{"url_path":"/sec/aixn/10-k/2026/item-15","section_key":"item-15","section_title":"Item 15 **","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/835662/0001493152-26-023606-index.html","accession_number":"0001493152-26-023606","cik":"0000835662","ticker":"AIXN","issuer_name":"AiXin Life International, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/835662/0001493152-26-023606-index.html","primary_entity_key":"0000835662","primary_entity_name":"AiXin Life International, Inc."},"word_count":13677,"has_tables":true,"body_markdown":"**ITEM\n15**\n**EXHIBITS\nAND FINANCIAL STATEMENT SCHEDULES.**\n\n \n\n1.\nConsolidated\nFinancial Statements of Aixin Life International, Inc. for the years ended December 31, 2025 and 2024.\n\n \n\n2.\nFinancial\nStatement Schedules.\n\n \n\nAll\nschedules are omitted because they are not applicable or not required or because the required information is included in the Financial\nStatements or the Notes thereto.\n\n \n\n3.\nExhibits.\nThe following exhibits are filed as part of, or incorporated by reference into, this Annual Report:\n\n \n\n**Exhibit\nNumber**\n** **\n**Description\nof Document**\n\n3.1\n \n[Articles of Incorporation (incorporated by reference to the Company’s Annual Report on Form 10-KSB for the fiscal year ended May 31, 2006 as filed with the SEC on March 7, 2007).](https://www.sec.gov/Archives/edgar/data/835662/000102189007000031/mercari10kex3i.htm)\n\n3.2\n \n[Articles of Amendment to Articles of Incorporation (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on June 3, 2008).](https://www.sec.gov/Archives/edgar/data/835662/000102189008000107/mercari530088kex31.htm)\n\n3.3\n \n[Articles of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.3 the Company’s Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2017 as filed with the SEC on January 16, 2018).](https://www.sec.gov/Archives/edgar/data/835662/000149315218000585/ex3-3.htm)\n\n3.4\n \n[Articles of Amendment to Articles of Incorporation (incorporated by reference to Appendix A to the 14C Information Schedule filed with the SEC on August 24, 2020).](https://www.sec.gov/Archives/edgar/data/835662/000149315220016570/formdef14c.htm)\n\n3.5\n \n[Articles of Amendment to Articles of Incorporation (incorporated by reference to Appendix A to Current Report on Form 8-K filed with the SEC on January 12, 2023)](https://www.sec.gov/Archives/edgar/data/835662/000149315223001284/ex3-1.htm)\n\n3.6\n \n[Statement of Correction (incorporated by reference to Current Report on Form 8-K filed with the SEC on February 15, 2023)](https://www.sec.gov/Archives/edgar/data/835662/000149315223005143/ex3-2.htm)\n\n3.7\n \n[Bylaws of the Company (incorporated by reference to Exhibit 3.6 of Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-268190) filed January 17, 2023).](https://www.sec.gov/Archives/edgar/data/835662/000149315223001658/ex3-6.htm)\n\n4.1\n \n[Description of Securities (incorporated by reference to the Company’s Annual Report on Form 10-K filed with the SEC on May 14, 2020).](https://www.sec.gov/Archives/edgar/data/835662/000149315220008775/ex4-1.htm)\n\n10.1\n \n[2019 Incentive Stock Plan (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-8 filed on January 10, 2019).](https://www.sec.gov/Archives/edgar/data/835662/000149315219000416/ex10-1.htm)\n\n10.2\n \n[English Translation of Equity Transfer Agreement with Respect to Shangyan Hotel Company (incorporated by reference to Current Report on Form 8-K dated May 25, 2021).](https://www.sec.gov/Archives/edgar/data/835662/000149315221013300/ex10-1.htm)\n\n10.3\n \n[English Translation of Equity Transfer Agreement with Respect to Chengdu Aixin Pharmacy Co., Ltd. and affiliated entities (incorporated by reference to Current Report on Form 8-K dated June 2, 2021).](https://www.sec.gov/Archives/edgar/data/835662/000149315221013493/ex10-1.htm)\n\n10.4\n \n[English Translation of Equity Transfer Agreement among the Company, Chen Yun and Yunnan Sheng Shengyuan Technology Co., Ltd. (incorporated by reference to Current Report on Form 8-K dated July 19, 2022)](https://www.sec.gov/Archives/edgar/data/835662/000149315222020283/ex10-1.htm)\n\n10.5\n \n[English Translation of Supplementary Agreement to Equity Transfer Agreement among the Company, Yunnan Sheng Shengyuan Technology Co., Ltd. and Chen Yun. (incorporated by reference to Current Report on Form 8-K/A filed October 6, 2022).](https://www.sec.gov/Archives/edgar/data/835662/000149315222027791/ex10-1.htm)\n\n10.6\n \n[English Translation of Supplementary 2 Agreement to Equity Transfer Agreement among the Company, Yunnan Sheng Shengyuan Technology Co., Ltd. And Chen Yun. (incorporated by reference to Report on Form 8-K/A filed October 27, 2022).](https://www.sec.gov/Archives/edgar/data/835662/000149315222029671/ex10-1.htm)\n\n1\n0.7\n \n[English translation of Framework Agreement for Project Cooperation in Intelligent Deep Processing of Agricultural Products with Plateau Characteristics (incorporated by reference to Exhibit 10.7 to Amendment No. 2 to Registration Statement on Form S-1 (File No. 333-268190) filed March 7, 2023).](https://www.sec.gov/Archives/edgar/data/835662/000149315223006849/ex10-7.htm)\n\n10.8\n \n[Contribution Agreement dated March 17, 2025, by Mr. Quanzhong Lin in favor of the Company (incorporated by reference to Exhibit 10.8 to Amendment No. 8 to Registration Statement on Form S-1 (File No. 333-268190) filed April 15, 2025).](https://www.sec.gov/Archives/edgar/data/835662/000164117225004875/ex10-8.htm)\n\n14.1\n \n[Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to Current Report on Form 8-K filed September 25, 2020).](https://www.sec.gov/Archives/edgar/data/835662/000149315220018334/ex14-1.htm)\n\n19.1\n \n[Insider Trading Policy (incorporated by reference to Exhibit 19.1 to Report on Form 10-K filed April 8 , 2024).](https://www.sec.gov/Archives/edgar/data/835662/000149315224013947/ex19-1.htm)\n\n21.1\n \n[List of Subsidiaries (incorporated by reference to Exhibit 21.1 to Amendment No. 8 to Registration Statement on Form S-1 (File No. 333-268190) filed April 15, 2025).](https://www.sec.gov/Archives/edgar/data/835662/000164117225004875/ex21-1.htm)\n\n23.1\n \n[Consent of Independent Registered Public Accounting Firm](ex23-1.htm)\n\n31.1\n \n[Certification of Chief Executive Officer pursuant to Rule 13a-14 or Rule 15d-14 of Securities Exchange Act of 1934.](ex31-1.htm)\n\n31.2\n \n[Certification of Chief Financial Officer pursuant to Rule 13a-14 of 15d-14 of Securities Exchange Act of 1934.](ex31-2.htm)\n\n32.1\n \n[Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).](ex32-1.htm)\n\n32.2\n \n[Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).](ex32-2.htm)\n\n99.1\n \n[Executive Compensation Clawback Policy. (incorporated by reference to Exhibit 99.1 to Annual Report on Form 10-K filed April 8, 2024).](https://www.sec.gov/Archives/edgar/data/835662/000149315224013947/ex99-1.htm)\n\n \n \n \n\n101.INS\n \nInline\nXBRL Instance Document\n\n101.SCH\n \nInline\nXBRL Taxonomy Extension Schema\n\n101.CAL\n \nInline\nXBRL Taxonomy Extension Calculation\n\n101.DEF\n \nInline\nXBRL Taxonomy Extension Definition\n\n101.LAB\n \nInline\nXBRL Taxonomy Extension Label\n\n101.PRE\n \nInline\nXBRL Taxonomy Extension Presentation\n\n104\n \nCover\nPage Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)\n\n \n\n55\n\n \n\n \n\n**SIGNATURES**\n\n \n\nPursuant\nto the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed\non its behalf by the undersigned, thereunto duly authorized.\n\n \n\nDate:\nMay 15, 2026\nBy:\n*/s/\nQuanzhong Lin*\n\n \n \n\nQuanzhong\nLin\n\nChief\nExecutive Officer\n\n(Principal\nExecutive Officer\n\n \n \n \n\n \nBy:\n/s/\n*Xiaowen Zheng*\n\n \n \n\nXiaowen\nZheng\n\nChief\nFinancial Officer\n\n(Principal\nFinancial Officer)\n\n \n\nIn\naccordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities\nindicated on May 15, 2026.\n\n \n\nSignature\n \nTitle\n\n \n \n \n\n*/s/\nQuanzhong Lin*\n \nChief\nExecutive Officer and a Director\n\nQuanzhong\nLin\n \n(Principal\nExecutive Officer)\n\n \n \n \n\n*/s/\nXiaowen Zheng*\n \nChief\nFinancial Officer\n\nXiaowen\nZheng\n \n(Principal\nFinancial Officer)\n\n \n \n \n\n*/s/\nHuiliang Jiao*\n \nDirector\n\nHuiliang\nJiao\n \n \n\n \n \n \n\n* *\n \nDirector\n\nChristopher\nLee\n \n \n\n \n \n \n\n*/s/ Onyu Jiang*\n \nDirector\n\nOnyu Jiang\n \n \n\n \n\n56\n\n \n\n \n\n[Report of Independent Registered Public Accounting Firm (PCAOB ID 6781)](#f_006)\n**F-2**\n\nReport\nof Independent Registered Public Accounting Firm (PCAOB ID 2851)\n \n\nFinancial\nStatements: \n** **\n\n[Consolidated Balance Sheets as of December 31, 2025 and 2024](#f_001)\n**F-4**\n\n[Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2025 and 2024](#f_002)\n**F-5**\n\n[Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2025 and 2024](#f_003)\n**F-6**\n\n[Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024](#f_004)\n**F-7**\n\n[Notes to Consolidated Financial Statements](#f_005)\n**F-8**\n\n \n\nF-1\n\n \n\n \n\n**REPORT\nOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**\n\n \n\n \n\nTo\nthe Board of Directors and Shareholders of AiXin Life International, Inc.\n\n \n\n**Opinion\non the Financial Statements**\n\n \n\nWe\nhave audited the accompanying consolidated balance sheets of AiXin Life International, Inc. and its subsidiaries (collectively, the “Company”)\nas of December 31, 2025 and 2024 and the related consolidated statements of operations and comprehensive loss, changes in stockholders’\ndeficit, and cash flows for the years ended December 31, 2025 and 2024 and the related notes (collectively referred to as the “financial\nstatements”).\n\n \n\nIn\nour opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company\nas of December 31, 2025 and 2024 and the results of its operations and its cash flow for years ended December 31, 2025 and 2024 in conformity\nwith accounting principles generally accepted in the United States of America.\n\n \n\n**Going\nConcern**\n\n \n\nThe\naccompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed\nin Note 1 to the consolidated financial statements, the Company had a working capital deficit as of December 31, 2025 and a net loss\nand negative cash flows from operations for the year ended December 31, 2025. These conditions raise substantial doubt about the Company’s\nability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. These consolidated\nfinancial statements do not include any adjustments that might result from the outcome of these uncertainties.\n\n** **\n\n**Basis\nfor Opinion**\n\n \n\nThese\nfinancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s\nfinancial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board\n(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal\nsecurities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe\nconducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain\nreasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company\nis not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,\nwe are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion\non the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur\naudits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error\nor fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding\nthe amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant\nestimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audits provide\na reasonable basis for our opinion.\n\n \n\nF-2\n\n \n\n** **\n\n**Critical\nAudit Matter**\n\n \n\nThe\ncritical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that\nwere communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material\nto the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication\nof a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are\nnot, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or\ndisclosures to which it relates.\n\n \n\n**Revenue\nRecognition for Product Sales**\n\n \n\n*Description\nof the Matter*\n\n \n\nAs\ndescribed in Note 2 to the consolidated financial statements, the Company recognizes revenue across multiple operating segments, including\ndirect sales, hotel operations, pharmacies, and manufacturing. We identified revenue recognition related to product sales as a critical\naudit matter due to the decentralized nature of the transactions and the potential for timing discrepancies. Given the volume of transactions\nand the extent of judgment required, evaluating the timing and amount of revenue recognition was especially challenging and required\nsignificant audit effort.\n\n \n\n*How\nthe Critical Audit Matter Was Addressed in the Audit*\n\n \n\nOur\naudit procedures related to revenue recognition for product sales included:\n\n \n\n●Obtaining\nan understanding of the Company’s revenue recognition policies for product sales and\nrelevant internal controls over revenue recognition.\n\n●Assessing\nthe identification of performance obligations, evaluating terms of customer arrangements,\nand inspecting signed delivery notes to confirm that products were delivered to and accepted\nby customers.\n\n●Tracing\ncustomer communication records and verifying cash remittances to Company bank accounts.\n\n●Performing\ncutoff testing to confirm proper timing of revenue recognition.\n\n●Performing\nanalytical procedures to identify unusual fluctuations or anomalies in sales volume or timing.\n\n●Assessing\nthe adequacy of financial statement disclosures regarding revenue recognition policies.\n\n \n\n/s/\n*YCM CPA INC.*\n\n \n\nWe\nhave served as the Company’s auditor since 2025.\n\n \n\nPCAOB\nID 6781\n\nIrvine,\nCalifornia\n\nMay\n15, 2026\n\n \n\nF-3\n\n \n\n \n\n**AIXIN\nLIFE INTERNATIONAL, INC.**\n\n**CONSOLIDATED\nBALANCE SHEETS**\n\n \n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nAssets \n    \n   \n\nCurrent assets \n    \n   \n\nCash and equivalents \n$20,751  \n$62,310 \n\nAccounts receivable \n 62,606  \n 153,378 \n\nAccounts receivable - related parties \n 318,881  \n 515,087 \n\nAccounts receivable \n 318,881  \n 515,087 \n\nOther receivables and prepaid expenses \n 98,065  \n 127,912 \n\nAdvances to suppliers \n 3,551  \n 37,247 \n\nAdvances to suppliers - related parties \n 11,364  \n - \n\nAdvances to suppliers \n 11,364  \n - \n\nInventory, net \n 427,426  \n 503,990 \n\nDue from related parties \n 73,479  \n 53,784 \n\nTotal current assets \n 1,016,123  \n 1,453,708 \n\n  \n    \n   \n\nProperty and equipment, net \n 660,230  \n 1,493,325 \n\nIntangible assets, net \n 2,786  \n 4,514 \n\nLong term prepaid expenses \n 1,266  \n 4,051 \n\nOperating lease right-of-use assets \n 1,501,802  \n 1,425,923 \n\nOperating lease right-of-use assets - related parties \n 18,767  \n 24,839 \n\nOperating lease right-of-use assets \n 18,767  \n 24,839 \n\nTotal assets \n$3,200,974  \n$4,406,360 \n\n  \n    \n   \n\nLiabilities and stockholders’ equity \n    \n   \n\nCurrent liabilities \n    \n   \n\nAccounts payable \n$534,176  \n$781,695 \n\nAccounts payable - related parties \n 60,372  \n 82,928 \n\nAccounts payable \n 60,372  \n 82,928 \n\nUnearned revenue \n 188,659  \n 127,646 \n\nUnearned revenue - related party \n 38,847  \n - \n\nUnearned revenue \n 38,847  \n - \n\nTaxes payable \n 38,265  \n 103,945 \n\nAccrued liabilities and other payables \n 1,545,034  \n 2,579,182 \n\nGovernment grant \n -  \n 733,721 \n\nShort term loan \n 85,799  \n - \n\nOperating lease liabilities \n 177,924  \n 101,422 \n\nOperating lease liabilities - related parties \n 7,507  \n 6,859 \n\nOperating lease liabilities \n 7,507  \n 6,859 \n\nDue to related parties \n 5,815,958  \n 2,957,472 \n\nTotal current liabilities \n 8,492,541  \n 7,474,870 \n\nOperating lease liabilities - non-current \n 1,267,286  \n 1,197,222 \n\nOperating lease liabilities - non-current - related parties \n 9,898  \n 16,671 \n\nOperating lease liabilities - non-current \n 9,898  \n 16,671 \n\nTotal liabilities \n 9,769,725  \n 8,688,763 \n\n  \n    \n   \n\nStockholders’ deficit \n    \n   \n\nUndesignated preferred stock, $0.001 par value, 20,000,000 shares authorized, none issued and outstanding \n -  \n - \n\nCommon stock, par value $0.00001 per share, 500,000,000 shares authorized; 24,999,834 shares issued and outstanding as of December 31, 2025 and 2024 \n 250  \n 250 \n\nAdditional paid in capital \n 15,276,550  \n 15,276,550 \n\nStatutory reserve \n 151,988  \n 151,988 \n\nAccumulated deficit \n (22,031,196) \n (19,988,733)\n\nAccumulated other comprehensive income \n 33,657  \n 277,542 \n\nTotal stockholders’ deficit \n (6,568,751) \n (4,282,403)\n\n  \n    \n   \n\nTotal liabilities and stockholders’ deficit \n$3,200,974  \n$4,406,360 \n\n \n\nThe accompanying notes are\nan integral part of these financial statements.\n\n \n\nF-4\n\n \n\n** **\n\n**AIXIN\nLIFE INTERNATIONAL, INC.**\n\n**CONSOLIDATED\nSTATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**\n\n** **\n\n  \n2025  \n2024 \n\n  \nYears Ended December 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nSales revenue \n    \n   \n\nDirect sales \n$171,949  \n$504,097 \n\nPharmacies \n 107,198  \n 822,958 \n\nHotel \n 408,581  \n 585,634 \n\nManufacture and sale \n 801,699  \n 1,911,612 \n\nTotal revenue, net \n 1,489,427  \n 3,824,301 \n\n  \n    \n   \n\nOperating costs and expenses \n    \n   \n\nCost of sales \n 867,821  \n 1,767,364 \n\nHotel operating costs \n 1,082,538  \n 1,447,599 \n\nSelling expenses \n 507,743  \n 791,104 \n\nGeneral and administrative \n 1,551,875  \n 2,105,298 \n\nStock-based compensation \n -  \n 301,127 \n\nTotal operating costs and expenses \n 4,009,977  \n 6,412,492 \n\n  \n    \n   \n\nLoss from operations \n (2,520,550) \n (2,588,191)\n\n  \n    \n   \n\nNon-operating income (expenses) \n    \n   \n\nInterest expense \n (18,589) \n (76,613)\n\nGain from sale of leasehold improvement  \n 467,695  \n - \n\nOther income (expense) \n 29,372  \n (103,009)\n\nTotal non-operating income (expenses), net \n 478,478  \n (179,622)\n\n  \n    \n   \n\nLoss before income tax \n (2,042,072) \n (2,767,813)\n\n  \n    \n   \n\nIncome tax expense \n 391  \n 528 \n\n  \n    \n   \n\nNet loss \n (2,042,463) \n (2,768,341)\n\n  \n    \n   \n\nOther comprehensive items \n    \n   \n\nForeign currency translation gain (loss) \n (243,885) \n 96,392 \n\n  \n    \n   \n\nComprehensive loss \n$(2,286,348) \n$(2,671,949)\n\n  \n    \n   \n\nLoss per share of common stock - basic and diluted \n$(0.082) \n$(0.111)\n\n  \n    \n   \n\nWeighted average shares outstanding \n 24,999,834  \n 24,999,834 \n\n** **\n\nThe\naccompanying notes are an integral part of these financial statements.\n\n** **\n\nF-5\n\n \n\n** **\n\n**AIXIN\nLIFE INTERNATIONAL, INC.**\n\n**CONSOLIDATED\nSTATEMENTS OF STOCKHOLDERS’ DEFICIT**\n\n**FOR\nTHE YEARS ENDED DECEMBER 31, 2025 AND 2024**\n\n** **\n\n  \nShares  \nAmount  \ncapital  \nreserves  \ndeficit  \nincome  \nTotal \n\n  \nCommon Stock  \n\nAdditional\n\npaid in\n  \nStatutory  \nAccumulated  \n\nAccumulated other\n\ncomprehensive\n  \n  \n\n  \nShares  \nAmount  \ncapital  \nreserves  \ndeficit  \nincome (loss)  \nTotal \n\n  \n   \n   \n   \n   \n   \n   \n  \n\nBalance at December 31, 2023 \n 24,999,834  \n 250  \n 14,975,423  \n 151,988  \n (17,220,392) \n 181,150  \n (1,911,581)\n\nStock-based compensation \n -  \n -  \n 301,127  \n -  \n -  \n -  \n 301,127 \n\nNet loss \n -  \n -  \n -  \n -  \n (2,768,341) \n -  \n (2,768,341)\n\nForeign currency translation loss \n -  \n -  \n -  \n -  \n -  \n 96,392  \n 96,392 \n\nBalance at December 31, 2024 \n 24,999,834  \n 250  \n 15,276,550  \n 151,988  \n (19,988,733) \n 277,542  \n (4,282,403)\n\nNet loss \n -  \n -  \n -  \n -  \n (2,042,463) \n -  \n (2,042,463)\n\nForeign currency translation loss \n -  \n -  \n -  \n -  \n -  \n (243,885) \n (243,885)\n\nBalance at December 31, 2025 \n 24,999,834  \n 250  \n 15,276,550  \n 151,988  \n (22,031,196) \n 33,657  \n (6,568,751)\n\n** **\n\nThe\naccompanying notes are an integral part of these financial statements.\n\n \n\nF-6\n\n \n\n** **\n\n**AIXIN\nLIFE INTERNATIONAL, INC.**\n\n**CONSOLIDATED\nSTATEMENTS OF CASH FLOWS**\n\n** **\n\n  \n2025  \n2024 \n\n  \nYears Ended December 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nCASH FLOWS FROM OPERATING ACTIVITIES: \n    \n   \n\nNet loss \n$(2,042,463) \n$(2,768,341)\n\nAdjustments required to reconcile net loss to net cash used in operating activities: \n    \n   \n\nDepreciation and amortization \n 156,830  \n 321,282 \n\nBad debts provision (reversal) \n 18,724  \n (22,415)\n\nLoss on disposal of fixed assets \n 86,523  \n 63,105 \n\n(Reversal of) provision for inventory reserve \n (14,223) \n 12,229 \n\nGain from sale of leasehold improvement \n (467,695) \n - \n\nInterest income \n -  \n (24,867)\n\nOperating lease expense \n 298,778  \n 542,675 \n\nStock based compensation \n -  \n 301,127 \n\nChanges in assets and liabilities: \n    \n   \n\nAccounts receivable \n 76,491  \n 226,110 \n\nAccounts receivable - related parties \n 212,843  \n (431,703)\n\nOther receivables and prepaid expenses \n 24,214  \n 38,729 \n\nAdvances to suppliers \n 34,371  \n 112,748 \n\nAdvances to suppliers - related parties \n (11,057) \n - \n\nInventory \n 110,187  \n (88,249)\n\nSecurity deposit \n 2,883  \n 79,274 \n\nAccounts payable \n (274,126) \n 317,729 \n\nAccounts payable - related parties \n (25,479) \n 85,507 \n\nUnearned revenue \n 53,925  \n (40,971)\n\nUnearned revenue - related party \n 37,796  \n - \n\nTaxes payable \n (68,331) \n 22,730 \n\nAccrued liabilities and other payables \n (19,948) \n 28,304 \n\nOperating lease liability \n (216,631) \n (395,878)\n\nOperating lease liability - related parties \n (7,943) \n (7,959)\n\nNet cash used in operating activities \n (2,034,331) \n (1,628,834)\n\n  \n    \n   \n\nCASH FLOWS FROM INVESTING ACTIVITIES: \n    \n   \n\nPurchase of property and equipment \n (13,045) \n (241,661)\n\nRepayment received from loans to third party \n -  \n 24,867 \n\nCash received on disposal of fixed assets \n -  \n 24,338 \n\nPurchase of intangible asset \n -  \n (2,779)\n\nNet cash used in investing activities \n (13,045) \n (195,235)\n\n  \n    \n   \n\nCASH FLOWS FROM FINANCING ACTIVITIES: \n    \n   \n\nAdvance from related parties \n 3,748,205  \n 2,347,095 \n\nRepayment to related parties \n (1,092,205) \n (753,991)\n\nRepayment of government grant \n (745,134) \n (166,662)\n\nProceeds from loan \n 83,478  \n - \n\nNet cash provided by financing activities \n 1,994,344  \n 1,426,442 \n\n  \n    \n   \n\nEFFECT OF EXCHANGE RATE CHANGE ON CASH \n 11,473  \n (7,029)\n\n  \n    \n   \n\nNET DECREASE IN CASH \n (41,559) \n (404,656)\n\n  \n    \n   \n\nCASH, BEGINNING OF PERIOD \n 62,310  \n 466,966 \n\n  \n    \n   \n\nCASH, END OF PERIOD \n$20,751  \n$62,310 \n\n  \n -  \n - \n\nSupplemental Cash flow data: \n    \n   \n\nIncome tax paid \n$-  \n$- \n\nInterest paid \n$253  \n$- \n\n  \n    \n   \n\nSupplemental disclosure of noncash activities: \n    \n   \n\nRight-of-use assets obtained in exchange for operating lease liabilities \n$255,088  \n$1,415,679 \n\nTermination of Right-of-use asset and operating lease liability \n$-  \n$1,066,276 \n\nSale of Leasehold Improvement \n$148,406  \n$- \n\nSpecification settlement of Property and equipment \n$479,655  \n$- \n\n \n\nThe accompanying notes are\nan integral part of these financial statements.\n\n** **\n\nF-7\n\n \n\n** **\n\n**AIXIN\nLIFE INTERNATIONAL, INC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**1.\nORGANIZATION AND DESCRIPTION OF BUSINESS**\n\n \n\nAixin\nLife International, Inc. (the “Company” or “Aixin Life” or “we”) was incorporated under the laws\nof the State of Colorado on December 30, 1987. On February 2, 2017, Mr. Quanzhong Lin (Mr. Lin) purchased 65.0% of the Company’s\noutstanding shares from China Concentric Capital Group for $300,000, pursuant to a Stock Purchase Agreement dated December 21, 2016,\nwhich resulted in a change in control of the Company.\n\n \n\nOn\nDecember 12, 2017, pursuant to a Share Exchange Agreement, in consideration for all of the outstanding shares of AiXin (BVI) International\nGroup Co., Ltd. a British Virgin Islands corporation (“AiXin BVI”), the Company issued to Mr. Lin, the sole stockholder of\nAiXin BVI, shares of common stock then representing 71% of the outstanding of common stock of the Company.\n\n \n\nAs\na result of the Share Exchange, AiXin BVI became the Company’s wholly-owned subsidiary, and the Company owns all of the outstanding\nshares of HK AiXin International Group Co., Limited, a Hong Kong limited company (“AiXin HK”), which in turn owns all of\nthe outstanding shares of Chengdu AiXinZhonghong Biological Technology Co., Ltd., a Chinese limited company (“AiXinZhonghong”),\nwhich markets and sells premium-quality nutritional products in China.\n\n \n\nAiXin\nBVI was incorporated on September 21, 2017 as a holding company and AiXin HK was established in Hong Kong on February 25, 2016 as an\nintermediate holding company. AiXinZhonghong was established in the People’s Republic of China (“PRC”) on March 4,\n2013, and on May 27, 2017, the local government of the PRC issued a certificate of approval regarding the foreign ownership of AiXinZhonghong\nby AiXin HK. Neither AiXin BVI nor AiXin HK had operations prior to December 12, 2017.\n\n \n\nFor\naccounting purposes, the acquisition of AiXin BVI was accounted for as a reverse acquisition and treated as a recapitalization of the\nCompany effected by a share exchange, with AiXin BVI as the accounting acquirer. Since neither AiXin BVI nor AiXin HK had operations\nprior to December 12, 2017, the historical consolidated financial statements of AiXinZhonghong are now the historical consolidated financial\nstatements of the Company. The assets and liabilities of AiXinZhonghong were brought forward at their book value and no goodwill was\nrecognized.\n\n \n\nEffective\nFebruary 1, 2018, the Company changed its name to AiXin Life International, Inc. (“Aixin Life”).\n\n \n\nThe\nCompany, through its indirectly owned subsidiary, AiXinZhonghong, develops and distributes consumer products by offering a line of nutritional\nproducts. The Company sells the products through exhibition events, conferences, and person-to-person marketing. The Company’s\nbusiness mainly focuses on a proactive approach to its customers such as hosting events for clients, which it believes is ideally suited\nto marketing its products because sales of nutrition products are strengthened by ongoing personal contact and support, coaching and\neducation of its clients, as to the benefits of a healthy and active lifestyle.\n\n \n\nOn\nMay 25, 2021, AiXin HK entered into an Equity Transfer Agreement (the “Hotel Purchase Agreement”) with Chengdu Aixin Shangyan\nHotel Management Co., Ltd (“Aixin Shangyan Hotel”), and its two shareholders Quanzhong Lin and Yirong Shen (“Transferor”).\nPursuant to the Hotel Purchase Agreement, Aixin Life purchased 100% ownership of Aixin Shangyan Hotel from Transferor. 80Eighty percent\nof the equity of Aixin Shangyan Hotel was owned by Mr. Lin, and the remaining balance was owned by Ms. Shen. Under the terms of the Hotel\nPurchase Agreement, Aixin Life purchased all of the outstanding equity of Aixin Shangyan Hotel for a purchase price of RMB 7,598,887,\nor approximately $1.16 million (the “Transfer Price”). The Transfer Price was to be reduced by an amount equal to any amounts\npaid or distributed by Aixin Shangyan Hotel to the Transferor after December 31, 2020 and increased by an amount equal to any amounts\ncontributed to Aixin Shangyan Hotel by the Transferor after December 31, 2020. The acquisition was completed in July 2021.\n\n \n\nF-8\n\n \n\n \n\nOn\nJune 2, 2021, AiXin HK entered into an Equity Transfer Agreement (the “Pharmacies Purchase Agreement”) with Chengdu Aixintang\nPharmacy Co., Ltd. and certain affiliated entities, each of which operates a pharmacy (together, “Aixintang Pharmacies”)\nand its three shareholders, Quanzhong Lin, Ting Li and Xiao Ling Li (“Transferor”). Mr. Lin owned in excess of 95% of the\noutstanding equity of Aixintang Pharmacies. The remaining equity interest was owned by Ting Li and Xiao Ling Li. Pursuant to the Pharmacies\nPurchase Agreement, AiXin HK purchased all of the outstanding equity of Aixintang Pharmacies for an aggregate purchase price of RMB 34,635,845,\nor approximately US$5.31 million (the “Transfer Price”). The Transfer Price was to be reduced by an amount equal to any amounts\npaid or distributed by any of the Aixintang Pharmacies to the Transferor after December 31, 2020 and increased by an amount contributed\nto any of the Aixintang Pharmacies by the Transferor after such date. The acquisition was completed in September 2021.\n\n \n\nOn\nJuly 19, 2022, AiXin HK entered into an Equity Transfer Agreement with Yunnan Shengshengyuan Technology Co., Ltd, (“Yunnan Shengshengyuan”)\nand Yun Chen (together, the “Sellers”), the shareholders of Yunnan Runcangsheng Technology Company Ltd. (“Runcangsheng”).\nYunnan Shengshengyuan owns in excess of 95% of the outstanding equity of Runcangsheng. The remaining equity interest is owned by Yun\nChen. Pursuant to the Transfer Agreement, AiXin HK agreed to purchase all of the outstanding equity of Runcangsheng for an aggregate\npurchase price of $4,418,095 (RMB 31,557,820), adjusted by $116,802 the amount equal to the initial net worth minus the audited net worth.\nIn addition to transferring their respective equity interest in Runcangsheng, both Sellers agree to forgive any loans Runcangsheng due\nto them. The acquisition was completed on September 30, 2022.\n\n \n\nOn\nFebruary 17, 2023, the Company effected a 1 for 2 reverse stock split. As a result of the reverse split, every two shares of the Company’s\nissued and outstanding common stock will be automatically combined and converted into one issued and outstanding share of common stock,\npar value $0.00001 per share. The Company has approximately 24,999,834 shares of outstanding common stock after the effect of reverse\nstock split and the elimination of fractional shares. All share and earnings per share information has been retroactively adjusted to\nreflect the reverse stock split.\n\n \n\n**Going\nConcern**\n\n \n\nThe\naccompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the\nrealization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction\nof liabilities in the normal course of business are dependent on, among other things, the Company’s ability to operate profitably,\nto generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements.\n\n \n\nThe\nCompany incurred a net loss of $2,042,463 and $2,768,341 for the years ended December 31, 2025 and 2024, respectively, and used net cash\nin operating activities of $2,034,331 and $1,628,834 for the years ended December 31, 2025 and 2024, respectively, and has a working\ncapital deficit of $7,476,418 as of December 31, 2025. These facts and conditions raise substantial doubt about the Company’s ability\nto continue as a going concern. From January 1, 2025 through December 31, 2025, the Company’s cash and cash equivalents decreased\nfrom $62,310 to $20,751 mainly due to an increase in cash outflow from operating activities.\n\n \n\nManagement\nbelieves that it has developed a liquidity plan, summarized below, that, if executed successfully, should provide sufficient liquidity\nto meet the Company’s obligations as they become due for a reasonable period of time, and allow the development of its core business.\nThe plan includes:\n\n \n\n●\nGaining positive cash-inflow from operating activities through continuous cost reductions and the sales of higher margin products.\n\n \n\n●\nRaising cash through loans from related parties and potential equity offerings.\n\n \n\nF-9\n\n \n\n \n\nWhile\nthe Company’s management believes that the measures in its liquidity plan including those described above will be adequate to satisfy\nits liquidity requirements for the twelve months after the date that these financial statements are issued, there is no assurance that\nthe liquidity plan will be successfully implemented. Failure to successfully implement the liquidity plan may have a material adverse\neffect on the Company’s business, results of operations and financial position, and may adversely affect its ability to continue\nas a going concern. These consolidated financial statements do not include any adjustments related to the recoverability\nand classification of recorded assets or the amounts and classification of liabilities or any other adjustments that might be necessary\nshould the Company be unable to continue as a going concern.\n\n \n\n**2.\nSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**\n\n \n\n**Basis\nof Presentation and Consolidation**\n\n \n\nThe\naccompanying consolidated financial statements are prepared in conformity with U.S. Generally Accepted Accounting\nPrinciples (“US GAAP”). The functional currency of AiXinZhonghong, Aixin Shangyan Hotel, Aixintang Pharmacies, and Runcangsheng\nis the Chinese Renminbi (“RMB”). The accompanying consolidated financial statements are translated from RMB and presented\nin U.S. dollars (“USD”).\n\n \n\nThe\nconsolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, AiXin HK, AiXinZhonghong, Aixin\nShangyan Hotel, Aixintang Pharmacies, and Runcangsheng. Intercompany transactions and accounts were eliminated in consolidation.\n\n \n\n**Global\nUncertainties**\n\n** **\n\nThe\nCompany’s liquidity may be adversely impacted by various risks and uncertainties, including, but not limited to future and current\nimpacts of global events such as a widespread health crisis, the continuation of the war in the Ukraine or the conflict in Palestine,\nthe outbreak of another conflict or the expansion of the conflict in Palestine to other countries, the ongoing tensions between the United\nStates and China, the Russian Federation and certain countries in the Middle East, increases in inflation, and other risks detailed in\nthe Company’s Annual Report on Form 10-K or other reports filed with the Securities and Exchange Commission.\n\n \n\nWhile\nthe invasion of Ukraine, the conflict in Palestine and responses thereto have not interrupted the Company’s operations, these or\nfuture developments which disrupt the international financial markets could make it difficult to access debt and equity capital on attractive\nterms, if at all, and impact the Company’s ability to fund business activities, including proposed acquisitions.\n\n** **\n\n**Use\nof Estimates**\n\n \n\nIn\npreparing consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions\nthat affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated\nfinancial statements, as well as the reported amounts of revenues and expenses during the reporting period.\n\n \n\nSignificant\nestimates required by management, include the recoverability of long-lived assets, allowance for doubtful accounts, and the reserve for\nobsolete and slow-moving inventories. Actual results could differ from those estimates.\n\n \n\n**Cash\nand Cash Equivalents**\n\n \n\nFor\nfinancial statement purposes, the Company considers all highly liquid investments with an original maturity of three months or less to\nbe cash and cash equivalents. The Company has cash on hand and deposits in accounts maintained with state-owned banks within the PRC.\nCash in state-owned banks is covered by insurance up to RMB 500,000 ($68,450) per bank.\n\n** **\n\n****\n\nF-10\n\n \n\n** **\n\n**Restricted\nCash**\n\n** **\n\nRestricted\ncash consist of cash deposited with banks in conjunction with borrowings from banks. Restriction on the use of such as is imposed by\nthe banks and remains effective throughout the terms of the bank borrowings. Restricted cash is classified as current asset on the Company’s\nconsolidated balance sheet as all the balance is expected to be released to cash within the next 12 months from December 31, 2025. The\nrestricted cash was cash maintained in temporarily frozen bank accounts held by Aixintang Pharmacy and its branches by the court for\na judgement against Aixintang Pharmacy (see Note 17 – litigation).\n\n \n\n**Credit\nLosses**\n\n** **\n\nThe\nCompany’s policy is to maintain an allowance for potential credit losses on accounts receivable. The Company adopted Accounting\nStandards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit losses on\nfinancial instruments later codified as Accounting Standard codification (“ASC”) 326 (“ASC 326”), on January\n1, 2023. The guidance introduces a revised approach to the recognition and measurement of credit losses, emphasizing an updated model\nbased on expected losses rather than incurred losses. There was no significant impact on the date of adoption of ASC 326.\n\n \n\nUnder\nASC 326, accounts receivable are recorded at the invoiced amount, net of allowance for expected credit losses. The Company’s primary\nallowance for credit losses is the allowance for doubtful accounts. The allowance for doubtful accounts reduces the accounts receivable\nbalance to the estimated net realizable value. The Company used a combination of method Aging schedule and Roll-rate method to assess\nthe reasonability and adequacy of current allowance.\n\n \n\nIn\nestablishing any required allowance, management considers historical losses adjusted for current market conditions, the Company’s\ncustomers’ financial condition, the amount of any receivables in dispute, the current receivables aging, current payment terms\nand expectations of forward-looking loss estimates.\n\n \n\nAll\nprovisions for the allowance for doubtful accounts are included as a component of general and administrative expenses on the accompanying\nconsolidated statements of operations and comprehensive loss. Accounts receivable deemed uncollectible are charged against the allowance\nfor credit losses when identified. Subsequent recoveries of amounts previously written off are credited to earnings in the period recovered.\n\n \n\n**Accounts\nReceivable**\n\n \n\nThe\nCompany’s policy is to maintain an allowance for potential credit losses on accounts receivable. Management reviews the composition\nof accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends\nand changes in customer payment patterns to evaluate the adequacy of these reserves. In practice, companies generally provide a high-level, aggregated description of payment terms, such as payment\nis generally due upon delivery or shortly thereafter. As of December 31, 2025 and 2024, the bad debt allowance\nwas $73,845 and $52,669, respectively.\n\n \n\nThe\nfollowing table summarizes the activity related to the Company’s accounts receivable allowance for doubtful accounts for the years\nended December 31, 2025 and 2024:\n\n SCHEDULE OF ACCOUNTS RECEIVABLE ALLOWANCE FOR DOUBTFUL ACCOUNTS \n\n  \n2025  \n2024 \n\n  \nFor the years ended December 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nBeginning balance \n$52,669  \n$80,640 \n\nProvision for (Reversal of) bad debts \n 18,360  \n (22,415)\n\nEffect of translation \n 2,816  \n (5,556)\n\nEnding balance \n$73,845  \n$52,669 \n\n \n\nF-11\n\n \n\n \n\n**Inventories**\n\n \n\nInventories\nare stated at net realizable value using weighted average method. Costs include the cost of raw materials, freight, direct labor and\nrelated production overhead. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision\nfor diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less\nany costs to complete and sell products. The Company evaluates inventories on a quarterly basis for its net realizable value adjustments,\nand reduces the carrying value of those inventories that are obsolete or in excess of the forecasted usage to their estimated net realizable\nvalue based on various factors including aging, expiration dates, as applicable, taking into consideration historical and expected future\nproduct sales. The Company recorded inventory impairment (reserve) of $(14,223) and $12,229 as of December 31, 2025 and 2024, respectively.\n\n \n\n**Cost\nof Goods Sold**\n\n** **\n\nCost\nof goods sold represents the direct costs incurred in the production or procurement of goods sold during the reporting period. Such costs\nprimarily include raw materials, direct labor, and manufacturing overhead directly attributable to the production of finished goods.\nFor retail or merchandising operations, cost of goods sold consists primarily of the purchase price of inventory, including freight-in\nand other costs necessary to bring inventory to a saleable condition.\n\n \n\n**Hotel\nOperating Costs**\n\n** **\n\nHotel\noperating costs represent the direct and indirect expenses associated with the operation of hotel properties during the reporting period.\nThese costs typically include payroll and related employee benefits for on-property staff, room operations, food and beverage costs,\nhousekeeping, utilities, maintenance and repairs, property-level administrative expenses, and other costs necessary to operate and maintain\nhotel facilities.\n\n \n\n**Property\nand Equipment**\n\n \n\nProperty\nand equipment are stated at cost, less accumulated depreciation, and impairment losses, if any. Major repairs and betterments that significantly\nextend original useful lives or improve productivity are capitalized and depreciated over the period benefited. Maintenance and repairs\nare expensed as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation\nare removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided\nusing the straight-line method for substantially all assets with 5% salvage value and estimated lives as follows:\n\nSCHEDULE OF PROPERTY AND EQUIPMENT ESTIMATED LIVES \n\nOffice\nfurniture\n \n1-5\nyears\n\nElectronic\nequipment\n \n2-3\nyears\n\nMachinery\n \n3-10\nyears\n\nLeasehold\nimprovements\n \n3-5\nyears\n\nVehicles\n \n5\nyears\n\n \n\nF-12\n\n \n\n \n\n**Impairment\nof Long-Lived Assets**\n\n \n\nLong-lived\nassets, which include property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances\nindicate that the carrying amount of an asset may not be recoverable, but at least annually.\n\n \n\nRecoverability\nof long-lived assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future\ncash flows expected to be generated by it. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an\nimpairment charge is recognized by the amount by which the carrying amount of the asset exceeds its fair value. Fair value is generally\ndetermined using the asset’s expected future discounted cash flows or market value, if readily determinable. Based on its review,\nthe Company believes that, as of December 31, 2025 and 2024, there were no significant impairments of its long-lived assets.\n\n \n\n**Income\nTaxes**\n\n \n\nIncome\ntaxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences\nin future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end\nbased on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable\nincome. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.\n\n \n\nThe\nCompany follows Accounting Standards Codification (“ASC”) Topic 740, which prescribes a more-likely-than-not threshold for\nfinancial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides\nguidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities,\naccounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures.\n\n \n\nUnder\nASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities,\nwhile others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately\nsustained. The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on\nall available evidence, management believes it is more likely than not that the position will be sustained upon examination, including\nthe resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax\npositions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than\n50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions\ntaken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying\nbalance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest\nassociated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative\nexpenses in the statement of income.\n\n \n\nAt\nDecember 31, 2025 and 2024, the Company did not take any uncertain positions that would necessitate recording a tax related liability.\n\n \n\n**Revenue\nRecognition**\n\n \n\nRevenue\nfrom sale of goods under *Topic 606* is recognized in a manner that reasonably reflects the delivery of the Company’s products\nand services to customers in return for expected consideration and includes the following elements:\n\n \n\n \n●\nexecuted\ncontract(s) with customers that the Company believes is legally enforceable;\n\n \n\nF-13\n\n \n\n \n\n \n●\nidentification\nof performance obligation in the respective contract;\n\n \n \n \n\n \n●\ndetermination\nof the transaction price for each performance obligation in the respective contract;\n\n \n \n \n\n \n●\nallocation\nof the transaction price to each performance obligation; and\n\n \n \n \n\n \n●\nrecognition\nof revenue only when the Company satisfies each performance obligation.\n\n* *\n\n**Disaggregation\nof Revenue**\n\n** **\n\nFor\nthe years ended December 31, 2025 and 2024, the Company disaggregate revenue into four revenue streams, consisting of direct product\nsales, pharmacies sales, hotel and manufacture sales as the following table:\n\nSCHEDULE OF DISAGGREGATION OF REVENUE \n\n  \n\nYear Ended\n\nDecember 31, 2025\n  \n\nYear Ended\n\nDecember 31, 2024\n \n\nDirect Product Sales \n$171,949  \n 504,097 \n\nPharmacies Sales \n 107,198  \n 822,958 \n\nHotel \n 408,581  \n 585,634 \n\nManufacture and Sale: \n 801,699  \n 1,911,612 \n\nTotal Revenues \n$1,489,427  \n$3,824,301 \n\n \n\nF-14\n\n \n\n \n\nThe\nCompany’s revenue recognition policies for its various operating segments are as follows:\n\n \n\n**Direct\nSales**\n\n \n\nThe\nCompany’s revenue from direct sales of products is recognized when goods are delivered to the customer and no other obligation\nexists. The Company does not provide unconditional return or other concessions to customers. The Company’s sales policy allows\nfor the return of unopened products for cash after deducting certain service and transaction fees. As an alternative to the product\nreturn option, customers have the option of asking for an exchange for products with the same value. The Company estimates expected\nproduct returns based on historical experience, contractual terms, applicable statutory return rights, and subsequent return\nactivity. Historically, returns have been insignificant, and no material refund liability or sales return allowance was recorded as\nof December 31, 2025 and 2024.\n\n \n\nSales\nrevenue of AiXin Zhonghong represents the invoiced value of goods, net of value-added taxes (“VAT”). All of the Company’s\nproducts sold in China are subject to the PRC VAT of 13% since April 1, 2019. This VAT may be offset by VAT paid by the Company on raw\nmaterials and other materials purchased in China. The Company records VAT payable and VAT receivable net of payments in the financial\nstatements. The VAT tax return is filed offsetting the payables against the receivables. Sales and purchases are recorded net of VAT\ncollected and paid as the Company acts as an agent for the government.\n\n \n\n**Hotel**\n\n \n\nHotel\nrevenues are primarily derived from the rental of rooms, food and beverage sales and other ancillary goods and services, including but\nnot limited to souvenir, parking and conference reservation. Each of these products and services represents a distinct performance obligation\nand, in exchange for these services, the Company receives fixed amounts based on published rates or negotiated contracts. Payment is\ndue in full at the time when the services are rendered or the goods are provided. Room rental revenue is recognized on a daily basis\nwhen rooms are occupied. Food and beverage revenue and other goods and services revenue are recognized when they have been delivered\nor rendered to the guests as the respective performance obligations are satisfied. All of the hotel’s goods sold in China are subject\nto the PRC VAT of 6%. This VAT may be offset by VAT paid by the Company on raw materials and other materials purchased in China.\n\n \n\n**Pharmacy**\n\n \n\nThe\nCompany’s retail drugstores (Aixintang Pharmacies) recognize revenue at the time the customer takes possession of the merchandise.\nFor pharmacy sales, each prescription claim is its own arrangement with the customer and is a performance obligation. Aixintang Pharmacies\ngenerally receives payments from customers as it satisfies its performance obligations. Sales of drugs reimbursed by local government\nmedical insurance agencies and receivables from these agencies are recognized when a customer pays for the drugs at a store, the receivables\nare usually collected within three months, and the Company has not experienced a payment default from any local government medical insurance\nagency. The Company records a receivable when it has an unconditional right to receive payment and only the passage of time is required\nbefore payment is due. Sales revenue represents the invoiced value of goods, net of VAT. Aixintang Pharmacies’ products sold in\nChina are subject to the PRC VAT of 0%-13% as certain pharmacies qualify as small businesses.\n\n \n\n**Manufacture\nand Sale**\n\n \n\nThe\nCompany’s subsidiary Runcangsheng recognizes revenue at the time products are shipped as this satisfies its performance obligation.\nThe Company records a receivable for its sales when it has an unconditional right to receive payment and only the passage of time is\nrequired before payment is due. Sales revenue represents the invoiced value of goods, net of value-added taxes (“VAT”). All\nof Runcangsheng’s products sold in China are subject to the PRC VAT of 13% unless it is a qualified small business subject to exemption.\n\n** **\n\n**Unearned\nRevenue**\n\n \n\nThe\nCompany’s unearned revenue primarily consists of advances received from customers for the purchase of products prior to the delivery\nof goods, and for the rental of hotel rooms prior to the delivery of service. The delivery of products and room rental services is based\nupon contract terms and customer demand, normally within one year.\n\n \n\nF-15\n\n \n\n \n\n**Concentration\nof Credit Risk**\n\n \n\nThe\noperations of the Company are in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may\nbe influenced by the political, economic, and legal environments in the PRC, and by the general state of the PRC economy.\n\n \n\nThe\nCompany has cash on hand and demand deposits in accounts maintained with state-owned banks within the PRC. Cash in state-owned banks\nis covered by insurance up to RMB 500,000 ($68,450) per bank. As of December 31, 2025 and 2024, the Company has uninsured deposits in\nbanks of nil held in the PRC.\n\n \n\nThe\nCompany has not experienced any losses in such accounts and believes they are not exposed to any risks on its cash in these bank accounts.\n\n \n\nDuring\nthe year ended December 31, 2025, the Company had one customer that accounted for 39% of its total revenue. Net sales for this customer\namounted to $581,080 during the year ended December 31, 2025.\n\n \n\nDuring\nthe year ended December 31, 2024, the Company had two customers that accounted for 14% and 10% of its total revenue. Net sales for those\ntwo customers amounted to $530,851 and $376,786 during the year ended December 31, 2024.\n\n \n\nDuring\nthe year ended December 31, 2025, the Company had two major suppliers that accounted for over 10% of its total purchases.\n\nSCHEDULE OF CONCENTRATION OF RISK BY RISK FACTORS \n\nSupplier \n\n**Net purchases for the**\n\n**year ended**\n\n**December 31, 2025**\n  \n\n**% of total**\n\n**purchase**\n \n\nA \n$242,933  \n 48%\n\nD \n 102,932  \n 20%\n\n \n\nDuring\nthe year ended December 31, 2024, the Company had three major suppliers that accounted for over 10% of its total purchases.\n\n \n\nSupplier \n\n**Net purchases for the**\n\n**year ended**\n\n**December 31, 2024**\n  \n\n**% of total**\n\n**purchase**\n \n\nA \n$556,202  \n 28%\n\nB \n 311,774  \n 16%\n\nC* \n 224,901  \n 11%\n\n \n\n*\nCEO\nowns this entity with 100% ownership\n\n \n\nF-16\n\n \n\n \n\n**Leases**\n\n \n\nThe\nCompany determines if an arrangement is a lease at inception under Financial Accounting Standards Board (“FASB”) ASC Topic\n842, Right of Use Assets (“ROU”) and lease liabilities are recognized at commencement date based on the present value of\nremaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at\nthe time of commencement. As most of its leases do not provide an implicit rate, it uses its incremental borrowing rate based on the\ninformation available at commencement date in determining the present value of lease payments. The Company’s incremental borrowing\nrate is a hypothetical rate based on its understanding of what its credit rating would be. ROU assets are adjusted for prepayments and\naccrued lease payments. ROU assets also reflect any lease payments made prior to commencement and are recorded net of any lease incentives\nreceived. The Company’s lease terms may include options to extend or terminate the lease and such options are considered when determining\nthe value of an ROU asset when it is reasonably certain that the Company will exercise such options.\n\n \n\nROU\nassets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject\nto the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets.\n\n \n\nROU\nassets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent\nfrom the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used,\nwhich represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets\nand liabilities. The Company recognized no impairment of ROU assets as of December 31, 2025 and 2024. Operating leases are included in\noperating lease ROU and operating lease liabilities (current and non-current), on the consolidated balance sheets.\n\n \n\n**Statement\nof Cash Flows**\n\n \n\nIn\naccordance with ASC Topic 230, *“Statement of Cash Flows,”* cash flows from the Company’s operations are calculated\nbased on the local currencies using the average translation rates. As a result, amounts related to assets and liabilities reported on\nthe consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on\nthe consolidated balance sheets.\n\n \n\n**Fair\nValue of Financial Instruments**\n\n \n\nThe\ncarrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accrued liabilities and\naccounts payable, approximate their fair value due to their short maturities. FASB ASC Topic 825, “Financial Instruments,”\nrequires disclosure of the fair value of financial instruments held by the Company. Unless otherwise disclosed, the fair value of the\nCompany’s cash, accounts receivable, inventories, advances to suppliers, prepaid expenses and other current assets, accounts payable,\nunearned revenue accrued expenses and other current liabilities, taxes payable and due to related parties, approximate the fair value\nof the respective assets and liabilities as of December 31, 2025 and 2024 based upon the short-term nature of the assets and liabilities.\n\n \n\n**Fair\nValue Measurements and Disclosures**\n\n \n\nASC\nTopic 820, “Fair Value Measurements and Disclosures,” defines fair value, and establishes a three-level valuation hierarchy\nfor disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels are defined\nas follow:\n\n \n\n \n●\nLevel\n1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.\n\n \n\nF-17\n\n \n\n \n\n \n●\nLevel\n2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that\nare observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.\n\n \n●\nLevel\n3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.\n\n \n\nAs\nof December 31, 2025 and 2024, the Company did not identify any assets and liabilities that are required to be presented on the balance\nsheet at fair value.\n\n \n\n**Foreign\nCurrency Translation and Comprehensive Income (Loss)**\n\n \n\nThe\nfunctional currency of the Company is RMB. For financial reporting purposes, RMB is translated into USD as the reporting currency. Assets\nand liabilities are translated at the exchange rate in effect at the balance sheet dates. Revenues and expenses are translated at the\naverage rate of exchange prevailing during the reporting period.\n\n \n\nTranslation\nadjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’\nequity as “Accumulated other comprehensive income”. Gains and losses resulting from foreign currency transactions are included\nin income. There was no significant fluctuation in the exchange rate for the conversion of RMB to USD after the balance sheet date.\n\n \n\nThe\nCompany uses FASB ASC Topic 220, “Comprehensive Income”. Comprehensive loss is comprised of net loss and all changes to the\nstatements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions\nto stockholders. Comprehensive income (loss) for the years ended December 31, 2025 and 2024 consisted of net income (loss) and foreign\ncurrency translation adjustments.\n\n \n\nTranslation\nof amounts from RMB into USD has been made at the following exchange rates as of December 31, 2025 and 2024 and for the years ended December\n31, 2025 and 2024.\n\nSCHEDULE OF FOREIGN CURRENCY TRANSLATION \n\n  \nDecember 31, 2025  \nDecember 31, 2024 \n\nPeriod/year-end RMB:USD exchange rate \n 6.9931  \n 7.2993 \n\nPeriod/annual average RMB:USD exchange rate \n 7.1875  \n 7.1957 \n\nExchange rate \n 7.1875  \n 7.1957 \n\n \n\n**Earnings\nper Share**\n\n \n\nBasic\nincome (loss) per share is computed on the basis of the weighted average number of common shares outstanding during the period.\n\n \n\nDilution\nis computed by applying the treasury stock method for options and warrants. Under this method, options and warrants are assumed to be\nexercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase\ncommon stock at the average market price during the period.\n\n \n\nAs\nof December 31, 2025 and 2024, the Company did not have any potentially dilutive instruments.\n\n \n\nF-18\n\n \n\n \n\n**Stock-Based\nCompensation**\n\n \n\nThe\nCompany periodically grants stock options, warrants and awards to employees and non-employees in non-capital raising transactions as\ncompensation for services rendered. The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation—Stock\nCompensation. Under the Company’s equity incentive plan, stock awards and other share-based payments are granted to employees,\ndirectors, and consultants as compensation for services rendered. Stock-based compensation cost is measured on the grant date based on\nthe fair value of the shares awarded and is recognized as expense on a straight-line basis over the service period. The fair value of\ncommon stock granted is determined using the closing market price of the Company’s common stock on the grant date. Stock-based\ncompensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are\nno future performance requirements by the employees and non-employees, option, warrant and award grants are immediately vested and the\ntotal stock-based compensation charge is recorded in the period of the measurement date.\n\n** **\n\n**Segment\nReporting**\n\n \n\nASC\nTopic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management\napproach model is based on the way a company’s chief operating decision maker organizes segments within the Company for making\noperating decisions assessing performance and allocating resources. Reportable segments are based on products and services, geography,\nlegal structure, management structure, or any other manner in which management disaggregates a company.\n\n \n\nThe\nCompany manages its business as four operating segments, direct sales, pharmacy, hotel, and manufacture and sales, all of which are located\nin the PRC. All of its revenues are derived in the PRC. All long-lived assets are located in PRC.\n\n \n\nThe\nfollowing table shows the Company’s operations by business segment for years ended December 31, 2025 and 2024.\n\nSCHEDULE OF SEGMENTS INFORMATION \n\n  \n2025  \n20214 \n\n  \nFor the Years Ended December 31, \n\n  \n2025  \n2024 \n\nNet revenue \n    \n   \n\nDirect sales \n$171,949  \n$504,097 \n\nPharmacy \n 107,198  \n 822,958 \n\nHotel \n 408,581  \n 585,634 \n\nManufacture and sale \n 801,699  \n 1,911,612 \n\nTotal revenues, net \n$1,489,427  \n$3,824,301 \n\n  \n    \n   \n\nOperating costs and expenses \n    \n   \n\nDirect sales \n    \n   \n\nCost of sales \n$44,101  \n$173,950 \n\nOperating expenses \n 962,910  \n 1,815,052 \n\nPharmacy \n    \n   \n\nCost of sales \n 59,085  \n 262,276 \n\nOperating expenses \n 287,428  \n 366,707 \n\nHotel \n    \n   \n\nHotel operating costs \n 1,082,538  \n 1,447,599 \n\nOperating expenses \n 315,370  \n 272,153 \n\nManufacture and sale \n    \n   \n\nCost of sales \n 764,635  \n 1,331,138 \n\nOperating expenses \n 493,910  \n 743,617 \n\nTotal operating costs and expenses \n$4,009,977  \n$6,412,492 \n\n  \n    \n   \n\nIncome (loss) from operations \n    \n   \n\nDirect sales \n$(835,062) \n$(1,484,905)\n\nPharmacy \n (239,315) \n 193,976 \n\nHotel \n (989,327) \n (1,134,119)\n\nManufacture and sale \n (456,846) \n (163,143)\n\nLoss from operations \n$(2,520,550) \n$(2,588,191)\n\n \n\nF-19\n\n \n\n \n\nThe\nfollowing table shows the Company’s assets by business segment as of December 31, 2025 and 2024.\n\n \n\nSegment assets \n\n**As of**\n\n**December 31, 2025**\n  \n\n**As of**\n\n**December 31, 2024**\n \n\nDirect sales \n$314,793  \n$508,005 \n\nPharmacy \n 406,369  \n 260,937 \n\nHotel \n 1,443,727  \n 1,578,367 \n\nManufacture and sale \n 1,036,085  \n 2,059,051 \n\nTotal assets \n$3,200,974  \n$4,406,360 \n\n \n\n**New\nAccounting Pronouncements**\n\n \n\n*Recently\nAdopted Accounting Standards*\n\n \n\nln\nDecember 2023, the FASB issued Accounting Standards Update No.2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”\n(“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories\nin the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between\ndomestic and foreign) and (3)income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU\n2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among\nother changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual\nfinancial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis,\nbut retrospective application is permitted. The Company adopted the ASU in 2025. The adoption did not have a material impact on the financial\nstatements.\n\n \n\nIn\nMarch 2025, the FASB issued ASU 2025-02—Liabilities (405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin\nNo. 122. The amendments in this Update are effective immediately and on a fully retrospective basis to annual periods beginning after\nDecember 15, 2024. The Company adopted the ASU in 2025. The adoption did not have a material impact on the financial statements.\n\n \n\n*Recently\nIssued But Not Yet Adopted Accounting Pronouncements*\n\n \n\nIn\nOctober 2023, the FASB issued ASU No. 2023-06, “Disclosure Improvements — Codification Amendments in Response to the SEC’s\nDisclosure Update and Simplification Initiative.” The ASU amends the disclosure or presentation requirements related to various\nsubtopics in the FASB ASC. The ASU was issued in response to the SEC’s August 2018 final amendments in Release No. 33-10532, Disclosure\nUpdate and Simplification that updated and simplified disclosure requirements that the SEC believed were duplicative, overlapping, or\noutdated. The guidance in ASU 2023-06 is intended to align GAAP requirements with those of the SEC and to facilitate the application\nof GAAP for all entities. The amendments introduced by ASU 2023-06 are effective if the SEC removes the related disclosure or presentation\nrequirement from its existing regulations by June 30, 2027. If, by June 30, 2027, the SEC has not removed the applicable requirements\nfrom its existing regulations, the pending content of the associated amendment will be removed from the ASC and will not become effective\nfor any entities. Early adoption is permitted. The adoption of ASU 2023-06 is not expected to have a material impact on the Company’s\nconsolidated financial statements or related disclosures.\n\n \n\nOn\nNovember 4, 2024, the FASB issued an ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024 03”) to improve\nthe disclosures about a public business entity’s expenses and address requests from investors for more detailed information about\nthe types of expenses in commonly presented expense captions (such as cost of sales; selling, general, and administrative expenses; and\nresearch and development). The amendments in the ASU require disclosure in the notes to financial statements of specified information\nabout certain costs and expenses. The amendments require that at each interim and annual reporting period an entity: 1.Disclose the amounts\nof (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation,\ndepletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included\nin each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within\ncontinuing operations that contains any of the expense categories listed in (a)–(e). 2. Include certain amounts that are already\nrequired to be disclosed under current generally accepted accounting principles in the same tabular disclosure as the other disaggregation\nrequirements. 3. Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated\nquantitatively. 4) Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling\nexpenses. In January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date (“ASU 2025-01”). The amendments,\nas clarified by ASU 2025-01, are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods\nwithin annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU should be\napplied either (1) prospectively to financial statements issued for reporting periods after the effective date of the ASU or (2) retrospectively\nto any or all prior periods presented in the financial statements. The Company is currently evaluating the impact that the adoption of\nASU 2024-03 will have on its consolidated financial statement presentation or disclosures.\n\n \n\nF-20\n\n \n\n \n\nIn\nJanuary 2025, the FASB issued ASU 2025-01 Income Statement-Reporting Comprehensive Income – Expense Disaggregation Disclosures\n(Subtopic 220-40). The FASB issued ASU 2024-03 on November 4, 2024-03 states that the amendments are effective for public business entities\nfor annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Following\nthe issuance of ASU 2024-03, the FASB was asked to clarify the initial effective date for entities that do not have an annual reporting\nperiod that ends on December 31 (referred to as non-calendar year-end entities). Because of how the effective date guidance was written,\na non-calendar year-end entity may have concluded that it would be required to initially adopt the disclosure requirements in ASU 2024-03\nin an interim reporting period, rather than in annual reporting period. The FASB’s intent in the basis for conclusions of ASU 2024-03\nis clear that all public business entities should initially adopt the disclosure requirements in the first annual reporting period beginning\nafter December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company\nis currently evaluating the impact that the adoption of ASU 2025-01 will have on its consolidated financial statement presentation or\ndisclosures.\n\n \n\nThe\nCompany’s management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently\nadopted, would have a material impact on the Company’s financial statement presentation or disclosures.\n\n \n\n**3.\nOTHER RECEIVABLES AND PREPAID EXPENSES**\n\n \n\nOther\nreceivables and prepaid expenses consisted of the following at December 31, 2025 and 2024:\n\nSCHEDULE OF OTHER RECEIVABLES AND PREPAID EXPENSES \n\n  \nDecember 31, 2025  \nDecember 31, 2024 \n\nDeposits \n$52,392  \n$48,678 \n\nPrepaid expenses \n 1,787  \n 6,702 \n\nEmployees’ social insurance \n 19,666  \n 18,350 \n\nOthers \n 26,602  \n 56,037 \n\nTotal \n$100,447  \n$127,912 \n\nLess: bad debt allowance \n 2,382  \n 1,855 \n\nTotal other receivables and prepaid expenses, net \n$98,065  \n$127,912 \n\nLong-term prepaid expenses \n$1,266  \n$4,051 \n\n \n\nOthers\nprimarily consist of temporary advances , amounts paid on behalf of employees for housing-related expenses, and petty cash funds\nfor operational purposes.\n\n \n\nF-21\n\n \n\n \n\n**4.\nADVANCES TO SUPPLIERS**\n\n \n\nThe\nCompany had advances to suppliers of $3,551 and $37,247 as of December 31, 2025 and 2024, respectively. Advances to suppliers primarily\ninclude prepayments for products and equipment expected to be delivered subsequent to balance sheet dates. Due to their short-term nature,\nadvances to suppliers are usually satisfied within 12 months.\n\n \n\n**5.\nINVENTORIES**\n\n \n\nInventories\nconsisted of the following at December 31, 2025 and 2024:\n\n SCHEDULE OF INVENTORIES \n\n  \nDecember 31, 2025  \nDecember 31, 2024 \n\nRaw material \n$150,017  \n$260,024 \n\nDrugs, pharmaceutical and nutritional products \n 317,302  \n 293,159 \n\nFood and beverage, hotel supplies and consumables \n 38,749  \n 40,156 \n\nTotal \n 506,068  \n 593,339 \n\nLess: reserve for inventory \n 78,642  \n 89,349 \n\nTotal inventories, net \n$427,426  \n$503,990 \n\n \n\nProvision\nfor inventory reserve for the years ended December 31, 2025 and 2024 was $(14,223) and $12,229, respectively.\n\n \n\n**6.\nPROPERTY AND EQUIPMENT, NET**\n\n \n\nProperty\nand equipment consisted of the following at December 31, 2025 and 2024:\n\nSCHEDULE OF PROPERTY AND EQUIPMENT \n\n  \nDecember 31, 2025  \nDecember 31, 2024 \n\nVehicles \n$409,958  \n$440,256 \n\nOffice equipment \n 99,392  \n 99,170 \n\nMachinery equipment \n 989,311  \n 1,429,230 \n\nLeasehold improvements \n 587,848  \n 1,129,681 \n\nTotal \n 2,086,509  \n 3,098,337 \n\nProperty\nand equipment, gross \n 2,086,509  \n 3,098,337 \n\nLess: Accumulated depreciation \n (1,426,279) \n (1,605,012)\n\nProperty and equipment, net \n$660,230  \n$1,493,325 \n\n \n\nDuring\nthe year, the Company entered into a settlement agreement with the vendor of certain equipment after identifying that certain materials\nand specifications associated with the equipment did not meet contractual requirements. As part of the settlement, the vendor agreed\nto reduce outstanding amounts payable by approximately $0.48 million. The Company accounted for the settlement as a reduction to the\ncarrying amount of property and equipment.\n\n \n\nDepreciation\nexpense for the years ended December 31, 2025 and 2024 was $154,956 and $315,139, respectively.\n\n \n\nF-22\n\n \n\n \n\n**7.\nINTANGIBLE ASSETS, NET**\n\n \n\nIntangible\nasset consisted of the following at December 31, 2025 and 2024:\n\n SCHEDULE OF INTANGIBLE ASSET \n\n  \nDecember 31, 2025  \nDecember 31, 2024 \n\nSoftware \n$5,251  \n$5,919 \n\nLess: Accumulated amortization \n (2,465) \n (1,405)\n\nIntangible asset, net \n$2,786  \n$4,514 \n\n \n\nAmortization\nexpense for the years ended December 31, 2025 and 2024 was $1,873 and $6,143, respectively. At December 31, 2026, estimated amortization\nexpense for each of the next five years is as follows: $1,086, $928, $772, nil and nil.\n\n \n\n**8.\nTAXES PAYABLE**\n\n** **\n\nTaxes\npayable consisted of the following at December 31, 2025 and 2024:\n\n SCHEDULE OF TAX PAYABLE \n\n  \nDecember 31, 2025  \nDecember 31, 2024 \n\nValue-added \n$8,190  \n$57,647 \n\nIncome \n 30,075  \n 29,216 \n\nCity construction \n -  \n 4,703 \n\nEducation \n -  \n 3,367 \n\nOther tax payable \n -  \n 9,012 \n\nTaxes payable \n$38,265  \n$103,945 \n\n \n\n**9.\nACCRUED LIABILITIES AND OTHER PAYABLES**\n\n \n\nAccrued\nliabilities and other payables consisted of the following at December 31, 2025 and 2024:\n\n SCHEDULE OF ACCRUED LIABILITIES AND OTHER PAYABLES \n\n  \nDecember 31, 2025  \nDecember 31, 2024 \n\nAccrued employees’ social insurance \n$114,350  \n$161,342 \n\nAccrued payroll and commission \n 941,110  \n 746,183 \n\nConstruction payable \n 40,679  \n 1,124,230 \n\nAccrued professional fees \n 283,286  \n 342,568 \n\nOther payables \n 165,609  \n 204,859 \n\nTotal \n$1,545,034  \n$2,579,182 \n\n \n\nF-23\n\n \n\n \n\n**10.\nGOVERNMENT GRANT**\n\n \n\nOn\nDecember 1, 2021, the Company and Luquan Yizu Miaozu Autonomous County People’s Government (“the People’s Government”)\nentered a cooperation agreement with a term of 10 years. According to the agreement, the People’s Government was to contribute\nRMB 8,000,000 ($1,194,400) as a one-time payment to the Company for deep processing of Chinese herbs. The Company can retain the contributed\namount at the end of the cooperation term if it passes the performance assessment by the People’s Government; otherwise, it will\nreturn the full proceeds received plus a 20% penalty. The Company had balance of nil and $733,721 payable to the People’s Government. For the years ended December 31, 2025 and 2024, the Company returned $745,134 and $166,662, respectively to the\nPeoples’ Government. For the years ended December 31, 2025 and 2024, the Company recorded $18,611 and $77,219 interest expense\nrelated to this grant.\n\n \n\n**11.\nSHORT TERM LOAN**\n\n** **\n\nOn\nNovember 7, 2025, the Company entered into a short-term loan with Bank of Communications Co., Ltd. for a principal amount of $85,700\n(RMB 600,000) for working capital purposes. The loan is valid until November 5, 2027, with individual drawdowns not exceeding 12 months\nwith interest at an annual rate of 2.8%. For the year ended December 31, 2025, the Company recorded and paid $253 interest expense for\nthis loan. As of December 31, 2025, the outstanding of this loan was $85,799.\n\n \n\n**12.\nLEASE**\n\n \n\nAiXinZhonghong\nleases its office. The lease has a remaining lease term of approximately 2.40 years.\n\n \n\nAixin\nShangyan Hotel leases its hotel premises under an operating lease arrangement. The lease has a remaining lease terms of approximately\n8.29 years.\n\n \n\nAixintang\nPharmacies lease retail pharmacy stores under operating lease arrangements, with remaining lease terms of 2.45 to 4.48 years.\n\n \n\nRuncangsheng\nleases its office under an operating lease arrangement. The lease was expired as of December 31, 2023. In January 2024, the lease was\nrenewed with an expiration date of December\n31, 2024.\nThe lease was renewed for another year to December 31, 2025. On November 26, 2025, the Company entered into a three-year lease agreement\nwith Yunnan Luquan Industrial Park for the Food Processing Project. The annual lease expense is $44,720 (RMB 318,194). Under the terms\nof the agreement, the Company is required to pay the first year’s lease expense by April 15, 2026, the second year’s lease\nexpense by April 15, 2027, and the third year’s lease expense by April 15, 2028. The lease has a remaining lease term of approximately\n2.9\nyears.\n\n \n\nBalance\nsheet information related to the Company’s leases is presented below:\n\n SCHEDULE OF OPERATING LEASE LIABILITIES \n\n  \n\n**December\n31,**\n\n**2025**\n  \n\n**December\n31,**\n\n**2024**\n \n\nOperating Leases \n    \n   \n\nOperating lease right-of-use assets-third party \n$1,501,802  \n$1,425,923 \n\nOperating lease right-of-use assets-related party \n 18,767  \n 24,839 \n\nTotal operating lease right-of-use assets \n$1,520,569  \n$1,450,762 \n\n  \n    \n   \n\nOperating lease liabilities – current-third party \n 177,924  \n 101,422 \n\nOperating lease liabilities – current-related party \n 7,507  \n 6,859 \n\nTotal operating lease liabilities-current \n 185,431  \n 108,281 \n\n  \n    \n   \n\nOperating lease liability – non-current-third party \n 1,267,286  \n 1,197,222 \n\nOperating lease liability – non-current-related party \n 9,898  \n 16,671 \n\nTotal operating lease liabilities-non-current \n 1,277,184  \n 1,213,893 \n\n  \n    \n   \n\nTotal operating lease liabilities \n$1,462,615  \n$1,322,174 \n\n \n\nF-24\n\n \n\n \n\nThe\nfollowing provides details of the Company’s lease expenses:\n\n SCHEDULE OF OPERATING LEASE EXPENSES \n\n  \n2025  \n2024 \n\n  \nYears Ended December 31, \n\n  \n2025  \n2024 \n\nOperating lease expenses \n$298,778  \n$542,675 \n\n \n\nOther\ninformation related to leases is presented below:\n\n SCHEDULE OF OTHER INFORMATION RELATED LEASES\n\n  \nYears Ended December 31, \n\n  \n2025  \n2024 \n\nCash Paid for Amounts Included In Measurement of Liabilities: \n    \n   \n\nOperating cash flows from operating leases \n$224,574  \n$403,837 \n\n  \n    \n   \n\nWeighted Average Remaining Lease Term As of December 31, 2025 and December 31, 2024: \n    \n   \n\nOperating leases \n 7.48 years  \n 8.76 years \n\n  \n    \n   \n\nWeighted Average Discount Rate: \n    \n   \n\nOperating leases \n 4.26% \n 4.75%\n\n \n\nF-25\n\n \n\n \n\nAs\nof December 31, 2025, the five-year maturity of the Company’s operating lease liabilities was as following:\n\n SCHEDULE OF MATURITIES OF LEASE LIABILITIES \n\nFor the year ending December 31: \n   \n\n2026 \n$248,315 \n\n2027 \n 253,946 \n\n2028 \n 225,146 \n\n2029 \n 187,941 \n\n2030 \n 180,178 \n\nThereafter \n 648,556 \n\nTotal lease payments \n 1,744,082 \n\nLess: imputed interest \n (281,467)\n\nTotal lease liabilities \n 1,462,615 \n\n \n\n**13.\nRELATED PARTY TRANSACTIONS**\n\n \n\n**Accounts\nreceivable – related parties**\n\n \n\nAccounts\nreceivable – related party consisted of the following as of the periods indicated:\n\n SCHEDULE OF ACCOUNTS RECEIVABLE - RELATED PARTY \n\n  \nDecember 31, 2025  \nDecember 31, 2024 \n\nChengdu Lisheng Huiren Pharmacy Co., Ltd. \n$151,386  \n$144,331 \n\nChengdu Cigu Foshou Pharmacy Co., Ltd. \n -  \n 22 \n\nSichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. \n 24,115  \n 22,632 \n\nSichuan Yunxitang Pharmacy Co., Ltd. \n -  \n 868 \n\nShengcaofeng Health Industry (Yunnan) Co., Ltd. \n -  \n 137,010 \n\nChengdu Aixin International Travel Service Co., Ltd. \n 143,380  \n 210,224 \n\nTotal \n$318,881  \n$515,087 \n\nAccounts receivable - related party \n$318,881  \n$515,087 \n\n \n\nThe\nrelated party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder of Aixin Life), except\nfor Shengcaofeng Health Industry (Yunnan) Co., Ltd, which is owned by Huiliang Jiao, a Director of the Company.\n\n \n\nF-26\n\n \n\n \n\n**Sales\nrevenue – related party**\n\n \n\nSales\nrevenue – related party consisted of the following for the periods indicated:\n\n SCHEDULE OF SALES REVENUE RELATED PARTY\n\n  \n2025  \n2024 \n\n  \nYears Ended December 31, \n\n  \n2025  \n2024 \n\nSichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. \n$3,706  \n$22,513 \n\nChengdu Aixin International Travel Service Co., Ltd. \n 4,676  \n 3,258 \n\nChengdu Lisheng Huirentang Pharmacy Co., Ltd \n 785  \n 60,223 \n\nShengcaofeng Health Industry (Yunnan) Co., Ltd. \n 656,621  \n - \n\nYuefu Restaurant \n -  \n 128 \n\nTotal \n$665,788  \n$86,122 \n\nSales revenue - related party \n$665,788  \n$86,122 \n\n \n\nThe\nrelated party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder of Aixin Life), except\nfor Shengcaofeng Health Industry (Yunnan) Co., Ltd, which is owned by Huiliang Jiao, a Director of the Company.\n\n \n\n**Purchase\n– related party**\n\n \n\nPurchase\n– related party consisted of the following for the periods indicated:\n\n SCHEDULE OF PURCHASE RELATED PARTY\n\n  \n2025  \n2024 \n\n  \nYears Ended December 31, \n\n  \n2025  \n2024 \n\nSichuan Yunxitang Pharmacy Co., Ltd \n$127  \n$806 \n\nSichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. \n 50,878  \n 229,959 \n\nChengdu Heshengyuan Pharmacy Co., Ltd. \n 1,796  \n 1,913 \n\nChengdu Cigu Foshou Pharmacy Co., Ltd. \n 502  \n 4,881 \n\nChengdu Aixin International Travel Service Co., Ltd. \n -  \n 114,789 \n\nYunnan Shengcaofeng Biotechnology Co., Ltd \n -  \n 1,223 \n\nTotal \n$53,303  \n$353,571 \n\nPurchase - related party \n$53,303  \n$353,571 \n\n \n\nThe\nrelated party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder of Aixin Life), except\nfor Yunan Shengcaofeng Biotechnology Co., Ltd, which is owned by Huiliang Jiao, a Director of the Company.\n\n \n\nF-27\n\n \n\n \n\n**Accounts\npayable – related parties**\n\n \n\nAccounts\npayable – related party consisted of the following as of the periods indicated:\n\n SCHEDULE OF ACCOUNTS PAYABLE - RELATED PARTY \n\n  \nDecember 31, 2025  \nDecember 31, 2024 \n\nSichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. \n$57,136  \n$75,474 \n\nShengcaofeng Health Industry (Yunnan) Co., Ltd. \n -  \n 1,206 \n\nSichuan Yunxitang Pharmacy Co., Ltd. \n 111  \n 370 \n\nChengdu Heshengyuan Pharmacy Co., Ltd. \n 2,426  \n 1,529 \n\nChengdu Cigu Foshou Pharmacy Co., Ltd. \n 699  \n 4,349 \n\nTotal \n$60,372  \n$82,928 \n\n \n\nThe\nrelated party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder of Aixin Life), except\nfor Shengcaofeng Health Industry (Yunnan) Co., Ltd, which is owned by Huiliang Jiao, a Director of the Company.\n\n \n\n**Advances\nto suppliers– related parties**\n\n \n\nAdvances\nto suppliers – related parties consisted of the following as of the periods indicated:\n\n SCHEDULE OF ADVANCES TO SUPPLIERS - RELATED PARTY\n\n  \nDecember 31, 2025  \nDecember 31, 2024 \n\nSichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. \n$8,957  \n$- \n\nSichuan Yunxitang Pharmacy Co., Ltd. \n 860  \n - \n\nChengdu Heshengyuan Pharmacy Co., Ltd. \n 103  \n - \n\nChengdu Cigu Foshou Pharmacy Co., Ltd. \n 1,444  \n - \n\nTotal \n$11,364  \n$- \n\nAdvance from suppliers \n$11,364  \n$- \n\n \n\nThe\nrelated party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder of Aixin Life).\n\n \n\n**Unearned\nrevenue - related party**\n\n \n\nAs\nof December 31, 2025 and 2024, unearned revenue - related party consisted of $36,833\nand nil advance payment from Shengcaofeng Health Industry (Yunnan) Co., Ltd, which is owned by Huiliang Jiao, a Director of the\nCompany and $2,014\nand nil advance payment from Chengdu Aixin Yuefu Catering Management Co., Ltd, which is owned by Quanzhong Lin, the CEO of the\nCompany.\n\n \n\nF-28\n\n \n\n \n\n**Due\nfrom related parties**\n\n \n\nDue\nfrom related parties consisted of the following as of the periods indicated:\n\n SCHEDULE OF RELATED PARTY TRANSACTIONS \n\n  \nDecember 31, 2025  \nDecember 31, 2024 \n\nChengdu WenJiang Aixin Nanjiang Pharmacy Co., Ltd. \n$-  \n$547 \n\nChengdu Fuxiangtang Pharmacy Co., Ltd. \n -  \n 82 \n\nChengdu Heshengyuan Pharmacy Co., Ltd. \n 286  \n - \n\nChengdu Wenjiang District Heneng Hupu Pharmacy Co., Ltd. \n -  \n 685 \n\nSichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. \n 54,260  \n - \n\nChengdu Cigu Foshou Pharmacy Co., Ltd. \n 6,540  \n - \n\nSichuan Aixin Investment Co. Ltd. \n 286  \n 274 \n\nChengdu Lisheng Huiren Pharmacy Co., Ltd. \n 6,600  \n 1,132 \n\nMianyang Aixin Cunshan Pharmacy \n 5,064  \n - \n\nSichuan Yunxitang Pharmacy Co., Ltd \n 443  \n - \n\nXiaoyan Zhou \n -  \n 2,055 \n\nHuiliang Jiao \n -  \n 49,009 \n\nTotal \n$73,479  \n$53,784 \n\nDue from related parties \n$73,479  \n$53,784 \n\n \n\n**Due\nto related parties**\n\n \n\nDue\nto related parties consisted of the following as of the periods indicated:\n\n \n\n  \nDecember 31, 2025  \nDecember 31, 2024 \n\nQuanzhong Lin \n$5,257,326  \n$2,952,403 \n\nHuiliang Jiao \n 367,830  \n - \n\nMianyang Aixin Cunshan Pharmacy Co. Ltd. \n -  \n 121 \n\nXiaoyan Zhou \n 15,015  \n - \n\nSichuan Aixintang Xinfu Pharmacy Chain Co., Ltd. \n 33,695  \n - \n\nChengdu Aixin International Travel Service Co., Ltd. \n 5,165  \n 4,948 \n\nChengdu Cigu Foshou Pharmacy Co., Ltd. \n 1,079  \n - \n\nRuncangsheng Health Industry (Yunnan) Co., Ltd. \n 135,848  \n - \n\nTotal \n$5,815,958  \n$2,957,472 \n\nDue to related parties \n$5,815,958  \n$2,957,472 \n\n \n\nThe\namounts due from related parties and due to related parties described above were for working capital purposes, payable on demand, and\nbear no interest. The related party entities listed above are controlled by Mr. Quanzhong Lin (the Chairman, CEO and major shareholder\nof Aixin Life). Mr. Huiliang Jiao is a Director of the Company. Xiaoyan Zhou is the wife of Huiliang Jiao.\n\n \n\nF-29\n\n \n\n \n\n**14.\nINCOME TAXES**\n\n \n\nThe\nCompany was incorporated in the United States of America (“USA”) and has operations in one tax jurisdiction, i.e. the PRC.\nThe Company generated substantially all of its sales from its operations in the PRC for the year ended December 31, 2025 and 2024, and\nrecorded an income tax provision for each of the periods.\n\n \n\nPRC\n\n \n\nUnder\nthe Enterprise Income Tax (“EIT”) Law of the PRC, domestic enterprises and Foreign Investment Enterprises (the “FIE”)\nare usually subject to a unified 25% EIT rate while preferential tax rates, tax holidays, and even tax exemption may be granted on case-by-case\nbasis. From January 1, 2022 to December 31, 2025, small and low-profit enterprises with annual taxable income exceeding RMB 1 million\nbut not more than RMB 3 million, the actual income to be taxed will be further lowered at 25% of annual taxable income, and the corporate\nincome tax is paid at the rate of 20%.A company recognized as a High-Tech Enterprise is eligible for a preferential enterprise income\ntax rate of 15%, reduced from the statutory rate of 25%, for a total of three years, including the year in which the High-Tech Enterprise\nCertificate is issued and the following two consecutive years, thereby benefiting from a 10% reduction in the applicable income tax rate.\n\n \n\nThe\ncurrent PRC EIT Law imposes a 10% withholding income tax for dividends distributed by foreign invested enterprises to their immediate\nholding companies outside the PRC. A lower withholding tax rate will be applied if there is a tax treaty arrangement between the PRC\nand the jurisdiction of the foreign holding company. Distributions to holding companies in Hong Kong that satisfy certain requirements\nspecified by the PRC tax authorities, for example, will be subject to a 5% withholding tax rate. The Company did not benefit from this\ntax incentive during the reporting period.\n\n \n\nThe\nCompany’s subsidiaries in mainland China are subject to the statutory rate of 25%, in accordance with the Enterprise Income Tax\nlaw (the “EIT Law”), which has been effective since January 1, 2008, expect for certain entities eligible for preferential\ntax rates. The Company does not currently apply or claim any preferential tax treatments.\n\n \n\nThe\ncomponents of the provision for income taxes for the years ended December 31, 2025 and 2024 consisted of the following:\n\n SCHEDULE OF COMPONENTS OF THE PROVISION FOR INCOME TAXES \n\n \n** **\n**2025**\n \n \n**2024**\n** **\n\n \n** **\n**For\nthe Years Ended December 31,**\n** **\n\n \n** **\n**2025**\n \n \n**2024**\n** **\n\nCurrent:\n \n \n \n \n \n \n\nChina\n \n$\n-\n \n \n$\n-\n \n\nTotal\ncurrent\n \n \n-\n \n \n \n-\n \n\nDeferred:\n \n \n \n \n \n \n \n \n\nChina\n \n \n391\n \n \n \n528\n \n\nTotal\ndeferred\n \n \n391\n \n \n \n528\n \n\nTotal\nincome tax expense\n \n$\n391\n \n \n$\n528\n \n\n \n\nF-30\n\n \n\n \n\nDeferred\ntax assets as of December 31, 2025 and 2024 consisted of the following:\n\n SCHEDULE OF DEFERRED TAX ASSETS \n\n  \nDecember 31, 2025  \nDecember 31, 2024 \n\nDeferred tax assets: \n    \n   \n\nAllowance for inventory \n$25,212  \n$22,337 \n\nAllowance for doubtful accounts \n 17,612  \n 14,279 \n\nRight of use asset, net \n 8,120  \n 11,934 \n\nNOL carry forward \n 1,255,826  \n 755,458 \n\nLess: valuation allowance \n (1,306,770) \n (804,009)\n\nDeferred tax assets, net \n$-  \n$- \n\n \n\nThe\nfollowing table reconciles the statutory rates to the Company’s effective tax rate for years ended December 31, 2025 and 2024:\n\n SCHEDULE OF EFFECTIVE INCOME TAX RATE \n\n  \n2025  \n2024 \n\nStatutory U.S. federal income tax rate \n (21.0)% \n (21.0)%\n\nForeign tax rate differential \n (4.0)% \n (3.6)%\n\nPermanent difference \n 2.5% \n 5.8%\n\nChange in valuation allowances \n 24.9% \n 18.8%\n\nOther \n (2.4)% \n -%\n\nEffective combined tax rate \n 0.0% \n 0.0%\n\n \n\nAs\nof December 31, 2025, the Company had approximately $1,255,826 net operating loss carry-forwards available to offset future taxable income\nin China primarily from Aixin Shangyan Hotel and Aixintang Pharmacies. The Company’s net operating loss carry-forwards begins to\nexpire in 2024. After consideration of all information available, management believes that uncertainty exists with respect to future\nrealization of its deferred tax assets resulted from net operating loss carry-forwards due to the Company’s net loss, and established\na full valuation allowance of deferred tax assets resulted from net operating loss carry-forwards.\n\n \n\nUncertain\nTax Positions\n\n \n\nInterest\nassociated with unrecognized tax benefits are classified as income tax, and penalties are classified in selling, general and administrative\nexpenses in the statements of operations. For the years ended December 31, 2025 and 2024, the Company had no unrecognized tax benefits\nand related interest and penalties expenses. Currently, the Company is not subject to examination by major tax jurisdictions.\n\n \n\nF-31\n\n \n\n \n\n**15.\nSTOCKHOLDERS’ EQUITY**\n\n \n\nThe\nCompany is authorized to issue 20,000,000 shares preferred stock at $0.001 par value per share and 500,000,000 shares of common stock\nat $.00001 par value per share.\n\n \n\nAs\nof d December 31, 2025 and 2024, the Company had 24,999,834 common shares issued and outstanding, and no outstanding shares of preferred\nstock.\n\n \n\nStock\nAwards Issued for Services\n\n \n\nOn\nOctober 22, 2019, the Company granted and issued 18,750 shares to its employees and contractors under its 2019 Equity Incentive Plan.\nThe stock awards were valued at $337,500 based on the post-split closing price of $18 on the grant date.\n\n \n\nOn\nOctober 24, 2019, the Company granted and issued 275,000\nshares to its employees and contractors under its 2019 Equity Incentive Plan. The stock awards were valued at $1,520,200\nbased on the post-split closing price of $5.528\non the grant date. There are 331,250 unissued shares remaining under the Company’s 2019 Equity Incentive Plan.\n\n \n\nThe\nstock awards will vest over five (5)\nyears from the grant date, and the grantee will forfeit a portion of the shares granted (“Shares Granted”) if the grantee\nis no longer employed by or contracted with the Company. Specifically, the\ngrantee will forfeit 80% of Shares Granted if no longer employed by or contracted with the Company on the date that is one year from\nthe grant date, forfeit 60% of Shares Granted if no longer employed by or contracted with the Company on the date that is two years from\nthe grant date, forfeit 40% of Shares Granted if no longer employed by or contracted with the Company on the date that is three years\nfrom the grant date, and forfeit 20% of Shares Granted if no longer employed by or contracted with the Company on the date that is four\nyears from the grant date. Effective on the 5th year from the grant date, none of the shares will be subject to forfeiture.\n\n \n\nFor\nthe years ended December 31, 2025 and 2024, stock-based compensation expenses were nil and $301,127, respectively.\n\n \n\n**16.\nSTATUTORY RESERVES**\n\n \n\nPursuant\nto the PRC corporate law, the Company is now only required to maintain one statutory reserve by appropriating from its after-tax profit\nbefore declaration or payment of dividends. The statutory reserve represents restricted retained earnings.\n\n** **\n\n**Surplus\nreserve fund**\n\n \n\nThe\nCompany is required to transfer 10% of its net income, as determined under PRC accounting rules and regulations, to a statutory surplus\nreserve fund until such reserve balance reaches 50% of the Company’s registered capital. During the years ended December 31, 2025\nand 2024, the Company made $0 and $0 contribution to statutory reserve fund.\n\n \n\nThe\nsurplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any,\nand may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion\nto their shareholding or by increasing the par value of the shares currently held by them, provided that the remaining reserve balance\nafter such issue is not less than 25% of the registered capital.\n\n \n\nF-32\n\n \n\n \n\n**Common\nwelfare fund**\n\n \n\nCommon\nwelfare fund is a voluntary fund to which the Company can elect to transfer 5% to 10% of its net income, as determined under PRC accounting\nrules and regulations. The Company did not make any contribution to this fund during the years ended December 31, 2025 and 2024.\n\n \n\nThis\nfund can only be utilized on capital items for the collective benefit of the Company’s employees, such as construction of dormitories,\ncafeteria facilities, and other staff welfare facilities. This fund is non-distributable other than upon liquidation.\n\n \n\n**17.\nOPERATING CONTINGENCIES**\n\n \n\nThe\nCompany’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies\nin North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments\nand foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect\nto laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among\nother things.\n\n \n\nThe\nCompany’s sales, purchases and expenses are denominated in RMB and all of the Company’s assets and liabilities are also denominated\nin RMB. The RMB is not freely convertible into foreign currencies under the current law. In China, foreign exchange transactions are\nrequired by law to be transacted only by authorized financial institutions. Remittances in currencies other than RMB may require certain\nsupporting documentation to affect the remittance.\n\n \n\n**Litigation**\n\n \n\nThe\nCompany is, from time to time, involved in litigation incidental to the conduct of its business regarding merchandise sold, employment\nmatters, and litigation regarding intellectual property rights.\n\n \n\nOn\nAugust 30, 2024, Zhangjiagang People’s Court in Jiangsu Province issued a Notice of Case Closure, stating the Judgement for this\ncase was fully executed and the plaintiff has received the full execution amount as of August 30, 2024.\n\n \n\nIn\nNovember 2021, the Company and Mr. Quanzhong Lin agreed that Mr. Lin shall assume any losses arising from this legal proceeding. As such,\nthe Company did not accrue contingent losses from this legal proceeding as of December 31, 2024.\n\n \n\nThe\nCompany believes that the litigation will not have a material adverse effect on its consolidated financial position, results of operations\nor cash flows.\n\n \n\n**18.\nSUBSEQUENT EVENT**\n\n \n\nThe\nCompany follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through\nthe date the financial statements were issued and determined the Company has the following major subsequent events that need to be disclosed.\n\n \n\nRun Cangsheng entered into a loan\nagreement for borrowings in the principal amount of $142,998 (RMB 1,000,000) with a term of three years commencing on January 1,\n2026. The loan is personally guaranteed by the Company’s legal representative, Chen Yun. In addition, four of the\nCompany’s intellectual property rights were pledged as collateral to secure the borrowings. The loan bears an annual interest\nrate of 2.8% during the first year of the term, with the interest rate decreasing by 0.01% every 12 months thereafter.\n\n \n\nF-33"}