the Board, we issued 100,000 Series A Preferred Shares to Mr. Kong. Each Series A Preferred Share is entitled to 100 votes per share and votes together with holders of our ordinary shares as a single class on all matters submitted to a vote of shareholders, unless otherwise required by applicable law or the Company’s memorandum and articles of association. As a result, Mr. Kong currently controls approximately 73.5% of our total voting power. The Series A Preferred Shares are convertible into ordinary shares and are subject to transfer restrictions and certain automatic conversion provisions.
Each Series A Preferred Share is convertible into one ordinary share at the holder’s option and is also subject to automatic conversion upon the occurrence of certain events, including if Mr. Kong ceases to serve as an executive officer or director of the Company or upon the closing of a Board-approved change-of-control transaction. The Series A Preferred Shares are also subject to transfer restrictions and generally may not be transferred without the Board’s prior written consent, subject to limited exceptions for certain tax or estate planning purposes.
Mr. Kong’s ownership of all of the outstanding Series A Preferred Shares, together with his leadership position, gives him significant influence over matters requiring shareholder approval, including director elections, amendments to governing documents, and major corporate transactions. His control could delay or prevent a change in control, potentially depriving shareholders of the opportunity to receive a premium for their shares and adversely affecting the market value and liquidity of our ordinary shares. His influence may also deter potential investors and raise actual or perceived conflicts of interest between his personal interests and those of other shareholders. Mr. Kong’s significant influence could affect our corporate decision-making and his interests may not align with those of other shareholders.
We qualify as a “controlled company” under the Nasdaq Listing Rules. Although we do not currently intend to rely on the exemptions available to controlled companies (relying instead on certain exemptions available to us as a foreign private issuer, as described under Item 16G. Corporate Governance below), we may elect to rely on some or all of the exemptions available to controlled companies in the future, in which case our shareholders may not have the same governance protections afforded to shareholders of companies that are subject to all applicable Nasdaq corporate governance requirements.
Under the Nasdaq Listing Rules, a “controlled company” is a company of which more than 50% of the voting power is held by an individual, group, or another company. Following the issuance of 100,000 Series A Preferred Shares to Mr. Kong, our Chairman of Board, he holds more than 50% of the voting power of our outstanding ordinary shares and Series A Preferred Shares, voting together as a single class, and we therefore qualify as a controlled company and would be eligible to rely on exemptions from the requirements that our board of directors be composed of a majority of independent directors and that we have a compensation committee and a nominating and corporate governance committee composed entirely of independent directors. We do not currently intend to rely on the exemptions available to controlled companies, and rely instead on certain exemptions available to us as a foreign private issuer, as described under Item 16G. Corporate Governance below. If we elect to rely on some or all of these exemptions in the future, our board of directors and committees may not consist of a majority of independent directors, and you would not have the same protections afforded to shareholders of companies that are subject to all of the Nasdaq corporate governance requirements.
We have identified material weaknesses in our internal control over financial reporting, and our disclosure controls and procedures were ineffective as of March 31, 2026. If we fail to remediate these weaknesses, our ability to report our financial results accurately and timely could be adversely affected.
As disclosed in Item 15 below, management concluded that our disclosure controls and procedures were ineffective as of March 31, 2026 due to material weaknesses in internal control over financial reporting, including a lack of timely reconciliation from China GAAP to U.S. GAAP, insufficient accounting staff with adequate U.S. GAAP experience, and a lack of timely reconciliation of revenue and accounts receivable collectability. Although we have implemented and continue to implement remediation measures, those material weaknesses have not yet been fully remediated. If we are unable to remediate these weaknesses and maintain effective disclosure controls and internal control over financial reporting, we may fail to timely or accurately report our financial results, be unable to prevent or detect misstatements, incur additional audit and compliance costs, and experience a loss of investor confidence that could adversely affect the market price of our ordinary shares.
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ITEM 4. INFORMATION ON THE COMPANY.
A. HISTORY AND DEVELOPMENT OF THE COMPANY.
Overview
We are a wholesale distributor of pharmaceutical and other healthcare products in the People’s Republic of China (“PRC” or “China”). As further described below, the wholesale business is primarily conducted through subsidiaries of Renovation, including Zhejiang Jiuxin Medicine Co., Ltd. (“Jiuxin Medicine”) acquired by us in August 2011, and Allright (Hangzhou) Internet Technology Co. Ltd (“Allright”) acquired by us in February 2025 (see “Corporate History” below).
Under the name of China Jo-Jo Drugstores, Inc., the Company was originally founded as a retail pharmacy business and subsequently ventured into the wholesale business in 2011 through the acquisition of Jiuxin Medicine. Prior to the Restructuring Transactions, we operated our pharmacies (including the medical clinics) through VIEs including Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd. (“Jiuzhou Pharmacy”), Hangzhou Jiuzhou Clinic of Integrated Traditional and Western Medicine (General Partnership) (“Jiuzhou Clinic”), and Hangzhou Jiuzhou Medical & Public Health Service Co., Ltd. (“Jiuzhou Service”), which we controlled contractually through Jiuxin Investment. We also had a herb farming business cultivating and wholesaling herbs used for TCM prior to the Restructuring Transactions. This business was conducted through Hangzhou Qianhong Agriculture Development Co., Ltd. (“Qianhong Agriculture”), a wholly-owned subsidiary of Jiuxin Investment.
In the first quarter of 2025, the Company completed strategic restructuring of its overall business, aiming to transition from a high-cost retail segment to a wholesale-focused model by expansion of its wholesale business through acquisition of Allright and divestiture of its retail drugstores business. Pursuant to that certain Equity Exchange Agreement with Renovation, Mr. Lei Liu, Ms. Li Qi, and Oakview International Limited (“Oakview”), dated January 31, 2025, Renovation transferred all equity in Jiuxin Investment to Oakview, in exchange for irrevocable surrender for no consideration by Mr. Liu, Ms. Qi, Oakview and their affiliates in total 16,990 ordinary shares back to us. Concurrently on January 31, 2025, we entered into that certain Equity Exchange Agreement with Mr. Lingtao Kong and Ridgeline, pursuant to which the Company acquired from Mr. Kong all of the issued and outstanding ordinary shares of Ridgeline, the direct parent company of Allright, by issuing 14,834 ordinary shares to Mr. Kong. The Restructuring Transactions were approved by our shareholders at our annual general meeting of shareholders held on February 25, 2025, and were closed on February 28, 2025. Following the consummation of the Divestiture, Jiuxin Investment and all entities owned or controlled by Jiuxin Investment, including each of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, are owned or controlled indirectly by Mr. Liu and Ms. Qi. As the result of the Restructuring Transactions, the Company currently operates primarily in the wholesale business selling pharmaceutical products to trading companies and other businesses.
We currently operate in the offline wholesale distribution of pharmaceutical products primarily to local buyers, while also engaging in online sales through both our self-operated and third-party platforms to customers nationwide. Since August 2011, we have operated a wholesale business through Jiuxin Medicine, distributing third-party pharmaceutical products, including prescription and over-the-counter (“OTC”) drugs, nutritional supplements, traditional Chinese medicine (“TCM”), personal and family care products, and medical devices, as well as convenience products, including consumable, seasonal, and promotional items primarily to trading companies throughout China. Jiuxin Medicine is wholly owned by Renovation.
As discussed above, Allright was acquired by us in February 2025. Allright operates in the B2B sector, providing wholesale distribution and online sales through self-operated and third-party platforms, with a focus on pharmaceuticals, medical devices, health foods, cosmetics, and daily necessities.
As result of the Restructuring Transactions in February 2025, we no longer operate in the retail pharmacy business or the herb farming business. In October 2025, Shouantang Bio, our wholly owned subsidiary, and Kahamadi Bio, a joint venture specializing in the development of nutritional supplement brands in which we held a 49% equity interest, were dissolved after having remained inactive for an extended period.
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Corporate History
We were incorporated in Nevada on December 19, 2006, under the name “Kerrisdale Mining Corporation,” with a principal business objective to acquire and develop mineral properties. Although we had acquired certain mining claims, we were not operational.
On September 17, 2009, we acquired control of Renovation, pursuant to a share exchange agreement. On September 24, 2009, we amended our Articles of Incorporation to change our name from “Kerrisdale Mining Corporation” to “China Jo-Jo Drugstores, Inc.” (“CJJD Nevada”).
On May 14, 2021, CJJD Nevada and China Jo-Jo Drugstores Holdings, Inc., an exempted company incorporated under the laws of the Cayman Islands and a wholly owned subsidiary of CJJD Nevada (“CJJD Cayman”) entered into a definitive agreement and plan of merger (the “Merger Agreement”), pursuant to which, upon the terms and subject to the conditions set forth in the Merger Agreement, CJJD Nevada merged with and into CJJD Cayman (the “Redomicile Merger”), with CJJD Cayman surviving and changing its name to China Jo-Jo Drugstores, Inc. Following the Redomicile Merger, CJJD Cayman, together with its subsidiaries, owns and continues to conduct CJJD Nevada’s business in substantially the same manner as was conducted by CJJD Nevada and its subsidiaries prior to the Redomicile Merger. The Redomicile Merger was completed on July 30, 2021. As a result of the Reorganization, each issued and outstanding share of CJJD Nevada’s common stock was converted into the right to receive one CJJD Cayman ordinary share, which shares were issued by CJJD Cayman as part of the Redomicile Merger.
On January 31, 2025, we entered into (i) that certain Equity Exchange Agreement with Mr. Lingtao Kong and Ridgeline, pursuant to which the Company acquired from Mr. Kong, the sole shareholder of Ridgeline, all of the issued and outstanding ordinary shares of Ridgeline, by issuing 14,834 our ordinary shares to Mr. Kong, and (ii) that certain Equity Exchange Agreement with Renovation, Mr. Lei Liu, Ms. Li Qi, and Oakview, pursuant to which Renovation transferred all equity in Jiuxin Investment to Oakview, in exchange for irrevocable surrender for no consideration by Mr. Liu, Ms. Qi, Oakview and their affiliates in total 16,990 our ordinary shares back to us. The transactions were closed on February 28, 2025. Following the closing of these transactions, we changed our name from “China Jo-Jo Drugstores, Inc.” to “Ridgetech, Inc.”, effective as of February 28, 2025. We also changed our trading symbol on The Nasdaq Stock Market LLC from “CJJD” to “RDGT”, effective as of March 4, 2025. Effective as of the closing, Mr. Liu and Ms. Qi resigned from our board of directors and any other officer positions with us (including Mr. Liu’s role as our Chief Executive Officer), and Mr. Ming Zhao, our Chief Financial Officer, was appointed as our interim Chief Executive Officer to hold such office until a permanent Chief Executive Officer is duly appointed.
On May 28, 2025, following the receipt of an order granted by the Grand Court of the Cayman Islands confirming the capital reduction and the share subdivision, we effected a reduction of the par value of each of our issued, ordinary share from US$0.24 to US$0.001 by cancelling the paid-up capital to the extent of the difference between US$0.24 and such new par value, and immediately following the capital reduction, each of our authorized but unissued ordinary shares of par value of US$0.24 be sub-divided into 240 new ordinary shares of par value of US$0.001 each. On May 29, 2025, we filed a copy of the Fourth Amended and Restated Memorandum and Articles of Association reflecting the capital reduction and the share subdivision with the Cayman Islands General Registry. Pursuant to the Fourth Amended and Restated Memorandum and Articles, our authorized share capital now has become US$36,010,000 divided into (i) 36,000,000,000 ordinary shares of a par value of US$0.001 each and (ii) 10,000,000 preferred shares of a par value of US$0.001 each.
On March 27, 2026, pursuant to shareholder approval, our board approved a 1-for-150 reverse share split, which became effective on April 7, 2026. Pursuant to the reverse share split, every 150 issued and outstanding ordinary shares, par value US$0.001 per share, were automatically combined into one ordinary share, par value US$0.15 per share. As a result, our authorized share capital changed from US$36,010,000 divided into 36,000,000,000 ordinary shares with a par value of US$0.001 each and 10,000,000 preferred shares with a par value of US$0.001 each, to US$36,010,000 divided into 240,000,000 ordinary shares with a par value of US$0.15 each and 10,000,000 preferred shares with a par value of US$0.001 each. In connection with the effectiveness of the reverse share split, we adopted and filed our Fifth Amended and Restated Memorandum and Articles of Association with the Registrar of Companies of the Cayman Islands, thereby replacing our Fourth Amended and Restated Memorandum and Articles of Association in its entirety.
On June 29, 2026, following approval by the Audit Committee and the Board, we authorized and designated 2,000,000 Series A Preferred Shares. On July 16, 2026, we entered into a Subscription Agreement with Mr. Lingtao Kong and issued 100,000 Series A Preferred Shares to him. The Series A Preferred Shares carry enhanced voting rights and are subject to conversion and transfer restrictions, as described under “Item 10.B. Memorandum and Articles of Association — Preferred Shares” below.
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Corporate Information
Our principal executive office is located at 5th Floor, Building 6, No. 100, 18th Street, Baiyang Sub-district, Qiantang District, Hangzhou City, Zhejiang Province, and China. Our main telephone number is +86-571-88219579. Our website is www.ridgetch.com. We routinely post important information on our website. The information contained on our website is not a part of this annual report.
Our transfer agent is Equiniti Trust Company, LLC, whose address is 48 Wall Street, Floor 23 New York, NY 10005, and whose telephone number is (800) 468-9716.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.
B. BUSINESS OVERVIEW.
We are a holding company incorporated in the Cayman Islands that conducts substantially all of its business operations in China. Following the disposition of our wholly-owned subsidiary, Jiuxin Investment and its owned or controlled entities, we have divested our retail pharmacy business, and shifted our focus to the wholesale business of pharmaceutical products in China, both online and offline. We currently operate in the offline wholesale distribution of pharmaceutical products primarily to local buyers, while also engaging in online sales through both our self-operated and third-party platforms to customers nationwide.
Since acquiring Jiuxin Medicine in August 2011, we have been distributing third-party products primarily to drug distributors throughout China, including prescription drugs, OTC drugs, nutritional supplements, TCM products, sundry products, and medical devices.
During the fiscal year ended March 31, 2025, we expanded our operations in wholesale distribution business by the acquisition of Ridgeline and its subsidiary, Allright. Allright is a rapidly growing online and offline wholesale distributor of pharmaceutical and other healthcare products such as health foods, cosmetics and daily necessities in China. Allright actively sells on popular online distribution platforms nationwide. Through these online platforms, Allright sells various medical products to retail pharmacies, clinics and other vendors across the country. Allright also operates its own online distribution platform, which is designed to provide services such as medication guidance, sales management, and customer health solutions while utilizing digital tools to enhance the user experience. Its operations are supported by modern logistics systems, including automated and intelligent warehousing, and a focus on quality management and traceability to maintain product safety and transparency. Additionally, Allright has a professional sales team with strong service capabilities, and it has a well-established and high-quality sales network covering Zhejiang Province.
We believe that our presence on multiple platforms offers greater opportunities to distribute pharmaceutical products nationwide, and that the acquisition of Allright has strengthened our online distribution capabilities and broadened our geographic reach and customer base.
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Our Customers
Our wholesale customers includes retail pharmacies, clinics and third-party trading companies that purchase from us to resell to pharmacies throughout China. As of June 2026, we have more than 5000 varieties of products and serves over 180,000 customers including retail pharmacies, clinics and other vendors across the country.
On February 28, 2025, the Divestiture was completed. In accordance with ASC 205-20 (Discontinued Operations), the Company determined that Jiuxin Investment’s business qualified as a discontinued operation and has presented it as such in the audited consolidated financial statements. Financial results for discontinued operations are reported separately from continuing operations. After divestiture of Jiuxin Investment, the internal sales to Jiuzhou Pharmacy were not eliminated in the audited consolidated financial statements. For the fiscal year ended March 31, 2026, the Company had one customer that accounted for more than 10% of the Company’s total sales from continuing operations, which was 53.7%. For the fiscal year ended March 31, 2025, the Company had two customers that accounted for more than 10% of the Company’s total sales from continuing operations, which were 67.1% and 18.7%, respectively.
Following the consummation of the Restructuring Transactions, Jiuxin Medicine and Jiuzhou Pharmacy entered into a three-year supply agreement starting from February 28, 2025 (the “Supply Agreement”). Sales to Jiuzhou Pharmacy currently account for over 50% of the Company’s revenue and are expected to remain a significant source of revenue in the near term.
Under the terms of the Supply Agreement, Jiuxin Medicine agrees to supply pharmaceutical products to Jiuzhou Pharmacy at a price no higher than the lowest wholesale price in the area where Jiuzhou Pharmacy (or the applicable branch thereof) is located. The agreement may be terminated by mutual consent or by either party with one month’s prior written notice in the event of a material change to the other party’s business or operations. Additional termination rights apply in cases of material pricing disputes, provision of false information, force majeure, regulatory non-compliance, reputational harm, or product discontinuation. A copy of the Supply Agreement is filed as Exhibit 4.40 to this annual report.
See “Item 3. Key Information – D. Risk Factor – Our business relies on a limited number of key customers, which may change from year to year, and a loss of one or more of these key customers may adversely affect our operating results.;” and “Item 3. Key Information - D. Risk Factors - We may face challenges in recovering accounts receivable from Jiuzhou Pharmacy and associated clinics following the Restructuring Transactions and in maintaining the supply relationship between Jiuxin Medicine and Jiuzhou Pharmacy, which we expect will continue to generate a substantial portion of our revenue in the near term. The loss of this relationship could have a material adverse effect on our business, financial condition, and results of operations.”
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Marketing and Promotion
Our marketing and promotion efforts are focused on our online and offline wholesale segments, and our strategy includes exploring more third-party platforms, providing a wide variety of commodity with competitive pricing, adapting to the needs of small customers, establishing and promoting our own platform, and engaging more experience salespersons.
Third-party platforms have become a fast-growing channel for online medicine wholesale. Our sales team has explored a variety of these platforms such as YSB, Inc., Medicine Help, and One Medical City. We design customized sale strategies for each platform.
Our customers on these platforms are usually small local business such as clinics and small drugstores, Although they place smaller orders, their demand for pharmaceutical and related products is diverse. By carrying a broad range of products with reasonable pricing, we are able to attract more small customers who have limited supplying resources.
Unlike certain large customers, small customers are not always experienced in identifying the appropriate usage of various medicines and often turn to us for assistance. We have organized a team to actively monitor and respond to the questions from these customers.
Furthermore, we have established our own platform to promote sales. Although sales via our own platform are currently limited, we believe we are making steady progress toward gaining greater control over supplier and customer resources by operating our own platform.
In addition, local pharmaceutical vendors remain an important source of revenue. Experienced salespersons are often able to locate these vendors and meet their demands on specific medical products. We have invested significant resource in retaining such talent in this area.
Logistics
Astro Boy Logistic provides us warehouse facility located approximately fifty miles from our headquarters, which served as our central distribution center. Astro Boy Logistics’ staff and vehicles make regular deliveries to our wholesale customers.
We employ third-party logistics companies for deliveries to wholesale customers outside Hangzhou. We believe that reliable logistics providers are readily available and can be replaced without any material interruptions to our business.
Suppliers
We source wholesale products from approximately 438 suppliers. For the fiscal year ended March 31, 2026, the Company had one supplier that accounted for more than 10% of the Company’s total purchases, which was 11.5%. These suppliers are neither related to nor affiliated with us. This supplier was neither related to nor affiliated with us. For the fiscal year ended March 31, 2025, the Company had four suppliers that accounted for more than 10% of the Company’s total purchases, which were 14.9%, 14.3%, 10.8% and 10.1%, respectively. None of these suppliers was related to or affiliated with us.
We believe that competitive sources are readily available for substantially all of the products we require for our retail and wholesale businesses. As such, we believe that we can change suppliers without any material interruption to our business. To date, we have not experienced any significant difficulty in sourcing our suppliers.
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Quality Control
We strongly emphasize quality control, which starts with procurement. In addition to their market acceptance and costs, we select products based on Good Manufacturing Practice and Good Supply Practice (“GSP”) compliance status of their suppliers. We also assess product quality based on the manufacturer’s facilities and capabilities, including technology, packaging and logistics. We conduct random quality inspections of each batch of products we procure, and replace any supplier who fails to pass such inspections.
We also enforce strict quality control measures at our distribution center. All products are screened upon their arrival, and those with evidence of defects or damages are immediately rejected. Products that pass the screening process are recorded and stored strictly according to each manufacturer’s temperature and other requirements. Products are verified against the appropriate delivery orders prior to leaving the facility. We use vehicles with cold-temperature storage to make deliveries as necessary.
Competition
The wholesale pharmaceutical distribution industry in China is competitive and highly fragmented. We compete with regional distributors, such as Zhengchen Pharmaceutical Co., Ltd. and Hangzhou Xiaoran Pharmaceutical Co., Ltd., as well as national operators such as Fengwoda Pharmaceutical Co., Ltd. and Jiuzhoutong Pharmaceutical Co., Ltd. These competitors have substantially greater logistics capacities and more financial resources, as well as more industry-relevant experience, than us.
Employees
As of March 31, 2026, we had 64 employees combined in our wholesale operation. The number of employees for each area of operations, and such employees as a percentage of our total workforce, are as follows:
| As of March 31, 2026 | ||||||||
| Employees | Percentage | |||||||
| Management | 6 | 9.4 | ||||||
| Technicians | 2 | 3.1 | % | |||||
| Offline wholesale | 37 | 57.8 | % | |||||
| Online platform | 19 | 29.7 | % | |||||
| Total | 64 | 100.00 | % | |||||
We closely monitor the quality of the service provided by our employees at all levels. The training is designed to encompass a number of areas, such as knowledge of our products and effective customer service. We believe these programs have played an important role in strengthening the capabilities of our employees.
Relevant PRC Regulations
SAFE Registration
In October 2005, SAFE issued Circular 75. Circular 75 regulates foreign exchange matters in relation to the use of a special purpose vehicle by PRC residents to seek offshore equity financing and conduct “round trip investment” in China. The Key Personnel, who are PRC residents, are in compliance with Circular 75 and its implementing circulars.
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Dividend Distribution
Under current applicable laws and regulations, each of our consolidated PRC entities, including WFOEs and domestic companies, may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, each of our consolidated PRC entities is required to deposit at least ten percent (10%) of its after-tax profit based on PRC accounting standards each year into its statutory surplus reserve fund until the accumulative amount of such reserve reaches fifty percent (50%) of its registered capital. These reserves are not distributable as cash dividends. As of March 31, 2026, the accumulated balance of our statutory reserve funds reserves amounted to nil, and the accumulated losses of our consolidated PRC entities amounted to $17.69 million.
Taxation
The current PRC Enterprise Income Tax Law (the “EIT Law”), and the implementation regulations for the EIT Law issued by China’s State Council, became effective as of January 1, 2008. Under the EIT Law, enterprises are classified as either resident or non-resident enterprises. An enterprise established outside of China with its “de facto management bodies” located within China is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules of the EIT Law defines a “de facto management body” as a managing body that in practice exercises “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise; however, it remains unclear whether the PRC tax authorities would deem our managing body as being located within China. Due to the relatively short history of the EIT Law and lack of applicable legal precedents, the PRC tax authorities determine the PRC tax resident treatment of entities organized under the laws of foreign jurisdictions on a case-by-case basis.
If the PRC tax authorities determine that we are a resident enterprise for PRC enterprise income tax purposes, a number of PRC tax consequences could follow. First, we may be subject to enterprise income tax at a rate of twenty five percent (25%) on our respective worldwide taxable income, as well as PRC enterprise income tax reporting obligations. Second, although the EIT Law provides that “dividends, bonuses and other equity investment proceeds between qualified resident enterprises” is exempted income, and the implementing rules of the EIT Law refer to “dividends, bonuses and other equity investment proceeds between qualified resident enterprises” as the investment proceeds obtained by a resident enterprise from its direct investment in another resident enterprise, it is still unclear whether any dividends we may receive from our current subsidiaries would be classified as “dividends between qualified resident enterprises” and therefore qualify for tax exemption.
If we are treated as a non-resident enterprise under the EIT Law, any dividends that we receive from Allright, and historically received from Jiuxin Investment (assuming such dividends are deemed to be sourced from within the PRC) (i) may be subject to a five percent (5%) PRC withholding tax, provided that we own more than twenty five percent (25%) of the registered capital of Allright or Jiuxin Investment incessantly within twelve (12) months immediately prior to obtaining such dividends from Allright or Jiuxin Investment, as applicable, and if the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the “Arrangement”) is applicable, or (ii) if the Arrangement does not apply (i.e. the PRC tax authorities may deem us to be a conduit not entitled to treaty benefits), may be subject to a ten percent (10%) PRC withholding tax. Similarly, if we are treated as a non-resident enterprise, and Renovation is treated as a resident enterprise, then any dividends that we receive from Renovation (assuming such dividends were considered sourced within the PRC) may be subject to a ten percent (10%) PRC withholding tax. Any such taxes on dividends could materially reduce the amount of dividends, if any, that we could pay to our shareholders.
Finally, the new “resident enterprise” classification could result in a situation in which a ten percent (10%) PRC tax is imposed on dividends we pay to our investors that are non-resident enterprises so long as such non-resident enterprise investors do not have an establishment or place of business in China or, despite the existence of such establishment of place of business in China, the relevant income is not effectively connected with such establishment or place of business in China, to the extent that such dividends have their sources within the PRC. Similarly, any gain realized on the transfer of our shares by such investors is also subject to a ten percent (10%) PRC income tax if such gain is regarded as income derived from sources within China. In such event, we may be required to withhold a ten percent (10%) PRC tax on any dividends paid to our investors that are non-resident enterprises. Our investors that are non-resident enterprises also may be responsible for paying PRC tax at a rate of ten percent (10%) on any gain realized from the sale or transfer of our common shares in certain circumstances. We would not, however, have an obligation to withhold PRC tax with respect to such gain.
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Moreover, the State Administration of Taxation issued the Notice on Strengthening the Administration of Enterprise Income Tax on Share Transfer Income of Non-Resident Enterprises No. 698 (“Circular 698”) on December 10, 2009, which reinforces taxation on transfer of non-listed shares by non-resident enterprises through overseas holding vehicles. Circular 698 applies retroactively and was deemed to be effective as of January 2008. Pursuant to Circular 698, where (i) a foreign investor who indirectly holds equity interest in a PRC resident enterprise through an offshore holding company indirectly transfers equity interests in a PRC resident enterprise by selling the shares of the offshore holding company, and (ii) the offshore holding company is located in a jurisdiction where the effective tax rate is lower than twelve and a half percent (12.5%) or where the offshore income of its residents is not taxable, the foreign investor is required to provide the tax authority in charge of that PRC resident enterprise with certain relevant information within thirty (30) days of the transfer. The tax authorities in charge will evaluate the offshore transaction for tax purposes. In the event that the tax authorities determine that such transfer is abusing forms of business organization and there is no reasonable commercial purpose other than avoidance of PRC enterprise income tax, the tax authorities will have the power to conduct a substance-over-form re-assessment of the nature of the equity transfer. A reasonable commercial purpose may be established when the overall offshore structure is set up to comply with the requirements of supervising authorities of international capital markets. If the State Administration of Taxation’s challenge of a transfer is successful, they will deny the existence of the offshore holding company that is used for tax planning purposes. Since Circular 698 has a brief history, there is uncertainty as to its application.
General PRC Government Approval
As a wholesale distributor of pharmaceutical products, we are subject to regulation and oversight by different levels of the food and drug administration in China, in particular, the SFDA. The Drug Administration Law of the PRC, as amended, provides the basic legal framework for the administration of the production and sale of pharmaceutical products in China and governs the manufacturing, distributing, packaging, pricing, and advertising of pharmaceutical products in China. The corresponding implementation regulations set out detailed rules with respect to the administration of pharmaceuticals in China. We are also subject to other PRC laws and regulations that are applicable to business operators and foreign-invested companies.
Distribution of Pharmaceutical Products
A distributor of pharmaceutical products must obtain a distribution permit from the relevant provincial or designated municipal- or county-level SFDA. The grant of such permit is subject to an inspection of the distributor’s facilities, warehouses, hygienic environment, quality control systems, personnel, and equipment. The distribution permit is valid for five (5) years, and the holder must apply for renewal of the permit within six (6) months prior to its expiration. In addition, a pharmaceutical product distributor needs to obtain a business license from the relevant administration for industry and commerce prior to commencing its business. All of our consolidated entities that engage in the retail pharmaceutical business have obtained necessary pharmaceutical distribution permits, and we do not expect to face any difficulties in renewing these permits and/or certifications.
In addition, under the Supervision and Administration Rules on Pharmaceutical Product Distribution, promulgated by the SFDA on January 31, 2007, and effective May 1, 2007, a pharmaceutical product distributor is responsible for its procurement and sales activities and is liable for the actions of its employees or agents in connection with their conduct of distribution on behalf of the distributor.
Restrictions on Foreign Ownership of Wholesale Pharmaceutical Business in China
PRC regulations on foreign investment currently permit foreign companies to establish or invest in WFOEs or joint ventures that engage in wholesale or retail sales of pharmaceuticals in China. For retail sales, these regulations restrict the number and size of pharmacies that a foreign investor may establish. If a foreign investor owns more than thirty (30) stores that sell a variety of branded pharmaceutical products sourced from different suppliers, the foreign investor’s ownership interests in the stores are limited to forty nine percent (49%). In lieu of equity ownership, prior to the Restructuring Transactions, our WFOE, Jiuxin Investment, had entered into contractual arrangements with Jiuzhou Pharmacy and the Key Personnel.
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Later, in the revised Catalogue for the Guidance of Foreign Investment Industries (2011 Revision) (now abolished), the term “pharmaceuticals” in the aforementioned clause was removed, and pharmaceutical wholesale and retail were no longer classified as restricted industries for foreign investment. According to the current Special Administrative Measures for Foreign Investment Access (Negative List) (2021 Edition), the operating businesses of our domestic entities do not fall within the scope of the Foreign Investment Negative List. However, prior to the Restructuring Transactions, we retained the VIE structure intact without dismantling it.
On February 28, 2025, the Company divested Jiuxin Investment and its owned and controlled entities. Following the Restructuring Transactions, the Company no longer has any VIE within its corporate structure.
Good Supply Practice Standards
GSP standards regulate wholesale and retail pharmaceutical product distributors to ensure the quality of distribution of pharmaceutical products in China. All wholesale and retail pharmaceutical product distributors are required to apply for GSP certification within thirty (30) days after obtaining drug distribution permits. The current applicable GSP standards require pharmaceutical product distributors to implement strict controls on the distribution of medicine products, including standards regarding staff qualifications, distribution premises, warehouses, inspection equipment and facilities, management, and quality control. Specifically, the warehouse must be able to store the pharmaceutical products at various required temperatures and humidity, and handle transport, warehouse entries, delivery, and billing by computerized logistics management systems. The GSP certificate is usually valid for five (5) years. Currently, Jiuxin Medicine and Allright are both GSP certified.
Prescription Administration
Under the Rules on Administration of Prescriptions promulgated by the SFDA, effective May 1, 2007, doctors are required to include the chemical ingredients of the medicine they prescribe in their prescription and are not allowed to include brand names in their prescription. This regulation is designed to provide consumers with choices among different pharmaceutical products that contain the same chemical ingredients.
Advertisement of Pharmaceutical Products
Under the Advertising Law of PRC, the contents of an advertisement must be true, lawful, without falsehood, and must neither deceive nor mislead consumers. Accordingly, advertisement must be examined by the competent authority prior to its publication or broadcast through any form of media. In addition, advertisement of pharmaceutical products may only be based on a drug’s approved indication of use statement, and may not contain any assurance of a product’s efficiency, treatment efficiency, curative rate, or any other information prohibited by law. Advertisement for certain drugs should include an admonishment to seek a doctor’s advice before purchasing and application. Advertising is prohibited for certain drugs such as anesthetics and psychotropic drugs.
To further prevent misleading advertising of pharmaceutical products, the SAIC and the SFDA jointly promulgated the Standards for Examination and Publication of Advertisements of Pharmaceutical Products and Measures for Examination of Advertisement of Pharmaceutical Products in March 2007. Under these regulations, an approval must be obtained from the provincial level of food and drug administration before a pharmaceutical product may be advertised. In addition, once approved, an advertisement’s content may not be altered without further approval. Such approval, once obtained, is valid for one (1) year.
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Product Liability and Consumers Protection
Product liability claims may arise if the products sold have any harmful effect on consumers. The injured party may make a claim for damages or compensation. The General Principles of the Civil Law of the PRC, which became effective in January 1987, state that manufacturers and sellers of defective products causing property damage or injury shall incur civil liabilities for such damage or injuries.
The Product Quality Law of the PRC was enacted in 1993 and amended in 2000 to strengthen the quality control of products and protect consumers’ rights and interests. Under this law, manufacturers and distributors who produce or sell defective products may be subject to confiscation of earnings from such sales, revocation of business licenses, imposition of fines, and, in severe circumstances, may be subject to criminal liability.
The Administrative Measures for Drug Recalls was issued by the SFDA in December 2007, and covers two (2) types of drug recalls, namely voluntary recalls and compulsory recalls. Under such regulation, wholesalers are obliged to assist drug manufacturers with any drug recall. In addition, a wholesaler must immediately cease to sell any drug that the wholesaler learns has any safety issues, and must immediately notify the manufacturer or its supplier as well as report the matter to the SFDA.
The Law of the PRC on the Protection of the Rights and Interests of Consumers was promulgated on October 31, 1993 and became effective on January 1, 1994 to protect consumers’ rights when they purchase or use goods or services. All business operators must comply with this law when they manufacture or sell goods and/or provide services to customers. In extreme situations, pharmaceutical product manufacturers and distributors may be subject to criminal liability if their goods or services lead to the death or injuries of customers or other third parties.
The Tort Law of the PRC was promulgated on December 26, 2009 and went into effect on July 1, 2010. The Tort Law provides that manufacturers and distributors who produce or sell defective products shall be responsible for the damage caused by the defective products.
Sales of Nutritional Supplements and other Food Products
A distributor of nutritional supplements and other food products must obtain a food circulation permit from its local Administration of Industry and Commerce. The grant of such permit is subject to an inspection of the distributor’s facilities, warehouses, hygienic environment, quality control systems, personnel, and equipment. The food circulation permit is valid for three (3) years, and the holder must apply for renewal of the certificate within thirty (30) days prior to its expiration. Currently, Jiuxin Medicine holds a valid Food Circulation Permit.
Interim Regulations on Administration of Sino-Foreign Joint Venture and Cooperative Medical Institutions
As per China’s commitments to the World Trade Organization, “Foreign service suppliers are permitted to establish joint venture hospitals or clinics with local Chinese partners with quantitative limitations in line with China’s needs. Foreign majority ownership is permitted.” In accordance with the Interim Regulations on Administration of Sino-Foreign Joint Venture and Cooperative Medical Institutions issued jointly by the Ministry of Health (“MOH”) and the Ministry of Commerce (“MOFCOM”) in 2000, the Chinese party of Sino-foreign joint ventures and cooperative medical institutions shall hold no less than thirty percent (30%) of shares and legal rights or interest, which also mean foreign investors are allowed to hold a maximum stake of seventy percent (70%). Such regulations also specify that the establishment of Sino-foreign joint venture and cooperative medical institutions should be approved respectively by MOH and MOFCOM. In other words, foreigners are allowed to run hospitals or clinics in the form of equity or co-operative joint ventures with an equity interest of up to seventy percent (70%) lasting up to twenty (20) years.
Internet Pharmaceutical Sales
China’s central government regulates Internet access, the distribution of online information and the conduct of online commerce through strict business licensing requirements and other government regulations. Companies which sell pharmaceutical products to consumers through the Internet are required to obtain: (1) a drug distribution permit; (2) an Internet pharmaceutical information provider qualification certificate, renewable every five (5) years; (3) an Internet pharmaceutical transaction service qualification certificate, renewable every five (5) years; (4) a value-added telecommunication operation permit; and (5) registration with the Administration of Information Industry. Internet pharmacies are not allowed to distribute prescription drugs. The websites that sell pharmaceutical products must ensure transaction security and enable the consumers to consult with licensed pharmacists. Also, an Internet-based business in China is required to obtain and maintain certain assets relevant to its business, such as delivery and storage facilities. Allright has obtained required certificates and registrations.
Please also refer to the above Risk Factors sections “Risks Related to Our Corporate Structure” and “Risks Related to Doing Business in China”.
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Environmental Matters
Neither our wholesale operation, nor historically our retail pharmacy business, involve any activities subject to specific PRC environmental regulations. Our medical clinics (a part of our historical retail pharmacy business) were in compliance with applicable regulations regarding the administration of medical wastes, including collections, temperate storage, and packaging and labeling of medical wastes. Pursuant to such regulations, we contracted with DadiWeikang Medical Wastes Disposal Center to dispose of all medical wastes generated by our clinics. As result of the Structuring Transactions in February 2025, we no longer operate in the retail pharmacy business or any clinics.
C. ORGANIZATIONAL STRUCTURE
The following diagrams illustrate our corporate structure before the Restructuring Transactions and after the Restructuring Transactions, respectively:
Before the Restructuring Transactions:
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After the Restructuring Transactions:
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In October 2025, both Shouantang Bio and Kahamadi Bio were dissolved. The diagram below illustrates our corporate structure as of the date of this report:
The table below summarizes the status of the registered capital of our PRC subsidiaries as of the date of this report:
| Entity Name | Entity Type |
Registered Capital |
Registered Capital Paid |
Due Date for Unpaid Registered Capital | ||||
| Jiutong Medical | Subsidiary | USD 2,600,000 | USD 2,600,000 | N/A | ||||
| Jiuxin Medicine | Subsidiary | RMB 90,000,000 | RMB 78,917,780 | December 20, 2029 | ||||
| Shouantang Technology | Subsidiary | USD 11,000,000 | USD 11,000,000 | N/A | ||||
| Jiuyi Technology | Subsidiary | USD 5,000,000 | USD 3,350,780 | April 16, 2031 | ||||
| Allright | Subsidiary | RMB 10,000,000 | RMB 800,000 | December 31, 2031 |
D. PROPERTY, PLANTS AND EQUIPMENT
We are headquartered in Hangzhou, China. We own one property and lease our principal office.
| Description | Location | Size (square meters) |
Lease expiration date | |||
| Principal Executive office | 5th Floor, Building 6, No. 100, 18th Street, Baiyang Sub-district, Qiantang District, Hangzhou City, Zhejiang Province, China | 277.6 | August 31, 2026 | |||
| Land (1) | Lin’An District, Hangzhou, Zhejiang Province, China | 18,616 | February 1, 2040 |
| (1) | See Note 11, “Intangible Assets” to the Financial Statements. |
ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
A. OPERATING RESULTS.
The following discussion and analysis of our results of operations and financial condition for the fiscal years ended March 31, 2026, 2025 and 2024 should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the “Risk Factors,” “Cautionary Notice Regarding Forward-Looking Statements” and “Description of Business” sections and elsewhere in this report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” “predict” and similar expressions to identify forward-looking statements. Although we believe the expectations expressed in these forward-looking statements are based on reasonable assumptions within the bound of our knowledge of our business, our actual results could differ materially from those discussed in these statements. Factors that could contribute to such differences include, but are not limited to, those discussed in the “Risk Factors” section of this report. We undertake no obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the future other than in compliance with the SEC rules and regulations.
Our financial statements are prepared in U.S. Dollars and in accordance with accounting principles generally accepted in the United States. See “Exchange Rates” at the end of this section for information concerning the exchange rates at which Renminbi (“RMB”) were translated into U.S. Dollars (“USD” or “$”) at various pertinent dates and for pertinent periods.
Overview
We are a wholesale distributor of pharmaceutical and other healthcare products in the People’s Republic of China (“PRC” or “China”). We currently operate in the offline wholesale distribution of pharmaceutical products primarily to local buyers, while also engaging in online sales through both our self-operated and third-party platforms to customers nationwide.
Prior to February 28, 2025, we were primarily a retail pharmacy operator. We operated our pharmacies (including the medical clinics) through Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, which we controlled contractually through our indirect subsidiary Jiuxin Investment.
On January 31, 2025, the Company, Renovation, Mr. Lei Liu, Ms. Li Qi, and Oakview entered into that certain Equity Exchange Agreement, pursuant to which Renovation transferred all equity in Jiuxin Investment to Oakview, in exchange for irrevocable surrender by Mr. Liu, Ms. Qi, Oakview and their affiliates in total 16,990 our ordinary shares back to us. Concurrently on January 31, 2025, we entered into that certain Equity Exchange Agreement, with Mr. Lingtao Kong and Ridgeline, pursuant to which the Company acquired from Mr. Kong all of the issued and outstanding ordinary shares of Ridgeline, the direct parent company of Allright, by issuing 14,834 our ordinary shares to Mr. Kong. The Restructuring Transactions were approved by our shareholders at our annual general meeting of shareholders held on February 25, 2025, and were closed on February 28, 2025. Following the consummation of the Divestiture, Jiuxin Investment and all entities owned or controlled by Jiuxin Investment, including each of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, are owned or controlled indirectly by Mr. Liu and Ms. Qi. As the result of the strategic restructuring, the Company operates primarily in the wholesale business selling pharmaceutical products to trading companies and other businesses.
Prior to the acquisition of Allright in the first quarter of 2025, we operated a wholesale business primarily through Jiuxin Medicine distributing third-party pharmaceutical products (similar to those historically carried by our pharmacies) primarily to trading companies and other local drugstores in China. As discussed above, on February 28, 2025, we acquired Ridgeline and its wholly owned subsidiary Allright. Allright is a rapidly growing online and offline wholesale distributor of pharmaceutical and other healthcare products such as health foods, cosmetics and daily necessities in China. Allright actively sells on popular online distribution platforms nationwide. Through third-party platforms and Allright’s own platform, we sell various medical products to retail pharmacies, clinics and other vendors across the country. We believe that our presence on multiple platforms offers greater opportunities to distribute pharmaceutical products nationwide.
On February 28, 2025, the Divestiture was consummated. In accordance with ASC Topic 205, Presentation of Financial Statements (“ASC 205”), Subtopic 20 - Discontinued Operations, the Company determined that Jiuxin Investment’s business line met the conditions for a discontinued operation and is recorded as such in the audited consolidated financial statements. The Company reports financial results for discontinued operations separately from continuing operations in order to distinguish the financial impact of the disposal transaction from ongoing operations.
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Consolidated Summary Financial Results
The following table summarizes our results of operations for the years ended March 31, 2026, 2025 and 2024:
| Years ended March 31, | ||||||||||||||||||||||||
| 2026 | 2025 | 2024 | ||||||||||||||||||||||
| Amount | Percentage of total revenue | Amount | Percentage of total revenue | Amount | Percentage of total revenue | |||||||||||||||||||
| Revenue | $ | 132,163,734 | 100.0 | % | $ | 119,971,638 | 100.0 | % | $ | 123,994,053 | 100.0 | % | ||||||||||||
| Cost of goods sold | $ | 127,409,588 | 96.4 | % | 116,132,823 | 96.8 | % | 119,115,636 | 96.1 | % | ||||||||||||||
| Gross profit | $ | 4,754,146 | 3.6 | % | $ | 3,838,815 | 3.2 | % | $ | 4,878,417 | 3.9 | % | ||||||||||||
| Selling expenses | $ | 3,040,136 | 2.3 | % | $ | 1,534,200 | 1.3 | % | $ | 934,223 | 0.8 | % | ||||||||||||
| General and administrative expenses | $ | 3,580,025 | 2.7 | % | $ | 3,339,954 | 2.8 | % | $ | 3,348,112 | 2.7 | % | ||||||||||||
| Income (loss) from operations | $ | (1,866,015 | ) | (1.4 | )% | $ | (1,035,339 | ) | (0.9 | )% | $ | 596,082 | 0.5 | % | ||||||||||
| Other Income, net | $ | 516,495 | 0.4 | % | $ | 84,679 | 0.1 | % | $ | (1,423,151 | ) | (1.1 | )% | |||||||||||
| Income tax expense (benefit) | $ | (99,098 | ) | (0.1 | )% | $ | 503,524 | 0.4 | % | $ | (41,363 | ) | (0.0 | )% | ||||||||||
| Net loss from continuing operations | $ | (1,250,422 | ) | (0.9 | )% | $ | (1,454,184 | ) | (1.2 | )% | $ | (785,706 | ) | (0.6 | )% | |||||||||
| Net loss from discontinued operations, net of taxes | $ | - | - | % | $ | (4,103,718 | ) | (3.4 | )% | $ | (3,448,536 | ) | (2.8 | )% | ||||||||||
| GAIN OF DIVESTITURE JIUXIN INVESTMENT | - | - | % | 15,757,753 | 13.1 | % | - | - | % | |||||||||||||||
| Net income (loss) | $ | (1,250,422 | ) | (0.9 | )% | $ | 10,199,851 | 8.5 | % | $ | (4,234,242 | ) | (3.4 | )% | ||||||||||
Results of Operations
Comparison of years ended March 31, 2026 and 2025
Revenue
The following table breaks down the revenue for our two business segments for the years ended March 31, 2026 and 2025:
| For the years ended March 31, | ||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||
| Amount | % of total revenue | Amount | % of total revenue | Variance by amount | % of change | |||||||||||||||||||
| Revenue from offline wholesale | $ | 117,872,139 | 89.2 | % | $ | 118,864,443 | 99.1 | % | $ | (992,304 | ) | (0.8 | )% | |||||||||||
| Revenue from online platform | 14,291,595 | 10.8 | % | 1,107,195 | 0.9 | % | 13,184,400 | 1,190.8 | % | |||||||||||||||
| Total revenue | $ | 132,163,734 | 100.0 | % | $ | 119,971,638 | 100.0 | % | $ | 12,192,096 | 10.2 | % | ||||||||||||
Offline wholesale revenue was $117,872,139 for the year ended March 31, 2026, representing a decrease of $992,304, or 0.8%, as compared to that of $118,864,443 for the year ended March 31, 2025. We previously provided credit terms to certain offline customers. However, we experienced delayed repayments from several customers. Despite eventual recovery of the outstanding amounts, we decided to discontinue some of our credit sales effective March 2025 as a risk mitigation measure. As a result, the wholesale revenue declined.
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Online platform revenue increased by $13,184,400 from the year ended March 31, 2025 to the year ended March 31, 2026. This increase is primarily attributable to the inclusion of a full twelve months of Allright’s online platform revenue in the year ended March 31, 2026, compared to only one month (March 2025) of such revenue in the prior year period. On February 28, 2025, we acquired Ridgeline and its subsidiary, Allright which is a rapidly growing online and offline wholesale distributor of pharmaceutical and other healthcare products such as health foods, cosmetics and daily necessities in China. Allright actively trades on popular online distribution platforms nationwide. Through these online platforms, we sell various medical products to retail pharmacies, clinics and other vendors across the country. Allright also has its own online distribution platform.
Gross Profit
The average gross margins for each of our two business segments for the years ended March 31, 2026 and 2025 are as follows:
| Year ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Average gross margin for offline wholesale | 3.4 | % | 3.2 | % | ||||
| Average gross margin for online platform | 5.6 | % | 7.4 | % | ||||
Gross profit was $4,754,146 for the year ended March 31, 2026, representing an increase by $915,331, or 23.8%, as compared to that of $3,838,815 for the year ended March 31, 2025. For the year ended March 31, 2026 and 2025, gross margins were approximately 3.6% and 3.2%, respectively.
Gross margin of offline wholesale sales slightly increased for the year ended March 31, 2026, as compared to the year ended March 31, 2025, primarily due to the sales of high-margin products during this period. Although as a retailer and distributor we have attempted to market the products to major local hospitals and other pharmacies, we have not been able to make significant progress. As a result, we do not have significant bargain power on the prices. So our wholesale profit margin varies from time to time. Until we are able to obtain status as a provincial or national exclusive sale agent for certain popular drugs or have sales access to large local hospitals, we may have to maintain low profit margins in order to drive sales on our wholesale business.
Gross margin of online platform sales was approximately 5.6% for the year ended March 31, 2026, as compared to 7.4% for the year ended March 31, 2025 Due to online price transparency, customers can easily compare prices between different online pharmaceutical vendors. In order to keep competitive in the market, we chose to lower our prices. On the other side, we continuously searched for popular products with high profit margin and negotiated with the suppliers for better terms.
Selling and Marketing Expenses
Sales and marketing expenses for the year ended March 31, 2026 increased by $1,505,936 or 98.2%, as compared to the year ended March 31, 2025, primarily due to an increase in the sales and marketing expenses. The sales and marketing expenses increased by approximately $1.32 million, which was primarily attributable to the increase in drug distribution service fee resulting from the acquisition of Allright, which was recognized over 12 months this year, compared to just one month as the acquisition took place at the end of the Fiscal year 2025. Overall, such expenses as a percentage of our revenue were 2.3% and 1.3%, respectively, for the years ended March 31, 2026 and 2025.
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General and Administrative Expenses
General and administrative expenses for the year ended March 31, 2026 increased by $240,071 or 7.2%, as compared to the year ended March 31, 2025, primarily due to the increase in employee salary of approximately $0.31 million, offset by the decrease in exchange loss. Such expenses as a percentage of revenue decreased for the year ended March 31, 2026 to 2.7% from 2.8% for the same period a year ago. This increase in employee salary was primarily attributable to the acquisition of Ridgeline and its subsidiary Allright on February 28, 2025, which led to a rise in employee headcount and consequently an increase in employee salaries.
Loss from Operations
As a result of the above, loss from operations was $1,866,015 and $1,035,339 for the years ended March 31, 2026 and 2025, respectively. Our operating margin for the year ended March 31, 2026 and 2025 was (1.4) % and (0.9)%, respectively.
Other Income, net
Other expense, net was $516,495 for the year ended March 31, 2026, compared to $84,679 for the year ended March 31, 2025, representing an increase of $431,816. The increase was primarily attributable to an increase in interest income of approximately $0.36 million for the year ended March 31, 2026.
Income Taxes
Our income tax expense for the year ended March 31, 2026 decreased by $602,622 as compared to the year ended March 31, 2025. The decrease was primarily attributable to a reduction in the valuation allowance against deferred tax assets recognized for the year ended March 31, 2026, compared to a deferred tax expense recorded for the year ended March 31, 2025.
Net Loss from continuing operations
As a result of the foregoing, net loss from continuing operations was $1,250,422 and $1,454,184 in the years ended March 31, 2026 and 2025.
Comparison of years ended March 31, 2025 and 2024
Revenue
On February 28, 2025, the Divestiture Transaction was consummated. In accordance with ASC Topic 205, Presentation of Financial Statements (“ASC 205”), Subtopic 20 - Discontinued Operations, the Company determined that Jiuxin Investment’s business line met the conditions for a discontinued operation and is recorded as such in the Consolidated Financial Statements. The Company reports financial results for discontinued operations separately from continuing operations in order to distinguish the financial impact of the disposal transaction from ongoing operations. In connection with the divestiture of Jiuxin Investment and its controlled entities during the fiscal year ended March 31, 2025, we have revised the presentation of our historical consolidated financial statements to exclude the operations of the divested entities for all periods presented. This re-presentation is intended to provide a consistent basis of comparison that reflects our continuing operations. As a result, certain financial information for prior periods included in this annual report differs from the corresponding financial information presented in our annual report on Form 20-F for the fiscal year ended March 31, 2024.
The following table breaks down the revenue for our two business segments for the years ended March 31, 2025 and 2024:
| For the years ended March 31, | ||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||
| Amount | % of total revenue | Amount | % of total revenue | Variance by amount | % of change | |||||||||||||||||||
| Revenue from offline wholesale | $ | 118,864,443 | 99.1 | % | $ | 123,994,053 | 100.0 | % | $ | (5,129,610 | ) | (4.3 | )% | |||||||||||
| Revenue from online platform | 1,107,195 | 0.9 | % | - | - | % | 1,107,195 | 100.0 | % | |||||||||||||||
| Total revenue | $ | 119,971,638 | 100.0 | % | $ | 123,994,053 | 100.0 | % | $ | (4,022,415 | ) | (3.2 | )% | |||||||||||
Offline wholesale revenue was $118,864,443 for the year ended March 31, 2025, representing a decrease of $5,129,610, or 4.3%, as compared to that of $123,994,053 for the year ended March 31, 2024. As a local wholesale distributor in pharmaceutical products, our sales are limited to local and neighborhood regions. As the market became competitive, to keep reasonable profitability, we abandoned certain wholesales with low gross profit margin in the year ended March 31, 2025. As a result, the wholesale revenue declined..
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Online platform revenue increased by $1,107,195 from the year ended March 31, 2024 to the year ended March 31, 2025. The increased reflects Allright’s online platform revenue for the month of March, 2025. On February 28, 2025, we acquired Ridgeline and its subsidiary, Allright which is a rapidly growing online and offline wholesale distributor of pharmaceutical and other healthcare products such as health foods, cosmetics and daily necessities in China. Allright actively trades on popular online distribution platforms nationwide. Through these online platforms, we sell various medical products to retail pharmacies, clinics and other vendors across the country. Allright also has its own online distribution platform.
The average gross margins for each of our two business segments for the years ended March 31, 2025 and 2024 are as follows:
| Year ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Average gross margin for offline wholesale | 3.2 | % | 3.9 | % | ||||
| Average gross margin for online platform | 7.4 | % | N/A | % | ||||
Gross profit was $3,838,815 for the year ended March 31, 2025, representing a decrease by $1,039,602, or 21.3%, as compared to that of $4,878,417 for the year ended March 31, 2024. For the year ended March 31, 2025 and 2024, gross margins were approximately 3.2% and 3.9%, respectively.
Gross margin of offline wholesale sales slightly decreased for the year ended March 31, 2025, as compared to the year ended March 31, 2024, primarily due to various products with different profit margins we carried and sold to certain pharmaceutical vendors. Although as a retailer and distributor we have attempted to market the products to major local hospitals and other pharmacies, we have not been able to make significant progress. As a result, we do not have big bargain power on the prices. So our wholesale profit margin varies from time to time. Until we are able to obtain status as a provincial or national exclusive sale agent for certain popular drugs or have sales access to large local hospitals, we may have to maintain low profit margins in order to drive sales on our wholesale business.
Gross margin of online platform sales was approximately 7.4% for the month of March, 2025. Due to online price transparency, customers can easily compare prices between different online pharmaceutical vendors. In order to attract customers, we are unable to raise sales prices significantly. On the other side, we continuously searched for popular products with high profit margin and negotiated with the suppliers for better terms.
Selling and Marketing Expenses
Sales and marketing expenses for the year ended March 31, 2025 increased by $599,977 or 64.2%, as compared to the year ended March 31, 2024, primarily due to an increase in the sales and marketing expenses. The sales and marketing expenses increased by approximately $0.69 million, which was primarily attributable to the increase in drug distribution service fee. Overall, such expenses as a percentage of our revenue were 1.3% and 0.8% respectively, for the years ended March 31, 2025 and 2024.
General and Administrative Expenses
General and administrative expenses for the year ended March 31, 2025 decreased by $8,158 or 0.2%, as compared to the year ended March 31, 2024, primarily due to the decrease in warehousing management fee, offset by the increase in exchange loss of approximately $0.51 million. Such expenses as a percentage of revenue increased for the year ended March 31, 2025 to 2.8% from 2.7% for the same period a year ago. In the year ended March 31, 2025, we recorded approximately $0.52 million in warehousing management fee as compared to approximately $0.99 million in warehousing management fee in the year ended March 31, 2024.
Income (loss) from Operations
As a result of the above, income (loss) from operations was $(1,035,339) and $596,082 for the years ended March 31, 2025 and 2024, respectively. Our operating margin for the year ended March 31, 2025 and 2024 was (0.9) % and 0.5%, respectively.
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Income Taxes
Our income tax expense for the year ended March 31, 2025 increased by $544,887 as compared to the year ended March 31, 2024 due to an increase in the effective rate resulting from an increase in profits in several business lines.
Net Loss from continuing operations
As a result of the foregoing, net loss from continuing operations was $1,454,184 and $785,706 in the years ended March 31, 2025 and 2024.
Contractual Obligations and Off-Balance Sheet Arrangements
Contractual Obligations
The following table summarizes our contractual obligations:
| Payments due by period | ||||||||||||||||||||
| Contractual obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
| Notes payable | $ | 22,669 | 22,669 | - | - | - | ||||||||||||||
| Total | $ | 22,669 | 22,669 | - | - | - | ||||||||||||||
Off-balance Sheet Arrangements
We do not have any outstanding financial guarantees or commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.
Exchange Rates
Our subsidiaries and affiliated companies in the PRC maintain their books and records in RMB, the lawful currency of the PRC. In general, for consolidation purposes, we translate their assets and liabilities into USD using the applicable exchange rates prevailing at the balance sheet date, and the statement of income is translated at average exchange rates during the reporting period. Adjustments resulting from the translation of their financial statements are recorded as accumulated other comprehensive income.
The exchange rates used to translate amounts in RMB into USD for the purposes of preparing the audited consolidated financial statements or otherwise disclosed in this report were as follows:
| March 31, 2026 |
March 31, 2025 |
March 31, 2024 | ||||
| Balance sheet items, except for the registered and paid-up capital, as of end of period/year | USD1: RMB 6.8980 | USD1: RMB 7.2567 | USD1: RMB 7.2203 | |||
| Amounts included in the statement of Operations and statement of cash flows for the period/ year ended | USD1: RMB 7.1019 | USD1: RMB 7.2163 | USD1: RMB 7.1671 |
Inflation
We believe that inflation has not had a material effect on our operations to date.
B. LIQUIDITY AND CAPITAL RESOURCES
Ridgetech, Inc. is a holding company incorporated in the Cayman Islands. Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiaries are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of their respective registered capital. Our PRC subsidiaries may also allocate a portion of their after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends.
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The Company’s accounts have been prepared in accordance with the U.S. GAAP on a going concern basis. The going concern basis assumes that assets are realized and liabilities are extinguished in the ordinary course of business at amounts disclosed in the financial statements. The Company’s ability to continue as a going concern depends upon aligning its sources of funding (debt and equity) with its expenditure requirements and repayment of the short-term debts as and when they become due.
As disclosed in Note 12 – Notes Payable to the audited financial statements included elsewhere in this report, the Company maintains credit facilities with Hangzhou United Bank (“HUB”), under which the Company issues bank acceptance notes to suppliers. These notes are guaranteed by HUB and require the Company to deposit restricted cash with the bank prior to the payment date. These bank acceptance notes are used to settle payables to suppliers and are a key component of the Company’s short-term financing.
As of March 31, 2026, the Company had a credit line of approximately $5.80 million in the aggregate from HUB. By putting up the restricted cash of $0.01 million deposited in the banks, the total credit line was $5.81 million. As of March 31, 2026, the Company had approximately $0.02 million of bank notes payable and approximately $5.79 million bank credit line was still available for further borrowing. As the Chinese economy growth slows down, the national interest rates continue to decrease. Local banks such as HUB are encouraged to provide low interest rate loans to local enterprises.
To meet its working capital needs, the Company has also actively pursued, and intends to continue pursuing capital raising efforts as well as strategic and operational initiatives to improve its wholesale business performance. For example, on October 30, 2025, we sold 31,200 ordinary shares in a private placement for aggregate gross proceeds of $2,808,000, and issued warrants to purchase up to 78,000 ordinary shares, all of which warrants were cashless exercised on November 21, 2025 for 47,243 ordinary shares. Additionally, on December 29, 2025, we entered into a sales agreement with AC Sunshine Securities LLC pursuant to which the Company may offer and sell, from time to time, ordinary shares having an aggregate offering price of up to $200,000,000 under an at-the-market offering program (the “ATM Program”). On July 11, 2026, we terminated the sales agreement with AC Sunshine Securities LLC, and on July 28, 2026, entered into a new sales agreement with Pacific Century Securities, LLC, which now serves as the sales agent for the ATM Program. As of the date of this report, we had sold an aggregate of 3,487,171 ordinary shares under the ATM Program for aggregate gross proceeds of $15,279,787.
Based on the above factors, the Company believes it has sufficient financial resources to support its operations for at least the next 12 months.
Our cash flows for the periods indicated are as follows:
| For the year ended March 31, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Net cash provided by (used in) operating activities | $ | (1,393,945 | ) | $ | 1,247,770 | $ | (3,155,439 | ) | ||||
| Net cash used in investing activities | $ | (449 | ) | $ | (18,135,078 | ) | $ | (2,039,850 | ) | |||
| Net cash provided by (used in) financing activities | $ | (29,714 | ) | $ | 1,505,592 | $ | 8,004,291 | |||||
Net cash used in operating activities
Net cash used in operating activities for the year ended March 31, 2026 was approximately $1.39 million, primarily attributable to net loss of approximately $1.25 million, adjusted for non-cash item of depreciation and amortization expenses of approximately $0.36 million and changes in operating assets and liabilities including: (i) an increase of approximately $3.46 million in accounts receivable, (ii) an increase of approximately $2.04 million in other receivable, (iii) an increase of approximately $2.01 million in accounts payable, and (ⅳ) a decrease of approximately $1.95 million in inventories.
Net cash provided by operating activities for the year ended March 31, 2025 was approximately $1.25 million, primarily attributable to net income of approximately $10.20 million, adjusted for non-cash item of depreciation and amortization expenses of approximately $1.14 million, amortization of right-of-use assets of approximately $4.88 million, gain on disposal of subsidiaries of approximately $15.76 million and changes in operating assets and liabilities including: (i) an increase of approximately $10.04 million in accounts receivable, (ii) a decrease of approximately $11.76 million in other receivable, (iii) a decrease of approximately $21.13 million in accounts payable, and (ⅳ) an increase of approximately $28.75 million in other payables and accrued liabilities.
Net cash used in operating activities for the year ended March 31, 2024 was approximately $3.16 million, resulting primarily from net loss of approximately $4.23 million, adjusted for non-cash item of depreciation and amortization expenses of approximately $0.79 million, amortization of right-of-use assets of approximately $4.59 million, loss from long-term investments of approximately $1.61 million and changes in operating assets and liabilities including: (i) an increase of approximately $1.80 million in accounts receivable, (ii) an increase of approximately $6.00 million in accounts payable, and (iii) an increase of approximately $1.70 million in inventories.
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Net cash used in investing activities
Net cash used in investing activities resulted in cash outflow of $449 for the year ended March 31, 2026. Cash used in investing activities for the year ended March 31, 2026 was mainly due to $449 used for purchases of long-term assets.
Net cash used in investing activities resulted in cash outflow of approximately $18.14 million for the year ended March 31, 2025. Cash used in investing activities for the year ended March 31, 2025 was mainly due to approximately $22.35 million cash disposed from divestiture Jiuxin Investment offset by approximately $4.83 million cash acquired from acquisition of Ridgeline.
Net cash used in investing activities resulted in cash outflow of approximately $2.04 million for the year ended March 31, 2024. Cash used in investing activities for the year ended March 31, 2024 was mainly due to approximately $1.12 million used for investment in a joint venture and approximately $0.92 million used for purchases of long-term assets.
Net cash provided by financing activities
Net cash used in financing activities resulted a cash outflow of approximately $0.03 million for the year ended March 31, 2026, which was mainly attributable to approximately $24.94 million in repayment of notes payable offset by approximately $10.88 million proceeds from equity and debt financing and approximately $14.35 million in proceeds from notes payable.
Net cash provided by financing activities resulted a cash inflow of approximately $1.51 million for the year ended March 31, 2025, which was mainly attributable to approximately $51.69 million proceeds from notes payable and approximately $7.63 million proceeds from equity and debt financing offset by approximately $56.37 million in repayment of notes payable.
Net cash provided by financing activities resulted a cash inflow of approximately $8.00 million for the year ended March 31, 2024, which was mainly attributable to approximately $56.88 million proceeds from notes payable and approximately $2.59 million proceeds from equity and debt financing offset by approximately $53.00 million in repayment of notes payable.
As of March 31, 2026, we had cash and cash equivalents and restricted cash of approximately $17,913,781. Our total current assets as of March 31, 2026, were $64,556,192 and total current liabilities were $27,894,710, which resulted in a working capital of $36,661,482.
C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
The Company has no research and development policy for the past three years.
D. TREND INFORMATION.
Industry and Market Outlook
Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended March 31, 2026 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions.
E. CRITICAL ACCOUNTING ESTIMATES
See above under Item 5. Operating and Financial Review and Prospects - A. Operating Results - Critical Accounting Policies and Estimates.
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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.
A. DIRECTORS AND SENIOR MANAGEMENT.
The following table identifies our current executive officers and directors as of the date of this report, their respective offices and positions, and their respective dates of election or appointment:
| Name | Age(1) | Position | Date of Appointment | |||
| Lingtao Kong | 36 | Chairman of the Board of Directors | February 28, 2025(6) | |||
| Ming Zhao | 50 | Interim Chief Executive Officer and Chief Financial Officer | August 1, 2011(2) | |||
| Caroline Wang (3) (4) (5) | 39 | Director | March 29, 2017 | |||
| Jiangliang He (3) (4) (5) | 63 | Director | September 4, 2018 | |||
| Genghua Gu (3) (4) (5) | 75 | Director | March 28, 2014 |
| (1) | As of the date of this report. |
| (2) | Mr. Zhao was appointed as our Chief Financial Officer as of August 1, 2011 and as Interim Chief Executive Officer as of February 28, 2025. |
| (3) | Member of the Audit Committee. |
| (4) | Member of the Compensation Committee. |
| (5) | Member of the Nominating Committee. |
| (6) | Pursuant to that certain equity exchange agreement, dated as of January 31, 2025 (the “Acquisition Agreement”), we entered into with Ridgeline and Lingtao Kong, we agreed to take all necessary action to cause Mr. Kong to be nominated and elected as a director on our Board effective as of the closing of the transactions contemplated by the Acquisition Agreement. The election of Mr. Kong to our Board as Chairman was approved by our shareholders at our annual general meeting of shareholders held on February 25, 2025 and his appointment was effective as of February 28, 2025. |
Biographical Information of Our Current Directors and Executive Officers
Lingtao Kong has served as Chairman of our Board of Directors since February 28, 2025. Since September 2014, Mr. Kong has been serving at the Hong Kong subsidiary of a large energy group, where he has successively held the position of Deputy Director in the Finance Department. His primary responsibilities include resource trading, overseas investment, and financing activities. Since the inception of Ridgeline in 2023, Mr. Kong has served as its sole director. After Ridgeline’s acquisition of Allright, he has been actively involved in Allright’s strategic planning and business development, either directly or through delegating responsibilities to Allright’s general manager. Beyond his experience in the energy industry, Mr. Kong has extensive expertise in wholesaling and e-commerce, particularly in cross-border e-commerce and the logistics industry. Additionally, since 2008, he has been a successful investor in the pharmaceutical sector and several reputable high-tech companies. Mr. Kong holds a Master of Science in Engineering Enterprise Management from the Hong Kong University of Science and Technology and a Bachelor of Commerce from the University of Alberta. He also holds the professional title of Intermediate Economist.
Ming Zhao has served as our Chief Financial Officer since August 2011 and as our interim Chief Executive Officer since February 2025. From September 2010 to July 2011, Mr. Zhao was a senior manager at CFO Oncall, Inc., a financial consulting firm providing CFO services to U.S.-listed, China-based publicly traded companies. From December 2006 through August 2010, Mr. Zhao was a senior auditor at Sherb & Co., LLP. From January through June 2003, Mr. Zhao worked as a financial analyst at Microsoft Corporation. Mr. Zhao is a licensed certified public accountant. He graduated with a bachelor’s degree in accounting from Central University of Finance and Economic in Beijing in July 1999, and obtained a master’s degree in professional accounting from the University of Washington in December 2002.
Caroline Wang has been a member of our Board since March 29, 2017. Ms. Wang has been a project manager with JC Group, a comprehensive industrial financial group which serves the “city management”, performing internal audit and projects management for a variety of financial products since October 2015. Prior to that, Ms. Wang served as a CFO assistant of Kandi Technologies Group, Inc. (Nasdaq: KNDI), a company engaged in the research, development, manufacturing, and sales of vehicle products. She was mainly responsible for consolidation of financial reports and internal control audits. From 2012 to 2015, Ms. Wang was an audit department assistant manager with KPMG Huazhen LLP Hangzhou Branch, conducting financial report audits and internal control audits for listing companies and also providing audit services to pre-IPO companies. None of these companies are related to or affiliated with us. Ms. Wang holds a master’s degree in public administration from the London School of Economics and Political Science, and a bachelor’s degree in finance from Beijing Language and Culture University. The Board has determined that Ms. Wang has the qualification to serve as a member of the Board given her extensive financial, accounting and auditing experience, as well as her English and Chinese bilingual capabilities to facilitate the Board’s supervision of the management.
Jiangliang He has been a member of our Board since September 4, 2018. He has extensive experience as a professional attorney. He has served as a partner in Dentons China, a large law firm with a presence in approximately 45 cities in China, since August 2008. From July 1997 to July 2008, he was a partner in the Zhejiang Jiuyao law firm. From July 1984 to June 1997, he was a professor at Hangzhou School of Law. Mr. He received his bachelor’s degree in law from Beijing University. The Board believes his knowledge and experiences in law helps the Board have a good corporate governance.
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Genghua Gu is a retired physician, professor and published scientific researcher in the field of stomatology. From 2003 to 2013, Dr. Gu was a member of the Standing Committee of Zhejiang Province Political Consultative Conference. From 2000 to 2009, Dr. Gu was the Vice President of the Women’s Hospital of Zhejiang University’s School of Medicine (the “School of Medicine”), where, in addition to being a chief physician, professor and researcher, he was also in charge of logistics and financial control as part of the hospital’s management. From 1998 to 2000, Dr. Gu was the Vice President of the Second Affiliate Hospital of the School of Medicine (the “Affiliate Hospital”), where, in addition to his medical, teaching and research duties, he was also in charge of the hospital’s logistics. From 1995 to 1998, Dr. Gu served as the Deputy Magistrate with the Shuichang County Government in Zhejiang Province, in charge of the county’s culture, education and hygiene programs. From 1988 to 1995, Dr. Gu was the Head of the Medical Department at the Affiliate Hospital and was involved in planning and management of the medical department. Dr. Gu served as an oral surgeon from 1977 to 1988 at the Affiliate Hospital. Dr. Gu graduated from Shanghai Jiaotong University’s School of Medicine, Department of Stomatology in 1977. The Board has determined that Dr. Gu should serve as a director given his extensive medical and scientific research experience, as well as his government and hospital management and logistics experience.
Family Relationships
There are no family relationships among our officers and directors and those of our subsidiaries and affiliated companies.
B. COMPENSATION.
Compensation of Directors and Executive Officers
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our principal executive officer and principal financial officer during the last two fiscal years. No other executive officer received compensation in excess of $100,000 during the fiscal year ended March 31, 2026 and 2025. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors.
| Summary Compensation Table | ||||||||||||||||||||||||||||||||||||
| Name and Principal Position | Fiscal Year ended March 31, | Salary ($)(3) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||
| Lei Liu, | 2026 | (1) | -0- | -0- | - | -0- | -0- | -0- | -0- | -0- | ||||||||||||||||||||||||||
| Former CEO | 2025 | 82,500 | -0- | - | -0- | -0- | -0- | -0- | 82,500 | |||||||||||||||||||||||||||
| Ming Zhao, | 2026 | (1) | 88,000 | -0- | - | -0- | -0- | -0- | -0- | 88,000 | ||||||||||||||||||||||||||
| CFO and Interim CEO | 2025 | 88,000 | -0- | - | -0- | -0- | -0- | -0- | 88,000 | |||||||||||||||||||||||||||
| (1) | As disclosed above under Item 4. Information on the Company -History and Development of the Company, Mr. Liu resigned from our board of directors (the “Board”) and any other officer positions with us (including Mr. Liu’s role as our Chief Executive Officer), effective as of February 28, 2025. Mr. Zhao was appointed as Interim Chief Executive Officer as of February 28, 2025. |
| (2) | Reflects the full fair value of stock issued during the applicable fiscal year for financial statement reporting purposes. |
| (3) | Salary as reported is based on interbank exchange rate of RMB 7. 2567 to $1.00 on March 31, 2025 and RMB 6.8980 to $1.00 on March 31, 2026. |
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Employment Agreements, Termination of Employment and Change-in-Control Arrangements
Except as described below, we currently have no employment agreements with any of our executive officers, nor any compensatory plans or arrangements resulting from the resignation, retirement or any other termination of any of our executive officers, from a change-in-control, or from a change in any executive officer’s responsibilities following a change-in-control.
Agreement with Ming Zhao
We entered into an employment agreement with Mr. Zhao dated as of August 1, 2011, under which Mr. Zhao is serving as our Chief Financial Officer for a term of two years commencing August 1, 2011, for annual compensation of $100,000, payable in monthly installments, as well as a one-time grant of 3,333 shares of our ordinary shares under our 2010 Equity Incentive Plan. The term of his employment was extended verbally for another two (2) years with an amended annual compensation of $88,000 starting from October 2012. The term of this employment was extended verbally for another one (1) year automatically (unless providing prior notice otherwise) with an annual compensation of $88,000 starting from October 2015. During his employment, Mr. Zhao is subject to certain restrictive covenants, including (i) prohibition against engaging in any work that competes with us and our business and soliciting our customers, potential customers and employees, and (ii) requirement to maintain our confidential information.
Mr. Zhao’s employment agreement terminates upon his death or disability. If Mr. Zhao is unable to perform his duties for 60 days during any 12 month period, we may terminate the employment agreement upon 30-day written notice. We may also terminate the employment agreement for cause, upon notice if at any time Mr. Zhao commits (a) fraudulent, unlawful or grossly negligent conduct in connection with his employment duties; (b) willful misconduct; (c) willful and continued failure to perform his duties; (d) any felony or any crime involving moral turpitude; (e) any violation of any of our material policies; or (f) any material breach of any written agreement with us. Mr. Zhao may terminate his employment agreement immediately upon written notice if we breach our agreement with him.
Outstanding Equity Awards at Fiscal Year Ended March 31, 2026
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
| Name | Number of securities underlying unexercised options exercisable | Equity incentive plan awards: number of securities underlying unexercised options unexercisable | Equity incentive plan awards: number of securities underlying unexercised unearned options | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested | Market value of shares or units of stock that have not vested ($) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) | |||||||||||||||||||||||||||
| Ming Zhao | - | - | - | - | - | - | - | - | $ | - | ||||||||||||||||||||||||||
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Director Compensation
The following table provides compensation information for our directors during the fiscal year ended March 31, 2026:
| Director Compensation Table | ||||||||||||||||||||||||||||||
| Name | Fiscal Year ended March 31, | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||
| Lingtao Kong (2) | 2026 | -0- | -0- | -0- | -0- | -0- | -0- | -0- | ||||||||||||||||||||||
| Caroline Wang | 2026 | 11,263 | -0- | -0- | -0- | -0- | -0- | 11,263 | ||||||||||||||||||||||
| Genghua Gu | 2026 | 5,069 | -0- | -0- | -0- | -0- | -0- | 5,069 | ||||||||||||||||||||||
| Jiangliang He | 2026 | 5,069 | -0- | -0- | -0- | -0- | -0- | 5,069 | ||||||||||||||||||||||
| (1) | Reflects dollar amount expensed by the Company during the applicable fiscal year for financial statement reporting purposes. |
| (2) | For more information, see above under Item 4. Information on the Company -History and Development of the Company, the election of Mr. Kong to our Board as Chairman was approved by our shareholders at our annual general meeting of shareholders held on February 25, 2025 and his appointment was effective as of February 28, 2025. Mr. Kong did not receive any compensation during the fiscal year ended March 31, 2026. |
We do not currently have an established policy to provide compensation to members of our Board of Directors for their services in that capacity, although we have entered into certain agreements with some of our directors as described below. We may develop such a policy in the future.
Agreement with Genghua Gu
On December 9, 2013, we entered into an agreement with Dr. Gu in the form of a director offer letter, pursuant to which we have agreed to compensate him $6,000 annually for his services, payable in monthly installments on the last day of each month. Additionally, he is entitled to be included as an insured under our directors and officers insurance policy.
Agreement with Caroline Wang
On March 29, 2017, we entered into an agreement with Ms. Wang in the form of a director offer letter pursuant to which we agreed to compensate her $11,162 (RMB80,000) annually for her services. Additionally, she is entitled to be included as an insured under our directors and officers insurance policy.
Agreement with Jiangliang He
On September 4, 2018, we entered into an agreement with Mr. He in the form of a director offer letter pursuant to which we agreed to compensate him $5,023 (RMB36,000) annually for her services. Additionally, she is entitled to be included as an insured under our directors and officers insurance policy.
Agreement with Pingfan Wu
On October 26, 2018, we entered into an agreement with Ms. Wu in the form of a director offer letter pursuant to which we agreed to compensate him $9,349 (RMB60,000) annually for her services. Additionally, she is entitled to be included as an insured under our directors and officers insurance policy. On May 31, 2024, Ms. Pingfan Wu had resigned from her position as a member of the Board due to personal reasons.
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C. BOARD PRACTICES.
The Board of Directors and Committees
Under the Company’s Fifth Amended and Restated Memorandum of Association and Articles of Association, the number of directors of the Company shall not be less than two. There shall be no maximum number of directors unless otherwise determined from time to time by the shareholders in general meeting. The Company may from time to time in general meeting by ordinary resolution increase or reduce the number of directors but the number of directors shall never be less than two. Currently, the Board consists of four directors. The directors of the Company do not have a definite term of office, and each director will serve until the next annual meeting and until the director’s successor is elected and qualified.
We seek directors with established strong professional reputations and experience in areas relevant to the strategy and operation of our businesses. We also seek directors who possess the qualities of integrity and candor, who have strong analytical skills, and who are willing to engage with the management and each other in a constructive and collaborative fashion. We also seek directors who have the ability and commitment to devote significant time and energy to service on the board and its committees. We believe that all of our directors meet the foregoing qualifications. None of our non-executive directors has a service contract with us that provides for benefits upon termination of service.
Based on the information submitted by Ms. Caroline Wang, Mr. Jiangliang He and Dr. Genghua Gu, our Board of Directors has determined that each of them is independent under Rule 5605(a)(2) of The Nasdaq Listing Rules.
Our Board of Directors has three committees. During the fiscal year ended March 31, 2026, our Board of Directors and its committees held the following number of meetings and took the following number of actions by unanimous written consent:
| Meetings | Unanimous written consents | ||||
| Board of Directors | 2 | 4 | |||
| Audit Committee | 1 | 1 | |||
| Compensation Committee | 1 | 0 | |||
| Nominating Committee | 1 | 0 |
Audit Committee
Our Audit Committee operates under a written charter, a copy of which is available on our website at www.ridgetch.com under the tabs “Investor”-“Corporate Governance”-“Documents”, and is composed of our three (3) independent directors. Our Board of Directors has determined, based on information furnished by Ms. Caroline Wang and other available information, that she meets the requirements of an “audit committee financial expert” as that term is defined in the rules promulgated under the Exchange Act, and has accordingly designated her as such. Our Board of Directors has also appointed her chairperson of the committee.
The responsibilities of our Audit Committee include:
| ● | meeting with our management periodically to consider the adequacy of our internal control over financial reporting and the objectivity of our financial reporting; |
| ● | appointing the independent registered public accounting firm, determining the compensation of the independent registered public accounting firm, and pre-approving the engagement of the independent registered public accounting firm for audit and non-audit services; |
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| ● | overseeing the independent registered public accounting firm, including reviewing its independence and quality control procedures, as well as the experience and qualifications of the audit personnel that are providing audit services to us; |
| ● | meeting with the independent registered public accounting firm and reviewing the scope and significant findings of the audits performed by them, and meeting with management and internal financial personnel regarding these matters; and |
| ● | reviewing our financing plans, the adequacy and sufficiency of our financial and accounting controls, practices and procedures, the activities and recommendations of the auditors and our reporting policies and practices, and reporting recommendations to our full Board of Directors for approval. |
Compensation Committee
Our Compensation Committee operates under a written charter, a copy of which is available on our website at www.ridgetch.com under the tabs “Investor”-“Corporate Governance”-“Documents”, and is made up of our three (3) independent directors. Jiangliang He is chairperson of the committee. Our Compensation Committee oversees and, as appropriate, makes recommendations to the Board of Directors regarding the annual salaries and other compensation of our executive officers and our employees, and other employee policies; it also provides assistance and recommendations with respect to our compensation policies and practices.
Nominating Committee
Our Nominating Committee operates under a written charter, a copy of which is available on our website at www.ridgetch.com under the tabs “Investor”-“Corporate Governance”-“Documents”, and is made up of our three (3) independent directors. Genghua Gu is chairperson of the committee. Our Nominating Committee assists in the selection of director nominees, approves director nominations to be presented for stockholder approval at our annual general meeting, fills any vacancies on our Board of Directors, considers any nominations of director candidates validly made by shareholders, and reviews and considers developments in corporate governance practices.
Code of Ethics
The Company’s Code of Ethics, which applies to all officers, directors and employees, was adopted by the Board on March 15, 2010. The Code of Ethics was filed as Exhibit 14.1 to the Current Report on Form 8-K our predecessor, China Jo-Jo Drugstores, Inc. a Nevada Corporation, filed with the SEC on March 16, 2010, a copy of which is available on our website at www.ridgetch.com under the tabs “Investor”-“Corporate Governance”-“Documents”.
D. EMPLOYEES.
As of March 31, 2026, we had 64 employees combined in our wholesale operations. The number of employees for each area of operations as of March 31, 2026, and such employees as a percentage of our total workforce, are as follows:
| As of March 31, 2026 | ||||||||
| Employees | Percentage | |||||||
| Management | 6 | 9.4 | ||||||
| Technicians | 2 | 3.1 | % | |||||
| Offline wholesale | 37 | 57.8 | % | |||||
| Online platform | 19 | 29.7 | % | |||||
| Total | 64 | 100.00 | % | |||||
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E. SHARE OWNERSHIP.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding our ordinary shares beneficially owned on July 30, 2026, for (i) each stockholder known to be the beneficial owner of five percent (5%) or more of our outstanding ordinary shares, (ii) each executive officer and director, and (iii) all executive officers and directors as a group. To the best of our knowledge, subject to community and marital property laws, all persons named have sole voting and investment power with respect to such shares, except as otherwise noted.
| Ordinary Shares Beneficially Owned | ||||||||
| Executive officers and directors: (1) | Number of Shares beneficially owned (2) | Percentage of class beneficially owned (3) | ||||||
| Lingtao Kong, Chairman of the Board of Directors (4) | 114,834 | 3.2 | % | |||||
| Ming Zhao, Interim Chief Executive Officer and Chief Financial Officer | 5 | * | % | |||||
| Caroline Wang, Director | - | - | ||||||
| Genghua Gu, Director | 1 | * | % | |||||
| Jiangliang He, Director | - | - | ||||||
| 5% Shareholders: | ||||||||
| N/A | ||||||||
| * | Less than 0.1%. |
| (1) | Unless otherwise noted, the address for each of the Company’s current directors and officers is: 5th Floor, Building 6, No. 100, 18th Street, Baiyang Sub-district, Qiantang District, Hangzhou City, Zhejiang Province, People’s Republic of China, 310008. |
| (2) | Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of ordinary shares actually outstanding. |
| (3) | Unless otherwise noted, the number and percentage of outstanding shares of ordinary shares is based upon 3,629,540 shares outstanding as of July 30, 2026. |
| (4) | Representing (i) 14,834 ordinary shares and (ii) 100,000 Series A Preferred Shares held of record by Lingtao Kong. Each Series A Preferred Share is convertible at the option of the holder at any time into one ordinary share, subject to the terms of the Statement of Rights applicable to such Series A Preferred Shares. |
F. Disclosure of a registrant’s action to recover erroneously awarded compensation.
None.
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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.
A. MAJOR SHAREHOLDERS
Please refer to Item 6.E “Directors, Senior Management and Employees - Share Ownership.” As of the date of this annual report, we are not aware of any person or entity that beneficially owns 5% or more of our outstanding ordinary shares.
To our knowledge, (A) we are not directly or indirectly owned or controlled by (i) another corporation or (ii) any foreign government and (B) there are no arrangements (including any announced or expected takeover bid), the operation of which may at a subsequent date result in a change in our control.
All of our shareholders, including our directors and executive officers, have the same voting rights with respect to their ordinary shares. Our Chairman of the Board, Lingtao Kong, holds 100,000 Series A Preferred Shares, which carry one hundred votes per share and are convertible into ordinary shares in accordance with the Statement of Rights applicable to the Series A Preferred Shares, as described under “Item 10.B. Memorandum and Articles of Association — Preferred Shares” below.
B. RELATED PARTY TRANSACTIONS.
Subscription Agreement for Series A Preferred Shares
On July 16, 2026, the Company entered into a Subscription Agreement (the “Subscription Agreement”) with Mr. Lingtao Kong, Chairman of the Board of Directors, pursuant to which the Company issued 100,000 Series A Preferred Shares to Mr. Kong for an aggregate subscription price of US$100. The Audit Committee reviewed and approved the Subscription Agreement and the related-party aspects of the transactions contemplated thereby, including potential conflicts of interest. The issuance was approved for the purposes of promoting continuity of leadership, strategic direction and corporate stability, retaining and incentivizing Mr. Kong’s continued service to the Company, enhancing the Company’s ability to respond to hostile takeover attempts or other unsolicited change-of-control transactions, and achieving those objectives in a manner that minimizes economic dilution to existing shareholders. Each Series A Preferred Share carries 100 votes per share and votes together with holders of ordinary shares as a single class on all matters submitted to a vote of shareholders, unless otherwise required by applicable law or the Company’s memorandum and articles of association. The Series A Preferred Shares are subject to conversion, transfer, and other restrictions as described under “Item 10.B. Memorandum and Articles of Association — Preferred Shares” below.
Equity Exchange Agreements
On January 31, 2025, we entered into (i) that certain Equity Exchange Agreement with Mr. Lingtao Kong and Ridgeline, pursuant to which the Company acquired from Mr. Kong all of the issued and outstanding ordinary shares of Ridgeline, by issuing 14,834 our ordinary shares to Mr. Kong, and (ii) that certain Equity Exchange Agreement with Renovation, Mr. Lei Liu, Ms. Li Qi, and Oakview, pursuant to which Renovation transferred all equity in Jiuxin Investment to Oakview, in exchange for irrevocable surrender for no consideration by Mr. Liu, Ms. Qi, Oakview and their affiliates in total 16,990 our ordinary shares back to us. The transactions were closed on February 28, 2025. Following the closing of these transactions, we changed our name from “China Jo-Jo Drugstores, Inc.” to “Ridgetech, Inc.”, effective as of February 28, 2025. We also changed our trading symbol on The Nasdaq Stock Market LLC from “CJJD” to “RDGT”, effective as of March 4, 2025. Effective as of the closing, Mr. Liu and Ms. Qi resigned from our board of directors and any other officer positions with us (including Mr. Liu’s role as our Chief Executive Officer), and Mr. Ming Zhao, our Chief Financial Officer, was appointed as our interim Chief Executive Officer to hold such office until a permanent Chief Executive Officer is duly appointed.
Share Surrender
In October 2024, Mr. Lei Liu, our former Chairman of the Board and Chief Executive Officer, agreed to surrender for no consideration in total 52,500 fully-paid ordinary shares, par value $0.24 per share, of the Company, and Mr. Ming Zhao, our Chief Financial Officer, agreed to surrender for no consideration in total 2,500 ordinary shares, par value $0.24 per share, of the Company, such ordinary shares in each case to be immediately cancelled by the Company. In November 2024, Mr. Liu agreed to surrender for no consideration in total additional 420,715 fully-paid ordinary shares, par value $0.24 per share, of the Company, to be immediately cancelled by the Company. The Company shall make available for reissuance to participants under the Company’s 2010 Equity Incentive Plan an equivalent number of ordinary shares as surrendered and cancelled in connection with the share surrender. No grants, cash payments or other consideration has been or will be made to replace such ordinary shares or otherwise in connection with the share surrender.
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Other Related Party Transactions
In connection with the divestiture of Jiuxin Investment and its owned and controlled entities during the fiscal year ended March 31, 2025, we have revised the presentation of our historical consolidated financial statements to exclude the operations of the divested entities for all periods presented. This re-presentation is intended to provide a consistent basis of comparison that reflects our continuing operations. As a result, certain financial information for prior periods included in this annual report including the amounts disclosed for the fiscal year ended March 31, 2024, differs from the corresponding financial information presented in our annual report on Form 20-F for the fiscal year ended March 31, 2024.
| Due from related parties: | March 31, 2026 | March 31, 2025 | March 31, 2024 | |||||||||
| Due from a director of subsidiaries(1) | 329,258 | - | 7,202 | |||||||||
| Hangzhou Kahamadi Biotechnology Co., Ltd | - | - | 12,535 | |||||||||
| Total | $ | 329,258 | $ | - | $ | 19,737 | ||||||
| Due to related parties: | March 31, 2026 | March 31, 2025 | March 31, 2024 | |||||||||
| Due to a director of subsidiaries(2) | - | 2,130 | 2,140 | |||||||||
| Total | $ | - | $ | 2,130 | $ | 2,140 | ||||||
| (1) | Advances to directors of our subsidiaries. |
| (2) | Borrowed from a director of subsidiaries. |
C. INTERESTS OF EXPERTS AND COUNSEL.
Not applicable.
ITEM 8. FINANCIAL INFORMATION.
A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION.
See “Item 18. Financial Statements.”
Legal Proceedings
From time to time, we may be subject to legal proceedings, investigations and claims during the ordinary course of our business. We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder holding more than five percent of our ordinary shares, is an adverse party or has a material interest adverse to our company.
Dividend Policy
While there are no restrictions that limit our ability to pay dividends, we have not paid, and do not currently intend to pay cash dividends on our ordinary shares in the foreseeable future. Our policy is to retain all earnings, if any, to provide funds for the operation and expansion of our business. The declaration of dividends, if any, will be subject to the discretion of our Board of Directors, who may consider such factors as our results of operations, financial condition, capital needs and acquisition strategy, among others, in making its determination.
Our ability to receive dividends from our subsidiaries may limit our ability to pay dividends on our ordinary shares. See “Item 10. Additional Information - D. Exchange Controls - Dividend Distribution”.
B. SIGNIFICANT CHANGES.
N/A
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ITEM 9. THE OFFER AND LISTING
A. OFFER AND LISTING DETAILS.
Not Applicable.
B. PLAN OF DISTRIBUTION.
Not Applicable.
C. MARKETS.
Our ordinary shares trade on the Nasdaq Capital Market under the symbol “RDGT”.
Based on the records of our transfer agent, we had 3,629,540 shares of ordinary shares issued and outstanding as of July 30, 2026.
D. SELLING SHAREHOLDERS.
Not applicable.
E. DILUTION.
Not applicable.
F. EXPENSES OF THE ISSUE.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
A. SHARE CAPITAL
Not applicable.
B. MEMORANDUM AND ARTICLES OF ASSOCIATION
We are an exempted company incorporated with limited liability under the laws of the Cayman Islands and our affairs are governed by our currently effective Fifth Amend and Restated Memorandum and Articles of the Association, the Companies Law (as amended) of the Caymans Islands, which is referred to as the Companies Law below, and common law of the Cayman Islands. Our authorized share capital is US$36,010,000 divided into (i) 240,000,000 Ordinary Shares of a par value of US$0.15 each and (ii) 10,000,000 preferred shares of a par value of US$0.001 each Of the 10,000,000 authorized preferred shares, the Board of Directors has designated 2,000,000 preferred shares as “Series A Preferred Shares” with a par value of US$0.001 per share, pursuant to a Statement of Rights adopted by the Board on June 29, 2026. As of the date of this annual report, 100,000 Series A Preferred Shares are issued and outstanding.
We have included summaries of material provisions of our amended and restated memorandum and articles of association insofar as they relate to the material terms of our share capital. The summaries do not purport to be complete and are qualified in their entirety by reference to our Fifth Amend and Restated Memorandum and Articles of the Association, which is filed as Exhibit 1.1 to this annual report.
Ordinary Shares
All of our outstanding ordinary shares are fully paid and non-assessable.
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Issuance of Shares and Changes to Capital
Our board of directors with the power for the Company, insofar as is permitted by law, is able to redeem or purchase any of its shares and to increase or reduce the said share capital subject to the provisions of the Company Law and the Fifth Amended and Restated Articles of Association of the Company, which is referred to as the Articles below, and to issue any part of its capital, whether original, redeemed or increased, with or without any preference, priority or special privilege or subject to any postponement of rights or to any conditions or restrictions; and so that, unless the conditions of issue shall otherwise expressly declare, every issue of shares, whether declared to be preference or otherwise, shall be subject to the power otherwise regulated in our Fifth Amend and Restated Memorandum and Articles of the Association.
Subject to the Companies Law, the Articles and, where applicable, the rules of the Nasdaq Stock Market (“Nasdaq”) and without prejudice to any special rights or restrictions for the time being attached to any shares or any class of shares, the unissued shares of the Company (whether forming part of the original or any increased capital) shall be at the disposal of the Board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times and for such consideration and upon such terms and conditions as the Board may in its absolute discretion determine but so that no shares shall be issued at a discount, except in accordance with the provisions of Companies Law. In particular and without prejudice to the generality of the foregoing, the Board is hereby empowered to authorize by resolution or resolutions from time to time the issuance of one or more classes or series of preferred shares and to fix the designations, powers, preferences and relative, participating, optional and other rights, if any, and the qualifications, limitations and restrictions thereof, if any, including, without limitation, the number of shares constituting each such class or series, dividend rights, conversion rights, redemption privileges, voting powers, full or limited or no voting powers, and liquidation preferences, and to increase or decrease the size of any such class or series (but not below the number of shares of any class or series of preferred shares then outstanding) to the extent permitted by Companies Law. Without limiting the generality of the foregoing, the resolution or resolutions providing for the establishment of any class or series of preferred shares may, to the extent permitted by law, provide that such class or series shall be superior to, rank equally with or be junior to the preferred shares of any other class or series. Neither the Company nor the Board shall be obliged, when making or granting any allotment of, offer of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to shareholders or others with registered addresses in any particular territory or territories being a territory or territories where, in the absence of a registration statement or other special formalities, this would or might, in the opinion of the Board, be unlawful or impracticable. Shareholders affected as a result of the foregoing sentence shall not be, or be deemed to be, a separate class of shareholders for any purpose whatsoever. The Board may issue options, warrants or convertible securities or securities of similar nature conferring the right upon the holders thereof to subscribe for, purchase or receive any class of shares or securities in the capital of the Company on such terms as it may from time to time determine.
The Company may in connection with the issue of any shares exercise all powers of paying commission and brokerage conferred or permitted by the Companies Law. Subject to the Companies Law, the commission may be satisfied by the payment of cash or by the allotment of fully or partly paid shares or partly in one and partly in the other.
Except as required by law, no person shall be recognized by the Company as holding any share upon any trust and the Company shall not be bound by or required in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any fractional part of a share or (except only as otherwise provided by these Articles or by law) any other rights in respect of any share except an absolute right to the entirety thereof in the registered holder.
Subject to the Companies Law and the Articles, the Board may at any time after the allotment of shares but before any person has been entered in the Company’s register as the holder, recognize a renunciation thereof by the allottee in favor of some other person and may accord to any allottee of a share a right to effect such renunciation upon and subject to such terms and conditions as the Board considers fit to impose.
Dividends
Subject to the Companies Law, our shareholders may, by resolution passed by a simple majority of the voting rights entitled to vote at the general meeting, declare dividends (including interim dividends) to be paid to our shareholders but no dividend shall be declared in excess of the amount recommended by our board of directors. Dividends may be declared and paid out of funds lawfully available to us. Except as otherwise provided by the rights attached to shares, all dividends shall be declared and paid according to the amounts paid up on the shares on which the dividend is paid. All dividends shall be paid in proportion to the number of ordinary shares a shareholder holds during any portion or portions of the period in respect of which the dividend is paid; but, if any share is issued on terms providing that it shall rank for dividend as from a particular date, that share shall rank for dividend accordingly. Our board of directors may also declare and pay dividends out of the share premium account or any other fund or account which can be authorized for this purpose in accordance with the Companies Law.
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Whenever the Board or the Company in general meeting has resolved that a dividend be paid or declared, the Board may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind and in particular of paid up shares, debentures or warrants to subscribe securities of the Company or any other company, or in any one or more of such ways, and where any difficulty arises in regard to the distribution the Board may settle the same as it thinks expedient, and in particular may issue certificates in respect of fractions of shares, disregard fractional entitlements or round the same up or down, and may fix the value for distribution of such specific assets, or any part thereof, and may determine that cash payments shall be made to any Members upon the footing of the value so fixed in order to adjust the rights of all parties, and may vest any such specific assets in trustees as may seem expedient to the Board and may appoint any person to sign any requisite instruments of transfer and other documents on behalf of the persons entitled to the dividend, and such appointment shall be effective and binding on the shareholders. The Board may resolve that no such assets shall be made available to shareholders with registered addresses in any particular territory or territories where, in the absence of a registration statement or other special formalities, such distribution of assets would or might, in the opinion of the Board, be unlawful or impracticable and in such event the only entitlement of the Members aforesaid shall be to receive cash payments as aforesaid. Members affected as a result of the foregoing sentence shall not be or be deemed to be a separate class of Members for any purpose whatsoever.
Voting and Meetings
As a condition of admission to a shareholders’ meeting, a shareholder must be duly registered as our shareholder at the applicable record date for that meeting and all calls or installments then payable by such shareholder to us in respect of our ordinary shares must have been paid. Subject to any special rights or restrictions as to voting then attached to any shares, at any general meeting every shareholder who is present in person or by proxy (or, in the case of a shareholder being a corporation, by its duly authorized representative not being himself or herself a shareholder entitled to vote) shall have one vote per share.
As a Cayman Islands exempted company, we are not obliged by the Companies Law to call annual general meetings; however, our Fifth Amended And Restated Memorandum and Articles of Association provide that in each year we will hold an annual general meeting of shareholders at a time determined by our board of directors. Also, we may, but are not required to (unless required by the Companies Law), in each year hold any other extraordinary general meeting.
The Companies Law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. The Fifth Amended and Restated Memorandum And Articles of Association provide that upon the requisition of shareholders representing not less than 30% of the paid-up share capital of the Company, our board will convene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. However, shareholders shall have no right to propose certain resolutions, including the declaration and sanctioning of dividends, the consideration and adoption of the accounts and balance sheet and the reports of the directors and auditors and other documents required to be annexed to the balance sheet, the election of directors; and adoption of the Company’s equity incentive plan and its amendments.
Our Fifth Amended And Restated Memorandum and Articles of Association provide no other right to put any proposals before annual general meetings or extraordinary general meetings. Subject to regulatory requirements, our annual general meeting must be called by not less than ten (10) clear days’ notice, and any extraordinary general meetings must be called by not less than fourteen (14) clear days’ notice, in each case, prior to the relevant shareholders meeting and convened by a notice discussed below. Alternatively, upon the prior consent of all holders entitled to attend and vote (with regards to an annual general meeting), and the holders of a majority in number of the Members having the right to attend and vote at the meeting (with regard to an extraordinary general meeting), that meeting may be convened by a shorter notice and in a manner deemed appropriate by those holders.
We will give notice of each general meeting of shareholders by publication on our website and in any other manner that we may be required to follow in order to comply with Cayman Islands law, Nasdaq and SEC requirements. The holders of registered shares may be convened for a shareholders’ meeting by means of letters sent to the addresses of those shareholders as registered in our shareholders’ register, or, subject to certain statutory requirements, by electronic means. We will observe the statutory minimum convening notice period for a general meeting of shareholders.
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A quorum for a general meeting consists of any one or more persons holding or representing by proxy not less than one-third in nominal value of our issued voting shares entitled to vote upon the business to be transacted.
A resolution put to the vote of the meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded by the chairman of the meeting, certain shareholders as provided in the Articles or as required by the rules of Nasdaq. An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of the votes cast by, or on behalf of, the shareholders entitled to vote present in person or by proxy and voting at the meeting. A special resolution requires the affirmative vote of no less than two-thirds of the votes cast by the shareholders entitled to vote who are present in person or by proxy at a general meeting (except for certain matters described below which require an affirmative vote of two-thirds). Both ordinary resolutions and special resolutions may also be passed by a unanimous written resolution signed by all the shareholders of our company, as permitted by the Companies Law and our Fifth Amended And Restated Memorandum and Articles of Association.
Our Fifth Amended And Restated Memorandum and Articles of Association provide that the affirmative vote of no less than two-thirds of votes cast by the shareholders entitled to vote who are present in person or by proxy at a general meeting shall be required to approve a) to reduce its share capital or any capital redemption reserve or other undistributable reserve; b) the necessary quorum (whether at a separate general meeting or at its adjourned meeting) shall be a person or persons or (in the case of a shareholder being a corporation) its duly authorized representative together holding or representing by proxy not less than one-third in nominal value of the issued voting shares of that class; c) every holder of shares of the class shall be entitled on a poll to one vote for every such share held by him; and d) any holder of shares of the class present in person or by proxy or authorized representative may demand a poll.
Transfers of Shares
Subject to these Articles and the requirements of Nasdaq, any shareholder may transfer all or any of his shares by an instrument of transfer in the usual or common form or in a form prescribed by Nasdaq or in any other form approved by the Board and may be under hand or, if the transferor or transferee is a clearing house or a central depository house or its nominee(s), by hand or by machine imprinted signature or by electronic signature or by such other manner of execution as the Board may approve from time to time. The Board may, in its absolute discretion, and without giving any reason therefor, refuse to register a transfer of any share made in accordance with the Articles but only where such share is not a fully paid up share (and being transferred to a person of whom it does not approve), or any share issued under any share incentive scheme for employees or pursuant to any other agreement, contract or other such arrangement, upon which a restriction on transfer imposed thereby still subsists, and it may also, without prejudice to the foregoing generality, refuse to register a transfer of any share to more than four joint holders.
The Board in so far as permitted by any applicable law may, in its absolute discretion, at any time and from time to time transfer any share upon the register to any branch register or any share on any branch register to the Register or any other branch register. In the event of any such transfer, the shareholder requesting such transfer shall bear the cost of effecting the transfer unless the Board otherwise determines.
Unless the Board otherwise agrees (which agreement may be on such terms and subject to such conditions as the Board in its absolute discretion may from time to time determine, and which agreement the Board shall, without giving any reason therefore, be entitled in its absolute discretion to give or withhold), no shares upon the Register shall be transferred to any branch register nor shall shares on any branch register be transferred to the Register or any other branch register and all transfers and other documents of title shall be lodged for registration, and registered, in the case of any shares on a branch register, at the relevant registration office, and, in the case of any shares on the register, at the registered office of the Company or such other place at which the register is kept in accordance with the Companies Law.
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Liquidation
Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares (i) if the Company shall be wound up and the assets available for distribution amongst the shareholders of the Company shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed pari passu amongst such members in proportion to the amount paid up on the shares held by them respectively and (ii) if the Company shall be wound up and the assets available for distribution amongst the shareholders as such shall be insufficient to repay the whole of the paid-up capital such assets shall be distributed so that, a nearly as may be, the losses shall be borne by the shareholders in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively.
If the Company shall be wound up (whether the liquidation is voluntary or by the court) the liquidator may, with the authority of a special resolution and any other sanction required by the Companies Law, divide among the shareholders in specie or kind the whole or any part of the assets of the Company and whether or not the assets shall consist of properties of one kind or shall consist of properties to be divided as aforesaid of different kinds, and may for such purpose set such value as he deems fair upon any one or more class or classes of property and may determine how such division shall be carried out as between the shareholders or different classes of shareholders. The liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of the Members as the liquidator with the like authority shall think fit, and the liquidation of the Company may be closed and the Company dissolved, but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability.
Anti-Takeover Provisions
Some provisions of our Fifth Amended And Restated Memorandum and Articles of Association may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable, including provisions that authorize our board of directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our shareholders.
Inspection of Books and Records
Holders of ordinary shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records. No shareholder (other than a director) shall have any right of inspecting any accounting record or book or document of the Company except as conferred by law or authorized by the Board or the Company in general meeting. Notwithstanding the above, our Fifth Amended And Restated Memorandum and Articles of Association provide our shareholders with the right to receive annual audited financial statements. Such right to receive annual audited financial statements may be satisfied by filing such annual reports as we are required to file with the SEC.
Register of Shareholders
Under Cayman Islands law, we must keep a register of shareholders that includes: the name and address of each shareholder, the number and class of shares held by him and the amount paid or agreed to be considered as paid on such shares; the date on which each person was entered in the register; and the date on which any person ceased to be a shareholder.
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Exempted Company
We are an exempted company with limited liability under the Companies Law. The Companies Law distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. An exempted company:
| ● | does not have to file an annual return of its shareholders with the Registrar of Companies; | |
| ● | is not required to open its register of members for inspection; | |
| ● | does not have to hold an annual general meeting; | |
| ● | may issue shares with no par value; | |
| ● | may obtain an undertaking against the imposition of any future taxation; | |
| ● | may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; | |
| ● | may register as a limited duration company; and | |
| ● | may register as a segregated portfolio company. |
“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the Company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).
Preferred Shares
Our board of directors is empowered to designate and issue from time to time one or more classes or series of preferred shares and to fix and determine the relative rights, preferences, designations, qualifications, privileges, options, conversion rights, limitations and other special or relative rights of each such class or series so authorized. Such action could adversely affect the voting power and other rights of the holders of our ordinary shares or could have the effect of discouraging any attempt by a person or group to obtain control of us.
Series A Preferred Shares
On June 29, 2026, the Board of Directors designated 2,000,000 preferred shares as Series A Preferred Shares (par value US$0.001 per share) pursuant to a Statement of Rights. On July 16, 2026, the Company issued 100,000 Series A Preferred Shares to Mr. Lingtao Kong, Chairman of the Board, pursuant to a Subscription Agreement, for an aggregate subscription price of US$100 (US$0.001 per share).
The principal rights, preferences, privileges, restrictions and conditions attaching to the Series A Preferred Shares are as follows:
Ranking. The Series A Preferred Shares rank pari passu with the ordinary shares and all other classes or series of shares of the Company in all respects, including with respect to the payment of dividends, distributions upon a liquidation, dissolution or winding up of the Company, redemption or any other rights, save that upon a liquidation, dissolution or winding up, the amount repayable in respect of each Series A Preferred Share shall be limited to the amount that would be repayable in respect of the number of ordinary shares into which such Series A Preferred Share is then convertible.
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Voting Rights. Each holder of a Series A Preferred Share is entitled to receive notice of, attend, speak and vote at any general meeting of the Company. The Series A Preferred Shares vote together with the holders of ordinary shares as a single class on all matters submitted to a vote of members, unless otherwise required by applicable law or the articles of association of the Company, and do not carry any separate class vote except to the extent required by applicable law or the articles of association of the Company in connection with any variation of the rights attaching to the Series A Preferred Shares. Holders of Series A Preferred Shares are entitled to 100 votes per Series A Preferred Share on all matters submitted to shareholders for approval.
Conversion Rights. Each holder of Series A Preferred Shares has the right, at any time and from time to time, to convert all or any portion of their Series A Preferred Shares into fully paid ordinary shares at the then-applicable Conversion Ratio by delivering written notice to the Company at least 15 days prior to the proposed conversion date. The initial Conversion Ratio is one ordinary share per Series A Preferred Share, subject to proportional adjustment for any subdivision, split, consolidation, share dividend, reclassification, reorganization, or other recapitalization event affecting the ordinary shares.
Automatic Conversion. Each Series A Preferred Share will automatically convert into the number of fully paid ordinary shares equal to the then-applicable Conversion Ratio upon the occurrence of either of the following events: (i) the initial holder of the Series A Preferred Shares ceases to serve as an executive officer or director of the Company for any reason whatsoever, including by reason of resignation, removal (with or without cause), death or permanent incapacity; or (ii) the closing of a transaction constituting a change of control of the Company that has been recommended, approved or consented to by the Board prior to or at the time of such closing (a “Board-Approved Change of Control”). For the avoidance of doubt, any hostile takeover, unsolicited tender offer, unsolicited exchange offer or any other unsolicited change-of-control transaction not recommended or approved by the Board is expressly excluded from the definition of Board-Approved Change of Control.
In connection with any Board-Approved Change of Control, from the date on which the Board formally issues its recommendation, approval or consent until the earlier of (i) the closing of such transaction and (ii) the date on which the Board formally withdraws or revokes such recommendation in its entirety, each holder of Series A Preferred Shares shall not exercise any voting rights attaching to the Series A Preferred Shares in any manner contrary to, or inconsistent with, the Board’s recommendation, whether at any general meeting, by written resolution or otherwise.
Top-Up Payment. On any conversion of Series A Preferred Shares into ordinary shares (whether voluntary or automatic), if the aggregate par value of the ordinary shares to be issued upon such conversion exceeds the aggregate par value of the Series A Preferred Shares being converted, the converting holder must pay to the Company, as a condition precedent to the issuance of such ordinary shares, a cash amount equal to such excess (the “Top-Up Payment”). If the Top-Up Payment is not paid in full by the applicable deadline, no ordinary shares will be issued upon such conversion and the relevant Series A Preferred Shares will be automatically surrendered and cancelled for no consideration, provided that the Board may, in its sole discretion, waive or extend such payment deadline.
Transfer Restrictions. No holder of Series A Preferred Shares may sell, assign or transfer any Series A Preferred Shares to any person without the prior written consent of the Board (excluding the vote of any holder of Series A Preferred Shares), which may be withheld for whatever reason at the Board’s sole discretion; provided, however, that the initial holder may transfer Series A Preferred Shares to one or more trusts, family holding companies or other entities established and controlled by the initial holder solely for bona fide tax or estate planning purposes, so long as the initial holder retains sole voting control and sole investment control over such entities, and provided further that the transferee executes and delivers to the Company a joinder agreement in form and substance reasonably satisfactory to the Company. The Board will refuse to register any transfer of Series A Preferred Shares purported to be made in violation of these restrictions.
Variation. The rights attaching to the Series A Preferred Shares may only be varied in accordance with the articles of association of the Company.
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C. MATERIAL CONTRACTS.
All material contracts concluded by the Company during the two years preceding the date of this annual report were entered into in the ordinary course of business, except for those described in “Item 4. Information on the Company” or elsewhere in this annual report on Form 20-F. Copies or forms of such agreements are listed under the Exhibit Index of this annual report and incorporated by reference from the filings as indicated thereunder.
D. EXCHANGE CONTROLS.
This section sets forth a summary of the most significant regulations or requirements that affect our business activities in China or our shareholders’ right to receive dividends and other distributions from us.
Regulation of Foreign Exchange in Certain Onshore and Offshore Transactions
In October 2005, the SAFE issued the Notice on Issues Relating to the Administration of Foreign Exchange in Fund-raising and Return Investment Activities of Domestic Residents Conducted via Offshore Special Purpose Companies, or SAFE Notice 75, which became effective as of November 1, 2005, and was further supplemented by two implementation notices issued by the SAFE on November 24, 2005 and May 29, 2007, respectively. Under Circular 75, prior registration with the local SAFE branch is required for PRC residents to establish or to control an offshore company for the purposes of financing that offshore company with assets or equity interests in an onshore enterprise located in the PRC. An amendment to the registration or filing with the local SAFE branch by such PRC resident is also required for the injection of equity interests or assets of an onshore enterprise in the offshore company or overseas funds raised by such offshore company, or any other material change with respect to the offshore company in connection with any increase or decrease of capital, transfer of shares, merger, division, equity investment, debt investment, or creation of any security interest over any assets located in the PRC.
Under SAFE Notice 75, PRC residents are further required to repatriate into the PRC all of their dividends, profits or capital gains obtained from their shareholdings in the offshore entity within 180 days of their receipt of such dividends, profits or capital gains. The registration and filing procedures under SAFE Notice 75 are prerequisites for other approval and registration procedures necessary for capital inflow from the offshore entity, such as inbound investments or shareholders loans, or capital outflow to the offshore entity, such as the payment of profits or dividends, liquidating distributions, equity sale proceeds, or the return of funds upon a capital reduction. Therefore, failure to comply with such registration may subject us to certain restrictions on, including but not limited to, the increase of the registered capital of our PRC subsidiary, making loans to our PRC subsidiary, and making distributions to us from our on-shore companies.
Dividend Distribution
Under current applicable laws and regulations, each of our consolidated PRC entities, including WFOEs and domestic companies, may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, each of our consolidated PRC entities is required to deposit at least ten percent (10%) of its after-tax profit based on PRC accounting standards each year into its statutory surplus reserve fund until the accumulative amount of such reserve reaches fifty percent (50%) of its registered capital. These reserves are not distributable as cash dividends. As of March 31, 2026 the accumulated balance of our statutory reserve funds reserves amounted to nil, and the accumulated losses of our consolidated PRC entities amounted to $16.75 million.
Interim Regulations on Administration of Sino-Foreign Joint Venture and Cooperative Medical Institutions
As per China’s commitments to the World Trade Organization, “Foreign service suppliers are permitted to establish joint venture hospitals or clinics with local Chinese partners with quantitative limitations in line with China’s needs. Foreign majority ownership is permitted.” In accordance with the Interim Regulations on Administration of Sino-Foreign Joint Venture and Cooperative Medical Institutions issued jointly by the Ministry of Health (“MOH”) and the Ministry of Commerce (“MOFCOM”) in 2000, the Chinese party of Sino-foreign joint ventures and cooperative medical institutions shall hold no less than thirty percent (30%) of shares and legal rights or interest, which also mean foreign investors are allowed to hold a maximum stake of seventy percent (70%). Such regulations also specify that the establishment of Sino-foreign joint venture and cooperative medical institutions should be approved respectively by MOH and MOFCOM. In other words, foreigners are allowed to run hospitals or clinics in the form of equity or co-operative joint ventures with an equity interest of up to seventy percent (70%) lasting up to twenty (20) years.
In 2018, the State Council abolished the 2000 regulations to align with broader economic reforms. Pilot policies in Free Trade Zones (e.g., Shanghai, Hainan) introduced breakthroughs like wholly foreign-owned hospitals and delegated approval powers to provincial authorities. The pivotal shift came with the 2020 Foreign Investment Law (FIL), which established a “pre-establishment national treatment + negative list” system. Healthcare’s exclusion from the 2020 and 2021 Negative Lists implicitly permitted 100% foreign ownership nationwide, while the 2022 revision of medical institution regulations eliminated distinctions between domestic and foreign-invested entities, unifying operational standards.
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In 2023, full liberalization was formalized through the updated Negative List, which removed all healthcare equity restrictions. Foreign investors may now establish wholly-owned hospitals, clinics, and specialty centers across China, though projects involving human genetic resources or internet diagnostics require special approvals.
E. TAXATION
The current PRC Enterprise Income Tax Law (the “EIT Law”), and the implementation regulations for the EIT Law issued by China’s State Council, became effective as of January 1, 2008. Under the EIT Law, enterprises are classified as either resident or non-resident enterprises. An enterprise established outside of China with its “de facto management bodies” located within China is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules of the EIT Law defines a “de facto management body” as a managing body that in practice exercises “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise; however, it remains unclear whether the PRC tax authorities would deem our managing body as being located within China. Due to the relatively short history of the EIT Law and lack of applicable legal precedents, the PRC tax authorities determine the PRC tax resident treatment of entities organized under the laws of foreign jurisdictions on a case-by-case basis.
If the PRC tax authorities determine that we are a resident enterprise for PRC enterprise income tax purposes, a number of PRC tax consequences could follow. First, we may be subject to enterprise income tax at a rate of twenty five percent (25%) on our respective worldwide taxable income, as well as PRC enterprise income tax reporting obligations. Second, although the EIT Law provides that “dividends, bonuses and other equity investment proceeds between qualified resident enterprises” is exempted income, and the implementing rules of the EIT Law refer to “dividends, bonuses and other equity investment proceeds between qualified resident enterprises” as the investment proceeds obtained by a resident enterprise from its direct investment in another resident enterprise, it is still unclear whether any dividends we may receive from our current subsidiaries would be classified as “dividends between qualified resident enterprises” and therefore qualify for tax exemption.
If we are treated as a non-resident enterprise under the EIT Law, any dividends that we receive from Allright, or historically received from Jiuxin Investment (assuming such dividends are deemed to be sourced from within the PRC) (i) may be subject to a five percent (5%) PRC withholding tax, provided that we own more than twenty five percent (25%) of the registered capital of Allright or Jiuxin Investment incessantly within twelve (12) months immediately prior to obtaining such dividends from Allright or Jiuxin Investment, as applicable, and if the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the “Arrangement”) is applicable, or (ii) if the Arrangement does not apply (i.e. the PRC tax authorities may deem us to be a conduit not entitled to treaty benefits), may be subject to a ten percent (10%) PRC withholding tax. Similarly, if we are treated as a non-resident enterprise, and Renovation is treated as a resident enterprise, then any dividends that we receive from Renovation (assuming such dividends were considered sourced within the PRC) may be subject to a ten percent (10%) PRC withholding tax. Any such taxes on dividends could materially reduce the amount of dividends, if any, that we could pay to our shareholders.
Finally, the new “resident enterprise” classification could result in a situation in which a ten percent (10%) PRC tax is imposed on dividends we pay to our investors that are non-resident enterprises so long as such non-resident enterprise investors do not have an establishment or place of business in China or, despite the existence of such establishment of place of business in China, the relevant income is not effectively connected with such establishment or place of business in China, to the extent that such dividends have their sources within the PRC. Similarly, any gain realized on the transfer of our shares by such investors is also subject to a ten percent (10%) PRC income tax if such gain is regarded as income derived from sources within China. In such event, we may be required to withhold a ten percent (10%) PRC tax on any dividends paid to our investors that are non-resident enterprises. Our investors that are non-resident enterprises also may be responsible for paying PRC tax at a rate of ten percent (10%) on any gain realized from the sale or transfer of our common shares in certain circumstances. We would not, however, have an obligation to withhold PRC tax with respect to such gain.
Moreover, the State Administration of Taxation issued the Notice on Strengthening the Administration of Enterprise Income Tax on Share Transfer Income of Non-Resident Enterprises No. 698 (“Circular 698”) on December 10, 2009, which reinforces taxation on transfer of non-listed shares by non-resident enterprises through overseas holding vehicles. Circular 698 applies retroactively and was deemed to be effective as of January 2008. Pursuant to Circular 698, where (i) a foreign investor who indirectly holds equity interest in a PRC resident enterprise through an offshore holding company indirectly transfers equity interests in a PRC resident enterprise by selling the shares of the offshore holding company, and (ii) the offshore holding company is located in a jurisdiction where the effective tax rate is lower than twelve and a half percent (12.5%) or where the offshore income of its residents is not taxable, the foreign investor is required to provide the tax authority in charge of that PRC resident enterprise with certain relevant information within thirty (30) days of the transfer. The tax authorities in charge will evaluate the offshore transaction for tax purposes. In the event that the tax authorities determine that such transfer is abusing forms of business organization and there is no reasonable commercial purpose other than avoidance of PRC enterprise income tax, the tax authorities will have the power to conduct a substance-over-form re-assessment of the nature of the equity transfer. A reasonable commercial purpose may be established when the overall offshore structure is set up to comply with the requirements of supervising authorities of international capital markets. If the State Administration of Taxation’s challenge of a transfer is successful, they will deny the existence of the offshore holding company that is used for tax planning purposes. Since Circular 698 has a brief history, there is uncertainty as to its application.
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F. DIVIDENDS AND PAYING AGENTS.
Not applicable.
G. STATEMENT BY EXPERTS.
Not applicable.
H. DOCUMENTS ON DISPLAY.
We are subject to certain of the information reporting requirements of the Securities and Exchange Act of 1934, as amended. As a foreign private issuer we are exempt from the rules and regulations under the Securities Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Securities Exchange Act, with respect to their purchase and sale of our shares. In addition, we are not required to file reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Securities Exchange Act. Nasdaq rules generally require that companies send an annual report to shareholders prior to the annual general meeting, however we rely upon an exception under the Nasdaq rules. Specifically, we file annual reports on Form 20-F, which contain financial statements audited by an independent accounting firm, electronically with the SEC and post a copy on our website.
The SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, and our SEC reports can be viewed or downloaded there. The address of this web site is http://www.sec.gov. In addition, information that we furnish or file with the SEC, including annual reports on Form 20-F, current reports on Form 6-K, proxy and information statements and any amendments to, or exhibits included in, those reports are available to be viewed or download, free of charge, on our website at www.ridgetch.com as soon as reasonably practicable after such materials are filed or furnished with the SEC. Information contained, or that can be accessed through, our website does not constitute a part of this annual report and is not incorporated by reference herein, and we have included our website address in this annual report solely for informational purposes.
I. SUBSIDIARY INFORMATION
Not applicable.
J. ANNUAL REPORT TO SECURITY HOLDERS
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a smaller reporting company, we are not required to provide this information.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.
A. DEBT SECURITIES.
Not applicable.
B. WARRANTS AND RIGHTS.
Not applicable.
C. OTHER SECURITIES.
Not applicable.
D. AMERICAN DEPOSITARY SHARES.
Not applicable.
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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.
Not applicable.
ITEM 15. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Interim Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As of March 31, 2026, the end of the fiscal year covered by this report, our management, under the supervision and with the participation of our Interim Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures.
Based on the evaluation, our Interim Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2026, our disclosure controls and procedures were ineffective. They reached this conclusion due to the presence of material weaknesses in internal controls over financial reporting as described below. Management anticipates that our disclosure controls and procedures will remain ineffective until such material weaknesses are remediated.
Management’s Report on Internal Control over Financial Reporting
We assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2026. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (COSO) in the Internal Control-Integrated Framework. We are responsible for establishing and maintaining adequate internal control over financial reporting. Based on our evaluation, management concluded that our internal control over financial reporting was ineffective as of March 31, 2026 due to the following material weaknesses:
Accounting and Finance Personnel Weaknesses
Management concluded that in light of the inexperience of our accounting staff with respect to the requirements of U.S. GAAP-based reporting and SEC rules and regulations, we did not maintain effective controls and did not implement adequate and proper supervisory review to ensure that significant internal control deficiencies can be detected or prevented.
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Management’s assessment of the control deficiency over accounting and finance personnel as of March 31, 2026 considered the same factors, including:
| ● | the number of adjustments proposed by our independent auditors during our semiannual review and annual audit processes; | |
| ● | how adequately we complied with U.S. GAAP on transactions; and | |
| ● | how accurately we prepared supporting information to provide to our independent auditors on a semiannually and annual basis. |
Based on the above factors, management concluded that the lack of timely reconciliation of booking and recording from China GAAP to US GAAP, lack of accounting staff with sufficient US GAAP experience, and lack of timely reconciliation of revenue and accounts receivable collectability are material weaknesses as of March 31, 2026.
Remediation of Material Weakness for the year ended March 31, 2026
Subsequent to the identification of the material weakness, we have enhanced existing controls and design and implemented new controls. We have devoted significant time and attention to remediate the above material weaknesses. For example, we redesigned our system to retrieve data faster, so we are able to identify and reconcile the GAAP difference more efficiently. We continued to use SAP to strengthen the data processing and transferring. In addition, we trained our accounting staff with US GAAP knowledge, so they can meet the requirement from our auditors more efficiently. Additionally, we plan to more closely monitor the collection of our accounts receivables. We will check more often about the collectability of their receivables. If we determine that the accounts are uncollectible, we will quickly seek the potential recovery and recognize any potential loss soon. These improvements to our internal control infrastructure were implemented, and were in place in connection with the preparation of our financial statements for the year ended March 31, 2026. However, the material weaknesses have not yet been fully remediated, and we will continue to monitor and test the effectiveness of the newly implemented controls. We believe that the remediation initiative outlined above will be sufficient to remediate as the changes become operational for future years the material weakness in internal control over financial reporting as discussed.
Changes in Internal Control over Financial Reporting
Other than for the on-going remediation efforts described above, there have been no changes in our internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act that occurred during the year ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Controls
Management does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent or detect all errors and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
Item 16. [Reserved]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT.
Our Board of Directors has determined, based on information furnished by Ms. Caroline Wang and other available information, that she meets the requirements of an “audit committee financial expert” as that term is defined in the rules promulgated under the Exchange Act, and has accordingly designated her as such. Ms. Caroline Wang also satisfies the “independence” requirements of the Nasdaq listing rules and meets the independence standards under Rule 10A-3 under the Exchange Act. Our Board of Directors has also appointed her chairperson of the committee.
74
ITEM 16B. CODE OF ETHICS.
The Company’s Code of Ethics, which applies to all officers, directors and employees, was adopted by the Board on March 15, 2010. The Code of Ethics was filed as Exhibit 14.1 to the Current Report on Form 8-K our predecessor, China Jo-Jo Drugstores, Inc. a Nevada Corporation, filed with the SEC on March 16, 2010, a copy of which is available on our website at http://www.ridgetch.com under the tabs “Investor”-“Corporate Governance”-“Documents”.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Our current principal independent auditor is YCM CPA INC. (“YCM”) whom we engaged on May 31, 2022. The following table shows the fees for audit and other services provided by YCM in relation to our 2026 and 2025 fiscal years:
| For the Fiscal Years ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Audit Fees (1) | $ | 278,500 | $ | 335,000 | ||||
| Audit-Related Fees (2) | - | - | ||||||
| Tax Fees (3) | - | - | ||||||
| All Other Fees (4) | - | - | ||||||
| Total | $ | 278,500 | $ | 335,000 | ||||
| (1) | Audit Fees: This category includes the audit of our annual financial statements, review of financial statements included in our interim semi-annual report on Form 6-K, and services that are normally provided by independent auditors in connection with statutory and regulatory filings or the engagement for fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements. |
| (2) | Audit-Related Fees: This category consists of assurance and related services by our independent auditors that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” |
| (3) | Tax Fees: This category consists of professional services rendered by our independent auditors for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice. |
| (4) | All Other Fees: This category consists of fees for other miscellaneous items. |
Pre-Approval Policies and Procedures of the Audit Committee
The Audit Committee approves the engagement of our independent auditors and is also required to pre-approve all audit and non-audit expenses. Prior to engaging its accountants to perform particular services, the Audit Committee obtains an estimate for the service to be performed. All of the services described above were approved by the Audit Committee in accordance with its procedure.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.
Not applicable.
75
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.
No purchases of ordinary shares were made by or on behalf of the company or any “affiliated purchaser” during the fiscal year ended March 31, 2026. However, please refer to “Item 7. Major Shareholders and Related Party Transactions – B. Related Party Transactions – Equity Exchange Agreements” and “– Share Surrender” for a discussion of certain transactions in which former directors and officers of the company surrendered their shares for no consideration.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 16G. CORPORATE GOVERNANCE.
Our ordinary shares are listed on Nasdaq. In order to list on Nasdaq, we are required to comply with certain of the Nasdaq Rules. As a foreign private issuer, we may follow our home country’s corporate governance practices in lieu of certain of the Nasdaq Rules. Pursuant to the home country practice exemption set forth under Nasdaq Marketplace Rule 5615(a)(3)(A) and other applicable exemptions, which provide (with certain exceptions not relevant to the conclusions expressed herein) that a foreign private issuer may follow its home country practice in lieu of the requirements of the Nasdaq Marketplace Rule 5600 Series, we have elected to be exempted from certain requirements including the following:
| (i) | Nasdaq Marketplace Rule 5605(b)(1) which sets forth the requirement that a majority of the board of directors for companies listed on Nasdaq must be comprised of Independent Directors; |
| (ii) | Nasdaq Marketplace Rule 5250(d) which requires companies listed on Nasdaq to distribute annual and interim reports; |
| (iii) | Rule 5635 pursuant to which shareholder approval is required, including: |
| (a) | Rule 5635(a), pursuant to which shareholder approval is required in certain circumstances prior to the issuance of securities in connection with the acquisition of the stock or assets of another company; |
| (b) | Rule 5635(b), pursuant to which shareholder approval is required prior to the issuance of securities when the issuance or potential issuance will result in a change of control of the company; |
| (c) | Rule 5635(c), pursuant to which shareholder approval is required prior to the issuance of securities when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees, or consultants, subject to certain exceptions; |
| (d) | Nasdaq Marketplace Rule 5640 which requires that the voting rights of existing shareholders of publicly traded common stock registered under Section 12 of the Securities Exchange Act of 1934 may not be disparately reduced or restricted through any corporate action or issuance; and |
| (iv) | Rule 5640 requiring that the voting rights of existing shareholders of publicly traded common stock registered under Section 12 of the Securities Exchange Act of 1934 may not be disparately reduced or restricted through any corporate action or issuance. |
Our Cayman Islands counsel, Conyers Dill & Pearman LLP, has provided a letter, as required by The Nasdaq Stock Market, certifying that, under Cayman Islands law and the Company’s currently effective memorandum and articles of association, the Company is not prohibited from adopting the governance practice as discussed above.
ITEM 16H. MINE SAFETY DISCLOSURE.
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
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ITEM 16J. INSIDER TRADING POLICIES.
We have considered and
ITEM 16K. CYBERSECURITY.
Risk Management and Strategy
We have developed a comprehensive cybersecurity threat defense system to address both internal and external threats. This system encompasses various levels, including network, host and application security and incorporates systematic security capabilities for threat defense, monitoring, analysis, response, deception and countermeasures.
As of the date of this Report, we have
Governance
Our Board of Directors is responsible for overseeing the Company’s cybersecurity risk management and be informed on risks from cybersecurity threats.
77
PART III
ITEM 17. FINANCIAL STATEMENTS.
We have elected to provide financial statements and related information specified in Item 18.
ITEM 18. FINANCIAL STATEMENTS.
See “Index to Consolidated Financial Statements” for a list of all financial statements filed as part of this annual report. The Financial Statements begin on page F-1.
ITEM 19. EXHIBITS.
See the Exhibit Index following the signature page of this report, which is incorporated herein by reference.
78
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| RIDGETECH, INC. | ||
| By: | /s/ Ming Zhao | |
| Ming Zhao | ||
| Interim Chief Executive Officer and Chief Financial Officer | ||
July 31, 2026
79
INDEX
The following documents are filed as part of this annual report on Form 20-F.
80
| * | Filed herewith |
| (1) | Incorporated by reference to Exhibit 4.1 to the predecessor of the registrant’s Registration Statement on Form SB-2 filed on November 28, 2007 |
| (2) | Incorporated by reference to Exhibit 2.1 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 24, 2009 |
| (3) | Incorporated by reference to Exhibit 99.5 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 24, 2009 |
| (4) | Incorporated by reference to Exhibit 99.6 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 24, 2009 |
| (5) | Incorporated by reference to Exhibit 99.7 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 24, 2009 |
| (6) | Incorporated by reference to Exhibit 99.8 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 24, 2009 |
| (7) | Incorporated by reference to Exhibit 99.9 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 24, 2009 |
| (8) | Incorporated by reference to Exhibit 99.10 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 24, 2009 |
| (9) | Incorporated by reference to Exhibit 99.11 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 24, 2009 |
| (10) | Incorporated by reference to Exhibit 99.12 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 24, 2009 |
| (11) | Incorporated by reference to Exhibit 99.13 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 24, 2009 |
81
| (12) | Incorporated by reference to Exhibit 99.14 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 24, 2009 |
| (13) | Incorporated by reference to Exhibit 99.15 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 24, 2009 |
| (14) | Incorporated by reference to Exhibit 99.16 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 24, 2009 |
| (15) | Incorporated by reference to Exhibit 99.17 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 24, 2009 |
| (16) | Incorporated by reference to Exhibit 99.18 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 24, 2009 |
| (17) | Incorporated by reference to Exhibit 99.19 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 24, 2009 |
| (18) | Incorporated by reference to Exhibit 99.1 to the predecessor of the registrant’s Current Report on Form 8-K filed on October 30, 2009 |
| (19) | Incorporated by reference to Exhibit 99.2 to the predecessor of the registrant’s Current Report on Form 8-K filed on October 30, 2009 |
| (20) | Incorporated by reference to Exhibit 99.3 to the predecessor of the registrant’s Current Report on Form 8-K filed on October 30, 2009 |
| (21) | Incorporated by reference to Exhibit 99.4 to the predecessor of the registrant’s Current Report on Form 8-K filed on October 30, 2009 |
| (22) | Incorporated by reference to Exhibit 99.5 the predecessor of the registrant’s Current Report on Form 8-K filed on October 30, 2009 |
| (23) | Incorporated by reference to Exhibit 99.6 to the predecessor of the registrant’s Current Report on Form 8-K filed on October 30, 2009 |
| (24) | Incorporated by reference to Exhibit 99.7 to the predecessor of the registrant’s Current Report on Form 8-K filed on October 30, 2009 |
| (25) | Incorporated by reference to Exhibit 99.8 to the predecessor of the registrant’s Current Report on Form 8-K filed on October 30, 2009 |
| (26) | Incorporated by reference to Exhibit 99.9 to the predecessor of the registrant’s Current Report on Form 8-K filed on October 30, 2009 |
| (27) | Incorporated by reference to Exhibit 99.10 to the predecessor of the registrant’s Current Report on Form 8-K filed on October 30, 2009 |
| (28) | Incorporated by reference to Exhibit 99.11 to the predecessor of the registrant’s Current Report on Form 8-K filed on October 30, 2009 |
| (29) | Incorporated by reference to Exhibit 99.12 to the predecessor of the registrant’s Current Report on Form 8-K filed on October 30, 2009 |
| (30) | Incorporated by reference to Exhibit 14.1 to the predecessor of the registrant’s Current Report on Form 8-K filed on March 16, 2010 |
| (31) | Incorporated by reference to Exhibit 99.1 to the predecessor of the registrant’s Current Report on Form 8-K filed on December 12, 2013 |
| (32) | Incorporated by reference to Exhibit 10.1 to the predecessor of the registrant’s Current Report on Form 8-K filed on October 26, 2018 |
| (33) | Incorporated by reference to Exhibit 10.2 to the predecessor of the registrant’s Current Report on Form 8-K filed on November 24, 2014 |
| (34) | Incorporated by reference to Exhibit 10.1 to the predecessor of the registrant’s Current Report on Form 8-K filed on December 2, 2015 |
| (35) | Incorporated by reference to Exhibit 10.33 to the predecessor of the registrant’s Annual Report on Form 10-K filed on June 29, 2017 |
| (36) | Incorporated by reference to Exhibit 10.1 to the predecessor of the registrant’s Current Report on Form 8-K filed on September 6, 2018 |
| (37) | Incorporated by reference to Exhibit 2.1 to the predecessor of the registrant’s Current Report on Form 8-K filed on May 14, 2021 |
| (38) | Incorporated by reference to Exhibit 1.1 to the Report of Foreign Private Issuer on Form 6-K filed with the Securities and Exchange Commission on April 10, 2026. |
82
| (39) | [Reserved] |
| (40) | Incorporated by reference to Exhibit 10.1 to the Report of Foreign Private Issuer on Form 6-K furnished to the Securities and Exchange Commission on February 3, 2025 |
| (41) | Incorporated by reference to Exhibit 10.2 to the Report of Foreign Private Issuer on Form 6-K furnished to the Securities and Exchange Commission on February 3, 2025 |
| (42) | Incorporated by reference to Exhibit 10.1 to the Report of Foreign Private Issuer on Form 6-K furnished to the Securities and Exchange Commission on June 11, 2024 |
| (43) | Incorporated by reference to Exhibit 10.1 to the Report of Foreign Private Issuer on Form 6-K furnished to the Securities and Exchange Commission on May 10, 2024 |
| (44) | Incorporated by reference to Exhibit 10.1 to the Report of Foreign Private Issuer on Form 6-K furnished to the Securities and Exchange Commission on April 29, 2024 |
| (45) | Incorporated by reference to Annex A to the Notice for the Annual General Meeting of the Shareholders furnished as Exhibit 99.1 to the Report of Foreign Private Issuer on Form 6-K to the Commission on November 14, 2023 |
| (46) | Incorporated by reference to Exhibit 10.1 to the Report of Foreign Private Issuer on Form 6-K furnished to the Securities and Exchange Commission on September 26, 2023 |
| (47) | Incorporated by reference to Exhibit 10.2 to the Report of Foreign Private Issuer on Form 6-K furnished to the Securities and Exchange Commission on January 20, 2023 |
| (48) | Incorporated by reference to Exhibit 99.2 to the Report of Foreign Private Issuer on Form 6-K furnished to the Securities and Exchange Commission on October 11, 2022 |
| (49) | Incorporated by reference to Exhibit 99.3 to the Report of Foreign Private Issuer on Form 6-K furnished to the Securities and Exchange Commission on October 11, 2022 |
| (50) | Incorporated by reference to Exhibit 99.2 to the Report of Foreign Private Issuer on Form 6-K furnished to the Securities and Exchange Commission on August 2, 2022 |
| (51) | Incorporated by reference to Exhibit 99.3 to the Report of Foreign Private Issuer on Form 6-K furnished to the Securities and Exchange Commission on August 2, 2022 |
| (52) | Incorporated herein by reference to Exhibit 97.1 to the Annual Report on Form 20-F filed with the SEC on July 30, 2024 |
| (53) | Incorporated by reference to Exhibit 10.2 to the predecessor of the registrant’s Current Report on Form 8-K filed on January 4, 2017 |
| (54) | Incorporated by reference to Exhibit 4.40 to the Annual Report on Form 20-F filed with the SEC on July 28, 2025 |
| (55) | Incorporated by reference to Exhibit 4.1 to the Report of Foreign Private Issuer on Form 6-K filed with the Securities and Exchange Commission on November 10, 2025 |
| (56) | Incorporated by reference to Exhibit 4.2 to the Report of Foreign Private Issuer on Form 6-K filed with the Securities and Exchange Commission on November 10, 2025 |
| (57) | Incorporated by reference to Exhibit 4.3 to the Report of Foreign Private Issuer on Form 6-K filed with the Securities and Exchange Commission on November 10, 2025 |
| (58) | Incorporated by reference to Exhibit 4.1 to the Report of Foreign Private Issuer on Form 6-K filed with the Securities and Exchange Commission on December 30, 2025. |
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Ridgetech, Inc. and Subsidiaries
CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Shareholders of Ridgetech, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Ridgetech, Inc. and subsidiaries (collectively, the “Company”) as of March 31, 2026 and 2025, and the related consolidated statements of operations and comprehensive income (loss), changes in shareholders’ equity, and cash flows for the years ended March 31, 2026, 2025 and 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2026 and 2025, and the results of its operations and its cash flows for the years ended March 31, 2026, 2025 and 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
F-2
Revenue Recognition
Description of the Matter
The Company recognizes wholesale revenue from pharmaceutical product distribution through its ERP-based order-to-cash system, serving hospitals, retail pharmacies, and sub-distributors across multiple regions. We identified revenue recognition related to wholesale sales as a critical audit matter due to the significant reliance on the ERP system for automated invoicing and revenue posting, coupled with the complexity of cutoff determination arising from delivery-acceptance cycles, third-party logistics handover timelines, and customer-specific contractual terms regarding title transfer and risk of loss. Given the high transaction volume, the involvement of multiple system interfaces (warehouse management, logistics tracking, and financial modules), and the need for judgment in determining the precise point of control transfer evaluating whether revenue was recorded in the correct period and supported by reliable system data required substantial audit effort.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to wholesale pharmaceutical revenue recognition included:
| ● | Obtaining an understanding of the Company’s revenue recognition policies for pharmaceutical wholesale, including contract terms for various customer types, and evaluating the design and implementation effectiveness of relevant internal controls over revenue recognition. | |
| ● | Performing cutoff testing by inspecting a sample of transactions near period-end, tracing time-stamped logistics records, customer orders, customer acceptance delivery notes to ensure revenue was recognized in the appropriate reporting period. | |
| ● | Validating system-generated sales data by tracing a sample of wholesale transactions from order entry through logistics handover, and final financial posting, and verifying the accuracy and completeness of data flow across interconnected systems. | |
| ● | Tracing customer communication records, including contracts, order and delivery confirmations, and verifying cash remittances to Company bank accounts as independent evidence of transaction completeness and period accuracy. |
/s/
We have served as the Company’s auditor since 2022.
PCAOB ID
July 30, 2026
F-3
RIDGETECH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| March 31, | March 31, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Trade accounts receivables | ||||||||
| Inventories | ||||||||
| Other receivables, net | ||||||||
| Advances to suppliers | ||||||||
| Due from related parties | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Notes payable | ||||||||
| Other payables | ||||||||
| Due to related parties | ||||||||
| Customer deposits | ||||||||
| Taxes payable | ||||||||
| Accrued liabilities | ||||||||
| Total current liabilities | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Deferred tax liabilities | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Ordinary shares; $ | ||||||||
| Preferred shares; $ | ||||||||
| Additional paid-in capital | ||||||||
| Statutory reserves | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ( | ) | ||||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these consolidated financial statements.
F-4
RIDGETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
| For the years ended March 31, |
||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| REVENUES, NET | $ | $ | $ | |||||||||
| COST OF GOODS SOLD | ||||||||||||
| GROSS PROFIT | ||||||||||||
| SELLING EXPENSES | ||||||||||||
| GENERAL AND ADMINISTRATIVE EXPENSES | ||||||||||||
| TOTAL OPERATING EXPENSES | ||||||||||||
| INCOME (LOSS) FROM OPERATIONS | ( | ) | ( | ) | ||||||||
| OTHER INCOME (EXPENSES): | ||||||||||||
| INTEREST INCOME | ||||||||||||
| INTEREST EXPENSES | ( | ) | ||||||||||
| INVESTMENT INCOME (EXPENSES) | ( | ) | ||||||||||
| OTHER INCOME (EXPENSES) | ( | ) | ( | ) | ( | ) | ||||||
| TOTAL OF OTHER INCOME (EXPENSES) | ( | ) | ||||||||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ||||||
| (BENEFIT) PROVISION FOR INCOME TAXES | ( | ) | ( | ) | ||||||||
| NET LOSS FROM CONTINUING OPERATIONS | ( | ) | ( | ) | ( | ) | ||||||
| NET LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES | ( | ) | ( | ) | ||||||||
| GAIN OF DIVESTITURE JIUXIN INVESTMENT | ||||||||||||
| NET GAIN(LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX | ( | ) | ||||||||||
| NET (LOSS) INCOME | ( | ) | ( | ) | ||||||||
| LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST | ( | ) | ||||||||||
| NET (LOSS) INCOME ATTRIBUTABLE TO RIDGETECH, INC. | ( | ) | ( | ) | ||||||||
| NET (LOSS) INCOME ATTRIBUTABLE TO RIDGETECH, INC. FROM CONTINUING OPERATIONS | ( | ) | ( | ) | ( | ) | ||||||
| NET (LOSS) INCOME ATTRIBUTABLE TO RIDGETECH, INC. FROM DISCONTINUED OPERATIONS | ( | ) | ||||||||||
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||
| FOREIGN CURRENCY TRANSLATION ADJUSTMENTS | ( | ) | ( | ) | ||||||||
| COMPREHENSIVE INCOME (LOSS) | ( | ) | ||||||||||
| WEIGHTED AVERAGE NUMBER OF SHARES*: | ||||||||||||
| Basic | ||||||||||||
| Diluted | ||||||||||||
| (LOSS) INCOME PER SHARE*: | ||||||||||||
| Basic | $ | ( | ) | $ | $ | ( | ) | |||||
| Diluted | $ | ( | ) | $ | $ | ( | ) | |||||
| * |
The accompanying notes are an integral part of these consolidated financial statements.
F-5
RIDGETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
| Accumulated | ||||||||||||||||||||||||||||||||
| Ordinary Shares* | Additional | other | Non- | Total | ||||||||||||||||||||||||||||
| Number of | paid-in | Statutory | Accumulated | comprehensive | controlling | Shareholders’ | ||||||||||||||||||||||||||
| shares | Amount | capital | reserves | deficit | income/(loss) | interest | Equity | |||||||||||||||||||||||||
| BALANCE, March 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Fractional shares issued for reverse stock split | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of shares and warrants in private placements | ||||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Foreign currency translation difference | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| BALANCE, March 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Cancellation of shares | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Divestiture of Jiuxin Investment | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Acquisition of Ridgeline | ||||||||||||||||||||||||||||||||
| Sale of shares and warrants | ||||||||||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||||||
| Foreign currency translation difference | - | |||||||||||||||||||||||||||||||
| BALANCE, March 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Sale of shares and in a private placement, net | ||||||||||||||||||||||||||||||||
| Cashless exercise of stock warrants | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Foreign currency translation difference | - | |||||||||||||||||||||||||||||||
| BALANCE, March 31, 2026 | ( | ) | ||||||||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these consolidated financial statements.
F-6
RIDGETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the years ended March 31, |
||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net (loss) income | $ | ( | ) | $ | $ | ( | ) | |||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Provision for (reversal of) doubtful accounts | ( | ) | ( | ) | ||||||||
| Amortization of right-of-use assets | ||||||||||||
| Loss from disposal of property and equipment | ||||||||||||
| Gain of divestiture Jiuxin Investment | ( | ) | ||||||||||
| Deferred tax expenses(benefits) | ( | ) | ( | ) | - | |||||||
| Investment loss | ||||||||||||
| Change in operating assets and liabilities: | ||||||||||||
| Accounts receivable | ( | ) | ( | ) | ||||||||
| Notes receivable | ( | ) | ||||||||||
| Inventories and biological assets | ( | ) | ||||||||||
| Other receivables | ( | ) | ( | ) | ( | ) | ||||||
| Advances to suppliers | ( | ) | ( | ) | ||||||||
| Long term deposit | ( | ) | ( | ) | ||||||||
| Other current assets | ||||||||||||
| Other noncurrent assets | ( | ) | ||||||||||
| Amount due from related parties | ( | ) | ||||||||||
| Accounts payable | ( | ) | ||||||||||
| Other payables and accrued liabilities | ||||||||||||
| Customer deposits | ( | ) | ( | ) | ||||||||
| Taxes payable | ( | ) | ||||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||||||
| Net cash provided by (used in) operating activities | ( | ) | ( | ) | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
| Acquisition of equipment and building | ( | ) | ( | ) | ( | ) | ||||||
| Investment in a joint venture | ( | ) | ||||||||||
| Purchases of intangible assets | ( | ) | ||||||||||
| Additions to leasehold improvements | ( | ) | ( | ) | ||||||||
| Acquisition of Ridgeline, net of cash acquired | ||||||||||||
| Divestiture Jiuxin Investment, net of cash disposed | ( | ) | ||||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Proceeds from short-term bank loan | ||||||||||||
| Repayment of short-term bank loan | ( | ) | ( | ) | ||||||||
| Proceeds from notes payable | ||||||||||||
| Repayment of notes payable | ( | ) | ( | ) | ( | ) | ||||||
| Net proceeds from issuance of shares and warrants in private placements | ||||||||||||
| Proceeds from other payable-related parties | ||||||||||||
| Repayment of other payable-related parties | ( | ) | ( | ) | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||||||
| EFFECT OF EXCHANGE RATE ON CASH | ( | ) | ||||||||||
| (DECREASE) INCREASE I IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | ( | ) | ( | ) | ||||||||
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year | ||||||||||||
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of year | $ | $ | $ | |||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||||
| Cash paid for income taxes | $ | $ | $ | |||||||||
| Cash paid for interest | ||||||||||||
| NON-CASH ACTIVITIES： | ||||||||||||
| Cashless exercise of warrants | $ | $ | $ | |||||||||
| Issuance of shares for acquisition of subsidiaries | ||||||||||||
| Cancellation of shares for disposal of subsidiaries | ||||||||||||
| Subscription receivable from issuance of ordinary shares | ||||||||||||
| (a) | The cash flows related to discontinued operations have not been segregated. Accordingly, the Consolidated Statements of Cash Flows include the results of continuing and discontinued operations. Refer to Note 4 - Discontinued Operations for further information. |
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Note 1 – DESCRIPTION OF BUSINESS AND ORGANIZATION
Ridgetech, Inc. (“RDGT” or the “Company”), formerly known as China Jo-Jo Drugstores, Inc. prior to February 2025, was incorporated in Nevada on
On September 17, 2009, the Company completed a share exchange transaction with Renovation Investment (Hong Kong) Co., Ltd. (“Renovation”), whereby
Prior to the Restructuring Transactions (as defined below) in the first quarter of 2025, the Company was an online and offline retailer and wholesale distributor of pharmaceutical and other healthcare products in the People’s Republic of China (“China” or the “PRC”). The Company’s offline retail business was comprised primarily of pharmacies, which were operated by Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd. (“Jiuzhou Pharmacy”), a company that the Company controlled through contractual arrangements.
The Company’s offline retail business also included four medical clinics through Hangzhou Jiuzhou Clinic of Integrated Traditional and Western Medicine (“Jiuzhou Clinic”) and Hangzhou Jiuzhou Medical and Public Health Service Co., Ltd. (“Jiuzhou Service”), both of which were also controlled by the Company through contractual arrangements. In May 2014, Shouantang Technology established Hangzhou Shouantang Bio-technology Co., Ltd. (“Shouantang Bio”). In May 2016, Shouantang Bio set up and held
Prior to the Restructuring Transactions, the Company also conducted its online retail pharmacy business through Jiuzhou Pharmacy, which held the Company’s online pharmacy license. On September 10, 2015, Renovation set up Jiuyi Technology to provide additional technical support such as webpage development to the Company’s online pharmacy business. In November 2015, the technical support function was transferred back to Jiuzhou Pharmacy, which hosted the Company’s online pharmacy.
Prior to the Restructuring Transactions, the Company’s wholesale business was primarily conducted through Zhejiang Jiuxin Medicine Co., Ltd. (“Jiuxin Medicine”), which is licensed to distribute prescription and non-prescription pharmaceutical products throughout China. Jiuzhou Pharmacy acquired Jiuxin Medicine on August 25, 2011. On April 20, 2018,
The Company’s herb farming business prior to the Restructuring Transactions was conducted by Hangzhou Qianhong Agriculture Development Co., Ltd. (“Qianhong Agriculture”), a wholly-owned subsidiary of Jiuxin Investment.
F-8
On July 30, 2021, China Jo-Jo Drugstores, Inc., a Nevada corporation (“CJJD”), completed a corporate reorganization (the “Reorganization” or “Redomicile Merger”), resulting in China Jo-Jo Drugstores Holdings, Inc., a company incorporated under the laws of the Cayman Islands (“CJJD Cayman”), becoming the publicly held parent company of CJJD, with CJJD merged with and into CJJD Cayman, pursuant to the Agreement and Plan of Merger, dated as of May 14, 2021, by and between CJJD and CJJD Cayman (the “Merger Agreement”). Prior to the Reorganization, shares of CJJD’s common stock were registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and listed on the NASDAQ Capital Market under the symbol “CJJD.” As a result of the Reorganization, each issued and outstanding share of CJJD’s common stock was converted into the right to receive one CJJD Cayman ordinary share, which shares were issued by CJJD Cayman as part of the Reorganization.
On April 7, 2022, the Company effected a
On March 1, 2024, the Company effected a
In the first quarter of 2025, the Company completed strategic restructuring of its overall business, aiming to transition from a high-cost retail segment to a wholesale-focused model by expansion of its wholesale business through acquisition of Allright (Hangzhou) Internet Technology Co. Ltd (“Allright”) and divestiture of its retail drugstores business. Pursuant to that certain Equity Exchange Agreement with Renovation, Mr. Lei Liu, Ms. Li Qi, and Oakview International Limited (“Oakview”), dated January 31, 2025, Renovation transferred all equity in Jiuxin Investment to Oakview, in exchange for irrevocable surrender for no consideration by Mr. Liu, Ms. Qi, Oakview and their affiliates in total
The accompanying consolidated financial statements reflect the activities of the Company and each of the following entities:
| Entity Name | Background | Ownership | ||
| Renovation | ||||
| Ridgeline | ● Incorporated in Hong Kong SAR on June 27, 2023
● Acquired by RDGT in February 2025 | |||
| Shouantang Technology | ● Established in the PRC on July 16, 2010 by Renovation with registered capital of $20 million
● Registered capital requirement reduced by the SAIC to $11 million in July 2012 and is fully paid
● Deemed a WFOE under PRC law
● Invests and finances the working capital of Quannuo Technology |
F-9
| Entity Name | Background | Ownership | ||
| Jiuxin Medicine | ● Established in PRC on December 31, 2003
● Acquired by Renovation in January 2024
● Registered capital of RMB 10 million fully paid
● Carries out pharmaceutical distribution services | |||
| Allright | ● Established in PRC on April 19, 2021
● Acquired by RDGT in February 2025
● Registered capital of RMB 10 million
● Carries out pharmaceutical distribution services | |||
| Jiutong Medical | ● Established in the PRC on December 20, 2011 by Renovation
● Registered capital of $2.6 million fully paid
● Currently has no operation | |||
| Jiuyi Technology | ● Established in the PRC on September 10, 2015
● 100% held by Renovation
● Technical support to online pharmacy |
Liquidity and capital resources
As of March 31, 2026, we had cash of approximately $
The Company’s accounts have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) on a going concern basis. The going concern basis assumes that assets are realized and liabilities are extinguished in the ordinary course of business at amounts disclosed in the financial statements. The Company’s ability to continue as a going concern depends upon aligning its sources of funding (debt and equity) with its expenditure requirements and repayment of the short-term debts as and when they become due.
In order to meet its capital demand, the Company strived to raise funds in the capital market, increase its credit line from the local banks, and improve its wholesale performance in the near future.
The Company has a credit line agreement from a local bank as described in detail in Note 12. As of March 31, 2026, approximately $
Based on the above factors, the Company believes it has sufficient financial resources to support its operations for at least the next 12 months.
F-10
Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and consolidation
The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The consolidated financial statements include the financial statements of the Company, its wholly-owned subsidiaries. All significant inter-company transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.
Use of estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The significant estimates made in the preparation of the accompanying consolidated financial statements relate to the assessment of the carrying amounts of accounts receivable and other receivables, including the related allowances for credit losses. Because of the use of estimates inherent in the financial reporting process, actual results could materially differ from those estimates.
Fair value measurements
The Company establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.
Unless otherwise disclosed, the fair value of the Company’s financial instruments including cash, restricted cash, accounts receivable, advances to suppliers, other current assets, accounts payable, due to related parties, other current liabilities, short-term bank loans and bank acceptance notes payable approximate their recorded values due to their short-term maturities. The fair value of longer term long-term bank loan and operating lease liabilities approximate their recorded values as their stated interest rates approximate the rates currently available.
Long-term investments
Long-term investments include equity investments. Equity investments include investments in common stock or in-substance common stock of entities. For those equity investments over which the Company can exercise significant influence but does not own a majority equity interest or control, the equity method is applied, and the Company adjusts the carrying amount of an investment and recognizes investment income or loss for the Company’s share of the earnings or loss of the investee after the date of investment. For those equity investments accounted for other than under the equity method, the fair value method is applied. However, for equity investments that do not have readily determinable fair values, the Company chooses to account for them at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. If this measurement alternative is elected, changes in the carrying value of the equity investments will be required to be made whenever there are observable price changes in transactions for identical or similar investments of the same issuer.
F-11
Revenue recognition
Effective March 31, 2018, the Company began recognizing revenue under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective transition method. The impact of adopting the new revenue standard was not material to the Company’s consolidated financial statements. The core principle of this new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
| ● | Step 1: Identify the contract with the customer |
| ● | Step 2: Identify the performance obligations in the contract |
| ● | Step 3: Determine the transaction price |
| ● | Step 4: Allocate the transaction price to the performance obligations in the contract |
| ● | Step 5: Recognize revenue when the company satisfies a performance obligation |
In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met:
| ● | The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct). |
| ● | The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). |
If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct.
The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.
The Company’s revenue is net of value added tax (“VAT”) collected on behalf of the PRC tax authorities with respect to the sales of merchandise. VAT collected from customers, net of VAT paid for purchases, is recorded as a liability in the accompanying consolidated balance sheets until it is paid to the relevant PRC tax authorities.
Certain contract liabilities primarily represent the Company’s obligation to transfer additional goods or services to a customer for which the Company has received consideration, for example, membership points. The consideration received remains a contract liability until goods or services have been provided to the retail customer. The estimated amount based on accrued membership points was deducted from sales revenue.
F-12
The following is a discussion of the Company’s revenue recognition policies by segment under the new revenue recognition accounting standard:
Pharmacy retail sales- Discontinued Following the Restructuring Transactions
The physical pharmacies sell prescription drugs, over-the-counter (“OTC”) drugs, traditional Chinese medicine, nutritional supplements, medical devices and sundry products. Revenue from sales of prescription medicine at drugstores is recognized when the prescription is filled and the customer picks up and pays for the prescription. Revenue from sales of other merchandise at drugstores is recognized at the point of sale, which is when a customer pays for and receives the merchandise. Usually the majority merchandise, such as prescription and OTC drugs, are not refundable after the customers leave the counter. Returns of other products, such as sundry products, are minimal. Sales of drugs reimbursed by the local government medical insurance agency and receivables from the agency are recognized when a customer pays for the drugs at a store. Based on historical experience, a reserve for potential losses from denial of reimbursement on certain unqualified drugs is made by the Company to the receivables from the government agency. Additionally, several onsite clinics adjacent to pharmacies provide limited medical services. Revenue from medical services is recognized after the service has been rendered to a customer. As revenue from medical services is minimal compared to pharmacy retail sales, it is included as part of the pharmacy retail sales.
The Company deduct the membership rewards directly from the retail revenue, and present such amounts in net sales as opposed to the current reduction of operation expense classification. Membership rewards, usually membership points, are accumulated by customers based on their historical spending levels. The Company has determined that there is an additional performance obligation to those customers at the time of the initial transaction. The customers can then redeem these points against the prices of merchandises they purchase in the future. At the end of each period, unredeemed membership rewards are reflected as a contract liability.
Online pharmacy sales- Discontinued Following the Restructuring Transactions
Revenue from online pharmacy sales is recognized when merchandise is shipped to customers. While most deliveries take one day, certain deliveries may take longer depending on a customer’s location. Any loss caused in a shipment will be reimbursed by the Company’s courier company. The Company’s sales policy allows for the return of certain merchandises without reason within seven days after a customer’s receipt of the applicable merchandise. Historically, sales returns seven days after merchandise receipts have been minimal.
Offline Wholesale
Jiuxin Medicine and Allright purchase medicine in quantity and distribute products primarily to local pharmacies and medical products dealers. Revenue from sales of merchandise to non-retail customers is recognized when the merchandise is transferred to customers. Historically, sales returns have been minimal.
The Company’s revenue is net of VAT collected on behalf of PRC tax authorities in respect to the sales of merchandise. VAT collected from customers, net of VAT paid for purchases, is recorded as a liability in the accompanying consolidated balance sheets until it is paid to the relevant PRC tax authorities.
Online platform sales
Revenue from online platform sales is recognized when merchandise is shipped to customers. While most deliveries take one day, certain deliveries may take longer depending on a customer’s location. Any loss caused in a shipment will be reimbursed by the Company’s courier company. The Company’s sales policy allows for the return of certain merchandises without reason within seven days after a customer’s receipt of the applicable merchandise. Historically, sales returns seven days after merchandise receipts have been minimal.
Disaggregation of Revenue
In accordance with ASC 205-20 (Discontinued Operations), the Company determined that Jiuxin Investment’s business qualified as a discontinued operation and has presented it as such in the audited consolidated financial statements. Financial results for discontinued operations are reported separately from continuing operations. After divestiture of Jiuxin Investment, the internal sales to Jiuzhou Pharmacy were not eliminated in the audited consolidated financial statements.
| For the year ended March 31, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Revenue from offline wholesale | $ | $ | $ | |||||||||
| Revenue from online platform | ||||||||||||
| Total revenue | $ | $ | $ | |||||||||
F-13
Restricted cash
The Company’s restricted cash consists of cash and long-term deposits in a bank as security for its notes payable. The Company has notes payable outstanding with the bank and is required to keep certain amounts on deposit that are subject to withdrawal restrictions. The notes payable are generally short term in nature due to their short maturity period of six to nine months; thus, restricted cash is classified as a current asset.
The following represents a reconciliation of cash and cash equivalents in the consolidated balance sheets to total cash, cash equivalents and restricted cash in the consolidated statements of cash flows as of March 31, 2026 and 2025:
| March 31, 2026 | March 31, 2025 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Cash, cash equivalents and restricted cash | $ | $ | ||||||
Accounts receivable
Accounts receivable represents the following: (1) amounts due from banks relating to retail sales that are paid or settled by the customers’ debit or credit cards, and (2) amounts due from non-bank third party payment instruments such as Alipay and certain e-commerce platforms.
Accounts receivable are amortized cost, net of an allowance for expected credit losses. The Company estimates expected credit losses on accounts receivable using a methodology in accordance with ASC 326, Financial Instruments — Credit Losses. The Company pools its receivables based on shared risk characteristics, which primarily include customer type, historical payment patterns, and the age of the receivable portfolio. To estimate expected credit losses, the Company considers historical loss experience over a relevant look-back period, adjusted for current economic conditions and reasonable and supportable forecasts of future economic conditions, including expected trends in customer payment behavior and general macroeconomic factors.
In the Company’s online platform business, accounts receivable primarily consist of amounts due from non-bank third party payment instruments such as Alipay and certain e-commerce platforms. To purchase pharmaceutical products from an e-commerce platform such as Pharmacist Help, Yiyao Help and Yao Help, customers are required to submit payment to certain non-bank third party payment instruments, such as Alipay, which, in turn, reimburse the Company within seven days to a month. Except for customer returns of sold products, the receivables from these payments instruments are rarely uncollectible. For these receivables, given their short-term nature and historical minimal loss experience, the Company applies a simplified approach and estimates expected credit losses at an immaterial amount, which is consistent with the Group’s overall credit loss estimation methodology.
Credit loss roll forward
With the adoption of the current expected credit loss standard in 2020, the Company estimates future expected losses on accounts receivable and other receivables over the remaining collection period of the instrument.
| For the year end March 31, 2026 | ||||||||||||
| Account receivable | Other receivables | Total | ||||||||||
| Allowance for credit losses as of March 31, 2025 | $ | $ | ||||||||||
| Credit loss addition (reversal) | ( | ) | ( | ) | ||||||||
| Ending allowance for credit losses | $ | $ | ||||||||||
Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first in first out (FIFO) method. The Company carries out physical inventory counts on a monthly basis and warehouse location. The Company periodically reviews its inventory and records write-downs to inventories for shrinkage losses and damaged merchandise that are identified. The Company provides a reserve for estimated inventory obsolescence or excess quantities on hand equal to the difference, if any, between the cost of the inventory and its estimated realizable value.
F-14
Property and equipment
Property and equipment are stated at cost, net of accumulated depreciation or amortization. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets, taking into consideration the assets’ estimated residual value.
| Estimated Useful Life | ||
| Motor vehicles | ||
| Office equipment & furniture |
Maintenance, repairs and minor renewals are charged to expenses as incurred. Major additions and betterment to property and equipment are capitalized.
Intangible assets
Intangible assets are acquired individually or as part of a group of assets, and are initially recorded at their fair value. The cost of a group of assets acquired in a transaction is allocated to the individual assets based on their relative fair values.
The estimated useful lives of the Company’s intangible assets are as follows:
| Estimated Useful Life | ||
| Land use rights | ||
| Software | ||
| Customer relationship |
The Company evaluates intangible assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired.
Impairment of long-lived assets
The Company evaluates long lived tangible and intangible assets for impairment, whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated future cash flows. Recoverability is measured by comparing the assets’ net book value to the related projected undiscounted cash flows from these assets, considering a number of factors including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss. There was impairment loss recognized for the year ended March 31, 2026, 2025 and 2024.
Notes payable
During the normal course of business, the Company regularly issues bank acceptance bills as a payment method to settle outstanding accounts payables with various material suppliers. The Company records such bank acceptance bills as notes payable. Such notes payable are generally short term in nature due to their short maturity period of six to nine months.
Income taxes
The Company follows FASB ASC Topic 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. 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.
F-15
The accounting standards clarify the accounting and disclosure requirements for uncertain tax positions and prescribe a recognition threshold and measurement attribute for recognition and measurement of a tax position taken or expected to be taken in a tax return. The accounting standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. significant penalties, uncertain tax provisions or interest relating to income taxes were incurred during the periods ended March 31, 2026, 2025 and 2024.
Value added tax
Sales revenue represents the invoiced value of goods, net of VAT. All of the Company’s products are sold in the PRC and are subject to a VAT on the gross sales price. The VAT rates range up to
Share-based compensation
The Company accounts for share-based payment awards granted to employees and directors by recording compensation expense based on estimated fair values. The Company estimates the fair value of share-based payment awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statements of operations. Share-based awards are attributed to expenses using the straight-line method over the vesting period. The Company determines the value of each option award that contains a market condition using a Monte Carlo Simulation valuation model, while all other option awards are valued using the Black-Scholes valuation model as permitted under FASB ASC 718 “Compensation - Stock Compensation.” The assumptions used in calculating the fair value of share-based payment awards represent the Company’s best estimates. The Company’s estimates of the fair values of stock options granted and the resulting amounts of share-based compensation recognized may be impacted by certain variables including stock price volatility, employee stock option exercise behaviors, additional stock option modifications, estimates of forfeitures, and the related income tax impact.
Advertising and promotion costs
Advertising and promotion costs are expensed as incurred and amounted to $
Foreign currency translation
The Company uses the United States dollar (“U.S. dollars” or “USD”) for financial reporting purposes. The Company’s subsidiaries maintain their books and records in their functional currency the Renminbi (“RMB”), the currency of the PRC.
In general, for consolidation purposes, the Company translates the assets and liabilities of its subsidiaries into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statements of income and cash flows are translated at average exchange rates during the reporting period. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the financial statements of the subsidiaries are recorded as accumulated other comprehensive income.
The exchange rates used to translate amounts in RMB into USD for the purposes of preparing the audited consolidated financial statements or otherwise disclosed in this report were as follows:
| March 31, 2026 | March 31, 2025 | March 31, 2024 | ||||
| Balance sheet items, except for the registered and paid-up capital, as of end of period/year | USD1: RMB | USD1: RMB | USD1: RMB | |||
| Amounts included in the statement of Operations and statement of cash flows for the period/ year ended | USD1: RMB | USD1: RMB | USD1: RMB |
F-16
Recent Accounting Pronouncements
The Company’s management does not believe that any recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the accompanying consolidated financial statements.
NOTE 3 – COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC are subject to special 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 environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.
The Company has significant cash deposits with suppliers in order to obtain and maintain inventory. The Company’s ability to obtain products and maintain inventory at existing and new locations is dependent upon its ability to post and maintain significant cash deposits with its suppliers. In the PRC, many vendors are unwilling to extend credit terms for product sales that require cash deposits to be made. The Company does not generally receive interest on any of its supplier deposits, and such deposits are subject to loss as a result of the creditworthiness or bankruptcy of the party who holds such funds, as well as the risk from illegal acts such as conversion, fraud, theft or dishonesty associated with the third party. If these circumstances were to arise, the Company would find it difficult or impossible, due to the unpredictability of legal proceedings in China, to recover all or a portion of the amount on deposit with its suppliers.
Concentrations and Credit Risk
Certain financial instruments, which subject the Company to concentration of credit risk, consist of cash and restricted cash. The Company has cash balances at financial institutions located in Hong Kong and PRC. Balances at financial institutions in Hong Kong may, from time to time, exceed Hong Kong Deposit Protection Board’s insured limits. Since March 31, 2015, balances at financial institutions and state-owned banks within the PRC are covered by insurance up to RMB
For the fiscal year ended March 31, 2026, the Company had one supplier that accounted for more than 10% of the Company’s total purchases from continuing operations, which was
For the fiscal year ended March 31, 2026, the Company had one customer that accounted for more than 10% of the Company’s total sales from continuing operations, which was
F-17
NOTE 4 – DISCONTINUED OPERATIONS
Pursuant to that certain Equity Exchange Agreement with Renovation, Mr. Lei Liu, Ms. Li Qi, and Oakview, dated January 31, 2025, Renovation transferred all equity in Jiuxin Investment to Oakview, in exchange for irrevocable surrender for no consideration by Mr. Liu, Ms. Qi, Oakview and their affiliates in total
The following table summarizes the financial results from discontinued operations of Jiuxin Investment:
| For the eleven months ended February 28, 2025 | For the year ended March 31, 2024 | For the year ended March 31, 2023 | ||||||||||
| REVENUES, NET | $ | $ | $ | |||||||||
| COST OF GOODS SOLD | ||||||||||||
| GROSS PROFIT | ||||||||||||
| SELLING EXPENSES | ||||||||||||
| GENERAL AND ADMINISTRATIVE EXPENSES | ||||||||||||
| TOTAL OPERATING EXPENSES | ||||||||||||
| LOSS FROM DISCONTINUED OPERATIONS | ( | ) | ( | ) | ( | ) | ||||||
| OTHER INCOME (EXPENSES): | ||||||||||||
| INTEREST INCOME | ||||||||||||
| INTEREST EXPENSE | ( | ) | ( | ) | ( | ) | ||||||
| INVESTMENT LOSS | ||||||||||||
| OTHER INCOME (EXPENSES) | ( | ) | ||||||||||
| LOSS FROM DISCONTINUED OPERATIONS BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ||||||
| PROVISION FOR INCOME TAXES | ||||||||||||
| NET LOSS FROM DISCONTINUED OPERATIONS | ( | ) | ( | ) | ( | ) | ||||||
| LESS: NET LOSS FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO NONCONTROLLING INTEREST | ( | ) | ( | ) | ||||||||
| NET LOSS FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO JIUXIN INVESTMENT | ( | ) | ( | ) | ( | ) | ||||||
F-18
The following table summarizes the assets and liabilities from discontinued operations of Jiuxin Investment:
| As of February 28, | ||||
| 2025 | ||||
| Cash and cash equivalents | $ | |||
| Restricted cash | ||||
| Trade accounts receivables | ||||
| Inventories | ||||
| Other receivables, net | ||||
| Advances to suppliers | ||||
| Due from related parties | ||||
| Other current assets | ||||
| Total current assets of discontinued operations | ||||
| Property and equipment, net | ||||
| Long-term investment | ||||
| Farmland assets | ||||
| Long-term deposits | ||||
| Intangible assets, net | ||||
| Operating lease right-of-use assets | ||||
| Other noncurrent assets | ||||
| Total non-current assets of discontinued operations | ||||
| Accounts payable | $ | |||
| Notes payable | ||||
| Other payables | ||||
| Due to related parties | ||||
| Customer deposits | ||||
| Taxes payable | ||||
| Accrued liabilities | ||||
| Current portion of operating lease liabilities | ||||
| Total current liabilities of discontinued operations | ||||
| Long-term operating lease liabilities | ||||
| Total non-current liabilities of discontinued operations | ||||
The following table summarizes gain of divestiture of Jiuxin Investment:
| Total considerations for divestiture of Jiuxin Investment | $ | |||
| Less: Net asset of Jiuxin Investment | ( | ) | ||
| Add: Noncontrolling interests | ( | ) | ||
| Add: Additional paid-in capital | ||||
| Add: Statutory reserve | ||||
| Add: Accumulated other comprehensive income | ||||
| Gain on divestiture of Jiuxin Investment | $ |
F-19
The following table summarizes cash flows related to discontinued operations for the period from March 31, 2024 through February 28, 2025：
| Period from March 31, 2024 through February 28, 2025 | ||||
| Operating activities of discontinued operations | ( | ) | ||
| Investing activities of discontinued operations | ( | ) | ||
| Financing activities of discontinued operations | ( | ) | ||
As of March 31, 2025, Cash and cash equivalents balance from discontinued operations was .
NOTE 5 – ACQUISITIONS OF SUBSIDIARIES
On January 31, 2025, the Company entered into that certain Equity Exchange Agreement with Mr. Lingtao Kong and Ridgeline, pursuant to which the Company acquired from Mr. Kong all of the issued and outstanding ordinary shares of Ridgeline, the direct parent company of Allright, by issuing
The fair value of the
The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition. Goodwill as a result of the acquisition of Ridgeline International Limited is calculated as follows:
| Total purchase considerations for | $ | |||
| Fair value of assets acquired: | ||||
| Cash and cash equivalents | $ | |||
| Restricted cash | ||||
| Trade accounts receivables | ||||
| Inventories | ||||
| Other receivables, net | ||||
| Other current assets | ||||
| Property and equipment, net | ||||
| Intangible assets, net | ||||
| Total assets acquired | ||||
| Fair value of liabilities assumed: | ||||
| Accounts payable | $ | |||
| Notes payable | ||||
| Other payables | ||||
| Taxes payable | ||||
| Deferred tax liabilities | ||||
| Total liabilities assumed | ||||
| Total net assets acquired | ||||
| Goodwill as a result of the acquisition | $ |
F-20
The following table presents Ridgeline International Limited’s statement of income for the period from the date of acquisition through March 31, 2025.
| From the date of acquisition through March 31, 2025 | ||||
| Revenue | $ | |||
| Operating costs and expenses | ||||
| Income from operations | ||||
| Other income | ||||
| Income tax expense | ||||
| Net income | ||||
The following condensed unaudited pro forma consolidated results of operations for the Company and Ridgeline International Limited for the years ended March 31, 2025, 2024, and 2023 present the results of operations of the Company and Ridgeline International Limited as if the acquisitions occurred on April 1, 2022.
The pro forma results are not necessarily indicative of the actual results that would have occurred had the acquisitions been completed as of the beginning of the periods presented, nor are they necessarily indicative of future consolidated results.
| For the years ended March 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Revenue | $ | $ | $ | |||||||||
| Operating costs and expenses | ||||||||||||
| Income (loss) from operations | ( | ) | ||||||||||
| Other income (loss) | ( | ) | ( | ) | ||||||||
| Income tax expense | ( | ) | ||||||||||
| Net income (loss) | ( | ) | ||||||||||
NOTE 6 – TRADE RECEIVABLES
Trade receivables consisted of the following:
| March 31, 2026 | March 31, 2025 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
| Note receivable | ||||||||
| Trade accounts receivable | ||||||||
F-21
Note 7 – PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
| March 31, 2026 | March 31, 2025 | |||||||
| Office equipment and furniture | $ | $ | ||||||
| Motor vehicles | ||||||||
| Total | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Total depreciation expense for property and equipment was $
Note 8 – LONG-TERM INVESTMENT
Long-term investment consists of the following:
| March 31, 2026 | March 31, 2025 | |||||||
| Zhuoli Life (1) | $ | $ | ||||||
| Long-term investment | $ | $ | ||||||
| (1) |
Note 9 – ADVANCES TO SUPPLIERS
Advances to suppliers consist of deposits, with or advances to, outside vendors for future inventory purchases. Most of the Company’s suppliers require a certain amount of money to be deposited with them as a guarantee that the Company will receive its purchase on a timely basis. This amount is refundable and bears no interest.
| March 31, 2026 | March 31, 2025 | |||||||
| Advance to suppliers | $ | $ | ||||||
| Less: reserve for vendor non-performance on advances | ( | ) | ( | ) | ||||
| Advance to suppliers, net | $ | $ | ||||||
Note 10 – INVENTORY
Inventory consisted of finished goods, valued at $
F-22
Note 11 – INTANGIBLE ASSETS
Net intangible assets consisted of the following at:
| March 31, 2026 | March 31, 2025 | |||||||
| Land use rights (1) | ||||||||
| Software | ||||||||
| Customer relationship | ||||||||
| Total intangible assets | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
Amortization expense of intangibles amounted to $
| (1) |
Note 12 – NOTES PAYABLE
The Company has credit facilities with Hangzhou United Bank (“HUB”) that provided working capital in the form of the following bank acceptance notes. Usually, the Company applies to issue a note, which is guaranteed by the bank, to its supplier to pay off its debt in a future date. Before the payment date, the bank will ask the Company to inject cash into the bank. On the payment date, the bank will pay the amount to whoever legally holds the note.
| Beneficiary(1) | Endorser | Origination date | Maturity date | March 31, 2026 | March 31, 2025 | ||||||||||||
| Allright | $ | $ | |||||||||||||||
| Allright | |||||||||||||||||
| Allright | |||||||||||||||||
| Allright | |||||||||||||||||
| Allright | |||||||||||||||||
| Jiuxin Medicine | |||||||||||||||||
| Jiuxin Medicine | |||||||||||||||||
| Allright | |||||||||||||||||
| Total | $ | $ | |||||||||||||||
| (1) | As of March 31, 2026, the Company had $ |
F-23
As of March 31, 2026, the Company had a credit line of approximately $
Note 13 – TAXES
Income tax
Income tax expense includes a provision for federal, state and foreign taxes based on the annual estimated effective tax rate applicable to the Company and its subsidiaries, adjusted for items which are considered discrete to the period.
A reconciliation of the income tax provision at the federal statutory rate and the effective rate is as follows:
| For the years ended March 31 | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| China income taxes | % | % | % | |||||||||
| Impact of US and HK tax rate | ( | ) | ||||||||||
| Non-deductible expenses-permanent difference | ( | ) | ( | ) | ||||||||
| Change in valuation allowance | ( | ) | ( | ) | ( | ) | ||||||
| Effective tax rate | % | ( | )% | % | ||||||||
Deferred tax assets,(liabilities) net are composed of the following:
| March 31, 2026 | March 31, 2025 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carry-forwards | $ | $ | ||||||
| Bad debt | ||||||||
| Total deferred tax assets, gross | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Total deferred tax assets, net | $ | $ | ||||||
| Deferred tax liabilities: | ||||||||
| Intangible assets from acquisition | ||||||||
| Total deferred tax liabilities | $ | $ | ||||||
| Deferred tax assets(liabilities), net | $ | ( | ) | $ | ( | ) | ||
The Company has recorded $
F-24
Note 14 – POSTRETIREMENT BENEFITS
Regulations in the PRC require the Company to contribute to a defined contribution retirement plan for all permanent employees. The contribution for each employee is based on a percentage of the employee’s current compensation as required by the local government. The Company contributed $
Note 15 – RELATED PARTY TRANSACTIONS AND ARRANGEMENTS
Summary of Balances with Related Parties as follows:
| Due from related parties: | March 31, 2026 | March 31, 2025 | ||||||
| Due from a director of subsidiaries(1) | ||||||||
| Total | $ | $ | ||||||
| Due to related parties: | March 31, 2026 | March 31, 2025 | ||||||
| Due to a director of subsidiaries(2) | ||||||||
| Total | $ | $ | ||||||
| (1) |
| (2) |
Note 16 – SHAREHOLDER’S EQUITY
Ordinary shares
On April 10, 2025, the Company presented a petition to the Grand Court of the Cayman Islands (the “Grand Court”) for confirmation of the capital reduction and the share subdivision. On May 28, 2025, following the receipt of an order granted by the Grand Court confirming the capital reduction and the share subdivision, the Company effected a reduction of the par value of each of our issued, ordinary share from US$
On October 30, 2025, Ridgetech, Inc. entered into Securities Purchase Agreements with certain non-U.S. accredited investors pursuant to which the Company agreed to sell to the Investors, and the Investors agreed to purchase from the Company, in a private placement an aggregate of
On December 29, 2025, Ridgetech, Inc. entered into a sales agreement (the “Prior Sales Agreement”) with AC Sunshine Securities LLC (“AC Sunshine”), acting as the Company’s sales agent or, if separately agreed in writing, principal, pursuant to which the Company may offer and sell, from time to time, to or through the sales agent, ordinary shares of the Company, having an aggregate offering price of up to Two Hundred Million Dollars ($
F-25
On July 11, 2026, the Company and AC Sunshine agreed to terminate the Prior Sales Agreement, effective immediately, subject to the completion of any pending settlements in accordance with the terms of the Sales Agreement. As of July 11, 2026, the Company had sold an aggregate of
On July 28, 2026, the Company entered into a new sales agreement (the “Sales Agreement”) with Pacific Century Securities, LLC. The Sales Agreement contains terms substantially similar to those of the Prior Sales Agreement, with Pacific Century Securities, LLC serving as the agent in place of AC Sunshine. The Company intends to resume its at-the-market offering with Pacific Century Securities, LLC.
Series A Preferred Shares
On June 29, 2026, following the approval of the Audit Committee, the Board of Directors of the Company (the “Board”) authorized and designated
On July 16, 2026, the Company entered into a Subscription Agreement for Series A Preferred Shares (the “Subscription Agreement”) with Mr. Lingtao Kong, the Chair of the Board (the “Subscriber”). Pursuant to the terms of the Subscription Agreement, the Subscriber agreed to subscribe for an aggregate of
Warrants
Concurrent with the registered direct offering of ordinary shares that closed on September 26, 2023, the Company issued to several investors warrants to purchase up to
Statutory reserves
Statutory reserves represent restricted retained earnings. Based on their legal formation, the Company is required to set aside
Appropriations to the Reserve Fund are accounted for as a transfer from unrestricted earnings to statutory reserves. During the years ended March 31, 2026 and 2025, the Company did not make appropriations to statutory reserves.
There are no legal requirements in the PRC to fund the Reserve Fund by transfer of cash to any restricted accounts, and the Company does not do so.
Note 17 – NET INCOME (LOSS) PER SHARE
The Company reports earnings per share in accordance with the provisions of the FASB’s related accounting standard. This standard requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes dilution, but includes vested restricted stocks and is computed by dividing income available to ordinary shareholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised and converted into ordinary shares.
F-26
The following is a reconciliation of the basic and diluted earnings per share computation:
| For the Years Ended March 31, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Net income (loss) attributable to controlling interest | $ | ( | ) | $ | $ | ( | ) | |||||
| Weighted average shares used in basic computation | ||||||||||||
| Diluted effect of stock options and warrants | ||||||||||||
| Weighted average shares used in diluted computation | ||||||||||||
| Income (loss) per share – Basic: | ||||||||||||
| Net income (loss) before noncontrolling interest | $ | ( | ) | $ | $ | ( | ) | |||||
| Add: Net income (loss) attributable to noncontrolling interest | $ | $ | $ | |||||||||
| Net income (loss) attributable to controlling interest | $ | ( | ) | $ | $ | ( | ) | |||||
| Income (loss) per share – Diluted: | ||||||||||||
| Net income (loss) before noncontrolling interest | $ | ( | ) | $ | $ | ( | ) | |||||
| Add: Net income (loss) attributable to noncontrolling interest | $ | $ | $ | |||||||||
| Net income (loss) attributable to controlling interest | $ | ( | ) | $ | $ | ( | ) | |||||
For the year ended March 31, 2026,
Note 18 – SEGMENTS
The Company currently operates within
The following table presents summarized information by segment of the continuing operations for the year ended March 31, 2026:
| Offline wholesale | Online platform | Total | ||||||||||
| Revenue | $ | $ | $ | |||||||||
| Cost of goods | ||||||||||||
| Gross profit | $ | $ | $ | |||||||||
| Selling expenses | ||||||||||||
| General and administrative expenses | ||||||||||||
| Income (loss) from operations | $ | ( | ) | $ | $ | ( | ) | |||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Total capital expenditures | $ | $ | $ | |||||||||
The following table presents summarized information by segment of the continuing operations for the year ended March 31, 2025:
| Offline wholesale | Online platform | Total | ||||||||||
| Revenue | $ | $ | $ | |||||||||
| Cost of goods | ||||||||||||
| Gross profit | $ | $ | $ | |||||||||
| Selling expenses | ||||||||||||
| General and administrative expenses | ||||||||||||
| Income (loss) from operations | $ | ( | ) | $ | $ | ( | ) | |||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Total capital expenditures | $ | $ | $ | |||||||||
F-27
The following table presents summarized information by segment of the continuing operations for the year ended March 31, 2024:
| Offline wholesale | Online platform | Total | ||||||||||
| Revenue | $ | $ | $ | |||||||||
| Cost of goods | ||||||||||||
| Gross profit | $ | $ | $ | |||||||||
| Selling expenses | ||||||||||||
| General and administrative expenses | ||||||||||||
| Income from operations | $ | $ | $ | |||||||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Total capital expenditures | $ | $ | $ | |||||||||
Note 19 – SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date that the financial statements were available to be issued, which is July 28, 2026. All subsequent events requiring recognition as of March 31, 2026 have been incorporated into these financial statements and there are no other subsequent events that require disclosure in accordance with FASB ASC Topic 855 except the following:
As previously reported, on December 29, 2025, Ridgetech, Inc. (the “Company”) entered into a Sales Agreement (the “Sales Agreement”) with AC Sunshine Securities LLC (“AC Sunshine”), pursuant to which the Company could offer and sell, from time to time, ordinary shares of the Company having an aggregate offering price of up to $
On June 29, 2026, following the approval of the Audit Committee, the Board of Directors of the Company (the “Board”) authorized and designated
On July 28, 2026, the Company entered into a new sales agreement (the “Sales Agreement”) with Pacific Century Securities, LLC. The Sales Agreement contains terms substantially similar to those of the Prior Sales Agreement, with Pacific Century Securities, LLC serving as the agent in place of AC Sunshine. The Company intends to resume its at-the-market offering with Pacific Century Securities, LLC.
F-28