10q10k10q10k.net
EShallGo Inc.

EShallGo Inc.EHGO财报

Nasdaq · 其他设备租赁

What changed in EShallGo Inc.'s 20-F — 2024 vs 2025

Top changes in EShallGo Inc.'s 2025 20-F

477 paragraphs added · 331 removed · 279 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

122 edited+108 added−14 removed653 unchanged
The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or interpreted in a manner different from our understanding of these laws and regulations.
The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or interpreted in a manner different from our understanding of these laws and regulations.
In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, which replaces the previous SAFE Circular 75.
In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, which replaces the previous SAFE Circular 75.
SAFE Circular 37 requires PRC residents, including PRC individuals and PRC corporate entities, to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities.
SAFE Circular 37 requires PRC residents, including PRC individuals and PRC corporate entities, to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities.
In addition, any PRC resident who is a direct or indirect shareholder of an SPV, is required to update its registration with the local branch of SAFE with respect to that SPV, to reflect any material change.
In addition, any PRC resident who is a direct or indirect shareholder of an SPV, is required to update its registration with the local branch of SAFE with respect to that SPV, to reflect any material change.
Moreover, any subsidiary of such SPV in China is required to urge the PRC resident shareholders to update their registration with the local branch of SAFE to reflect any material change.
Moreover, any subsidiary of such SPV in China is required to urge the PRC resident shareholders to update their registration with the local branch of SAFE to reflect any material change.
If any PRC resident shareholder of such SPV fails to make the required registration or to update the registration, the subsidiary of such SPV in China may be prohibited from distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited from making additional capital contributions into its subsidiaries in China.
If any PRC resident shareholder of such SPV fails to make the required registration or to update the registration, the subsidiary of such SPV in China may be prohibited from distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited from making additional capital contributions into its subsidiaries in China.
In February 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound direct investments, including those required under SAFE Circular 37, must be filed with qualified banks instead of SAFE.
In February 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound direct investments, including those required under SAFE Circular 37, must be filed with qualified banks instead of SAFE.
For example, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect our financial condition and results of operations.
For example, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect our financial condition and results of operations.
We cannot assure you that we have complied or will be able to comply with all applicable foreign exchange and outbound investment related regulations.
We cannot assure you that we have complied or will be able to comply with all applicable foreign exchange and outbound investment related regulations.
In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange regulations.
In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange regulations.
As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise.
As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise.
The Overseas Listing Trial Measures provides that an overseas listing or offering is explicitly prohibited, if any of the following: (1) such securities offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (2) the intended securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance with law; (3) the domestic company intending to make the securities offering and listing, or its controlling shareholder(s) and the actual controller, have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest three years; (4) the domestic company intending to make the securities offering and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion has yet been made thereof; or (5) there are material ownership disputes over equity held by the domestic company’s controlling shareholder(s) or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller. 45 Table of Contents According to the Circular, since the date of effectiveness of the Trial Measures on March 31, 2023, PRC domestic enterprises falling within the scope of filing that have been listed overseas or met the following circumstances are “existing enterprises”: before the effectiveness of the Trial Measures on March 31, 2023, the application for indirect overseas issuance and listing has been approved by the overseas regulators or overseas stock exchanges (such as the registration statement has become effective on the U.S. market), it is not required to perform issuance and listing supervision procedures of the overseas regulators or overseas stock exchanges, and the overseas issuance and listing will be completed by September 30, 2023.
The Overseas Listing Trial Measures provides that an overseas listing or offering is explicitly prohibited, if any of the following: (1) such securities offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (2) the intended securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance with law; (3) the domestic company intending to make the securities offering and listing, or its controlling shareholder(s) and the actual controller, have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest three years; (4) the domestic company intending to make the securities offering and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion has yet been made thereof; or (5) there are material ownership disputes over equity held by the domestic company’s controlling shareholder(s) or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller. 53 Table of Contents According to the Circular, since the date of effectiveness of the Trial Measures on March 31, 2023, PRC domestic enterprises falling within the scope of filing that have been listed overseas or met the following circumstances are “existing enterprises”: before the effectiveness of the Trial Measures on March 31, 2023, the application for indirect overseas issuance and listing has been approved by the overseas regulators or overseas stock exchanges (such as the registration statement has become effective on the U.S. market), it is not required to perform issuance and listing supervision procedures of the overseas regulators or overseas stock exchanges, and the overseas issuance and listing will be completed by September 30, 2023.
Furthermore, if we or the VIE is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including, without limitation: ● revoking the business license and/or operating licenses of our WFOE or the VIEs; ● discontinuing or placing restrictions or onerous conditions on our operations through any transactions among our WFOE, the VIEs and their subsidiaries; ● imposing fines, confiscating the income from our WFOE, the VIE or its subsidiaries, or imposing other requirements with which we or the VIEs may not be able to comply; ● placing restrictions on our right to collect revenues; ● shutting down our servers or blocking our app/websites; 22 Table of Contents ● requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with the VIEs and deregistering the equity pledges of the VIEs, which in turn would affect our ability to consolidate, derive economic interests from, or exercise our rights as the primary beneficiary over the VIEs; or ● restricting or prohibiting our use of the proceeds of any future financing activities to finance our business and operations in China. ● taking other regulatory or enforcement actions against us that could be harmful to our business.
Furthermore, if we or the VIE is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including, without limitation: ● revoking the business license and/or operating licenses of our WFOE or the VIEs; ● discontinuing or placing restrictions or onerous conditions on our operations through any transactions among our WFOE, the VIEs and their subsidiaries; ● imposing fines, confiscating the income from our WFOE, the VIE or its subsidiaries, or imposing other requirements with which we or the VIEs may not be able to comply; ● placing restrictions on our right to collect revenues; ● shutting down our servers or blocking our app/websites; 30 Table of Contents ● requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with the VIEs and deregistering the equity pledges of the VIEs, which in turn would affect our ability to consolidate, derive economic interests from, or exercise our rights as the primary beneficiary over the VIEs; or ● restricting or prohibiting our use of the proceeds of any future financing activities to finance our business and operations in China. ● taking other regulatory or enforcement actions against us that could be harmful to our business.
According to the Foreign Investment Law, “foreign investment” refers to investment activities directly or indirectly conducted by one or more natural persons, business entities, or otherwise organizations of a foreign country (collectively referred to as “foreign investor”) within China, and the investment activities include the following situations: (i) a foreign investor, individually or collectively with other investors, establishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares, equity shares, shares in assets, or other like rights and interests of an enterprise within China; (iii) a foreign investor, individually or collectively with other investors, invests in a new project within China; and (iv) investments in other means as provided by laws, administrative regulations, or the State Council. 28 Table of Contents The Special Administrative Measures (Negative List) for the Access of Foreign Investment (2021), as approved by the Central Committee of the Communist Party of China and the State Council became effective on January 1, 2022, upon which the Special Administrative Measures (Negative List) for the Access of Foreign Investment (2020) issued by the National Development and Reform Commission and the Ministry of Commerce on June 23, 2020, was repealed.
According to the Foreign Investment Law, “foreign investment” refers to investment activities directly or indirectly conducted by one or more natural persons, business entities, or otherwise organizations of a foreign country (collectively referred to as “foreign investor”) within China, and the investment activities include the following situations: (i) a foreign investor, individually or collectively with other investors, establishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares, equity shares, shares in assets, or other like rights and interests of an enterprise within China; (iii) a foreign investor, individually or collectively with other investors, invests in a new project within China; and (iv) investments in other means as provided by laws, administrative regulations, or the State Council. 36 Table of Contents The Special Administrative Measures (Negative List) for the Access of Foreign Investment (2021), as approved by the Central Committee of the Communist Party of China and the State Council became effective on January 1, 2022, upon which the Special Administrative Measures (Negative List) for the Access of Foreign Investment (2020) issued by the National Development and Reform Commission and the Ministry of Commerce on June 23, 2020, was repealed.
Failure by such shareholders or beneficial owners to comply with SAFE regulations, or failure by us to amend the foreign exchange registrations of our PRC subsidiaries, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, and limit our PRC subsidiaries’ ability to make distributions or pay dividends to us or affect our ownership structure, which could adversely affect our business and prospects. 36 Table of Contents Furthermore, as these foreign exchange and outbound investment related regulations are relatively new and their interpretation and implementation has been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border investments and transactions, will be interpreted, amended and implemented by the relevant government authorities.
Failure by such shareholders or beneficial owners to comply with SAFE regulations, or failure by us to amend the foreign exchange registrations of our PRC subsidiaries, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, and limit our PRC subsidiaries’ ability to make distributions or pay dividends to us or affect our ownership structure, which could adversely affect our business and prospects. 44 Table of Contents Furthermore, as these foreign exchange and outbound investment related regulations are relatively new and their interpretation and implementation has been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border investments and transactions, will be interpreted, amended and implemented by the relevant government authorities.
When EShallGo WFOE plans to declare and pay dividends to Junzhang HK and when we intend to apply for the tax resident certificate from the relevant Hong Kong tax authority, we plan to inform the investors through SEC filings, such as a current report on Form 6-K, prior to such actions. 26 Table of Contents Contractual arrangements in relation to the VIEs may be subject to scrutiny by the PRC tax authorities and they may determine that we or the VIEs owe additional taxes, which could negatively affect our financial condition and the value of your investment.
When EShallGo WFOE plans to declare and pay dividends to Junzhang HK and when we intend to apply for the tax resident certificate from the relevant Hong Kong tax authority, we plan to inform the investors through SEC filings, such as a current report on Form 6-K, prior to such actions. 34 Table of Contents Contractual arrangements in relation to the VIEs may be subject to scrutiny by the PRC tax authorities and they may determine that we or the VIEs owe additional taxes, which could negatively affect our financial condition and the value of your investment.
Although the Company is currently not required to obtain permission from any of the PRC federal or local government to obtain such permission and has not received any denial to list on the U.S. exchange, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to its business or industry. 33 Table of Contents On December 28, 2021, the CAC, the National Development and Reform Commission (“NDRC”), and several other administrations jointly issued the revised Measures for Cybersecurity Review, or the Revised Review Measures, which became effective and has replaced the existing Measures for Cybersecurity Review on February 15, 2022.
Although the Company is currently not required to obtain permission from any of the PRC federal or local government to obtain such permission and has not received any denial to list on the U.S. exchange, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to its business or industry. 41 Table of Contents On December 28, 2021, the CAC, the National Development and Reform Commission (“NDRC”), and several other administrations jointly issued the revised Measures for Cybersecurity Review, or the Revised Review Measures, which became effective and has replaced the existing Measures for Cybersecurity Review on February 15, 2022.
However, in preparing our consolidated financial statements as of and for the fiscal years ended March 31, 2024 and 2023, we have identified material weaknesses in our internal control over financial reporting, as defined in the standards established by the PCAOB, and other control deficiencies.
However, in preparing our consolidated financial statements as of and for the fiscal years ended March 31, 2025, 2024 and 2023, we have identified material weaknesses in our internal control over financial reporting, as defined in the standards established by the PCAOB, and other control deficiencies.
Such uncertainties, including uncertainties over the scope and effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations. 31 Table of Contents For example, recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions, which were made available to the public on July 6, 2021.
Such uncertainties, including uncertainties over the scope and effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations. 39 Table of Contents For example, recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions, which were made available to the public on July 6, 2021.
Further, if the enacted version of the Measures for Cybersecurity Review mandates clearance of cybersecurity review and other specific actions to be completed by companies like us, we face uncertainties as to whether such clearance can be timely obtained, or at all. 16 Table of Contents On November 14, 2021, the CAC published the Draft Regulations on the Network Data Security Administration (Draft for Comments) (the “Security Administration Draft”), which provides that data processing operators engaging in data processing activities that affect or may affect national security must be subject to network data security review by the relevant Cyberspace Administration of the PRC.
Further, if the enacted version of the Measures for Cybersecurity Review mandates clearance of cybersecurity review and other specific actions to be completed by companies like us, we face uncertainties as to whether such clearance can be timely obtained, or at all. 24 Table of Contents On November 14, 2021, the CAC published the Draft Regulations on the Network Data Security Administration (Draft for Comments) (the “Security Administration Draft”), which provides that data processing operators engaging in data processing activities that affect or may affect national security must be subject to network data security review by the relevant Cyberspace Administration of the PRC.
The market price of our ordinary shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: ● actual or anticipated fluctuations in our revenue and other operating results; 53 Table of Contents ● the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; ● actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; ● announcements by us or our competitors of significant services or features, technical innovations, acquisitions, strategic relationships, joint ventures, or capital commitments; ● price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; ● lawsuits threatened or filed against us; and ● other events or factors, including those resulting from war or incidents of terrorism, or responses to these events. ● In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies.
The market price of our ordinary shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: ● actual or anticipated fluctuations in our revenue and other operating results; ● the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; ● actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; ● announcements by us or our competitors of significant services or features, technical innovations, acquisitions, strategic relationships, joint ventures, or capital commitments; ● price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; ● lawsuits threatened or filed against us; and ● other events or factors, including those resulting from war or incidents of terrorism, or responses to these events. ● In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies.
Managing our growth and integrating the acquired businesses will require us to, among other things: ● comply with the laws, regulations and policies applicable to the acquired businesses, including obtaining timely approval for the construction or expansion of production and mining facilities as required under the relevant PRC laws; ● maintain adequate control on our business expansion to prevent, among other things, service delays or cost overruns; ● accumulate expertise and experience in managing the new businesses; 9 Table of Contents ● gain market acceptance for new products and services and establish relationships with new customers and suppliers; ● manage relationships with employees, customers and business partners during the course of our business expansion and integration of new businesses; ● attract, train and motivate members of our management and qualified workforce to support successful business expansion; ● access debt, equity or other capital resources to fund our business expansion, which may divert financial resources otherwise available for other purposes; ● divert significant management attention and resources from our other businesses; and ● strengthen our operational, financial and management controls to maintain the reliability of our reporting processes.
Managing our growth and integrating the acquired businesses will require us to, among other things: ● comply with the laws, regulations and policies applicable to the acquired businesses, including obtaining timely approval for the construction or expansion of production and mining facilities as required under the relevant PRC laws; ● maintain adequate control on our business expansion to prevent, among other things, service delays or cost overruns; ● accumulate expertise and experience in managing the new businesses; ● gain market acceptance for new products and services and establish relationships with new customers and suppliers; ● manage relationships with employees, customers and business partners during the course of our business expansion and integration of new businesses; ● attract, train and motivate members of our management and qualified workforce to support successful business expansion; ● access debt, equity or other capital resources to fund our business expansion, which may divert financial resources otherwise available for other purposes; ● divert significant management attention and resources from our other businesses; and ● strengthen our operational, financial and management controls to maintain the reliability of our reporting processes.
If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from initial public offering or any future financing activities and to fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business. 38 Table of Contents Adverse changes in political and economic policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could reduce the demand for our products and services and materially and adversely affect our competitive position.
If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from initial public offering or any future financing activities and to fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business. 46 Table of Contents Adverse changes in political and economic policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could reduce the demand for our products and services and materially and adversely affect our competitive position.
We cannot guarantee you that our security measures will prevent security breaches. 20 Table of Contents Risks Related to Our Corporate Structure and Operation If the PRC government deems that the contractual arrangements in relation to Junzhang Shanghai or Junzhang Beijing, our consolidated variable interest entities, do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
We cannot guarantee you that our security measures will prevent security breaches. 28 Table of Contents Risks Related to Our Corporate Structure and Operation If the PRC government deems that the contractual arrangements in relation to Junzhang Shanghai or Junzhang Beijing, our consolidated variable interest entities, do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
We intend to obtain the required materials and file with the relevant tax authorities when it plans to declare and pay dividends, but there is no assurance that the PRC tax authorities will approve the 5% withholding tax rate. 41 Table of Contents We are currently delinquent on our statutory obligations to make social insurance and housing provident fund contributions for our employees in China, which may subject us to fines or other penalties by government authorities.
We intend to obtain the required materials and file with the relevant tax authorities when it plans to declare and pay dividends, but there is no assurance that the PRC tax authorities will approve the 5% withholding tax rate. 49 Table of Contents We are currently delinquent on our statutory obligations to make social insurance and housing provident fund contributions for our employees in China, which may subject us to fines or other penalties by government authorities.
Therefore, there are possibilities that future laws, administrative regulations or provisions prescribed by the State Council may regard contractual arrangements as a form of foreign investment, and then whether our contractual arrangement will be recognized as foreign investment, whether our contractual arrangement will be deemed to be in violation of the foreign investment access requirements and how the above-mentioned contractual arrangement will be handled are uncertain. 29 Table of Contents PRC laws and regulations governing our current business operations are sometimes vague and uncertain and any changes in such laws and regulations may impair our ability to operate profitably.
Therefore, there are possibilities that future laws, administrative regulations or provisions prescribed by the State Council may regard contractual arrangements as a form of foreign investment, and then whether our contractual arrangement will be recognized as foreign investment, whether our contractual arrangement will be deemed to be in violation of the foreign investment access requirements and how the above-mentioned contractual arrangement will be handled are uncertain. 37 Table of Contents PRC laws and regulations governing our current business operations are sometimes vague and uncertain and any changes in such laws and regulations may impair our ability to operate profitably.
Prior to our initial public offering taken place in December 2022, there has been no public market for our Class A ordinary shares. An active trading market for our ordinary shares may not develop or be sustained following our initial public offering.
Prior to our initial public offering taken place in December 2022, there has been no public market for our Class A ordinary shares. An active trading market for our ordinary shares may not develop or be sustained.
Any limitation on the ability of the VIE to make remittance to our wholly-owned PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. 40 Table of Contents Under the PRC Enterprise Income Tax Law, or the EIT Law, we may be classified as a “resident enterprise” of China, which could result in unfavorable tax consequences to us and our non-PRC shareholders.
Any limitation on the ability of the VIE to make remittance to our wholly-owned PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. 48 Table of Contents Under the PRC Enterprise Income Tax Law, or the EIT Law, we may be classified as a “resident enterprise” of China, which could result in unfavorable tax consequences to us and our non-PRC shareholders.
This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our Company, which could have the effect of depriving our other shareholders of an opportunity to receive a premium for their shares as part of a sale of our Company and might ultimately affect the market price of our Class A Ordinary Shares. 50 Table of Contents Furthermore, we cannot predict whether our dual-class structure will result in a lower or more volatile market price of our Class A Ordinary Shares or in adverse publicity or other adverse consequences.
This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our Company, which could have the effect of depriving our other shareholders of an opportunity to receive a premium for their shares as part of a sale of our Company and might ultimately affect the market price of our Class A Ordinary Shares. 58 Table of Contents Furthermore, we cannot predict whether our dual-class structure will result in a lower or more volatile market price of our Class A Ordinary Shares or in adverse publicity or other adverse consequences.
On December 28 10, 2021, the Cyberspace Administration of China issued a revised draft of the Measures for Cybersecurity Review(2021), which took effect on Febuary 15, 2022, required that, the purchase of network products and services by critical information infrastructure operator (“CIIO”) and the data processing activities carries out online platform operators, which affects or may affect national security, shall be subject to cybersecurity review in accordance with the present Measures.
On December 28 10, 2021, the Cyberspace Administration of China issued a revised draft of the Measures for Cybersecurity Review(2021), which took effect on February 15, 2022, required that, the purchase of network products and services by critical information infrastructure operator (“CIIO”) and the data processing activities carries out online platform operators, which affects or may affect national security, shall be subject to cybersecurity review in accordance with the present Measures.
If any of the variable interest entities undergoes a voluntary or involuntary liquidation proceeding, its shareholders or unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business and our ability to generate revenues. 21 Table of Contents All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC.
If any of the variable interest entities undergoes a voluntary or involuntary liquidation proceeding, its shareholders or unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business and our ability to generate revenues. 29 Table of Contents All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC.
In the event that we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not be able to exercise our rights as the primary beneficiary over our consolidated variable interest entities, and our ability to conduct our business may be negatively affected. 25 Table of Contents We are a holding company and will rely on dividends paid by our subsidiaries for our cash needs.
In the event that we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not be able to exercise our rights as the primary beneficiary over our consolidated variable interest entities, and our ability to conduct our business may be negatively affected. 33 Table of Contents We are a holding company and will rely on dividends paid by our subsidiaries for our cash needs.
Since many of the disclosure obligations imposed on us as a foreign private issuer differ from those imposed on U.S. domestic reporting companies, you should not expect to receive the same information about us and at the same time as the information provided by U.S. domestic reporting companies. 51 Table of Contents Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.
Since many of the disclosure obligations imposed on us as a foreign private issuer differ from those imposed on U.S. domestic reporting companies, you should not expect to receive the same information about us and at the same time as the information provided by U.S. domestic reporting companies. 59 Table of Contents Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.
Although we usually utilize chops to execute contracts, the registered legal representatives of our subsidiary and consolidated VIE have the apparent authority to enter into contracts on behalf of such entities without chops, unless such contracts set forth otherwise. 27 Table of Contents In order to maintain the physical security of our chops, we generally have them stored in secured locations accessible only to the designated key employees of our legal, administrative or finance departments.
Although we usually utilize chops to execute contracts, the registered legal representatives of our subsidiary and consolidated VIE have the apparent authority to enter into contracts on behalf of such entities without chops, unless such contracts set forth otherwise. 35 Table of Contents In order to maintain the physical security of our chops, we generally have them stored in secured locations accessible only to the designated key employees of our legal, administrative or finance departments.
If such a licensing regime were introduced, we cannot assure you that we would be able to obtain any newly required license in a timely manner, or at all, which could materially and adversely affect our business and impede our ability to continue our operations. 30 Table of Contents From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights.
If such a licensing regime were introduced, we cannot assure you that we would be able to obtain any newly required license in a timely manner, or at all, which could materially and adversely affect our business and impede our ability to continue our operations. 38 Table of Contents From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights.
Therefore, we cannot assure you that we will remain fully compliant with all new regulatory requirements of these opinions or any future implementation rules on a timely basis, or at all. 32 Table of Contents On June 10, 2021, the Standing Committee of the National People’s Congress of China, or the SCNPC, promulgated the PRC Data Security Law, which took effect in September 2021.
Therefore, we cannot assure you that we will remain fully compliant with all new regulatory requirements of these opinions or any future implementation rules on a timely basis, or at all. 40 Table of Contents On June 10, 2021, the Standing Committee of the National People’s Congress of China, or the SCNPC, promulgated the PRC Data Security Law, which took effect in September 2021.
The SEC will implement a process for identifying such a registrant and any such identified registrant will be required to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction, and will also require disclosure in the registrant’s annual report regarding the audit arrangements of, and governmental influence on, such a registrant. 47 Table of Contents On June 22, 2021, the U.S.
The SEC will implement a process for identifying such a registrant and any such identified registrant will be required to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction, and will also require disclosure in the registrant’s annual report regarding the audit arrangements of, and governmental influence on, such a registrant. 55 Table of Contents On June 22, 2021, the U.S.
If such a return of purchase price takes place, the competent tax authority may require WFOE to pay enterprise income tax for ownership transfer income, in which case the amount of tax could be substantial. 24 Table of Contents Our contractual arrangements may not be as effective in providing operational control as direct ownership and the VIE shareholders may fail to perform their obligations under our contractual arrangements.
If such a return of purchase price takes place, the competent tax authority may require WFOE to pay enterprise income tax for ownership transfer income, in which case the amount of tax could be substantial. 32 Table of Contents Our contractual arrangements may not be as effective in providing operational control as direct ownership and the VIE shareholders may fail to perform their obligations under our contractual arrangements.
Any loans we extend to our PRC subsidiary, which are treated as foreign-invested enterprises under PRC law, cannot exceed the statutory limit and must be registered with the local counterpart of the SAFE. 37 Table of Contents We may transfer funds to our PRC subsidiary, which is FIE under PRC laws, or finance such FIE by means of shareholder loans or capital contributions upon completion of our offerings.
Any loans we extend to our PRC subsidiary, which are treated as foreign-invested enterprises under PRC law, cannot exceed the statutory limit and must be registered with the local counterpart of the SAFE. 45 Table of Contents We may transfer funds to our PRC subsidiary, which is FIE under PRC laws, or finance such FIE by means of shareholder loans or capital contributions upon completion of our offerings.
If we fail to protect our proprietary intellectual property and information, including with respect to any successful challenge to our ownership of intellectual property or material infringements of our intellectual property, this failure could have a significant adverse effect on our business, financial condition, and results of operations. 19 Table of Contents If we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed.
If we fail to protect our proprietary intellectual property and information, including with respect to any successful challenge to our ownership of intellectual property or material infringements of our intellectual property, this failure could have a significant adverse effect on our business, financial condition, and results of operations. 27 Table of Contents If we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed.
SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we may make in the future. 34 Table of Contents Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles, or SPVs, are required to register such investments with SAFE or its local branches.
SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we may make in the future. 42 Table of Contents Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles, or SPVs, are required to register such investments with SAFE or its local branches.
SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we may make in the future. 35 Table of Contents Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles, or SPVs, are required to register such investments with SAFE or its local branches.
SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we may make in the future. 43 Table of Contents Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles, or SPVs, are required to register such investments with SAFE or its local branches.
We expect that these rules and regulations will increase our legal, accounting and financial compliance costs and will make many corporate activities more time-consuming and costly. 54 Table of Contents We do not expect to incur materially greater costs as a result of becoming a public company than those incurred by similarly sized U.S. public companies.
We expect that these rules and regulations will increase our legal, accounting and financial compliance costs and will make many corporate activities more time-consuming and costly. 62 Table of Contents We do not expect to incur materially greater costs as a result of becoming a public company than those incurred by similarly sized U.S. public companies.
(v) We and VIEs have taken steps to strengthen the supervision and controls on the IT functions, including the enhancement of logical access security. However, such measures have not been fully implemented and we concluded that the material weakness in our internal control over financial reporting had not been remediated as of March 31, 2024.
(v) We and VIEs have taken steps to strengthen the supervision and controls on the IT functions, including the enhancement of logical access security. However, such measures have not been fully implemented and we concluded that the material weakness in our internal control over financial reporting had not been remediated as of March 31, 2025.
However, if we are fined or otherwise penalized by government authorities due to our failure to adequately pay social insurance and housing provident fund contributions for our employees, our financial condition may be negatively impacted. 42 Table of Contents We may face administrative penalty if we fail to register the correct business address.
However, if we are fined or otherwise penalized by government authorities due to our failure to adequately pay social insurance and housing provident fund contributions for our employees, our financial condition may be negatively impacted. 50 Table of Contents We may face administrative penalty if we fail to register the correct business address.
If such allegations are not proven to be groundless, we and our business operations will be severely affected and you could sustain a significant decline in the value of our stock. 43 Table of Contents The disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC.
If such allegations are not proven to be groundless, we and our business operations will be severely affected and you could sustain a significant decline in the value of our stock. 51 Table of Contents The disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC.
The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade. We do not currently engage in currency hedging transactions. 3 Table of Contents 3.B. Capitalization and Indebtedness Not applicable for annual reports on Form 20-F. 3.C.
The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade. We do not currently engage in currency hedging transactions. 3.B. Capitalization and Indebtedness Not applicable for annual reports on Form 20-F. 3.C.
Maintaining, protecting and enhancing our brand depends on several factors, including our ability to: ● maintain the quality and attractiveness of the services we offer; ● maintain relationships with landlords and other business partners; ● increase brand awareness through marketing and brand promotion activities; ● comply with relevant laws and regulations; 10 Table of Contents ● compete effectively against existing and future competitors; and ● preserve our reputation and goodwill generally and in the event of any negative publicity on our services and data security, or other issues affecting us, and China’s agile office space industry in general.
Maintaining, protecting and enhancing our brand depends on several factors, including our ability to: ● maintain the quality and attractiveness of the services we offer; ● maintain relationships with landlords and other business partners; ● increase brand awareness through marketing and brand promotion activities; ● comply with relevant laws and regulations; ● compete effectively against existing and future competitors; and ● preserve our reputation and goodwill generally and in the event of any negative publicity on our services and data security, or other issues affecting us, and China’s agile office space industry in general.
To open this account, we must submit to State Administration for Foreign Exchange (“SAFE”) certain application forms, identity documents, transaction documents, form of foreign exchange registration of overseas investments by domestic residents, and foreign exchange registration certificate of the invested company. 39 Table of Contents Second, we will remit the offering proceeds into this special foreign exchange account.
To open this account, we must submit to State Administration for Foreign Exchange (“SAFE”) certain application forms, identity documents, transaction documents, form of foreign exchange registration of overseas investments by domestic residents, and foreign exchange registration certificate of the invested company. 47 Table of Contents Second, we will remit the offering proceeds into this special foreign exchange account.
However, there remain uncertainties regarding the further interpretation and implementation of the Provisions on Confidentiality and Archives Administration. 46 Table of Contents As of the date of this Annual Report, we and our PRC subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are material for the business operations of our PRC subsidiaries.
However, there remain uncertainties regarding the further interpretation and implementation of the Provisions on Confidentiality and Archives Administration. 54 Table of Contents As of the date of this Annual Report, we and our PRC subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are material for the business operations of our PRC subsidiaries.
However, substantial uncertainty remains regarding the scope and applicability of the M&A Rules to offshore special purpose vehicles. 44 Table of Contents On July 6, 2021, the relevant PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in accordance with the Law.
However, substantial uncertainty remains regarding the scope and applicability of the M&A Rules to offshore special purpose vehicles. 52 Table of Contents On July 6, 2021, the relevant PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in accordance with the Law.
As of March 31, 2024 and 2023, the VIE accounted for almost 100% of the consolidated total assets and total liabilities of the Company. We rely on and expect to continue to rely on our wholly owned PRC subsidiary’s contractual arrangements with Junzhang Shanghai and Junzhang Beijing and their shareholders to operate our business.
As of March 31, 2025 and 2024, the VIE accounted for almost 100% of the consolidated total assets and total liabilities of the Company. We rely on and expect to continue to rely on our wholly owned PRC subsidiary’s contractual arrangements with Junzhang Shanghai and Junzhang Beijing and their shareholders to operate our business.
If Junzhang Shanghai fails to manage our relationship with existing subsidiary partner and the subsidiary partner develops the same or similar business as ours, our business and growth prospects may be materially and adversely affected. 23 Table of Contents Our contractual arrangements are governed by PRC law.
If Junzhang Shanghai fails to manage our relationship with existing subsidiary partner and the subsidiary partner develops the same or similar business as ours, our business and growth prospects may be materially and adversely affected. 31 Table of Contents Our contractual arrangements are governed by PRC law.
Our ordinary shares offered in any future offerings are shares of our offshore holding company instead of shares of the VIE in China. The VIE contributed almost 100% of the Company’s consolidated results of operations and cash flows for the years ended March 31, 2024 and 2023, respectively.
Our ordinary shares offered in any future offerings are shares of our offshore holding company instead of shares of the VIE in China. The VIE contributed almost 100% of the Company’s consolidated results of operations and cash flows for the years ended March 31, 2025 and 2024, respectively.
Holders of Class A Ordinary Shares and Class B Ordinary Shares have the same rights except for voting and conversion rights. 49 Table of Contents The currently Class B Ordinary Shares issued and outstanding are beneficially owned by our Chairman and Chief Executive Officer, Mr. Zhidan Mao and Mr.
Holders of Class A Ordinary Shares and Class B Ordinary Shares have the same rights except for voting and conversion rights. 57 Table of Contents The currently Class B Ordinary Shares issued and outstanding are beneficially owned by our Chairman and Chief Executive Officer, Mr. Zhidan Mao and Mr.
Failure to obtain sufficient funding at reasonable costs and on acceptable terms for our development plans could delay, reduce the scope of, or eliminate future activities or growth initiatives and adversely affect our business and prospects. Our future financial performance and success depend in large part on our ability to successfully implement our business strategy.
Failure to obtain sufficient funding at reasonable costs and on acceptable terms for our development plans could delay, reduce the scope of, or eliminate future activities or growth initiatives and adversely affect our business and prospects. 20 Table of Contents Our future financial performance and success depend in large part on our ability to successfully implement our business strategy.
According to the Cybersecurity Review Measures, operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which do or may affect national security. 15 Table of Contents In November 2016, the Standing Committee of China’s National People’s Congress passed China’s first Cybersecurity Law (“CSL”), which became effective in June 2017.
According to the Cybersecurity Review Measures, operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which do or may affect national security. In November 2016, the Standing Committee of China’s National People’s Congress passed China’s first Cybersecurity Law (“CSL”), which became effective in June 2017.
Risks Related to our Ordinary Shares The dual class structure of our ordinary shares has the effect of concentrating voting control with JUNZHANG DIGTAL LIMITED and MAGIC IDEAL LIMITED, which hold in aggregate 78.67% of the voting power of our capital, preventing you and other stockholders from influencing significant decisions, including the election of directors, amendments to our organizational documents and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring shareholder approval.
Risks Related to our Ordinary Shares The dual class structure of our ordinary shares has the effect of concentrating voting control with JUNZHANG DIGTAL LIMITED and MAGIC IDEAL LIMITED, which hold in aggregate 71.07% of the voting power of our capital, preventing you and other stockholders from influencing significant decisions, including the election of directors, amendments to our organizational documents and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring shareholder approval.
In the event that we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business. We have broad discretion in the use of the net proceeds from our public offering and may not use them effectively.
In the event that we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business. 61 Table of Contents We have broad discretion in the use of the net proceeds from our public offering and may not use them effectively.
Any of these failures or delays may adversely affect our ability to increase our profitability. The industries in which we operate are highly competitive and fragmented, and demand for our products and services could decrease if we are not able to compete effectively. The markets in which we operate are fragmented and highly competitive.
Any of these failures or delays may adversely affect our ability to increase our profitability. 12 Table of Contents The industries in which we operate are highly competitive and fragmented, and demand for our products and services could decrease if we are not able to compete effectively. The markets in which we operate are fragmented and highly competitive.
A significant interruption in our supply chains caused by any of the above factors could result in increased costs or delivery delays and result in a decrease in our net sales and profitability. 6 Table of Contents We have substantial fixed costs and, as a result, our operating income is sensitive to changes in our net sales.
A significant interruption in our supply chains caused by any of the above factors could result in increased costs or delivery delays and result in a decrease in our net sales and profitability. We have substantial fixed costs and, as a result, our operating income is sensitive to changes in our net sales.
As a result of inherent limitations, our internal control over financial reporting may not prevent or detect misstatements, errors or omissions. 12 Table of Contents To remedy our previously identified material weakness, we and the VIEs have undertaken and will continue to undertake steps to strengthen our internal control over financial reporting.
As a result of inherent limitations, our internal control over financial reporting may not prevent or detect misstatements, errors or omissions. To remedy our previously identified material weakness, we and the VIEs have undertaken and will continue to undertake steps to strengthen our internal control over financial reporting.
PRC regulators, including the Cyberspace Administration of China, MIIT, and the Ministry of Public Security have been increasingly focused on regulation in the areas of data security and data protection. The PRC regulatory requirements regarding cybersecurity are constantly evolving.
PRC regulators, including the Cyberspace Administration of China, MIIT, and the Ministry of Public Security have been increasingly focused on regulation in the areas of data security and data protection. 23 Table of Contents The PRC regulatory requirements regarding cybersecurity are constantly evolving.
For example, the average accounts receivable turnover period was approximately 125 days and 117 days for the fiscal years ended March 31, 2024 and 2023, respectively. Due to uncertainty of the timing of collection, we established an allowance for doubtful accounts based on individual account analysis and historical collection trends.
For example, the average accounts receivable turnover period was approximately 128 days and 125 days for the fiscal years ended March 31, 2025 and 2024, respectively. Due to uncertainty of the timing of collection, we established an allowance for doubtful accounts based on individual account analysis and historical collection trends.
Qiwei Miao through JUNZHANG DIGTAL LIMITED and MAGIC IDEAL LIMITED, respectively, representing 78.67% of the aggregate voting power of our issued and outstanding share capital as of the date hereof. Because of the ten-to-one voting ratio between our Class B Ordinary Shares and Class A Ordinary Shares, Mr. Mao and Mr.
Qiwei Miao through JUNZHANG DIGTAL LIMITED and MAGIC IDEAL LIMITED, respectively, representing 71.07% of the aggregate voting power of our issued and outstanding share capital as of the date hereof. Because of the ten-to-one voting ratio between our Class B Ordinary Shares and Class A Ordinary Shares, Mr. Mao and Mr.
Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this Annual Report, and as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess our auditor’s compliance with the applicable professional standards.
Our auditors, the independent registered public accounting firms that issue the audit report included elsewhere in this Annual Report, and as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, are subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess our auditor’s compliance with the applicable professional standards.
To the extent (i) we raise more money than required for the purposes explained in the section titled “Use of Proceeds” or (ii) we determine that the proposed uses set forth in that section are no longer in the best interests of our Company, we cannot specify with any certainty the particular uses of such net proceeds that we will receive from our public offering.
To the extent (i) we raised more money than required for the purposes explained in the section titled “Use of Proceeds” or (ii) we determine that the proposed uses set forth in that section are no longer in the best interests of our Company, we cannot specify with any certainty the particular uses of such net proceeds that we received from our initial public offering.
It may result in significant provisions and impairments on our accounts receivable which in turn would have a material adverse impact on our business operations, results of operation, financial condition, and our business pursuits and prospects. We had $133,449 and $256,882 of allowance for credit loss as of March 31, 2024 and 2023.
It may result in significant provisions and impairments on our accounts receivable which in turn would have a material adverse impact on our business operations, results of operation, financial condition, and our business pursuits and prospects. We had $668,195 and $133,449 of allowance for credit loss as of March 31, 2025 and 2024.
As of the date of this Annual Report, there are 15,879,000 Class A Ordinary Shares and 5,856,000 Class B Ordinary Shares issued and outstanding. Holders of Class A Ordinary Shares and Class B Ordinary Shares shall at all times vote together as one class on all matters submitted to a vote by the shareholders.
As of the date of this Annual Report, there are 23,838,163 Class A Ordinary Shares and 5,856,000 Class B Ordinary Shares issued and outstanding. Holders of Class A Ordinary Shares and Class B Ordinary Shares shall at all times vote together as one class on all matters submitted to a vote by the shareholders.
If such safety accidents, other incidents or the criminal liability are not handled properly, it may have an adverse impact on our brand and ability to operate. 8 Table of Contents We are subject to payment processing risk. Our customers pay for our product and service may using a variety of different online payment methods.
If such safety accidents, other incidents or the criminal liability are not handled properly, it may have an adverse impact on our brand and ability to operate. We are subject to payment processing risk. Our customers pay for our product and service may using a variety of different online payment methods. We rely on third parties to process such payment.
The Company’s predecessor auditor, Friedman LLP, and its current auditor, Marcum Asia CPAs, LLP, or Marcum Asia, are not subject to this determinations as to inability to inspect or investigate registered firms completely.
The Company’s predecessor auditor, Marcum Asia CPAs, LLP, or Marcum Asia, and its current auditor, YCM CPA Inc., or YCM, are not subject to this determinations as to inability to inspect or investigate registered firms completely.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding the relevant laws of the Cayman Islands and the PRC.
Acquisitions involve a number of special risks, including: ● problems implementing disclosure controls and procedures for the newly acquired business; ● unforeseen difficulties extending internal control over financial reporting and performing the required assessment at the newly acquired business; ● potential adverse short-term effects on operating results through increased costs or otherwise; ● diversion of management’s attention and failure to recruit new, and retain existing, key personnel of the acquired business; ● failure to successfully implement infrastructure, logistics and systems integration; ● our business growth could outpace the capability of our systems; and ● the risks inherent in the systems of the acquired business and risks associated with unanticipated events or liabilities, any of which could have a material adverse effect on our business, financial condition and results of operations. 5 Table of Contents In addition, we may not be able to obtain financing necessary to complete acquisitions on attractive terms or at all.
Acquisitions involve a number of special risks, including: ● problems implementing disclosure controls and procedures for the newly acquired business; 13 Table of Contents ● unforeseen difficulties extending internal control over financial reporting and performing the required assessment at the newly acquired business; ● potential adverse short-term effects on operating results through increased costs or otherwise; ● diversion of management’s attention and failure to recruit new, and retain existing, key personnel of the acquired business; ● failure to successfully implement infrastructure, logistics and systems integration; ● our business growth could outpace the capability of our systems; and ● the risks inherent in the systems of the acquired business and risks associated with unanticipated events or liabilities, any of which could have a material adverse effect on our business, financial condition and results of operations.
If the Nasdaq Capital Market subsequently delists our securities from trading, we could face significant consequences, including: ● limited availability for market quotations for our securities; ● reduced liquidity with respect to our securities; ● a determination that our Ordinary Share is a “penny stock,” which will require brokers trading in our Ordinary Share to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Ordinary Share; ● limited amount of news and analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future.
If we are unable to satisfy the Nasdaq Capital Market criteria for maintaining our listing, our securities could be subject to delisting. 60 Table of Contents If the Nasdaq Capital Market subsequently delists our securities from trading, we could face significant consequences, including: ● limited availability for market quotations for our securities; ● reduced liquidity with respect to our securities; ● a determination that our Ordinary Share is a “penny stock,” which will require brokers trading in our Ordinary Share to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Ordinary Share; ● limited amount of news and analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future.
The Company’s predecessor auditor and its current auditor are based in Manhattan, New York, and have been inspected by the PCAOB on a regular basis, with the last inspections in 2020, and therefore not subject to the determinations announced by the PCAOB on December 16, 2021.
The Company’s predecessor auditor and its current auditor are based in Manhattan, New York and Irvine, California, respectively, and have been inspected by the PCAOB on a regular basis, and therefore not subject to the determinations announced by the PCAOB on December 16, 2021.
For example, records of net losses may result in a deterioration of our credit ratings. We recorded a net operation cash flow of $2,220,418 and $783,940 for the years ended March 31, 2024 and 2023, respectively.
For example, records of net losses may result in a deterioration of our credit ratings. We recorded a net operation cash flow of $(1,283,432) and $2,220,418 for the years ended March 31, 2025 and 2024, respectively.
Our auditor is headquartered in New York, New York, and is subject to inspection by the PCAOB on a regular basis with the last inspection in June 2020. 48 Table of Contents However, the recent developments would add uncertainties to our offering and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements.
Our predecessor and current auditors are headquartered in New York, New York and Irvine, California, respectively, and are subject to inspection by the PCAOB on a regular basis. 56 Table of Contents However, the recent developments would add uncertainties to our offering and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements.
Since our directors and officers currently beneficially own 80.23% of the voting power of our issued and outstanding share capital, and will beneficially own at least 78.67% of the voting power of our issued and outstanding share capital following the Offering, they will have great impact in electing directors and approve matters requiring shareholder approval by way of ordinary resolution or special resolution.
Since our directors and officers currently beneficially own 71.07% of the voting power of our issued and outstanding share capital, they will have great impact in electing directors and approve matters requiring shareholder approval by way of ordinary resolution or special resolution.
The balance sheet amounts, with the exception of shareholders’ equity at March 31, 2024 and 2023 were translated at RMB7.2221 and RMB6.8680 to $1.00, respectively. The shareholders’ equity accounts were stated at their historical rate.
The balance sheet amounts, with the exception of shareholders’ equity at March 31, 2025 and 2024 were translated at RMB 7.2579 and RMB 7.2221 to $1.00, respectively. The shareholders’ equity accounts were stated at their historical rate.
The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income (loss) in shareholders’ equity. Translation adjustments included in accumulated other comprehensive income (loss) amounted to $(811,556) and $(284,967) as of March 31, 2024 and 2023, respectively.
The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income (loss) in shareholders’ equity. 11 Table of Contents Translation adjustments included in accumulated other comprehensive loss amounted to $864,735 and $811,556 as of March 31, 2025 and 2024, respectively.

… 164 more changes not shown on this page.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

68 edited+16 added−8 removed407 unchanged
On June 30, 2021, we established Junzhang Monarch Limited, or Junzhang HK, our wholly-owned Hong Kong subsidiary, and on July 22, 2021, we established Shanghai Eshallgo Enterprise Development (Group) Co., Ltd., or WOFE, which is a wholly-owned subsidiary of Junzhang HK.
On June 30, 2021, we established Junzhang Monarch Limited, or Junzhang HK, our wholly-owned Hong Kong subsidiary, and on July 22, 2021, we established Shanghai Eshallgo Enterprise Development (Group) Co., Ltd., or WOFE, which is a wholly-owned subsidiary of Junzhang HK.
However, the ability of our PRC subsidiaries to make such distribution to us is subject to various PRC laws and regulations, including the requirement to fund certain statutory funds, as well as potential restriction on currency exchange and capital controls imposed by the PRC governments.
However, the ability of our PRC subsidiaries to make such distribution to us is subject to various PRC laws and regulations, including the requirement to fund certain statutory funds, as well as potential restriction on currency exchange and capital controls imposed by the PRC governments.
In the event of default defined therein, upon written notice to the shareholders of Junzhang Beijing or Junzhang Shanghai, EShallGo WFOE, as pledgee, will have the right to dispose of the pledged equity interests in Junzhang Beijing or Junzhang Shanghai and priority in receiving the proceeds from such disposition.
In the event of default defined therein, upon written notice to the shareholders of Junzhang Beijing or Junzhang Shanghai, EShallGo WFOE, as pledgee, will have the right to dispose of the pledged equity interests in Junzhang Beijing or Junzhang Shanghai and priority in receiving the proceeds from such disposition.
The shareholders of Junzhang Beijing or Junzhang Shanghai agree that, without EShallGo WFOE's prior written approval, during the term of the equity pledge agreement, they will not dispose of the pledged equity interests or create or allow any other encumbrance on the pledged equity interests.
The shareholders of Junzhang Beijing or Junzhang Shanghai agree that, without EShallGo WFOE’s prior written approval, during the term of the equity pledge agreement, they will not dispose of the pledged equity interests or create or allow any other encumbrance on the pledged equity interests.
The pledge shall become effective on such date when the pledge of the equity interest contemplated in the equity interest pledge agreement is registered appropriately, and the pledge shall remain effective until all contractual obligations have been fully performed and all secured indebtedness have been fully paid.
The pledge shall become effective on such date when the pledge of the equity interest contemplated in the equity interest pledge agreement is registered appropriately, and the pledge shall remain effective until all contractual obligations have been fully performed and all secured indebtedness have been fully paid.
Under the Consumer Protection Law, any business operator providing a commodity or service to a consumer is subject to certain mandatory requirements, including the following: (a) to ensure that commodities and services up to certain safety requirements; (b) to protect the safety of consumers; (c) to disclose serious defects of a commodity or a service and to adopt preventive measures against occurrence of damage; (d) to provide consumers with accurate information and to refrain from conducting false advertising; (e) to obtain consents of consumers and to disclose the rules for the collection and/or use of information when collecting data or information from consumers; to take technical measures and other necessary measures to protect the personal information collected from consumers; not to divulge, sell, or illegally provide consumers’ information to others; not to send commercial information to consumers without the consent or request of consumers or with a clear refusal from consumers; (f) not to set unreasonable or unfair terms for consumers or alleviate or release itself from civil liability for harming the legal rights and interests of consumers by means of standard contracts, circulars, announcements, shop notices or other means; (g) to remind consumers in a conspicuous manner to pay attention to the quality, quantity and prices or fees of commodities or services, duration and manner of performance, safety precautions and risk warnings, after-sales service, civil liability and other terms and conditions vital to the interests of consumers under a standard form of agreement prepared by the business operators, and to provide explanations as required by consumers; and (h) not to insult or slander consumers or to search the person of, or articles carried by, a consumer or to infringe upon the personal freedom of a consumer. 82 Table of Contents Business operators in China may be subject to civil liabilities for failing to fulfill the obligations discussed above.
Under the Consumer Protection Law, any business operator providing a commodity or service to a consumer is subject to certain mandatory requirements, including the following: (a) to ensure that commodities and services up to certain safety requirements; (b) to protect the safety of consumers; (c) to disclose serious defects of a commodity or a service and to adopt preventive measures against occurrence of damage; (d) to provide consumers with accurate information and to refrain from conducting false advertising; (e) to obtain consents of consumers and to disclose the rules for the collection and/or use of information when collecting data or information from consumers; to take technical measures and other necessary measures to protect the personal information collected from consumers; not to divulge, sell, or illegally provide consumers’ information to others; not to send commercial information to consumers without the consent or request of consumers or with a clear refusal from consumers; (f) not to set unreasonable or unfair terms for consumers or alleviate or release itself from civil liability for harming the legal rights and interests of consumers by means of standard contracts, circulars, announcements, shop notices or other means; (g) to remind consumers in a conspicuous manner to pay attention to the quality, quantity and prices or fees of commodities or services, duration and manner of performance, safety precautions and risk warnings, after-sales service, civil liability and other terms and conditions vital to the interests of consumers under a standard form of agreement prepared by the business operators, and to provide explanations as required by consumers; and (h) not to insult or slander consumers or to search the person of, or articles carried by, a consumer or to infringe upon the personal freedom of a consumer. 91 Table of Contents Business operators in China may be subject to civil liabilities for failing to fulfill the obligations discussed above.
See “Risk Factors—Risks Related to Our Business—If we are unable to protect our intellectual property rights, or we infringe on the intellectual property rights of others, our ability to compete could be negatively impacted.” 70 Table of Contents Trademark The following table sets forth a brief description of the Company’s trademarks, including their respective publication numbers, application filing date, issue date, expiration date and title. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Trademark Number ​ File Date ​ Issue Date ​ Expiration Date ​ Trademark Name ​ Issue Country 36002269 ​ January 17, 2019 ​ November 28, 2020 ​ November 27, 2030 ​ ​ China 35990204 ​ August 27, 2020 ​ November 28, 2020 ​ November 27, 2030 ​ ​ China 35756220 ​ January 4, 2019 ​ October 7, 2019 ​ October 6, 2029 ​ 一修壹企租 ​ China 35756203 ​ January 4, 2019 ​ October 7, 2019 ​ October 6, 2029 ​ 一修壹企租 ​ China 35736380 ​ January 4, 2019 ​ October 7, 2019 ​ October 6, 2029 ​ 一修壹企租 ​ China 34265377 ​ October 25, 2018 ​ September 7, 2019 ​ September 6, 2029 ​ 一修租 ​ China 28630679 ​ January 10, 2018 ​ December 7, 2018 ​ December 6, 2028 ​ ​ China 28614583 ​ January 10, 2018 ​ December 7, 2018 ​ December 6, 2028 ​ ESHALLGO ​ China 23439293 ​ April 6, 2017 ​ March 28, 2018 ​ March 27, 2028 ​ 一修 师傅 ​ China 23233695 ​ March 21, 2017 ​ March 21, 2018 ​ March 20, 2028 ​ ESHALLGO.COM ​ China 23233470 ​ March 21, 2017 ​ March 21, 2018 ​ March 20, 2028 ​ ESHALLGO ​ China 23233433 ​ March 21, 2017 ​ April 7, 2018 ​ April 6, 2029 ​ ESHALLGO.COM ​ China 23233239 ​ March 21, 2017 ​ March 14, 2018 ​ March 13, 2028 ​ ESHALLGO ​ China 23233149 ​ March 21, 2017 ​ March 14, 2018 ​ March 13, 2028 ​ ESHALLGO.COM ​ China 23233117 ​ March 21, 2017 ​ March 21, 2018 ​ March 20, 2028 ​ ESHALLGO ​ China 23232952 ​ March 21, 2017 ​ March 14, 2018 ​ March 13, 2028 ​ ESHALLGO.COM ​ China 23232906 ​ March 21, 2017 ​ March 14, 2018 ​ March 13, 2028 ​ ESHALLGO.COM ​ China 23232816 ​ March 21, 2017 ​ April 7, 2018 ​ April 6, 2028 ​ ESHALLGO ​ China 23232476 ​ March 21, 2017 ​ March 14, 2018 ​ March 13, 2028 ​ ESHALLGO.COM ​ China 23232293 ​ March 21, 2017 ​ March 7, 2018 ​ March 6, 2029 ​ EHSALLGO ​ China 22523889 ​ January 5, 2017 ​ January 7, 2019 ​ January 6, 2029 ​ ​ China 22523818 ​ January 5, 2017 ​ January 7, 2019 ​ January 6, 2029 ​ ​ China 19233927 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ EHSALLGO ​ China 19233911 ​ March 7, 2016 ​ June 14, 2017 ​ June 13, 2027 ​ EHSALLGO ​ China 19233838 ​ March 7, 2016 ​ June 14, 2017 ​ June 13, 2027 ​ EHSALLGO ​ China 19233762 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ EHSALLGO ​ China 19233617 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ EHSALLGO ​ China 19233611 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ EHSALLGO ​ China 19233463 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ EHSALLGO ​ China 19233454 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ EHSALLGO ​ China 19233395 ​ March 7, 2016 ​ October 14, 2018 ​ October 13, 2028 ​ ​ China 19233333 ​ March 7, 2016 ​ June 14, 2017 ​ June 13, 2027 ​ ​ China 19233192 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ ​ China 19233021 ​ March 7, 2016 ​ June 28, 2017 ​ June 27, 2027 ​ ​ China 19232938 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ ​ China 19232871 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ ​ China 19232815 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ ​ China 19232766 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ ​ China ​ 71 Table of Contents Copyright The following table sets forth a brief description of the Company’s copyright in China, including their respective publication numbers, application filing date, issue date, expiration date and title. ​ ​ ​ ​ ​ Number Copyright Number Issue Country 1 ​ 2020SR1909086 ​ China 2 ​ 2020SR1900558 ​ China 3 ​ 2020SR1900479 ​ China 4 ​ 2020SR1900480 ​ China 5 ​ 2020SR1900567 ​ China 6 ​ 2020SR1900560 ​ China 7 ​ 2020SR1900478 ​ China 8 ​ 2020SR1900566 ​ China 9 ​ 2020SR1900568 ​ China 10 ​ 2020SR1900570 ​ China 11 ​ 2020SR1900560 ​ China 12 ​ 2020SR1900536 ​ China 13 ​ 2020SR1900535 ​ China 14 ​ 2018SR515338 ​ China 15 ​ 2018SR515330 ​ China 16 ​ 2018SR516650 ​ China 17 ​ 2018SR463795 ​ China 18 ​ 2018SR463799 ​ China 19 ​ 2018SR463798 ​ China 20 ​ 2018SR463806 ​ China 21 ​ 2018SR463796 ​ China 22 ​ 2018SR463797 ​ China 23 ​ 2016SR114239 ​ China 24 ​ 2016SR113746 ​ China 25 ​ 2016SR110309 ​ China 26 ​ 2016SR105244 ​ China 27 ​ 2016SR106076 ​ China 28 ​ 2016SR105171 ​ China 29 ​ 2016SR105125 ​ China 30 ​ 2016SR106072 ​ China ​ Insurance We provide social security insurance, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance for our employees as required by PRC law.
See “Risk Factors—Risks Related to Our Business—If we are unable to protect our intellectual property rights, or we infringe on the intellectual property rights of others, our ability to compete could be negatively impacted.” 78 Table of Contents Trademark The following table sets forth a brief description of the Company’s trademarks, including their respective publication numbers, application filing date, issue date, expiration date and title. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Trademark Number ​ File Date ​ Issue Date ​ Expiration Date ​ Trademark Name ​ Issue Country 36002269 ​ January 17, 2019 ​ November 28, 2020 ​ November 27, 2030 ​ ​ China 35990204 ​ August 27, 2020 ​ November 28, 2020 ​ November 27, 2030 ​ ​ China 35756220 ​ January 4, 2019 ​ October 7, 2019 ​ October 6, 2029 ​ 一修壹企租 ​ China 35756203 ​ January 4, 2019 ​ October 7, 2019 ​ October 6, 2029 ​ 一修壹企租 ​ China 35736380 ​ January 4, 2019 ​ October 7, 2019 ​ October 6, 2029 ​ 一修壹企租 ​ China 34265377 ​ October 25, 2018 ​ September 7, 2019 ​ September 6, 2029 ​ 一修租 ​ China 28630679 ​ January 10, 2018 ​ December 7, 2018 ​ December 6, 2028 ​ ​ China 28614583 ​ January 10, 2018 ​ December 7, 2018 ​ December 6, 2028 ​ ESHALLGO ​ China 23439293 ​ April 6, 2017 ​ March 28, 2018 ​ March 27, 2028 ​ 一修 师傅 ​ China 23233695 ​ March 21, 2017 ​ March 21, 2018 ​ March 20, 2028 ​ ESHALLGO.COM ​ China 23233470 ​ March 21, 2017 ​ March 21, 2018 ​ March 20, 2028 ​ ESHALLGO ​ China 23233433 ​ March 21, 2017 ​ April 7, 2018 ​ April 6, 2029 ​ ESHALLGO.COM ​ China 23233239 ​ March 21, 2017 ​ March 14, 2018 ​ March 13, 2028 ​ ESHALLGO ​ China 23233149 ​ March 21, 2017 ​ March 14, 2018 ​ March 13, 2028 ​ ESHALLGO.COM ​ China 23233117 ​ March 21, 2017 ​ March 21, 2018 ​ March 20, 2028 ​ ESHALLGO ​ China 23232952 ​ March 21, 2017 ​ March 14, 2018 ​ March 13, 2028 ​ ESHALLGO.COM ​ China 23232906 ​ March 21, 2017 ​ March 14, 2018 ​ March 13, 2028 ​ ESHALLGO.COM ​ China 23232816 ​ March 21, 2017 ​ April 7, 2018 ​ April 6, 2028 ​ ESHALLGO ​ China 23232476 ​ March 21, 2017 ​ March 14, 2018 ​ March 13, 2028 ​ ESHALLGO.COM ​ China 23232293 ​ March 21, 2017 ​ March 7, 2018 ​ March 6, 2029 ​ EHSALLGO ​ China 22523889 ​ January 5, 2017 ​ January 7, 2019 ​ January 6, 2029 ​ ​ China 22523818 ​ January 5, 2017 ​ January 7, 2019 ​ January 6, 2029 ​ ​ China 19233927 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ EHSALLGO ​ China 19233911 ​ March 7, 2016 ​ June 14, 2017 ​ June 13, 2027 ​ EHSALLGO ​ China 19233838 ​ March 7, 2016 ​ June 14, 2017 ​ June 13, 2027 ​ EHSALLGO ​ China 19233762 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ EHSALLGO ​ China 19233617 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ EHSALLGO ​ China 19233611 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ EHSALLGO ​ China 19233463 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ EHSALLGO ​ China 19233454 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ EHSALLGO ​ China 19233395 ​ March 7, 2016 ​ October 14, 2018 ​ October 13, 2028 ​ ​ China 19233333 ​ March 7, 2016 ​ June 14, 2017 ​ June 13, 2027 ​ ​ China 19233192 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ ​ China 19233021 ​ March 7, 2016 ​ June 28, 2017 ​ June 27, 2027 ​ ​ China 19232938 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ ​ China 19232871 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ ​ China 19232815 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ ​ China 19232766 ​ March 7, 2016 ​ April 14, 2017 ​ April 13, 2027 ​ ​ China ​ 79 Table of Contents Copyright The following table sets forth a brief description of the Company’s copyright in China, including their respective publication numbers, application filing date, issue date, expiration date and title. ​ ​ ​ ​ ​ Number Copyright Number Issue Country 1 ​ 2020SR1909086 ​ China 2 ​ 2020SR1900558 ​ China 3 ​ 2020SR1900479 ​ China 4 ​ 2020SR1900480 ​ China 5 ​ 2020SR1900567 ​ China 6 ​ 2020SR1900560 ​ China 7 ​ 2020SR1900478 ​ China 8 ​ 2020SR1900566 ​ China 9 ​ 2020SR1900568 ​ China 10 ​ 2020SR1900570 ​ China 11 ​ 2020SR1900560 ​ China 12 ​ 2020SR1900536 ​ China 13 ​ 2020SR1900535 ​ China 14 ​ 2018SR515338 ​ China 15 ​ 2018SR515330 ​ China 16 ​ 2018SR516650 ​ China 17 ​ 2018SR463795 ​ China 18 ​ 2018SR463799 ​ China 19 ​ 2018SR463798 ​ China 20 ​ 2018SR463806 ​ China 21 ​ 2018SR463796 ​ China 22 ​ 2018SR463797 ​ China 23 ​ 2016SR114239 ​ China 24 ​ 2016SR113746 ​ China 25 ​ 2016SR110309 ​ China 26 ​ 2016SR105244 ​ China 27 ​ 2016SR106076 ​ China 28 ​ 2016SR105171 ​ China 29 ​ 2016SR105125 ​ China 30 ​ 2016SR106072 ​ China ​ Insurance We provide social security insurance, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance for our employees as required by PRC law.
If non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may be at risk of being required to file a return and be taxed under SAT Bulletin 7 and we may be required to expend valuable resources to comply with SAT Bulletin 7 or to establish that we should not be held liable for any obligations under SAT Bulletin 7. 85 Table of Contents PRC Value Added Tax According to the Temporary Regulations on Value-added Tax, which was most recently amended on November 19, 2017, and the Detailed Implementing Rules of the Temporary Regulations on Value-added Tax, which was amended on October 28, 2011, and became effective on November 1, 2011, all taxpayers selling goods, providing processing, repair or replacement services or importing goods within the PRC shall pay Value-Added Tax.
If non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may be at risk of being required to file a return and be taxed under SAT Bulletin 7 and we may be required to expend valuable resources to comply with SAT Bulletin 7 or to establish that we should not be held liable for any obligations under SAT Bulletin 7. 94 Table of Contents PRC Value Added Tax According to the Temporary Regulations on Value-added Tax, which was most recently amended on November 19, 2017, and the Detailed Implementing Rules of the Temporary Regulations on Value-added Tax, which was amended on October 28, 2011, and became effective on November 1, 2011, all taxpayers selling goods, providing processing, repair or replacement services or importing goods within the PRC shall pay Value-Added Tax.
Circular 3 sets out various capital control measures to tighten authenticity and compliance verification of cross-border transactions and cross-border capital flow, which include, without limitation, requiring banks to verify resolution of the board of directors on distribution of profits (or resolution of partners on distribution of profits), original tax recordation form, and audited financial statements relating to the outward remittance before conducting the outward remittance of profits above US$50,000, and making up for losses in previous years with profits pursuant to the law before it is allowed to remit the profits overseas. 89 Table of Contents In addition, SAFE promulgated the Circular Regarding Further Promotion of the Facilitation of Cross-Border Trade and Investment on October 23, 2019, or SAFE Circular 28, pursuant to which all foreign-invested enterprises can make equity investments in the PRC with their capital funds in accordance with the law.
Circular 3 sets out various capital control measures to tighten authenticity and compliance verification of cross-border transactions and cross-border capital flow, which include, without limitation, requiring banks to verify resolution of the board of directors on distribution of profits (or resolution of partners on distribution of profits), original tax recordation form, and audited financial statements relating to the outward remittance before conducting the outward remittance of profits above US$50,000, and making up for losses in previous years with profits pursuant to the law before it is allowed to remit the profits overseas. 98 Table of Contents In addition, SAFE promulgated the Circular Regarding Further Promotion of the Facilitation of Cross-Border Trade and Investment on October 23, 2019, or SAFE Circular 28, pursuant to which all foreign-invested enterprises can make equity investments in the PRC with their capital funds in accordance with the law.
However, if non-resident enterprises have not formed permanent establishments or premises in the PRC, or if they have formed permanent establishments or premises in the PRC but their relevant income derived in the PRC is not related to those establishments, then their enterprise income tax would be set at a rate of 10% for their income sourced from inside the PRC. 84 Table of Contents The PRC EIT Law and its implementation rules, which was promulgated on December 6, 2007 and took effect on January 1, 2008 and partly amended on April 23, 2019 and became effective on the same date, permit certain “high and new technology enterprises strongly supported by the state” that independently own core intellectual property and meet statutory criteria, to enjoy a reduced 15% enterprise income tax rate.
However, if non-resident enterprises have not formed permanent establishments or premises in the PRC, or if they have formed permanent establishments or premises in the PRC but their relevant income derived in the PRC is not related to those establishments, then their enterprise income tax would be set at a rate of 10% for their income sourced from inside the PRC. 93 Table of Contents The PRC EIT Law and its implementation rules, which was promulgated on December 6, 2007 and took effect on January 1, 2008 and partly amended on April 23, 2019 and became effective on the same date, permit certain “high and new technology enterprises strongly supported by the state” that independently own core intellectual property and meet statutory criteria, to enjoy a reduced 15% enterprise income tax rate.
Pursuant to the EIT Law and the Implementation Rules, dividends generated after January 1, 2008, and payable by a foreign-invested enterprise in China to its foreign enterprise investors are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. 86 Table of Contents Pursuant to an Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Double Tax Avoidance Arrangement came into effect on January 1, 2007, and other applicable PRC laws and regulations, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the relevant conditions and requirements under such Double Tax Avoidance Arrangement and other applicable laws and regulations, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%.
Pursuant to the EIT Law and the Implementation Rules, dividends generated after January 1, 2008, and payable by a foreign-invested enterprise in China to its foreign enterprise investors are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. 95 Table of Contents Pursuant to an Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Double Tax Avoidance Arrangement came into effect on January 1, 2007, and other applicable PRC laws and regulations, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the relevant conditions and requirements under such Double Tax Avoidance Arrangement and other applicable laws and regulations, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%.
Under the Interim Measures on the Administration of Pre-Installation and Distribution of Applications for Mobile Smart Terminals, which took effect on July 1, 2017, the internet information service provider is also required to ensure that an app, as well as its ancillary resource files, configuration files and user data, can be conveniently uninstalled by its users, unless it is a basic function software (i.e., software that supports the normal functioning of hardware and operating system of a mobile smart device). 78 Table of Contents The MIIT issued the Notice on the Further Special Rectification of Apps Infringing upon Users’ Personal Rights and Interests, or the Further Rectification Notice, on July 22, 2020.
Under the Interim Measures on the Administration of Pre-Installation and Distribution of Applications for Mobile Smart Terminals, which took effect on July 1, 2017, the internet information service provider is also required to ensure that an app, as well as its ancillary resource files, configuration files and user data, can be conveniently uninstalled by its users, unless it is a basic function software (i.e., software that supports the normal functioning of hardware and operating system of a mobile smart device). 87 Table of Contents The MIIT issued the Notice on the Further Special Rectification of Apps Infringing upon Users’ Personal Rights and Interests, or the Further Rectification Notice, on July 22, 2020.
The Foreign Investment Law establishes the basic framework for the access to, and the promotion, protection and administration of foreign investments in view of investment protection and fair competition. 74 Table of Contents According to the Foreign Investment Law, “foreign investment” refers to investment activities directly or indirectly conducted by one or more natural persons, business entities, or otherwise organizations of a foreign country (collectively referred to as “foreign investor”) within China, and the investment activities include the following situations: (i) a foreign investor, individually or collectively with other investors, establishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares, equity shares, shares in assets, or other like rights and interests of an enterprise within China; (iii) a foreign investor, individually or collectively with other investors, invests in a new project within China; and (iv) investments in other means as provided by laws, administrative regulations, or the State Council.
The Foreign Investment Law establishes the basic framework for the access to, and the promotion, protection and administration of foreign investments in view of investment protection and fair competition. 83 Table of Contents According to the Foreign Investment Law, “foreign investment” refers to investment activities directly or indirectly conducted by one or more natural persons, business entities, or otherwise organizations of a foreign country (collectively referred to as “foreign investor”) within China, and the investment activities include the following situations: (i) a foreign investor, individually or collectively with other investors, establishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares, equity shares, shares in assets, or other like rights and interests of an enterprise within China; (iii) a foreign investor, individually or collectively with other investors, invests in a new project within China; and (iv) investments in other means as provided by laws, administrative regulations, or the State Council.
The average response time for our on-site service of the technician typically does not exceed 4 hours, and the work order can usually be completed as quickly as within 1 hour. 61 Table of Contents The flowchart for the construction of our operational dispatch process is indicated below: Visualized IoT and After-sales Service System (To Be Launched) As a service platform independently developed by EShallGo with our own intellectual property rights, Junzhang Shanghai adopts powerful concepts and tools such as “cloud procurement, cloud management, and cloud services” as the cornerstone to promote the development of the entire platform, and quickly establish an easily accessible platform for users.
The average response time for our on-site service of the technician typically does not exceed 4 hours, and the work order can usually be completed as quickly as within 1 hour. 69 Table of Contents The flowchart for the construction of our operational dispatch process is indicated below: Visualized IoT and After-sales Service System (To Be Launched) As a service platform independently developed by EShallGo with our own intellectual property rights, Junzhang Shanghai adopts powerful concepts and tools such as “cloud procurement, cloud management, and cloud services” as the cornerstone to promote the development of the entire platform, and quickly establish an easily accessible platform for users.
The lessor is entitled to terminate the contract if the lessee subleases the leased item without the consent of the lessor. 81 Table of Contents Pursuant to the Administrative Measures on Leasing of Commodity Housing which was issued by Ministry of Housing and Urban-Rural Development on December 1, 2010 and came into effect on February 1, 2011, House may not be leased in any of the following circumstances: (i) the house is an illegal structure;(ii) the house fails to meet mandatory engineering construction standards with respect to safety and disaster preventions; (iii) house usage is changed in violation of applicable regulations; and (iv) other circumstances which are prohibited by laws and regulations.
The lessor is entitled to terminate the contract if the lessee subleases the leased item without the consent of the lessor. 90 Table of Contents Pursuant to the Administrative Measures on Leasing of Commodity Housing which was issued by Ministry of Housing and Urban-Rural Development on December 1, 2010 and came into effect on February 1, 2011, House may not be leased in any of the following circumstances: (i) the house is an illegal structure;(ii) the house fails to meet mandatory engineering construction standards with respect to safety and disaster preventions; (iii) house usage is changed in violation of applicable regulations; and (iv) other circumstances which are prohibited by laws and regulations.
On July 30, 2021 and December 3, 2021, WFOE executed a supplementary agreement to the Exclusive Business Cooperation Agreement with Junzhang Beijing and Junzhang Shanghai, respectively, which amended the “services fee” to be VIEs’ net income, which is pretax income after deducting relevant costs and reasonable expenses. 94 Table of Contents Exclusive Option Agreement EShallGo WFOE, Junzhang Beijing and each of the shareholders of Junzhang Beijing, Junzhang Shanghai and each of the shareholders of Junzhang Shanghai have entered into exclusive option agreements, pursuant to which each of the shareholders of Junzhang Beijing and Junzhang Shanghai irrevocably granted EShallGo WFOE an exclusive call option to purchase, or have its designated person(s) to purchase, at its discretion, all or part of their equity interests in Junzhang Beijing and Junzhang Shanghai, and the purchase price shall be the lowest price permitted by applicable PRC law.
On July 30, 2021 and December 3, 2021, WFOE executed a supplementary agreement to the Exclusive Business Cooperation Agreement with Junzhang Beijing and Junzhang Shanghai, respectively, which amended the “services fee” to be VIEs’ net income, which is pretax income after deducting relevant costs and reasonable expenses. 103 Table of Contents Exclusive Option Agreement EShallGo WFOE, Junzhang Beijing and each of the shareholders of Junzhang Beijing, Junzhang Shanghai and each of the shareholders of Junzhang Shanghai have entered into exclusive option agreements, pursuant to which each of the shareholders of Junzhang Beijing and Junzhang Shanghai irrevocably granted EShallGo WFOE an exclusive call option to purchase, or have its designated person(s) to purchase, at its discretion, all or part of their equity interests in Junzhang Beijing and Junzhang Shanghai, and the purchase price shall be the lowest price permitted by applicable PRC law.
Enterprises in China are required by PRC laws and regulations to participate in certain employee benefit plans, including social insurance funds, namely a pension plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing provident fund, and contribute to the plans or funds in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees as specified by the local government from time to time at locations where they operate their businesses or where they are located. 83 Table of Contents According to the Interim Regulations on the Collection and Payment of Social Insurance Premiums, the Regulations on Work Injury Insurance, the Regulations on Unemployment Insurance and the Trial Measures on Employee Maternity Insurance of Enterprises, enterprises in the PRC shall provide benefit plans for their employees, which include basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and basic medical insurance.
Enterprises in China are required by PRC laws and regulations to participate in certain employee benefit plans, including social insurance funds, namely a pension plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing provident fund, and contribute to the plans or funds in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees as specified by the local government from time to time at locations where they operate their businesses or where they are located. 92 Table of Contents According to the Interim Regulations on the Collection and Payment of Social Insurance Premiums, the Regulations on Work Injury Insurance, the Regulations on Unemployment Insurance and the Trial Measures on Employee Maternity Insurance of Enterprises, enterprises in the PRC shall provide benefit plans for their employees, which include basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and basic medical insurance.
However, our PRC legal counsel has further advised us that there are substantial uncertainties as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering, and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules. 76 Table of Contents Regulations Relating to Value-Added Telecommunication Services On September 25, 2000, the State Council issued the PRC Regulations on Telecommunications, or the Telecom Regulations, as last amended on February 6, 2016, to regulate telecommunications activities in China.
However, our PRC legal counsel has further advised us that there are substantial uncertainties as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering, and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules. 85 Table of Contents Regulations Relating to Value-Added Telecommunication Services On September 25, 2000, the State Council issued the PRC Regulations on Telecommunications, or the Telecom Regulations, as last amended on February 6, 2016, to regulate telecommunications activities in China.
Sharp Trading (China) Co., Ltd. and its manufacturing subsidiaries supply office equipment to Shanghai Changyun Industrial Development Co., Ltd. in an amount of approximately RMB1,500,000 (approximately $211,000) annually, with authorization to sell and provide aftersales maintenance services.
Specifically, Sharp Trading (China) Co., Ltd. and its manufacturing subsidiaries supply office equipment to Shanghai Changyun Industrial Development Co., Ltd. in an amount of approximately RMB1,500,000 (approximately $211,000) annually, with authorization to sell and provide aftersales maintenance services.
Failure to comply with the registration procedures set forth in the Circular 37 may result in restrictions being imposed on the foreign exchange activities of the relevant onshore company, including the payment of dividends and other distributions to its offshore parent or affiliate, the capital inflow from the offshore entities and settlement of foreign exchange capital, and may also subject relevant onshore company or PRC residents to penalties under PRC foreign exchange administration regulations. 90 Table of Contents Our shareholders who, to our knowledge, are PRC residents have completed the required registrations with the local counterpart of SAFE in relation to our financing and restructuring to our shareholding structure.
Failure to comply with the registration procedures set forth in the Circular 37 may result in restrictions being imposed on the foreign exchange activities of the relevant onshore company, including the payment of dividends and other distributions to its offshore parent or affiliate, the capital inflow from the offshore entities and settlement of foreign exchange capital, and may also subject relevant onshore company or PRC residents to penalties under PRC foreign exchange administration regulations. 99 Table of Contents Our shareholders who, to our knowledge, are PRC residents have completed the required registrations with the local counterpart of SAFE in relation to our financing and restructuring to our shareholding structure.
The shareholders, Junzhang Beijing and Junzhang Shanghai shall not have any right to terminate this agreement in any event unless otherwise required by PRC laws. 93 Table of Contents Equity Interest Pledge Agreement Pursuant to the equity interest pledge agreement entered into among EShallGo WFOE, Junzhang Beijing/Junzhang Shanghai and the shareholders of Junzhang Beijing/Junzhang Shanghai, respectively, the shareholders of Junzhang Beijing/Junzhang Shanghai pledged all of their equity interests in Junzhang Beijing/Junzhang Shanghai to EShallGo WFOE to guarantee Junzhang Beijing or Junzhang Shanghai’s obligations under the contractual arrangements including the exclusive business cooperation agreement, the exclusive option agreement and the shareholders' power of attorney and this equity interest pledge agreement, as well as any loss incurred due to events of default defined therein and all expenses incurred by EShallGo WFOE in enforcing such obligations of Junzhang Beijing, Junzhang Shanghai, or their shareholders.
The shareholders, Junzhang Beijing and Junzhang Shanghai shall not have any right to terminate this agreement in any event unless otherwise required by PRC laws. 102 Table of Contents Equity Interest Pledge Agreement Pursuant to the equity interest pledge agreement entered into among EShallGo WFOE, Junzhang Beijing/Junzhang Shanghai and the shareholders of Junzhang Beijing/Junzhang Shanghai, respectively, the shareholders of Junzhang Beijing/Junzhang Shanghai pledged all of their equity interests in Junzhang Beijing/Junzhang Shanghai to EShallGo WFOE to guarantee Junzhang Beijing or Junzhang Shanghai’s obligations under the contractual arrangements including the exclusive business cooperation agreement, the exclusive option agreement and the shareholders’ power of attorney and this equity interest pledge agreement, as well as any loss incurred due to events of default defined therein and all expenses incurred by EShallGo WFOE in enforcing such obligations of Junzhang Beijing, Junzhang Shanghai, or their shareholders.
On January 23, 2019, the Office of the Central Cyberspace Affairs Commission, the MIIT, the Ministry of Public Security, and the SAMR jointly issued the Notice on Special Governance of Illegal Collection and Use of Personal Information via Apps, which restates the requirement of legal collection and use of personal information, encourages app operators to conduct security certifications, and encourages search engines and APP stores to clearly mark and recommend those certified Apps. 80 Table of Contents On March 13, 2019, the Office of the Central Cyberspace Affairs Commission and the SAMR jointly issued the Notice on App Security Certification and the Implementation Rules on Security Certification of Mobile Internet Application, which encourages mobile application operators to voluntarily obtain app security certification, and search engines and app stores are encouraged to recommend certified applications to users.
On January 23, 2019, the Office of the Central Cyberspace Affairs Commission, the MIIT, the Ministry of Public Security, and the SAMR jointly issued the Notice on Special Governance of Illegal Collection and Use of Personal Information via Apps, which restates the requirement of legal collection and use of personal information, encourages app operators to conduct security certifications, and encourages search engines and APP stores to clearly mark and recommend those certified Apps. 89 Table of Contents On March 13, 2019, the Office of the Central Cyberspace Affairs Commission and the SAMR jointly issued the Notice on App Security Certification and the Implementation Rules on Security Certification of Mobile Internet Application, which encourages mobile application operators to voluntarily obtain app security certification, and search engines and app stores are encouraged to recommend certified applications to users.
Any organization or individual shall legally obtain such personal information of others when necessary and ensure the safety of such information, and shall not illegally collect, use, process or transmit personal information of others, or illegally purchase or sell, provide or make public personal information of others. 79 Table of Contents Moreover, pursuant to the PRC Criminal Law lastly amended in December 26, 2020, any individual or entity that (i) sells or discloses any citizen’s personal information to others in a way violating the applicable law, or (ii) steals or illegally obtains any citizen’s personal information, shall be subject to criminal penalty in severe situation.
Any organization or individual shall legally obtain such personal information of others when necessary and ensure the safety of such information, and shall not illegally collect, use, process or transmit personal information of others, or illegally purchase or sell, provide or make public personal information of others. 88 Table of Contents Moreover, pursuant to the PRC Criminal Law lastly amended in December 26, 2020, any individual or entity that (i) sells or discloses any citizen’s personal information to others in a way violating the applicable law, or (ii) steals or illegally obtains any citizen’s personal information, shall be subject to criminal penalty in severe situation.
Our clients currently consist of mainly financial service companies and real estate companies, including Taiping Life Insurance, Debon Securities, Fosun Group, Laomiao Gold, Lianjia Real Estate, Centaline Real Estate, Quantuo Real Estate, among others. 59 Table of Contents The following chart illustrates our sales model, in which the remote management section will be installed: Services As the Company grows, it has gradually become clear that our revenue growth will come from the service aspect of our business, which mainly include: (1) Leasing (with installation payment and fixed service fee), (2) after-sales maintenance service, and (3) life-time maintenance service, which is characterized for its high profit margin, high degree of customer adhesion, and long profit cycle, as indicated below: 60 Table of Contents Service Operations The Company aims to gradually expand its emphasis on sales and office equipment distribution to a service-oriented model in the future, and to provide our customers with more personalized products and services.
Our clients currently consist of mainly financial service companies and real estate companies, including Taiping Life Insurance, Debon Securities, Fosun Group, Laomiao Gold, Lianjia Real Estate, Centaline Real Estate, Quantuo Real Estate, among others. 67 Table of Contents The following chart illustrates our sales model, in which the remote management section will be installed: Services As the Company grows, it has gradually become clear that our revenue growth will come from the service aspect of our business, which mainly include: (1) Leasing (with installation payment and fixed service fee), (2) after-sales maintenance service, and (3) life-time maintenance service, which is characterized for its high profit margin, high degree of customer adhesion, and long profit cycle, as indicated below: 68 Table of Contents Service Operations The Company aims to gradually expand its emphasis on sales and office equipment distribution to a service-oriented model in the future, and to provide our customers with more personalized products and services.
The EShallGo App is integrated with our smart office system, IoT devices and other technology capabilities to create a seamless working experience for our customers in and beyond physical office supplies. 58 Table of Contents Attract new customers and develop new market opportunities We believe the comprehensive geographical presence of our operations across a project lifecycle facilitates extensive, shared market awareness in our sector.
The EShallGo App is integrated with our smart office system, IoT devices and other technology capabilities to create a seamless working experience for our customers in and beyond physical office supplies. 66 Table of Contents Attract new customers and develop new market opportunities We believe the comprehensive geographical presence of our operations across a project lifecycle facilitates extensive, shared market awareness in our sector.
The MIIT or its provincial counterpart has the power to require corrective actions after discovering any non-compliance by operators, and where operators fail to take those steps, the MIIT or its provincial counterpart can revoke the value-added telecommunications services license. 77 Table of Contents We engage in business activities that are VATS as defined in the Telecom Regulations and the Catalog.
The MIIT or its provincial counterpart has the power to require corrective actions after discovering any non-compliance by operators, and where operators fail to take those steps, the MIIT or its provincial counterpart can revoke the value-added telecommunications services license. 86 Table of Contents We engage in business activities that are VATS as defined in the Telecom Regulations and the Catalog.
This subcontracting service coverage system is managed and supported by a website portal nationwide. 57 Table of Contents This central system not only collectively manages the overall business, but also supports multiple affiliates in other locations to carry out daily leasing management business simultaneously and accomplishes a standardized distribution of maintenance and repair tasks.
This subcontracting service coverage system is managed and supported by a website portal nationwide. 65 Table of Contents This central system not only collectively manages the overall business, but also supports multiple affiliates in other locations to carry out daily leasing management business simultaneously and accomplishes a standardized distribution of maintenance and repair tasks.
Notable awards and activities are detailed in chronological order as the following: ● In December 2018, National Public Resource Exchange awarded the Eshallgo brand one of the “Top Ten After-sales Service Brands.” ● In November 2018, the Shanghai Taxation Bureau of the State Administration of Taxation awarded Junzhang the High-tech Enterprise Certificate. ● Since June 2019, Junzhang has been regarded as triple A level Company in credit, trustworthiness, honesty and operations by the China Business Integrity Public Service Platform. ● In 2018, Junzhang was deemed as a leading company in the OA industry by China Modern Office Equipment Association.
Notable awards and activities are detailed in chronological order as the following: ● In December 2018, National Public Resource Exchange awarded the Eshallgo brand one of the “Top Ten After-sales Service Brands.” ● In November 2018, the Shanghai Taxation Bureau of the State Administration of Taxation awarded Junzhang the High-tech Enterprise Certificate. ● Since June 2019, Junzhang has been regarded as triple A level Company in credit, trustworthiness, honesty and operations by the China Business Integrity Public Service Platform. 76 Table of Contents ● In 2018, Junzhang was deemed as a leading company in the OA industry by China Modern Office Equipment Association.
We compete in an emerging and competitive industry for the following: ● Locations : The growth of our business depends on our ability to source suitable rental service locations. ● Customers : While the number of companies and individuals seeking agile office space solutions is growing, we compete to acquire new customers and retain existing members. ● Business partners : Our ability to continue to attract and retain quality business partners and to obtain favorable pricing for our customers from such business partners depends on our ability to grow our customer base and effectively match our customers’ needs with the services provided by our business partners. ● Technology : Technology drives the growth and operating efficiencies of our business.
We compete in an emerging and competitive industry for the following: ● Locations : The growth of our business depends on our ability to source suitable rental service locations. 77 Table of Contents ● Customers : While the number of companies and individuals seeking agile office space solutions is growing, we compete to acquire new customers and retain existing members. ● Business partners : Our ability to continue to attract and retain quality business partners and to obtain favorable pricing for our customers from such business partners depends on our ability to grow our customer base and effectively match our customers’ needs with the services provided by our business partners. ● Technology : Technology drives the growth and operating efficiencies of our business.
Any uncertainties or negative publicity regarding CSRC approval requirements could have a material adverse effect on the trading price of our Class A Ordinary Shares. 91 Table of Contents 4.C. Organizational structure We commenced our commercial operations in 2015 through Junzhang Digital Technology (Shanghai) Co., Ltd., or Junzhang Shanghai.
Any uncertainties or negative publicity regarding CSRC approval requirements could have a material adverse effect on the trading price of our Class A Ordinary Shares. 100 Table of Contents 4.C. Organizational structure We commenced our commercial operations in 2015 through Junzhang Digital Technology (Shanghai) Co., Ltd., or Junzhang Shanghai.
Our aftersales system is dedicated to the aftersales market of the office total solution industry, independently developed by EShallGo. All the software is interoperable, and the data is seamlessly connected, which greatly helps to improve work efficiency, standardize service, and collect and analyze big data. 62 Table of Contents Our system includes three major software components: 1.
Our aftersales system is dedicated to the aftersales market of the office total solution industry, independently developed by EShallGo. All the software is interoperable, and the data is seamlessly connected, which greatly helps to improve work efficiency, standardize service, and collect and analyze big data. 70 Table of Contents Our system includes three major software components: 1.
The provision of value-added telecommunications services falls in the restricted category under the Special Administrative Measures and the percentage of foreign ownership cannot exceed 50% (except for e-commerce). 73 Table of Contents The Administrative Provisions on Administration of Foreign-Invested Telecommunications Enterprises, or the FITE Regulations, are the key regulations for foreign direct investment in telecommunications companies in China.
The provision of value-added telecommunications services falls in the restricted category under the Special Administrative Measures and the percentage of foreign ownership cannot exceed 50% (except for e-commerce). 82 Table of Contents The Administrative Provisions on Administration of Foreign-Invested Telecommunications Enterprises, or the FITE Regulations, are the key regulations for foreign direct investment in telecommunications companies in China.
If the draft of the Company Lawadopted, PRC subsidiary also need to comply with the relevant regulations. 75 Table of Contents Regulations on Overseas Listings On February 17, 2023, CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises (the “Trial Measures”), which became effective on March 31, 2023.
If the draft of the Company Lawadopted, PRC subsidiary also need to comply with the relevant regulations. 84 Table of Contents Regulations on Overseas Listings On February 17, 2023, CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises (the “Trial Measures”), which became effective on March 31, 2023.
Our long-term goal is to become a leading service provider for not only office total solutions, but also to expand our service technology to other types of house products. 56 Table of Contents Our Background EshallGo, through Junzhang Shanghai, is a one-stop service company dedicated to creating overall solutions for any types of offices.
Our long-term goal is to become a leading service provider for not only office total solutions, but also to expand our service technology to other types of house products. 64 Table of Contents Our Background EshallGo, through Junzhang Shanghai, is a one-stop service company dedicated to creating overall solutions for any types of offices.
The following diagram illustrates our corporate structure, including our principal subsidiaries and the VIEs: 92 Table of Contents Contractual Arrangements with the VIEs and Their Shareholders Due to PRC legal restrictions on foreign ownership, neither we nor our subsidiaries own any direct equity interest in Junzhang Beijing or Junzhang Shanghai.
The following diagram illustrates our corporate structure, including our principal subsidiaries and the VIEs: 101 Table of Contents Contractual Arrangements with the VIEs and Their Shareholders Due to PRC legal restrictions on foreign ownership, neither we nor our subsidiaries own any direct equity interest in Junzhang Beijing or Junzhang Shanghai.
Regulations Relating to Intellectual Property The PRC has adopted comprehensive legislation governing intellectual property rights, including trademarks, copyrights and domain names. 87 Table of Contents Trademark Law The PRC Trademark Law and its implementation rules protect registered trademarks. The PRC Trademark Office of State Administration for Market Regulation is responsible for the registration and administration of trademarks throughout the PRC.
Regulations Relating to Intellectual Property The PRC has adopted comprehensive legislation governing intellectual property rights, including trademarks, copyrights and domain names. 96 Table of Contents Trademark Law The PRC Trademark Law and its implementation rules protect registered trademarks. The PRC Trademark Office of State Administration for Market Regulation is responsible for the registration and administration of trademarks throughout the PRC.
Nevertheless, as of the date of this Annual Report we have not experienced any major labor disputes. Customers and Suppliers Junzhang Shanghai and its subsidiaries maintain a customer base of approximately 22,445 customers, many of which represent long-term relationships.
Nevertheless, as of the date of this Annual Report we have not experienced any major labor disputes. Customers and Suppliers Junzhang Shanghai and its subsidiaries maintain a customer base of approximately 22,988 customers, many of which represent long-term relationships.
We also provide differentiated, value-add services to our customers including: ● fast product delivery with many of our products available on a same or next day basis; ● product and technological expertise; ● close customer and vendor relationships with an integrated “total solution sale;” ● extensive network to assist with the customer’s sourcing function; and ● onsite product training and after-sales support.
We also provide differentiated, value-add services to our customers including: ● fast product delivery with many of our products available on a same or next day basis; ● product and technological expertise; 74 Table of Contents ● close customer and vendor relationships with an integrated “total solution sale;” ● extensive network to assist with the customer’s sourcing function; and ● onsite product training and after-sales support.
The system can also undertake the task of providing data reports and analysis, customer big data analysis, and business profit allocation and settlement between the Company and its affiliates and partnered service outlets. Specifically, the background management system entails three modules, each of which carries out a different function that comprehensively streamline the solution process. 63 Table of Contents a.
The system can also undertake the task of providing data reports and analysis, customer big data analysis, and business profit allocation and settlement between the Company and its affiliates and partnered service outlets. Specifically, the background management system entails three modules, each of which carries out a different function that comprehensively streamline the solution process. a.
Because of its ability to conduct a large amount of data analysis, it sufficiently meets the management needs of today’s office total solution industry. 2. Remote Equipment Management Systems for Both Users and Technicians (to be Launched) This management system is tailored for customers looking for conventional office solution functions.
Because of its ability to conduct a large amount of data analysis, it sufficiently meets the management needs of today’s office total solution industry. 71 Table of Contents 2. Remote Equipment Management Systems for Both Users and Technicians (to be Launched) This management system is tailored for customers looking for conventional office solution functions.
We believe this integrated team approach results in achieving operational results, and has contributed to the growth of our revenues at a higher rate than our competitors. 65 Table of Contents Leadership position in large, fragmented markets We believe that the fragmented nature in this sector makes it full of opportunities for dynamic growth.
We believe this integrated team approach results in achieving operational results, and has contributed to the growth of our revenues at a higher rate than our competitors. Leadership position in large, fragmented markets We believe that the fragmented nature in this sector makes it full of opportunities for dynamic growth.
The function of this software is to connect to the user’s equipment effectively and conveniently, and to facilitate the effective management and repair of customers equipment. ERP is connected to equipment’s usage data, making data collection and analysis more efficient. Our Competitive Strengths We believe that we benefit significantly from the following competitive strengths.
The function of this software is to connect to the user’s equipment effectively and conveniently, and to facilitate the effective management and repair of customers equipment. ERP is connected to equipment’s usage data, making data collection and analysis more efficient. 73 Table of Contents Our Competitive Strengths We believe that we benefit significantly from the following competitive strengths.
Quality Control and Customer Service Junzhang Shanghai has obtained ISO9001, ISO14001, ISO45001 quality system certification for many years under the strict management mechanism of all parties and has a specialized department responsible for the supervision of all processes required for certification. 67 Table of Contents For the quality of after-sales service, a sound supervision system has also been established.
Quality Control and Customer Service Junzhang Shanghai has obtained ISO9001, ISO14001, ISO45001 quality system certification for many years under the strict management mechanism of all parties and has a specialized department responsible for the supervision of all processes required for certification. For the quality of after-sales service, a sound supervision system has also been established.
As of the date of this Annual Report, we have registered 1 domain name at wwwl.eshallgo.com. 88 Table of Contents Regulations Relating to Foreign Exchange The principal regulations governing foreign currency exchange in China are the PRC Foreign Exchange Administration Regulations, which were promulgated by the State Council on January 29, 1996 and last amended on August 5, 2008.
As of the date of this Annual Report, we have registered 1 domain name at www.eshallgo.com. 97 Table of Contents Regulations Relating to Foreign Exchange The principal regulations governing foreign currency exchange in China are the PRC Foreign Exchange Administration Regulations, which were promulgated by the State Council on January 29, 1996 and last amended on August 5, 2008.
Active on social media, we regularly interact with our customers and business partners to promote our brand and the EShallGo services. Supported by our integrated operation systems, our dedicated sales and marketing team also conducts promotion of our agile office equipment repairs and maintenance services.
Active on social media, we regularly interact with our customers and business partners to promote our brand and the EShallGo services. Supported by our integrated operation systems, our dedicated sales and marketing team also conducts promotion of our agile office equipment repairs and maintenance services. Additionally, we cooperate with industrial zones, enterprises and organizations to conduct marketing and sales.
We maintain relationships with approximately 1,600 suppliers for many of our products, thereby limiting the risk of product shortages. We believe this allows us to deliver a diverse product offering on a cost-effective and timely basis.
We maintain relationships with approximately 1,600 suppliers for many of our products, thereby limiting the risk of product shortages. We believe this allows us to deliver a diverse product offering on a cost-effective and timely basis. Our diverse geographic footprint of over 150 locations limits our dependence on any one region.
Shanghai Shuizhi Real Estate Co., Ltd. 417 m 2 ​ March 15, 2024 4 1206B, Building 3, 1501 Jinsui Road, Pudong New Area, Shanghai 201258 RMB 8,769 Eshallgo Office Supplies (Shanghai)Co., Ltd. Shanghai Shuopu Mould Co., Ltd. 186 m 2 ​ May 10, 2025 ​ ​ ITEM 4A. UNRESOLVED STAFF COMMENTS None. 95 Table of Contents
Shanghai Shuopu Mould Co., Ltd. 186 m 2 ​ May 31, 2026 4 1206B, Building 3, 1501 Jinsui Road, Pudong New Area, Shanghai 201258 RMB 8,769 Eshallgo Office Supplies (Shanghai)Co., Ltd. Shanghai Shuopu Mould Co., Ltd. 186 m 2 ​ May 31, 2026 ​ ​ 104 Table of Contents ITEM 4A. UNRESOLVED STAFF COMMENTS None.
We need to develop better operating systems and more user-friendly apps to remain competitive. ● Personnel : Employees are our most valuable assets.
We need to develop better operating systems and more user-friendly apps to remain competitive. ● Personnel : Employees are our most valuable assets. We compete with our peer company to retain and recruit talented employees by providing competitive compensation and growth opportunities to our employees.
The technician-end mobile App completes the work order module, which includes but not limited to background summary table data, classification data of each work order of the technician such location map, which enables door-to-door service, customer rating, and customer signature. 64 Table of Contents b.
This App can also act as an attendance check-in tool for employees when they conduct business activities outside the Company. 72 Table of Contents The technician-end mobile App completes the work order module, which includes but not limited to background summary table data, classification data of each work order of the technician such location map, which enables door-to-door service, customer rating, and customer signature. b.
As a result, we have generally been able to attract and retain qualified employees and maintain a stable core management team.
We believe we offer our employees competitive compensation packages and a dynamic work environment that encourages initiative. As a result, we have generally been able to attract and retain qualified employees and maintain a stable core management team.
Under PRC laws and regulations, our PRC subsidiaries may pay cash dividends to us out of their respective accumulated profits.
We have relied and expect to continue to rely on these contractual arrangements to conduct our business in China. Under PRC laws and regulations, our PRC subsidiaries may pay cash dividends to us out of their respective accumulated profits.
Under PRC laws and regulations, our PRC subsidiaries may pay cash dividends to us out of their respective accumulated profits.
We have relied and expect to continue to rely on these contractual arrangements to conduct our business in China. Under PRC laws and regulations, our PRC subsidiaries may pay cash dividends to us out of their respective accumulated profits.
We depend on these contractual arrangements with the VIE, in which we have no ownership interests, and its shareholders to conduct most aspects of our operation. We have relied and expect to continue to rely on these contractual arrangements to conduct our business in China.
Junzhang Shanghai later entered into a series of contractual arrangements with EShallGo Shanghai, which we refer to as the VIE (variable interest entity), and its shareholders. We depend on these contractual arrangements with the VIE, in which we have no ownership interests, and its shareholders to conduct most aspects of our operation.
We depend on these contractual arrangements with the VIE, in which we have no ownership interests, and its shareholders to conduct most aspects of our operation. We have relied and expect to continue to rely on these contractual arrangements to conduct our business in China.
Junzhang Shanghai later entered into a series of contractual arrangements with EShallGo Shanghai, which we refer to as the VIE (variable interest entity), and its shareholders. We depend on these contractual arrangements with the VIE, in which we have no ownership interests, and its shareholders to conduct most aspects of our operation.
Additionally, this will give us central access to specific customer and product profitability analyses across the entire business, allowing us to better understand performance variances among business units. Our infrastructure will also provide talent management, seamless customer integration for sales, receivables optimization, inventory management, and highly-scalable internal processes without rework and waste.
Our centralized infrastructure will provide capabilities for online sales, order and warehouse management, pricing, reporting, administrative functions and business analytics. Additionally, this will give us central access to specific customer and product profitability analyses across the entire business, allowing us to better understand performance variances among business units.
Additionally, we cooperate with industrial zones, enterprises and organizations to conduct marketing and sales. 68 Table of Contents In the foreseeable future, we plan on adopting the following process to advertise our services: Competition Since we operate in a highly fragmented industry and hold leading positions in multiple market sectors, competition in each market sector varies.
In the foreseeable future, we plan on adopting the following process to advertise our services: Competition Since we operate in a highly fragmented industry and hold leading positions in multiple market sectors, competition in each market sector varies. The majority of our competition comes from mid-size regional; however, we also face competition from a number of small and local competitors.
For example, we believe that our largest business unit, office equipment maintenance, will continue to provide an opportunity for consistent and substantial long-term growth.
We expect these cyclical markets to recover in layered and overlapping stages at varying points in the economic cycle, as they have done in the past. For example, we believe that our largest business unit, office equipment maintenance, will continue to provide an opportunity for consistent and substantial long-term growth.
For potential impact of legal or administrative proceedings on us, see “Risk Factors — Risks Related to Doing Business in the PRC — Adverse changes in political and economic policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could reduce the demand for our products and services and materially and adversely affect our competitive position.” 72 Table of Contents Regulation We operate in an increasingly complex legal and regulatory environment.
For potential impact of legal or administrative proceedings on us, see “Risk Factors — Risks Related to Doing Business in the PRC — Adverse changes in political and economic policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could reduce the demand for our products and services and materially and adversely affect our competitive position.” 80 Table of Contents Recent Development Notice of Non-Compliance with Nasdaq Minimum Bid Price Requirement On July 23, 2025, the Company received a written notification from the Nasdaq Stock Market LLC (“Nasdaq”) stating that the Company is not in compliance with the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2).
We do not incorporate the information on our website into this Annual Report and you should not consider any information on, or that can be accessed through, our website as part of this Annual Report.
We do not incorporate the information on our website into this Annual Report and you should not consider any information on, or that can be accessed through, our website as part of this Annual Report. 63 Table of Contents The SEC maintains an internet site at http://www.sec.gov that contains reports, information statements, and other information regarding issuers that file electronically with the SEC. 4.B.
Property, plants and equipment We lease the properties below for our principal executive office and other operating offices: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Monthly ​ ​ ​ ​ Address Rent ​ Lessee ​ Lessor ​ Area ​ Expiration 1 12th Floor, Building 16, Jinling Capital, No. 1000 Jinhai Road, Pudong New Area, Shanghai, China 201209 RMB 25,888.5 Junzhang Digital Technology (Shanghai) Co., Ltd.
Property, plants and equipment We lease the properties below for our principal executive office and other operating offices: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Monthly ​ ​ ​ ​ Address Rent ​ Lessee ​ Lessor ​ Area ​ Expiration 1 No. 37, Lane 97, Songlin Road, Pudong New Area, Shanghai RMB 80,000 Shanghai Eshallgo Enterprise Development (Group) Co., Ltd., ZHU YAQIN 300.65m 2 ​ October 27, 2027 2 1206A, Building 3, 1501 Jinsui Road, Pudong New Area, Shanghai 201258 RMB 8,769 Junzhang Digital Technology (Shanghai) Co., Ltd.
Highly integrated technology infrastructure While each of our business units has adopted a customized technology platform tailored to its respective market, we have built and will implement an integrated IT infrastructure and a number of common technologies. Our centralized infrastructure will provide capabilities for online sales, order and warehouse management, pricing, reporting, administrative functions and business analytics.
By integrating offline and online services on our platform, we will create strong connections among our customers and between our customers and our business partners, fostering a vibrant community around our brand. 75 Table of Contents Highly integrated technology infrastructure While each of our business units has adopted a customized technology platform tailored to its respective market, we have built and will implement an integrated IT infrastructure and a number of common technologies.
Our diverse geographic footprint of over 150 locations limits our dependence on any one region. 66 Table of Contents We believe that our diversity in end-market is a key competitive strength, as our growth opportunities and ability to deploy resources are not constrained by any single end-market dynamic.
We believe that our diversity in end-market is a key competitive strength, as our growth opportunities and ability to deploy resources are not constrained by any single end-market dynamic. We believe that we stand to benefit both from large markets that are characterized by stable long-term growth potential, as well as from markets that are exposed to cyclical intervals.
Furthermore, it allows technicians to conduct repairs and supplies and parts orders on-site, and transfer on-site tasks to other technicians if necessary. This App can also act as an attendance check-in tool for employees when they conduct business activities outside the Company.
Furthermore, it allows technicians to conduct repairs and supplies and parts orders on-site, and transfer on-site tasks to other technicians if necessary.
Jilin Xerox Business Machine Co., Ltd. and Zhejiang Maimaitong Supply Chain Management Co., Ltd. are our largest customers, accounting for approximately 8.4% and 3.8% of the year ended March 31, 2024 in net sales, respectively. We are subject to very low customer concentration, reducing our exposure to any single customer.
Tianjin Tianjia Lide Digital Technology Co., Ltd is our largest customer, accounting for approximately 4.5% of the year ended March 31, 2025 in net sales. We are subject to very low customer concentration, reducing our exposure to any single customer. We have developed relationships with approximately 1,963 suppliers, many of which are long-standing.
Due to restrictions imposed by PRC laws and regulations on foreign ownership of companies that engage in internet, value-added telecommunications services and other related business. Junzhang Shanghai later entered into a series of contractual arrangements with EShallGo Shanghai, which we refer to as the VIE (variable interest entity), and its shareholders.
On May 19, 2025, we established its U.S. subsidiary, ESHALLGO USA, INC., owned 75% by Eshallgo Inc. and 25% by Shanghai Eshallgo Enterprise Development (Group) Co., Ltd. Due to restrictions imposed by PRC laws and regulations on foreign ownership of companies that engage in internet, value-added telecommunications services and other related business.
We have developed relationships with approximately 1,813 suppliers, many of which are long-standing. Shanghai Mingzhe Office Equipment Co., Ltd. and Liaoning Qiyuan Intelligent Technology Co., Ltd. are our largest suppliers, accounting for approximately 12.9% and 6.1% respectively of the year ended March 31, 2024 in purchases, respectively.
Kunming Jinbi Office Equipment Co., Ltd and Nanjing Yuanzhiquan Digital Technology Co., Ltd are our largest suppliers, accounting for approximately 6.4% and 5.3% respectively of the year ended March 31, 2025 in purchases, respectively.
The SEC maintains an internet site at http://www.sec.gov that contains reports, information statements, and other information regarding issuers that file electronically with the SEC. 55 Table of Contents 4.B. Business overview Eshallgo Inc (“EShallGo” or the “Company”) was incorporated in the Cayman Islands in June 2021. Through its variable interest entity and operating company, Junzhang Digital Technology (Shanghai) Co., Ltd.
Business overview Eshallgo Inc (“EShallGo” or the “Company”) was incorporated in the Cayman Islands in June 2021. Through its variable interest entity and operating company, Junzhang Digital Technology (Shanghai) Co., Ltd. (“Junzhang Shanghai”), we have created an extensive geographical presence, which expands throughout 20 provinces in China.
Due to restrictions imposed by PRC laws and regulations on foreign ownership of companies that engage in internet, value-added telecommunications services and other related business. Junzhang Shanghai later entered into a series of contractual arrangements with EShallGo Shanghai, which we refer to as the VIE (variable interest entity), and its shareholders.
On May 19, 2025, we established ESHALLGO USA, INC., our U.S. subsidiary owned 75% by Eshallgo Inc. and 25% by Shanghai Eshallgo Enterprise Development (Group) Co., Ltd. Due to restrictions imposed by PRC laws and regulations on foreign ownership of companies that engage in internet, value-added telecommunications services and other related business.
Removed
(“Junzhang Shanghai”), we have created an extensive geographical presence, which expands throughout 20 provinces in China.
Added
Our infrastructure will also provide talent management, seamless customer integration for sales, receivables optimization, inventory management, and highly-scalable internal processes without rework and waste.
Removed
We believe that we stand to benefit both from large markets that are characterized by stable long-term growth potential, as well as from markets that are exposed to cyclical intervals. We expect these cyclical markets to recover in layered and overlapping stages at varying points in the economic cycle, as they have done in the past.
Added
The notice was issued because the closing bid price of the Company’s Class A ordinary shares was below $1.00 per share for 30 consecutive business days. The notification does not result in the immediate delisting of the Company’s Class A ordinary shares, which will continue to trade on the Nasdaq Capital Market.
Removed
By integrating offline and online services on our platform, we will create strong connections among our customers and between our customers and our business partners, fostering a vibrant community around our brand.
Added
Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has 180 calendar days, or until January 19, 2026, to regain compliance. Compliance will be achieved if, at any time prior to January 19, 2026, the closing bid price of the Company’s Class A ordinary shares is at or above $1.00 per share for a minimum of ten consecutive trading days.
Removed
The majority of our competition comes from mid-size regional; however, we also face competition from a number of small and local competitors.
Added
If the Company does not regain compliance within the initial compliance period, it may be eligible for an additional 180-day extension, provided that it meets all other continued listing requirements for the Nasdaq Capital Market, excluding the bid price requirement, and notifies Nasdaq of its intent to cure the deficiency, which may include effecting a reverse stock split.
Removed
We compete with our peer company to retain and recruit talented employees by providing competitive compensation and growth opportunities to our employees. 69 Table of Contents We believe we offer our employees competitive compensation packages and a dynamic work environment that encourages initiative.
Added
The Company intends to monitor the closing bid price of its Class A ordinary shares and to take all reasonable measures to regain compliance with Nasdaq Listing Rule 5550(a)(2). However, there can be no assurance that the Company will regain or maintain compliance with Nasdaq’s continued listing requirements.
Removed
Specifically, Shanghai Mingzhe Office Equipment Co., Ltd. is to provide office equipment to Shanghai Lixin Office Equipment Co., Ltd. (“Lixin”) according to Lixin’s periodic needs and deliver within 3 business days, and the supplier contract is automatically renewed annually.
Added
Change in Company’s Certifying Public Accountant On January 10, 2025, Eshallgo Inc. dismissed Marcum Asia CPAs LLP as its independent registered public accounting firm, with the decision approved by both the Board of Directors and the Audit Committee.

… 12 more changes not shown on this page.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

60 edited+64 added−24 removed93 unchanged
Leasing costs of office equipment primarily included the deprecation expense of equipment leased, and the handling and shipping costs. Cost of maintenance and repair services primarily include the labor, costs of equipment parts and supplies, the transportation expenses, and the costs paid to the contractors in the cases that we outsourced the services.
Leasing costs of office equipment primarily included the deprecation expense of equipment leased, and the handling and shipping costs. Cost of maintenance and repair services primarily include the labor, costs of equipment parts and supplies, the transportation expenses, and the costs paid to the contractors in the cases that we outsourced the services.
The Company records wealth management products with variable interest rates with maturities less than one year at fair value in accordance with ASC 825 Financial Instruments. The interest earned is recognized in the consolidated statements of income and comprehensive income (loss) as interest income.
The Company records wealth management products with variable interest rates with maturities less than one year at fair value in accordance with ASC 825 Financial Instruments. The interest earned is recognized in the consolidated statements of income (loss) and comprehensive income (loss) as interest income.
We extended credits to some of our customers as their business was affected by the 2022 Resurgence, however, due to the recovery of general economy in China , our credit term was back to normal and we have put efforts in collection of long overdue receivables from our customers. ● An increase in advance to vendors to third parties and related parties of $ 552 , 110 .
We extended credits to some of our customers as their business was affected by the 2022 Resurgence, however, due to the recovery of general economy in China, our credit term was back to normal and we have put efforts in collection of long overdue receivables from our customers; and an increase in advance to vendors to third parties and related parties of $552,110.
Investing Activities Net cash used in investing activities amounted to $1,616,941 for the year ended March 31, 2024, and primarily included the purchase of short-term investment of $3,019,257, payment made for short-term loans to third parties of $1,170,183 and purchase of property and equipment of $55,216, partially offset by the redemption of short-term investment of $2,656,228.
Net cash used in investing activities amounted to $1,616,941 for the year ended March 31, 2024, and primarily included the purchase of short-term investment of $3,019,257, payment made for short-term loans to third parties of $1,170,183 and purchase of property and equipment of $55,216, partially offset by the redemption of short-term investment of $2,656,228.
Operating Results Comparison of Results of Operations for the Fiscal Years Ended March 31, 2024 and 2023 The following table summarizes our operating results as reflected in our consolidated statements of income and comprehensive income (loss) during the years ended March 31, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such periods. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended March 31, ​ ​ 2024 ​ 2023 ​ Variance ​ ​ ​ ​ % of ​ ​ ​ % of ​ ​ ​ Amount revenue Amount revenue Amount % of REVENUE ​ $ 16,963,957 100.0 % $ 18,425,312 ​ 100.0 % $ (1,461,355) (7.9) % COST OF REVENUE ​ 12,392,482 73.1 % 13,726,491 74.5 % (1,334,009) (9.7) % GROSS PROFIT ​ 4,571,475 26.9 % 4,698,821 25.5 % (127,346) (2.7) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ Selling expenses ​ 925,395 5.5 % 1,014,513 5.5 % (89,118) (8.8) % General and administrative expenses ​ 2,512,566 14.8 % 2,116,248 11.5 % 396,318 18.7 % Research and development expenses ​ 223,136 1.3 % 250,344 1.4 % (27,208) (10.9) % Total operating expenses ​ 3,661,097 21.6 % 3,381,105 18.4 % 279,992 8.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income from operations ​ 910,378 5.4 % 1,317,716 7.2 % (407,338) (30.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income ​ 59,755 0.4 % 60,039 0.3 % (284) (0.5) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income tax provision ​ 970,133 5.7 % 1,377,755 7.5 % (407,622) (29.6) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ 124,802 0.7 % 107,829 0.6 % 16,973 15.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ 845,331 5.0 % 1,269,926 6.9 % (424,595) (33.4) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: net income attributable to non-controlling interest ​ 836,679 4.9 % 792,237 4.3 % 44,442 5.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCOME ATTRIBUTABLE TO ESHALLGO INC ​ $ 8,652 0.1 % $ 477,689 2.6 % $ (469,037) (98.2) % ​ ​ 98 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended March 31, ​ ​ 2024 ​ 2023 ​ Variance ​ ​ ​ ​ % of ​ ​ ​ % of ​ ​ ​ ​ ​ Amount revenue Amount revenue Amount % of Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sale of equipment ​ $ 13,627,509 80.3 % $ 15,117,845 82.0 % $ (1,490,336) (9.9) % Maintenance service ​ 2,090,109 12.3 % 2,184,692 11.9 % (94,583) (4.3) % Lease of equipment ​ 1,234,320 7.3 % 1,109,840 6.0 % 124,480 11.2 % Finance income from sales type leases ​ 12,019 0.1 % 12,935 0.1 % (916) (7.1) % Total revenue ​ 16,963,957 100.0 % 18,425,312 100.0 % (1,461,355) (7.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of Revenue ​ ​ ​ ​ Cost of sale of equipment ​ 11,717,366 86.0 % 13,040,429 86.3 % (1,323,063) (10.1) % Costs of maintenance service ​ 146,768 7.0 % 170,726 7.8 % (23,958) (14.0) % Costs of lease of equipment ​ 528,348 42.8 % 515,336 46.4 % 13,012 2.5 % Cost of finance income ​ — — ​ — — ​ — — ​ Total cost of revenue ​ 12,392,482 73.1 % 13,726,491 74.5 % (1,334,009) (9.7) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Profit ​ ​ ​ ​ Sale of equipment ​ 1,910,143 14.0 % 2,077,416 13.7 % (167,273) (8.1) % Maintenance service ​ 1,943,341 93.0 % 2,013,966 92.2 % (70,625) (3.5) % Lease of equipment ​ 705,972 57.2 % 594,504 53.6 % 111,468 18.7 % Finance income ​ 12,019 100.0 % 12,935 100.0 % (916) (7.1) % Total gross profit ​ $ 4,571,475 26.9 % $ 4,698,821 25.5 % $ (127,346) (2.7) % ​ Revenue Our total revenues decreased by $1,461,355, or 7.9%, to $16,963,957 for the year ended March 31, 2024 from $18,425,312 for the year ended March 31, 2023.
Comparison of Results of Operations for the Fiscal Years Ended March 31, 2024 and 2023 The following table summarizes our operating results as reflected in our consolidated statements of income and comprehensive income (loss) during the years ended March 31, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such periods. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended March 31, ​ ​ 2024 ​ 2023 ​ Variance ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ Amount revenue Amount revenue Amount % of REVENUE ​ $ 16,963,957 100.0 % $ 18,425,312 100.0 % $ (1,461,355) (7.9) % COST OF REVENUE ​ 12,392,482 73.1 % 13,726,491 74.5 % (1,334,009) (9.7) % GROSS PROFIT ​ 4,571,475 26.9 % 4,698,821 25.5 % (127,346) (2.7) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ Selling expenses ​ 925,395 5.5 % 1,014,513 5.5 % (89,118) (8.8) % General and administrative expenses ​ 2,512,566 14.8 % 2,116,248 11.5 % 396,318 18.7 % Research and development expenses ​ 223,136 1.3 % 250,344 1.4 % (27,208) (10.9) % Total operating expenses ​ 3,661,097 21.6 % 3,381,105 18.4 % 279,992 8.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income from operations ​ 910,378 5.4 % 1,317,716 7.2 % (407,338) (30.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income ​ 59,755 0.4 % 60,039 0.3 % (284) (0.5) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income tax provision ​ 970,133 5.7 % 1,377,755 7.5 % (407,622) (29.6) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ 124,802 0.7 % 107,829 0.6 % 16,973 15.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ 845,331 5.0 % 1,269,926 6.9 % (424,595) (33.4) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: net income attributable to non-controlling interest ​ 836,679 4.9 % 792,237 4.3 % 44,442 5.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCOME ATTRIBUTABLE TO ESHALLGO INC ​ $ 8,652 0.1 % $ 477,689 2.6 % $ (469,037) (98.2) % ​ 115 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended March 31, ​ ​ 2024 ​ 2023 ​ Variance ​ ​ ​ ​ % of ​ ​ ​ % of ​ ​ ​ ​ ​ Amount revenue Amount revenue Amount % of Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sale of equipment ​ $ 13,627,509 80.3 % $ 15,117,845 82.0 % $ (1,490,336) (9.9) % Maintenance service ​ 2,090,109 12.3 % 2,184,692 11.9 % (94,583) (4.3) % Lease of equipment ​ 1,234,320 7.3 % 1,109,840 6.0 % 124,480 11.2 % Finance income from sales type leases ​ 12,019 0.1 % 12,935 0.1 % (916) (7.1) % Total revenue ​ 16,963,957 100.0 % 18,425,312 100.0 % (1,461,355) (7.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of Revenue ​ ​ ​ ​ Cost of sale of equipment ​ 11,717,366 86.0 % 13,040,429 86.3 % (1,323,063) (10.1) % Costs of maintenance service ​ 146,768 7.0 % 170,726 7.8 % (23,958) (14.0) % Costs of lease of equipment ​ 528,348 42.8 % 515,336 46.4 % 13,012 2.5 % Cost of finance income ​ — — ​ — — ​ — — ​ Total cost of revenue ​ 12,392,482 73.1 % 13,726,491 74.5 % (1,334,009) (9.7) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Profit ​ ​ ​ ​ Sale of equipment ​ 1,910,143 14.0 % 2,077,416 13.7 % (167,273) (8.1) % Maintenance service ​ 1,943,341 93.0 % 2,013,966 92.2 % (70,625) (3.5) % Lease of equipment ​ 705,972 57.2 % 594,504 53.6 % 111,468 18.7 % Finance income ​ 12,019 100.0 % 12,935 100.0 % (916) (7.1) % Total gross profit ​ $ 4,571,475 26.9 % $ 4,698,821 25.5 % $ (127,346) (2.7) % ​ Revenue Our total revenues decreased by $1,461,355, or 7.9%, to $16,963,957 for the year ended March 31, 2024 from $18,425,312 for the year ended March 31, 2023.
As a percentage of revenues, our selling expenses accounted for 5.5% and 5.5% of our total revenue for the years ended March 31, 2024 and 2023, respectively. 101 Table of Contents General and administrative expenses Our general and administrative expenses primarily consist of employee salaries, welfare and insurance expenses, consultant and professional service fees incurred for company reorganization and going public, depreciation and amortization expenses, rental expenses, office and utility expenses, bad debt expenses, and business travel and meals expenses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended March 31, ​ ​ 2024 ​ 2023 ​ Variance ​ Amount % of Amount % of Amount % of General and Administrative Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consulting and professional service fees ​ $ 848,343 33.8 % $ 556,703 26.3 % $ 291,640 52.4 % Depreciation and amortization ​ 178,589 7.1 % 112,154 5.3 % 66,435 59.2 % Office, utility and other expenses ​ 206,463 8.2 % 145,194 6.9 % 61,269 42.2 % Salary, employee insurance and welfare expenses ​ 1,180,283 47.0 % 1,159,146 54.8 % 21,137 1.8 % Rent expense ​ 274,707 10.9 % 260,561 12.3 % 14,146 5.4 % Net recovery of credit losses/doubtful accounts ​ (175,819) (7.0) % (117,510) (5.6) % (58,309) (49.6) % Total general and administrative expenses ​ $ 2,512,566 100.0 % $ 2,116,248 100.0 % $ 396,318 18.7 % ​ Our general and administrative expenses decreased by $396,318, or 18.7%, to $2,512,566 for the year ended March 31, 2024 from $2,116,248 for the year ended March 31, 2023, primarily attributable to (i) an increase in our consultant and professional fees by $291,640, or 52.4% for the year ended March 31, 2024 as compared to the same period last year, primarily due to our effort made towards preparation of our initial public offering in the year ended March 31, 2024; (ii) an increase in depreciation and amortization by $66,435, or 59.2% for the year ended March 31, 2024 as compared to the same period last year, primarily due to the increased amortization of leasehold improvement as the Company renovated its offices in order to present a higher-class brand and image for the Company; (iii) an increase in office, utility and other expenses by $61,269, or 42.2% for the year ended March 31, 2024 as compared to the same period last year, primarily due to the recovery of our business operation from the 2022 Resurgence; (iv) an increase in our salary and welfare expenses paid to our employees by $21,137, or 1.8% for the year ended March 31, 2024 as compared to the same period last year, primarily due to the recovery of our business operation from the 2022 Resurgence.
As a percentage of revenues, our selling expenses accounted for 5.5% and 5.5% of our total revenue for the years ended March 31, 2024 and 2023, respectively. 118 Table of Contents General and administrative expenses Our general and administrative expenses primarily consist of employee salaries, welfare and insurance expenses, consultant and professional service fees incurred for company reorganization and going public, depreciation and amortization expenses, rental expenses, office and utility expenses, bad debt expenses, and business travel and meals expenses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended March 31, ​ ​ 2024 ​ 2023 ​ Variance ​ Amount % of Amount % of Amount % of General and Administrative Expenses ​ ​ ​ ​ Consulting and professional service fees ​ $ 848,343 33.8 % $ 556,703 26.3 % $ 291,640 52.4 % Depreciation and amortization ​ ​ 178,589 ​ 7.1 % ​ 112,154 ​ 5.3 % ​ 66,435 ​ 59.2 % Office, utility and other expenses ​ 206,463 8.2 % 145,194 6.9 % 61,269 42.2 % Salary, employee insurance and welfare expenses ​ 1,180,283 47.0 % 1,159,146 54.8 % 21,137 1.8 % Rent expense ​ 274,707 10.9 % 260,561 12.3 % 14,146 5.4 % Net recovery of credit losses/doubtful accounts ​ (175,819) (7.0) % (117,510) (5.6) % (58,309) (49.6) % Total general and administrative expenses ​ $ 2,512,566 100.0 % $ 2,116,248 100.0 % $ 396,318 18.7 % ​ Our general and administrative expenses decreased by $396,318, or 18.7%, to $2,512,566 for the year ended March 31, 2024 from $2,116,248 for the year ended March 31, 2023, primarily attributable to (i) an increase in our consultant and professional fees by $291,640, or 52.4% for the year ended March 31, 2024 as compared to the same period last year, primarily due to our effort made towards preparation of our initial public offering in the year ended March 31, 2024; (ii) an increase in depreciation and amortization by $66,435, or 59.2% for the year ended March 31, 2024 as compared to the same period last year, primarily due to the increased amortization of leasehold improvement as the Company renovated its offices in order to present a higher-class brand and image for the Company; (iii) an increase in office, utility and other expenses by $61,269, or 42.2% for the year ended March 31, 2024 as compared to the same period last year, primarily due to the recovery of our business operation from the 2022 Resurgence; (iv) an increase in our salary and welfare expenses paid to our employees by $21,137, or 1.8% for the year ended March 31, 2024 as compared to the same period last year, primarily due to the recovery of our business operation from the 2022 Resurgence.
Any financing which involves the sale of equity securities or instruments that are convertible into equity securities could result in immediate and possibly significant dilution to our existing shareholders. In the coming years, we will be looking to financing sources, such as bank loans and equity financing, to meet our cash needs.
Any financing which involves the sale of equity securities or instruments that are convertible into equity securities could result in immediate and possibly significant dilution to our existing shareholders. In the coming years, we will be looking to financing sources, such as bank loans and debt and equity financing, to meet our cash needs.
Research and development expenses Our research and development expenses primarily consist of employee salaries, welfare and insurance expenses, technical service fees, depreciation expenses, conference expenses, and business travel and meals expenses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended March 31, ​ ​ 2024 ​ 2023 ​ Variance ​ Amount % of Amount % of Amount % of Research and Development Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ Salary, employee insurance and welfare expenses ​ $ 221,984 99.5 % $ 249,006 99.5 % $ (27,022) (10.9) % Others ​ 1,152 0.5 % 1,338 0.5 % (186) (13.9) % Total research and development expenses ​ $ 223,136 100.0 % $ 250,344 100.0 % $ (27,208) (10.9) % ​ 102 Table of Contents Our research and development expenses decreased by $27,208, or 10.9%, to $223,136 for the year ended March 31, 2024 from $250,344 for the year ended March 31, 2023, primarily attributable to a decrease in salary and welfare expenses by $27,022, or 10.9% to $221,984 for the year ended March 31, 2024 from $249,006 in the year ended March 31, 2023.
Research and development expenses Our research and development expenses primarily consist of employee salaries, welfare and insurance expenses, technical service fees, depreciation expenses, conference expenses, and business travel and meals expenses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended March 31, ​ ​ 2024 ​ 2023 ​ Variance ​ Amount % of Amount % of Amount % of Research and Development Expenses ​ ​ ​ ​ Salary, employee insurance and welfare expenses ​ $ 221,984 99.5 % $ 249,006 99.5 % $ (27,022) (10.9) % Others ​ 1,152 0.5 % 1,338 0.5 % (186) (13.9) % Total research and development expenses ​ $ 223,136 100.0 % $ 250,344 100.0 % $ (27,208) (10.9) % ​ 119 Table of Contents Our research and development expenses decreased by $27,208, or 10.9%, to $223,136 for the year ended March 31, 2024 from $250,344 for the year ended March 31, 2023, primarily attributable to a decrease in salary and welfare expenses by $27,022, or 10.9% to $221,984 for the year ended March 31, 2024 from $249,006 in the year ended March 31, 2023.
The gross margin of sales of equipment remained relatively stable with a slight in crease of 0 .3 percentage points, from 13.7% for the year ended March 31, 2023 to 14.0 % for the year ended March 31, 2024. 100 Table of Contents ● The gross profit of maintenance service de creased by $70,625, or 3.5 %, to $1,943,341 for the year ended March 31, 2024 from $2,013,966 for the year ended March 31, 2023.
The gross margin of sales of equipment remained relatively stable with a slight in crease of 0 .3 percentage points, from 13.7% for the year ended March 31, 2023 to 14.0 % for the year ended March 31, 2024. 117 Table of Contents ● The gross profit of maintenance service de creased by $70,625, or 3.5 %, to $1,943,341 for the year ended March 31, 2024 from $2,013,966 for the year ended March 31, 2023.
The COVID-19 outbreak has been causing lockdowns, travel restrictions, and closures of businesses across the globe, and our business has been adversely affected by the COVID-19 pandemic. 96 Table of Contents Due to a resurgence of the COVID-19 pandemic in March 2022 (“2022 Resurgence”) in China, the Chinese government employed measures including city lockdowns, quarantines, travel restrictions, suspension of business activities and school closures to reduce the spread of COVID-19.
The COVID-19 outbreak has been causing lockdowns, travel restrictions, and closures of businesses across the globe, and our business has been adversely affected by the COVID-19 pandemic. 105 Table of Contents Due to a resurgence of the COVID-19 pandemic in March 2022 (“2022 Resurgence”) in China, the Chinese government employed measures including city lockdowns, quarantines, travel restrictions, suspension of business activities and school closures to reduce the spread of COVID-19.
The increase was primarily due to increased sales in last quarter of the year ended March 31, 2023 as well as the extended credits to some of our customers as their business was affected by the 2022 Resurgence as mentioned above. ● An increase in accounts payable of $758,843, because of the extended payment period we requested from our suppliers as our business was affected by the 2022 Resurgence.
The increase was primarily due to increased sales in last quarter of the year ended March 31, 2023 as well as the extended credits to some of our customers as their business was affected by the 2022 Resurgence as mentioned above; and (ii) an increase in accounts payable of $758,843, because of the extended payment period we requested from our suppliers as our business was affected by the 2022 Resurgence.
We received lease concession from our landlards during the year ended March 31, 2023 due to the pandemic, rent expense increased since no such concession was received in the year ended March 31, 2024; and (vi) an increase in net recovery of credit losses and doubtful accounts by $58,309, or 49.6%.
We received lease concession from our landlords during the year ended March 31, 2023 due to the pandemic, rent expense increased since no such concession was received in the year ended March 31, 2024; and (vi) an increase in net recovery of credit losses and doubtful accounts by $58,309, or 49.6%.
These judgments and estimates are highly subjective, making the transparency and reasonableness of the property and equipment impairment policy crucial for investors and regulatory bodies. And therefore, it is a critical accounting policy. There were no impairments of these assets for the years ended March 31, 2024, 2023 and 2022.
These judgments and estimates are highly subjective, making the transparency and reasonableness of the property and equipment impairment policy crucial for investors and regulatory bodies. And therefore, it is a critical accounting policy. There were no impairments of these assets for the years ended March 31, 2025, 2024 and 2023.
The decrease was in line with the decreased sales of office equipment, which caused less demand for our full coverage and repair service; and (ii) the revenue from other service remained relatively stable with a slight de crease by $61,938, or 3.4 %, to $1,772,468 for the year ended March 31, 2024 from $1,834,406 for the year ended March 31, 2023. 99 Table of Contents ● Our revenue from leasing of equipment in creased by $124,480, or 11.2 %, to $1,234,320 for the year ended March 31, 2024 from $1,109,840 for the year ended March 31, 2023.
The decrease was in line with the decreased sales of office equipment, which caused less demand for our full coverage and repair service; and (ii) the revenue from other service remained relatively stable with a slight de crease by $61,938, or 3.4 %, to $1,772,468 for the year ended March 31, 2024 from $1,834,406 for the year ended March 31, 2023. 116 Table of Contents ● Our revenue from leasing of equipment increased by $124,480, or 11.2%, to $1,234,320 for the year ended March 31, 2024 from $1,109,840 for the year ended March 31, 2023.
T he gross margin of lease of equipment increase d by 3.6 percentage points, from 53.6% for the year ended March 31, 2023 to 57.2 % for the year ended March 31, 202 4. Whille ensuring our quality of leasing services, we have tried to improve our profit margin by selecting more cost-effective consumables in our leasing package.
T he gross margin of lease of equipment increase d by 3.6 percentage points, from 53.6% for the year ended March 31, 2023 to 57.2 % for the year ended March 31, 202 4. Whil e ensuring our quality of leasing services, we have tried to improve our profit margin by selecting more cost-effective consumables in our leasing package.
Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements are prepared in accordance with U.S.
E. Critical Accounting Estimates and Policies Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements are prepared in accordance with U.S.
Trend Information Other than as disclosed below and elsewhere in this annual report on Form 20-F, we are not aware of any trends, uncertainties, demands, commitments, or events for the period from April 1, 2023 to March 31, 2024 that are reasonably likely to have a material adverse effect on our net revenue, income, profitability, liquidity, or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition. 112 Table of Contents E.
Trend Information Other than as disclosed below and elsewhere in this annual report on Form 20-F, we are not aware of any trends, uncertainties, demands, commitments, or events for the period from April 1, 2024 to March 31, 2025 that are reasonably likely to have a material adverse effect on our net revenue, income, profitability, liquidity, or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition.
The increase was also due to slow recovery of economic in China after the pandemic as mentioned above, many customer prefer to lease equipment instead of purchas ing them which also led to an increase in our revenue from leasing of equipment for the year ended March 31, 2024 as compared to the same period last year . ● Finance income is generated from sales type leases.
The increase was also due to slow recovery of economic in China after the pandemic as mentioned above, many customers prefer to lease equipment instead of purchasing them which also led to an increase in our revenue from leasing of equipment for the year ended March 31, 2024 as compared to the same period last year. ● Finance income is generated from sales type leases.
We believe that our current cash and cash equivalents, cash flows provided by operating activities and the proceeds we received from the IPO will be sufficient to meet our working capital needs in the next 12 months from the date the consolidated financial statements were issued.
We believe that our current cash and cash equivalents, cash flows provided by operating activities, debt financing, the proceeds we received from the IPO and other equity financing activities will be sufficient to meet our working capital needs in the next 12 months from the date the consolidated financial statements were issued.
Net Income Attributable to Non-controlling Interest One of our main operating entities, Junzhang Shanghai owns 55% shares of nineteen subsidiaries, which located in many major cities in the PRC. Accordingly, we recorded non-controlling interest income attributed to non-controlling shareholders of these subsidiaries.
Net Income (Loss) Attributable to Non-controlling Interest One of our main operating entities, Junzhang Shanghai owns 55% shares of twenty-three subsidiaries, which located in many major cities in the PRC. Accordingly, we recorded non-controlling interest income attributed to non-controlling shareholders of these subsidiaries.
In addition, we have granted the underwriters of the Offering an option, exercisable within 45 days from the date of the underwriting agreement, to purchase up to an additional 187,500 Class A ordinary shares at the public offering price, less underwriting discounts and commissions.
In addition, we have granted the underwriters of the Offering an option, exercisable within 45 days from the date of the underwriting agreement, to purchase up to an additional 187,500 Class A Ordinary Shares at the public offering price, less underwriting discounts and commissions. The option was expired and no share was exercised by the underwriters.
Each 1% increase (decrease) in our estimates would increase (decrease) our inventory reserve as of March 31, 2024 by $19,830. 113 Table of Contents Impairment of long-lived assets Impairment of property and equipment involves estimating future cash flows, which are typically based on management’s judgment and assumptions.
Each 1% increase (decrease) in our estimates would increase (decrease) our inventory reserve as of March 31, 2025 by $18,182. 124 Table of Contents Impairment of long-lived assets Impairment of property and equipment involves estimating future cash flows, which are typically based on management’s judgment and assumptions.
The following critical accounting policies (i) credit losses; (ii) inventories, net; (iii) impairment of long-lived assets; (iv) revenue recognition; and (v) income taxes, rely upon assumptions and estimates and were used in the preparation of our consolidated financial statements: Credit losses We use the roll-rate method to measure the expected credit losses accounts receivable, finance receivable and long-term receivable on a collective basis when similar risk characteristics exist.
We believe critical accounting policies as disclosed in this report reflect the more significant judgments and estimates used in preparation of our consolidated financial statements. 123 Table of Contents The following critical accounting policies (i) credit losses; (ii) inventories, net; (iii) impairment of long-lived assets; (iv) revenue recognition; and (v) income taxes, rely upon assumptions and estimates and were used in the preparation of our consolidated financial statements: Credit losses We use the roll-rate method to measure the expected credit losses accounts receivable, finance receivable, long-term accounts receivable and long-term other receivable on a collective basis when similar risk characteristics exist.
Our accounts receivable primarily include balance due from customers for our office equipment sold and services provided and accepted by customers. Approximately 26%, or $1.3 million of our net accounts receivable balance as of March 31, 2024 have been subsequently collected. Collected accounts receivable will be used as working capital in our operations, if necessary.
Our accounts receivable primarily include balance due from customers for our office equipment sold and services provided and accepted by customers. Approximately 18.8% of our net accounts receivable balance as of March 31, 2025 have been subsequently collected. Collected accounts receivable will be used as working capital in our operations, if necessary.
As of March 31, 2024, our inventory balance amounted to $1,963,166, primarily consisting of purchased goods and supplies, which we believe are able to be sold quickly based on the analysis of the current trends in demand for our products. As of March 31, 2024, our working capital balance was $15,687,912.
As of March 31, 2025, our inventory balance amounted to $1,800,020, primarily consisting of purchased goods and supplies, which we believe are able to be sold quickly based on the analysis of the current trends in demand for our products. As of March 31, 2025, our working capital balance was $15,104,778.
As of March 31, 2024, we had short-term investments of $1,131,267, including accrued interests of $23,556. Short-term investments include wealth management products, which are certain deposits with variable interest rates or principal not-guaranteed with certain financial institutions and the Company can redeem the deposits at any time.
As of March 31, 2025, we had short-term investments of $3,094,208, including accrued interests of $62,788. Short-term investments include wealth management products, which are certain deposits with variable interest rates or principal not-guaranteed with certain financial institutions and the Company can redeem the deposits at any time.
As of March 31, 2024 and 2023, allowance for credit losses for accounts receivable amounted to$133,449 and $256,882, respectively, allowance for credit losses for long-term receivable amounted to $5,073 and $ nil, respectively, allowance for credit losses for loan to third parties which is included in current and non-current prepaid expenses and other assets amounted to $25,026 and $nil, respectively, and allowance for credit losses for finance receivable amounted to $6,040 and $34,191, respectively.
As of March 31, 2025 and 2024, allowance for credit losses for accounts receivable amounted to$668,195 and $133,449, respectively, allowance for credit losses for long-term accounts receivable amounted to $101,820 and $5,073, respectively, allowance for credit losses for long-term other receivable amounted to $818,191 and $ nil, respectively, allowance for credit losses for loan to third parties which is included in current and non-current prepaid expenses and other assets amounted to $144,251 and $25,026, respectively, and allowance for credit losses for finance receivable amounted to $13,247 and $6,040, respectively.
We provided mainly two types of services: (i) Full coverage, which mainly includes technical support and routine maintenance and repair service; and (ii) Other service, which mainly includes ad hoc maintenance and repair service, and provision of other software and system services such as providing Enterprise Resource Planning (“ERP”) and live streaming service.
We provided mainly two types of services: (i) Full coverage, which mainly includes technical support and routine maintenance and repair service; and (ii) Other service, which mainly includes ad hoc maintenance and repair service, and provision of other software and system services.
The increase was mainly due to our commitmen t to develop our company into a national wide muti-brand leasing company , and our continuous efforts in expanding our leaseing business.
The increase was mainly due to our commitment to develop our company into a nationalwide muti-brand leasing company, and our continuous efforts in expanding our leasing business.
Each 1 percentage point decrease in our expected credit loss rate would decrease our allowance for credit losses for accounts receivable, long-term receivable, loan to third parties and finance receivable as of March 31, 2024 by $30,485, $1,512, $4,568 and $1,606, respectively. Inventories, net Inventory allowance involves estimating potential future inventory write-downs or losses.
Each 1 percentage point decrease in our expected credit loss rate would decrease our allowance for credit losses for accounts receivable, long-term accounts receivable, long-term other receivable, loan to third parties and finance receivable as of March 31, 2025 by $46,299, $1,708, $15,786, $13,785 and $1,309, respectively. Inventories, net Inventory allowance involves estimating potential future inventory write-downs or losses.
The decrease in gross profit was primarily due to the decrease in revenue from sales of equipment. The gross margin of sales of equipment remained relatively stable with a slight decrease of 2.3 percentage points, from 16.0% for the year ended March 31, 2022 to 13.7% for the year ended March 31, 2023.
The decrease in gross profit was primarily due to the decrease in revenue from sales of equipment. The gross margin of sales of equipment remained relatively stable with a slight decrease of 2.6 percentage points, from 14.0% for the year ended March 31, 2024 to 11. 4 % for the year ended March 31, 202 5 .
The inventory reserve amounted $19,830 and $23,301 as of March 31, 2024 and 2023, respectively.
The inventory reserve amounted $18,182 and $19,830 as of March 31, 2025 and 2024, respectively.
Each 1 percentage point increase in our expected credit loss rate would increase our allowance for credit losses for accounts receivable, long-term receivable, loan to third parties and finance receivable as of March 31, 2024 by $50,278, $2,021, $8,335 and $2,036, respectively.
Each 1 percentage point increase in our expected credit loss rate would increase our allowance for credit losses for accounts receivable, long-term accounts receivable, long-term other receivable, loan to third parties and finance receivable as of March 31, 2025 by $45,164, $1,708, $15,786, $14,105 and $1,309, respectively.
The finance income decreased by $427, or 3.2% from $13,362 in the year ended March 31, 2022 to $12,935 in the year ended March 31, 2023. Cost of Revenue Cost of equipment sold primarily included the costs to purchase the office equipment, inducing the freight expenses and ordering expenses.
The finance income decreased by $4,622, or 38.5 %, to $7,397 in the year ended March 31, 2025 from $12,019 in the year ended March 31, 2024. Cost of Revenue Cost of equipment sold primarily included the costs to purchase the office equipment, inducing the freight expenses and ordering expenses.
Net cash used in investing activities amounted to $2,263,259 for the year ended March 31, 2022, and primarily included the purchase of fixed assets of $919,541, the purchase of short-term investment of $4,177,230, and the redemption of short-term investment of $2,527,957. 111 Table of Contents Financing Activities Net cash provided by financing activities amounted to $50,431 for the year ended March 31, 2024, and primarily included proceeds received from investors for subscription of Class A ordinary share of $458,341, partially offset by the repayments of loans from related parties of $163,362, repayment of short-term bank loan of $146,791 and refund of capital contribution by a non-controlling shareholder of $98,220.
Financing Activities Net cash provided by financing activities amounted to $8,678,984 for the year ended March 31, 2025, and primarily included net proceeds from initial public offerings, net of issuance costs of $4,436,973, net proceeds from issuance of convertible note of $4,206,970. 122 Table of Contents Net cash provided by financing activities amounted to $50,431 for the year ended March 31, 2024, and primarily included proceeds received from investors for subscription of Class A ordinary share of $458,341, partially offset by the repayments of loans from related parties of $163,362, repayment of short-term bank loan of $146,791 and refund of capital contribution by a non-controlling shareholder of $98,220.
As of March 31, 2024, our future lease payments totaled $ 462,572 . Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements as of March 31, 2024 and 2023. C. Research and Development, Patents and Licenses, etc. See “Item 4. Information on the Company—B. Business Overview—Intellectual Property.” D.
As of March 31, 2025, our future lease payments totaled $559 ,519 . (2) Represents the outstanding principal balance of short-term loan from bank. Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements as of March 31, 2025 and 2024. C. Research and Development, Patents and Licenses, etc. See “Item 4. Information on the Company—B.
Net Income Attributable to Eshallgo Inc As a result of the foregoing, we reported a net income attributable to Eshallgo of $477,689 for the year ended March 31, 2023, representing a $1,350,671, or 73.9% decrease from a net income of $1,828,360 for the year ended March 31, 2022. 109 Table of Contents B.
Net Income Attributable to Eshallgo Inc As a result of the foregoing, we reported a net income attributable to Eshallgo of $8,652 for the year ended March 31, 2024, representing a $469,037, or 98.2% decrease from a net income of $477,689 for the year ended March 31, 2023. B.
We increased our advance to vendors to secure supplies in anticipation of increased sales in the coming months. Net cash provided by operating activities was $783,940 for the year ended March 31, 2023, primarily consisting of the following: ● Net income of $1,269,926 for the fiscal year 2023. ● An increase in accounts receivable due from third parties of $1,328,948.
Net cash provided by operating activities was $783,940 for the year ended March 31, 2023, primarily derived from a net income of $1,269,926 for the year, and net changes in our operating assets and liabilities, which mainly included (i) an increase in accounts receivable due from third parties of $1,328,948.
Our overall gross profit margin decreased by 6.4% to 25.5% for the year ended March 31, 2023 from 31.9% for the year ended March 31, 2022.
Our overall gross profit margin decreased by 3.9% to 23.0% for the year ended March 31, 2025 from 26.9% for the year ended March 31, 2024.
As a percentage of revenues, general and administrative expenses were 11.5% and 13.3% of our revenue for the years ended March 31, 2023 and 2022, respectively. 108 Table of Contents Research and development expenses Our research and development expenses primarily consist of employee salaries, welfare and insurance expenses, technical service fees, depreciation expenses, conference expenses, and business travel and meals expenses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended March 31, ​ ​ 2023 ​ 2022 ​ Variance ​ Amount % of Amount % of Amount % of Research and Development Expenses ​ ​ ​ ​ Salary, employee insurance and welfare expenses ​ $ 249,006 99.5 % $ 301,196 99.6 % $ (52,190) (17.3) % Others ​ 1,338 0.5 % 1,283 0.4 % 55 4.3 % Total research and development expenses ​ $ 250,344 100.0 % $ 302,479 100.0 % $ (52,135) (17.2) % ​ Our research and development expenses decreased by $52,135, or 17.2%, to $250,344 for the year ended March 31, 2023 from $302,479 for the year ended March 31, 2022, primarily attributable to a decrease in salary and welfare expenses by $52,190, or 17.3% to $249,006 for the year ended March 31, 2023 from $301,196 in the year ended March 31, 2022.
As a percentage of revenues, general and administrative expenses were 72.4% and 14.8% of our revenue for the years ended March 31, 2025 and 2024, respectively. 113 Table of Contents Research and development expenses Our research and development expenses primarily consist of employee salaries, welfare and insurance expenses, technical service fees, depreciation expenses, conference expenses, and business travel and meals expenses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended March 31, ​ ​ 2025 ​ 2024 ​ Variance ​ Amount % of Amount % of Amount % of Research and Development Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ Salary, employee insurance and welfare expenses ​ $ 19,954 100.0 % $ 221,984 99.5 % $ (202,030) (91.0) % Others ​ — — ​ 1,152 0.5 % (1,152) (100.0) % Total research and development expenses ​ $ 19,954 100.0 % $ 223,136 100.0 % $ (203,182) (91.1) % ​ Our research and development expenses decreased by $203,182, or 91.1%, to $19,954 for the year ended March 31, 2025 from $223,136 for the year ended March 31, 2024.
The decrease in our costs was primarily attributable to the following reasons: ● Our cost of revenues from sale of equipment decreased by $2,328,893, or 15.2%, to $13,040,429 for the year ended March 31, 2023 from $15,369,322 for the year ended March 31, 2022.
The decrease in our revenues was primarily attributable to the following reasons: ● The revenues from sale of equipment decreased by $2,606,998, or 19.1 %, to $11,020,511 for the year ended March 31, 2025 from $13,627,509 for the year ended March 31, 2024.
The decrease in our gross profit and gross margin was primarily attributable to the following reasons: ● The gross profit from sales of equipment decreased by $845,556, or 28.9%, to $2,077,416 for the year ended March 31, 2023 from $2,922,972 for the year ended March 31, 2022.
The decrease in our gross profit and gross margin was primarily attributable to the following reasons: ● The gross profit from sales of equipment decreased by $654,898, or 34.3 %, to $1,255,245 for the year ended March 31, 202 5 from $1,910,143 for the year ended March 31, 2024.
Contractual obligations As of March 31, 2024, our contractual obligations were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than ​ 1-2 ​ 2-3 ​ 3-4 ​ 4-5 ​ ​ Contractual obligations Total 1 year years years years years Thereafter Future lease payments (1) ​ $ 462,572 ​ $ 258,820 ​ $ 80,743 ​ $ 63,193 ​ $ 10,468 ​ $ 10,966 ​ $ 38,382 Total ​ $ 462,572 ​ $ 258,820 ​ $ 80,743 ​ $ 63,193 ​ $ 10,468 ​ $ 10,966 ​ $ 38,382 (1) We lease office space and warehouse space for the VIEs and the subsidiaries in various major cities in the PRC.
Contractual obligations As of March 31, 2025, our contractual obligations were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than ​ 1-2 ​ 2-3 ​ 3-4 ​ 4-5 ​ ​ Contractual obligations Total 1 year years years years years Thereafter Future lease payments (1) ​ $ 559,519 ​ $ 286,416 ​ $ 147,447 ​ $ 76,551 ​ $ 10,912 ​ $ 10,912 ​ $ 27,281 Short-term bank loan (2) ​ ​ 137,781 ​ ​ 137,781 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total ​ $ 697,300 ​ $ 424,197 ​ $ 147,447 ​ $ 76,551 ​ $ 10,912 ​ $ 10,912 ​ $ 27,281 (1) We lease office space and warehouse space for the VIEs and the subsidiaries in various major cities in the PRC.
In addition, continued turbulence in the international markets may adversely affect our ability to access capital markets to meet liquidity needs. 97 Table of Contents A.
In addition, continued turbulence in the international markets may adversely affect our ability to access capital markets to meet liquidity needs. 106 Table of Contents Cash Transfers within our Corporate Structure Eshallgo Inc is a holding company with no operations of its own. We conduct our operations in China primarily through the VIEs in China.
The decrease was primarily attributable to the following reasons: (i) the cost of sale of office equipment decreased by $1,892,303, or 17.0%, to $9,222,475 for the year ended March 31, 2023 from $11,114,778 for the year ended March 31, 2022.
The decrease in our costs was primarily attributable to the following reasons: ● Our cost of revenues from sale of equipment decreased by $1,952,100, or 16.7 %, to $9,765,266 for the year ended March 31, 2025 from $11,717,366 for the year ended March 31, 2024.
The decrease was primarily attributable to the following reasons: (i) the revenue from full coverage and repair service decreased by $157,402, or 31.0%, to $350,286 for the year ended March 31, 2023 from $507,688 for the year ended March 31, 2022.
The decrease was primarily attributable to the following reasons: (i) the revenue from full coverage and repair service decreased by $104,724, or 33.0 %, to $212,917 for the year ended March 31, 2025 from $317,641 for the year ended March 31, 2024; and (ii) the revenue from other service decreased by $777,698, or 43.9 %, to $994,770 for the year ended March 31, 2025 from $1,772,468 for the year ended March 31, 2024.
Net Income As a result of the foregoing, we reported a net income of $1,269,926 for the year ended March 31, 2023, representing a $1,627,638, or 56.2% decrease from a net income of $2,897,564 for the fiscal year ended March 31, 2022.
Net Income (Loss) As a result of the foregoing, we reported a net loss of $10,900,606 for the year ended March 31, 2025, representing a $11,745,937, or 1,389.5% decrease from a net income of $845,331 for the year ended March 31, 2024.
Our total costs of revenues decreased by $2,527,100, or 15.5%, to $13,726,491 for the year ended March 31, 2023 from $16,253,591 for the year ended March 31, 2022.
Our total costs of revenues decreased by $2,022,184, or 16.3%, to $10,370,298 for the year ended March 31, 2025 from $12,392,482 for the year ended March 31, 2024.
The decrease in gross profit consists: (i) the gross profit for sales of office equipment decreased by $397,897, or 23.4%, to $1,302,205 for the year ended March 31, 2023 from $1,700,102 for the year ended March 31, 2022; and (ii) the gross profit for sales of consumable material, parts and others decreased by $447,659, or 36.6%, to $775,211 for the year ended March 31, 2023 from $1,222,870 for the year ended March 31, 2022.
The decrease in gross profit consists: (i) the gross profit for sales of office equipment decreased by $529,278, or 45.6 %, to $630,195 for the year ended March 31, 202 5 from $1,159,473 for the year ended March 31, 2024; and (ii) the gross profit for sales of consumable material, parts and others decreased by $125,6 20 , or 16.7 %, to $625,05 0 for the year ended March 31, 202 5 from $750,670 for the year ended March 31, 2024.
The decrease was mainly due to the impact of 2022 Resurgence, and we paid less bonus and incentives during the suspension period of our business. As a percentage of revenues, research and development expenses were 1.4% and 1.3% of our revenue for the years ended March 31, 2023 and 2022, respectively.
As a percentage of revenues, research and development expenses were 0.1% and 1.3% of our revenue for the years ended March 31, 2025 and 2024, respectively. Other Income (Expenses), Net Our net other expenses was $173,886 for the year ended March 31, 2025 as compared to net other income of $14,198 for the year ended March 31, 2024.
Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed in this report reflect the more significant judgments and estimates used in preparation of our consolidated financial statements.
Some of our accounting policies require higher degrees of judgment than others in their application.
The decrease was primarily attributable to the following reasons: (i) sales of office equipment decreased by $2,290,200 or 17.9%, to $10,524,680 for the year ended March 31, 2023 from $12,814,880 for the year ended March 31, 2022. The decrease was mainly due to the 2022 Resurgence in China as mentioned above.
The decrease was primarily attributable to the following reasons: (i) sales of office equipment decreased by $1,965,432, or 20.3 %, to $7,716,552 for the year ended March 31, 2025 from $9,681,984 for the year ended March 31, 2024.
The following table sets forth summary of our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ March 31, ​ 2024 2023 2022 Net cash provided by operating activities ​ $ 2,220,418 ​ $ 783,940 ​ $ 216,455 Net cash provided by (used in) investing activities ​ (1,616,941) ​ 1,162,959 ​ (2,263,259) Net cash provided by financing activities ​ 50,431 ​ 520,893 ​ 699,371 Effect of exchange rate change on cash and cash equivalents ​ (241,643) ​ (185,351) ​ 137,380 Net increase (decrease) in cash and cash equivalents ​ 412,265 ​ 2,282,441 ​ (1,210,053) Cash and cash equivalents, beginning of year ​ 4,949,836 ​ 2,667,395 ​ 3,877,448 Cash and cash equivalents, end of year ​ $ 5,362,101 ​ $ 4,949,836 ​ $ 2,667,395 ​ 110 Table of Contents Operating Activities Net cash provided by operating activities was $2,220,418 for the year ended March 31, 2024, primarily consisting of the following: ● Net income of $845,331 for the year ended March 31, 2024 . ● A decrease in accounts receivable due from third parties and related parties of $1,038,007.
While facing uncertainties in regards to the size and timing of capital raises, we are confident that we can continue to meet operational needs mainly by utilizing cash flows generated from our operating activities and shareholder working capital funding, as necessary. 121 Table of Contents The following table sets forth summary of our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ March 31, ​ 2025 2024 2023 Net cash provided by (used in) operating activities ​ $ (1,283,432) ​ $ 2,220,418 ​ $ 783,940 Net cash provided by (used in) investing activities ​ (5,163,214) ​ (1,616,941) ​ 1,162,959 Net cash provided by financing activities ​ 8,678,984 ​ 50,431 ​ 520,893 Effect of exchange rate change on cash and cash equivalents ​ 5,999 ​ (241,643) ​ (185,351) Net increase in cash, cash equivalents and restricted cash ​ 2,238,337 ​ 412,265 ​ 2,282,441 Cash, cash equivalents and restricted cash, beginning of year ​ 5,362,101 ​ 4,949,836 ​ 2,667,395 Cash, cash equivalents and restricted cash, end of year ​ $ 7,600,438 ​ $ 5,362,101 ​ $ 4,949,836 ​ Operating Activities Net cash used in operating activities was $1,283,432 for the year ended March 31, 2025, primarily derived from a net loss of $10,900,606 for the year, reconciled by issuance of Class A Ordinary Share for services of $3,643,333, stock-based compensation of $2,672,450, allowance for credit losses and doubtful accounts of $1,758,927, loss on derivative liabilities of $356,134 and amortization of debt issuance cost of $230,700, and net changes in our operating assets and liabilities, which mainly included an increase in deferred revenue of $405,770, and increase in advance to third-party and related party vendors of $413,078.
The decrease in cost of revenue was largely in line with the decrease in revenue from lease of equipment. 106 Table of Contents Gross Profit Our total gross profit decreased by $2,922,919, or 38.3%, to $4,698,821 for the year ended March 31, 2023 from $7,621,740 for the year ended March 31, 2022.
Cost of revenue from lease of equipment decreased despite the increase in revenue from lease of equipment, as discussed in greater details below. Gross Profit Our total gross profit decreased by $1,469,661, or 32.1%, to $3,101,814 for the year ended March 31, 2025 from $4,571,475 for the year ended March 31, 2024.
The decrease in gross profit consists: (i) the gross profit from full coverage and repair services decreased by $152,423, or 32.9%, to $310,597 in the year ended March 31, 2023 from $463,020 in the year ended March 31, 2022; and (ii) the gross profit from other services decreased by $1,682,509, or 49.7%, to $1,703,369 in the year ended March 31, 2023 from $3,385,878 in the year ended March 31, 2022.
The decrease in gross profit consists: (i) the gross profit from full coverage and repair services decreased by $103,783, or 35.6 %, to $187,939 in the year ended March 31, 202 5 from $291,722 in the year ended March 31, 2024; and (ii) the gross profit from other services decreased by $776,041, or 47.0 %, to $875,578 in the year ended March 31, 202 5 from $1,651,619 in the year ended March 31, 2024.
The decrease in gross profit was primarily due to the decrease in revenue from maintenance service.
The decrease in gross profit was primarily due to the decrease in revenue from maintenance service. The gross margin of maintenance service de creased by 4.9 percentage points, from 93.0% for the year ended March 31, 2024 to 88.1 % for the year ended March 31, 202 5 .
Net cash provided by operating activities was $216,455 for the year ended March 31, 2022, primarily consisting of the following: ● Net income of $2,897,564 for the fiscal year, reconciled by change in depreciation and amortization of $295,040, allowance for credit loss of $266,945 and amortization right-of-use assets of $257,929. ● An increase in accounts receivable due from third parties and related parties of $2,410,293.
Net cash provided by operating activities was $2,220,418 for the year ended March 31, 2024, primarily derived from a net income of $845,331 for the year, and net changes in our operating assets and liabilities, which mainly included (i) a decrease in accounts receivable due from third parties and related parties of $1,038,007.
The decrease in cost of revenue from sales of office equipment was in line with the decrease in revenue from sales of office equipment; and (ii) the cost of revenues from sale of consumable materials, parts and others decreased by $436,590, or 10.3%, to $3,817,954 for the year ended March 31, 2023 from $4,254,544 for the year ended March 31, 2022, due to the decrease in sales of consumable materials and parts for the year ended March 31, 2023. ● Our cost of revenues from maintenance service decreased by $63,418, or 27.1%, to $170,726 for the year ended March 31, 2023 from $234,144 for the year ended March 31, 2022, primarily due to the following reasons: (i) the cost of revenues from full coverage and repair service decreased by $4,979, or 11.1%, to $39,689 for the year ended March 31, 2023 from $44,668 for the year ended March 31, 2022; and (ii) the cost of revenues from other service decreased by $58,439, or 30.8%, to $131,037 for the year ended March 31, 2023 from $189,476 for the year ended March 31, 2022. ● Our cost of revenues from lease of equipment decreased by $134,789, or 20.7%, to $515,336 for the year ended March 31, 2023 from $650,125 for the year ended March 31, 2022.
The percentage decrease in cost of revenue from sale of equipment was less than the percentage decrease in revenue from sale of equipment, as discussed in greater details below. ● Our cost of revenues from maintenance service decreased by $ 2,598 , or 1.8 %, to $144,170 for the year ended March 31, 2025 from $146,768 for the year ended March 31, 2024, primarily due to the following reasons: (i) the cost of revenues from full coverage and repair service decreased by $ 941 , or 3.6 %, to $24,978 for the year ended March 31, 2025 from $25,919 for the year ended March 31, 2024; and (ii) the cost of revenues from other service decreased by $1,657, or 1.4 %, to $119,192 for the year ended March 31, 2025 from $120,849 for the year ended March 31, 2024.
The decrease was mainly due to less sales of supporting consumable materials and parts to our customers caused by decrease in sales of equipment for the year ended March 31, 2023. 105 Table of Contents ● Our revenue from maintenance service decreased by $1,898,350, or 46.5%, to $2,184,692 for the year ended March 31, 2023 from $4,083,042 for the year ended March 31, 2022.
The decrease was mainly due to less sales of supporting consumable materials to our customers for the year ended March 31, 2025 as we received fewer one-off orders from our customers.
General and administrative expenses Our general and administrative expenses primarily consist of employee salaries, welfare and insurance expenses, consultant and professional service fees incurred for company reorganization and going public, depreciation and amortization expenses, rental expenses, office and utility expenses, bad debt expenses, and business travel and meals expenses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended March 31, ​ ​ 2023 ​ 2022 ​ Variance ​ Amount % of Amount % of Amount % of General and Administrative Expenses ​ ​ ​ ​ Salary, employee insurance and welfare expenses ​ $ 1,159,146 54.8 % $ 1,471,392 46.3 % $ (312,246) (21.2) % Allowance for (net recovery of) credit losses ​ (117,510) (5.6) % 260,671 8.2 % (378,181) (145.1) % Consulting and professional service fees ​ 556,703 26.3 % 740,556 23.3 % (183,853) (24.8) % Office, utility and other expenses ​ 88,036 4.2 % 166,887 5.3 % (78,851) (47.2) % Travel and entertainment expense ​ 57,158 2.7 % 111,903 3.5 % (54,745) (48.9) % Depreciation and amortization ​ 112,154 5.3 % 145,349 4.6 % (33,195) (22.8) % Rent expense ​ 260,561 12.3 % 279,841 8.8 % (19,280) (6.9) % Total general and administrative expenses ​ $ 2,116,248 100.0 % $ 3,176,599 100.0 % $ (1,060,351) (33.4) % ​ Our general and administrative expenses decreased by $1,060,351, or 33.4%, to $2,116,248 for the year ended March 31, 2023 from $3,176,599 for the year ended March 31, 2022, primarily attributable to (i) a decrease in our salary and welfare expenses paid to our employees by $312,246, or 21.2%, to $1,159,146 for the year ended March 31, 2023 from $1,471,392 for the year ended March 31, 2022.
General and administrative expenses Our general and administrative expenses primarily consist of stock-based compensation expense, employee salaries, welfare and insurance expenses, consultant and professional service fees incurred for company’s going public, depreciation and amortization expenses, rental expenses, office and utility expenses, bad debt expenses, and business travel and meals expenses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended March 31, ​ ​ 2025 ​ 2024 ​ Variance ​ Amount % of Amount % of Amount % of General and Administrative Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock-based compensation expense ​ $ 4,059,500 41.6 % $ — — ​ $ 4,059,500 100.0 % Allowance for (net recovery of) credit losses/doubtful accounts ​ 1,758,927 18.0 % (175,819) (7.0) % 1,934,746 (1,100.4) % Salary, employee insurance and welfare expenses ​ 1,802,766 18.5 % 1,180,283 47.0 % 622,483 52.7 % Consulting and professional service fees ​ 1,228,798 12.6 % 848,343 33.8 % 380,455 44.8 % Travel and entertainment expense ​ 220,192 2.3 % 56,920 2.3 % 163,272 286.8 % Office, utility and other expenses ​ 681,693 7.0 % 602,839 23.9 % 78,854 13.1 % Total general and administrative expenses ​ $ 9,751,876 100.0 % $ 2,512,566 100.0 % $ 7,239,310 288.1 % ​ Our general and administrative expenses increased by $7,239,310, or 288.1%, to $9,751,876 for the year ended March 31, 2025 from $2,512,566 for the year ended March 31, 2024, primarily attributable to (i) an increase in our stock-based compensation expense by $4,059,500, or 100.0%, for the year ended March 31, 2025 as compared to the same period last year, as we adopted equity incentive plan to award our consultants or key employees for their best efforts in our successful initial public offering; (ii) an increase in allowance for credit losses and doubtful accounts by $1,934,746, or 1,100.4%, for the year ended March 31, 2025 as compared to the same period last year.
Removed
Net Income Attributable to Eshallgo Inc As a result of the foregoing, we reported a net income attributable to Eshallgo of $8,652 for the year ended March 31, 2024, representing a $469,037, or 98.2% decrease from a net income of $477,689 for the year ended March 31, 2023. 103 Table of Contents Comparison of Results of Operations for the Fiscal Years Ended March 31, 2023 and 2022 The following table summarizes our operating results as reflected in our statements of income during the fiscal years ended March 31, 2023 and 2022, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such periods. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended March 31, ​ ​ 2023 ​ 2022 ​ Variance ​ ​ ​ ​ ​ % of ​ ​ ​ % of ​ ​ ​ ​ ​ ​ Amount revenue Amount revenue Amount % of REVENUE ​ $ 18,425,312 ​ 100.0 % $ 23,875,331 ​ 100.0 % $ (5,450,019) ​ (22.8) % COST OF REVENUE ​ 13,726,491 74.5 % 16,253,591 68.1 % (2,527,100) (15.5) % GROSS PROFIT ​ 4,698,821 25.5 % 7,621,740 31.9 % (2,922,919) (38.3) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ Selling expenses ​ 1,014,513 5.5 % 1,188,585 5.0 % (174,072) (14.6) % General and administrative expenses ​ 2,116,248 11.5 % 3,176,599 13.3 % (1,060,351) (33.4) % Research and development expenses ​ 250,344 1.4 % 302,479 1.3 % (52,135) (17.2) % Total operating expenses ​ 3,381,105 18.4 % 4,667,663 19.6 % (1,286,558) (27.6) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income from operations ​ 1,317,716 7.2 % 2,954,077 12.4 % (1,636,361) (55.4) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income ​ 60,039 0.3 % 107,074 0.4 % (47,035) (43.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income tax provision ​ 1,377,755 7.5 % 3,061,151 12.8 % (1,683,396) (55.0) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ 107,829 0.6 % 163,587 0.7 % (55,758) (34.1) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ 1,269,926 6.9 % 2,897,564 12.1 % (1,627,638) (56.2) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: net income attributable to non-controlling interest ​ 792,237 4.3 % 1,069,204 4.5 % (276,967) (25.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCOME ATTRIBUTABLE TO ESHALLGO INC ​ $ 477,689 2.6 % $ 1,828,360 7.7 % $ (1,350,671) (73.9) % ​ ​ 104 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended March 31, ​ ​ 2023 ​ 2022 ​ Variance ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ Amount revenue Amount revenue Amount % of Revenue ​ ​ ​ ​ Sale of equipment ​ $ 15,117,845 82.0 % $ 18,292,294 76.6 % $ (3,174,449) (17.4) % Maintenance service ​ 2,184,692 11.9 % 4,083,042 17.1 % (1,898,350) (46.5) % Lease of equipment ​ 1,109,840 6.0 % 1,486,633 6.2 % (376,793) (25.3) % Finance income from sales type leases ​ 12,935 0.1 % 13,362 0.1 % (427) (3.2) % Total revenue ​ 18,425,312 100.0 % 23,875,331 100.0 % (5,450,019) (22.8) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of Revenue ​ ​ ​ ​ Cost of sale of equipment ​ 13,040,429 86.3 % 15,369,322 84.0 % (2,328,893) (15.2) % Costs of maintenance service ​ 170,726 7.8 % 234,144 5.7 % (63,418) (27.1) % Costs of lease of equipment ​ 515,336 46.4 % 650,125 43.7 % (134,789) (20.7) % Cost of finance income ​ — — ​ — — ​ — — ​ Total cost of revenue ​ 13,726,491 74.5 % 16,253,591 68.1 % (2,527,100) (15.5) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Profit ​ ​ ​ ​ Sale of equipment ​ 2,077,416 13.7 % 2,922,972 16.0 % (845,556) (28.9) % Maintenance service ​ 2,013,966 92.2 % 3,848,898 94.3 % (1,834,932) (47.7) % Lease of equipment ​ 594,504 53.6 % 836,508 56.3 % (242,004) (28.9) % Finance income ​ 12,935 100.0 % 13,362 100.0 % (427) (3.2) % Total gross profit ​ $ 4,698,821 25.5 % $ 7,621,740 31.9 % $ (2,922,919) (38.3) % ​ Revenue Our total revenues decreased by $5,450,019, or 22.8%, to $18,425,312 for the year ended March 31, 2023 from $23,875,331 for the year ended March 31, 2022.
Added
We may rely on dividends to be paid by the VIEs and their subsidiaries to fund our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders, to service any debt we may incur and to pay our operating expenses.
Removed
The decrease in our revenues was primarily attributable to the following reasons: ● The revenues from sale of equipment decreased by $3,174,449, or 17.4%, to $15,117,845 for the year ended March 31, 2023 from $18,292,294 for the year ended March 31, 2022.
Added
If the VIEs and their subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.
Removed
Our largest operating companies are located in Shanghai, which temporarily suspended all their business from April 1 2022 to the middle of June 2022 due to the city lockdowns.
Added
Eshallgo Inc is permitted under the Cayman Islands laws to provide funding to our subsidiaries in Hong Kong and PRC through loans or capital contributions without restrictions on the amount of the funds, subject to satisfaction of applicable government registration, approval and filing requirements.
Removed
In addition, our other operating companies in various cities such as Qinghai, Xi’an, Shenzhen and Shijiazhuang etc., also had to temporarily suspend their business operation due to the local outbreak, therefore, sales of office equipment decreased for the year ended March 31, 2023; and (ii) sales of consumable materials, parts and others decreased by $884,249, or 16.1%, to $4,593,165 for the year ended March 31, 2023 from $5,477,414 for the year ended March 31, 2022.
Added
Eshallgo HK is also permitted under the laws of Hong Kong to provide funding to EShallGo through dividend distribution without restrictions on the amount of the funds. As of the date of this annual report, there has been no distribution of dividends or assets among the holding company or the subsidiaries, or to the VIEs or investors.
Removed
The decrease was in line with the decreased sales and leases of equipment, which caused less new orders received for our full coverage and repair service as the business operation of our customers was adversely affected by the 2022 Resurgence in China as mentioned above; and (ii) the revenue from other service decreased by $1,740,948, or 48.7%, to $1,834,406 for the year ended March 31, 2023 from $3,575,354 for the year ended March 31, 2022.
Added
We currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business, or settle amounts owed under the VIE agreements, if any, and do not anticipate declaring or paying any dividends in the foreseeable future.
Removed
During the year ended March 31, 2022, we promoted our ERP service to our customers, and we have successfully signed ERP service contracts with three customers. Meanwhile, we also generated services revenue from providing live streaming service through the video conference system during the year ended March 31, 2022.
Added
Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments.
Removed
Due to the impact of 2022 Resurgence as mentioned above, less above-mentioned services revenue was generated during the year ended March 31, 2023. ● Our revenue from leasing of equipment decreased by $376,793, or 25.3%, to $1,109,840 for the year ended March 31, 2023 from $1,486,633 for the year ended March 31, 2022.
Added
Subject to the Companies Act (As Revised) of the Cayman Islands, which we refer to as the “Companies Act” below, and our memorandum and articles of association, as amended and restated from time to time, our board of directors has discretion as to whether to distribute dividends.
Removed
The decrease was mainly due to the demand of leasing of equipment was affected as the business operation of many companies was adversely interrupted by the 2022 Resurgence.
Added
In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors.
Removed
Meanwhile, many our customers requested for certain lease concessions as those leased equipment was left unused during the temporary closure period, which led to our revenue from leasing of equipment decreased in the year ended March 31, 2023 as compared to the same period last year. ● Finance income is generated from sales type leases.
Added
Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profit or share premium account of the Company, provided that in no circumstances may a dividend be paid if this would result in, immediately following the date on which the dividend is proposed to be paid, the company being unable to pay its debts as they fall due in the ordinary course of business.
Removed
The decrease was mainly attributable to a higher proportionate of sales were contributed by the sales of lower margin consumable materials, parts and others. ● The gross profit of maintenance service decreased by $1,834,932, or 47.7%, to $2,013,966 for the year ended March 31, 2023 from $3,848,898 for the year ended March 31, 2022.
Added
Under the current practice of the Inland Revenue Department of Hong Kong, no tax is levied in Hong Kong in respect of dividends paid by us.

… 68 more changes not shown on this page.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

15 edited+2 added−0 removed81 unchanged
One of these rules, Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, provides an exemption to the insider trading rules in the form of an affirmative defense.
One of these rules, Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, provides an exemption to the insider trading rules in the form of an affirmative defense.
Rule 10b5-1 recognizes the creation of formal programs under which executives and other insiders may sell the securities of publicly traded companies on a regular basis pursuant to written plans that are entered into at a time when the plan participants are not aware of material non-public information and that otherwise comply with the requirements of Rule 10b5-1.
Rule 10b5-1 recognizes the creation of formal programs under which executives and other insiders may sell the securities of publicly traded companies on a regular basis pursuant to written plans that are entered into at a time when the plan participants are not aware of material non-public information and that otherwise comply with the requirements of Rule 10b5-1.
In particular, the Nominating Committee is focused on relevant subject matter expertise, depth of knowledge in key areas that are important to us, and diversity of thought, background, perspective and experience so as to facilitate robust debate and broad thinking on strategies and tactics pursued by us. ​ 120 Table of Contents The following table provides certain information regarding the diversity of our Board of Directors as of the date of this annual report. ​ ​ Board Diversity Matrix (As of the date of this annual report) ​ ​ Country of Principal Executive Offices: ​ China Foreign Private Issuer ​ Yes Disclosure Prohibited Under Home Country Law ​ No Total Number of Directors ​ 5 ​ ​ ​ ​ Female Male Non- Binary Did Not Disclose Gender Part I: Gender Identity ​ ​ ​ ​ ​ ​ ​ ​ Directors ​ 1 ​ 4 ​ 0 ​ 0 ​ ​ ​ ​ ​ ​ ​ ​ ​ Part II: Demographic Background ​ ​ ​ ​ ​ ​ ​ ​ Underrepresented Individual in Home Country Jurisdiction ​ — LGBTQ+ ​ — ​ 6.D.
In particular, the Nominating Committee is focused on relevant subject matter expertise, depth of knowledge in key areas that are important to us, and diversity of thought, background, perspective and experience so as to facilitate robust debate and broad thinking on strategies and tactics pursued by us. ​ 131 Table of Contents The following table provides certain information regarding the diversity of our Board of Directors as of the date of this annual report. ​ ​ Board Diversity Matrix (As of the date of this annual report) ​ ​ Country of Principal Executive Offices: ​ China Foreign Private Issuer ​ Yes Disclosure Prohibited Under Home Country Law ​ No Total Number of Directors ​ 5 ​ ​ ​ ​ Female Male Non- Binary Did Not Disclose Gender Part I: Gender Identity ​ ​ ​ ​ ​ ​ ​ ​ Directors ​ 1 ​ 4 ​ 0 ​ 0 ​ ​ ​ ​ ​ ​ ​ ​ ​ Part II: Demographic Background ​ ​ ​ ​ ​ ​ ​ ​ Underrepresented Individual in Home Country Jurisdiction ​ — LGBTQ+ ​ — ​ 6.D.
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. 118 Table of Contents Compensation Committee.
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. 129 Table of Contents Compensation Committee.
Share Ownership The following tables sets forth information regarding the beneficial ownership of our ordinary shares as of the date hereof by: ● each person known to us to beneficially own more than 5% of our ordinary shares; ● each of our officers and directors; and ● all of our officers and directors as a group. 121 Table of Contents Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to securities.
Share Ownership The following tables sets forth information regarding the beneficial ownership of our ordinary shares as of the date hereof by: ● each person known to us to beneficially own more than 5% of our ordinary shares; ● each of our officers and directors; and ● all of our officers and directors as a group. 132 Table of Contents Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to securities.
Ms. Luo received her B.A. in Communication Studies and Journalism Multimedia Arts, and her M.S. in Journalism Multimedia Technology from Duquesne University in Pittsburgh, Pennsylvania. Family Relationships There are no family relationships among any of our directors, director nominees or executive officers as defined in Item 401 of Regulation S-K. 116 Table of Contents 6.B.
Ms. Luo received her B.A. in Communication Studies and Journalism Multimedia Arts, and her M.S. in Journalism Multimedia Technology from Duquesne University in Pittsburgh, Pennsylvania. Family Relationships There are no family relationships among any of our directors, director nominees or executive officers as defined in Item 401 of Regulation S-K. 127 Table of Contents 6.B.
Wu had extensive experience with Hong Kong economic affairs while he worked at Hong Kong and Macao Affairs Office of the Ministry of Foreign Affairs of PRC from 1996 to 2006. Mr. Wu acquired his bachelor’s degree in English from Jilin University in 1996. 115 Table of Contents Weibo Weng, Independent Director and Nominating Committee Chair Mr.
Wu had extensive experience with Hong Kong economic affairs while he worked at Hong Kong and Macao Affairs Office of the Ministry of Foreign Affairs of PRC from 1996 to 2006. Mr. Wu acquired his bachelor’s degree in English from Jilin University in 1996. 126 Table of Contents Weibo Weng, Independent Director and Nominating Committee Chair Mr.
A copy of the Compensation Recovery Policy has been filed herewith as Exhibit 97.1. 117 Table of Contents 6.C. Board Practices Board of Directors and Board Committees Our board of directors consists of five directors, three of whom are independent as such term is defined by the Nasdaq Capital Market.
A copy of the Compensation Recovery Policy has been filed herewith as Exhibit 97.1. 128 Table of Contents 6.C. Board Practices Board of Directors and Board Committees Our board of directors consists of five directors, three of whom are independent as such term is defined by the Nasdaq Capital Market.
Xiaohui Wu is the controlling person of EXTRAORDINARY START LIMITED and has sole voting and dispositive power over shares beneficially owned by EXTRAORDINARY START LIMITED. 122 Table of Contents (4) Represents 2,944,000 Class A Ordinary Shares held by MASSIVE HONOR LIMITED, a British Virgin Islands company.
Xiaohui Wu is the controlling person of EXTRAORDINARY START LIMITED and has sole voting and dispositive power over shares beneficially owned by EXTRAORDINARY START LIMITED. 133 Table of Contents (4) Represents 2,944,000 Class A Ordinary Shares held by MASSIVE HONOR LIMITED, a British Virgin Islands company.
Insider Trading Policy The Board of Directors also adopted an insider trading policy that allows insiders to sell securities of the Company pursuant to pre-arranged trading plans. 119 Table of Contents This insider trading policy was put into place because effective October 23, 2000, the SEC adopted rules related to insider trading.
Insider Trading Policy The Board of Directors also adopted an insider trading policy that allows insiders to sell securities of the Company pursuant to pre-arranged trading plans. 130 Table of Contents This insider trading policy was put into place because effective October 23, 2000, the SEC adopted rules related to insider trading.
Under the “rule of three,” if voting and dispositive decisions regarding an entity’s securities are made by three or more individuals, and voting and dispositive decisions require approval of a majority of those individuals, then none of the individuals is deemed a beneficial owner of the entity’s securities. ​ ​
Under the “rule of three,” if voting and dispositive decisions regarding an entity’s securities are made by three or more individuals, and voting and dispositive decisions require approval of a majority of those individuals, then none of the individuals is deemed a beneficial owner of the entity’s securities. 6.F.
Summary Compensation Table The following table sets forth certain information with respect to compensation for the years ended March 31, 2024 and 2023, earned by or paid to our chief executive officer and principal executive officer, our principal financial officer, and our other most highly compensated executive officers whose total compensation exceeded US$100,000 (the “named executive officers”). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Share All Other ​ ​ ​ ​ Fiscal ​ Salary ​ Bonus ​ Awards ​ Compensation ​ Total Name and Principal Position ​ Year ​ ($) ​ ($) ​ ($) ​ ($) ​ ($) Zhidan Mao 2024 ​ $ 30,183 — — — ​ $ 30,183 Chairman 2023 ​ $ 31,771 — — — ​ $ 31,771 Qiwei Miao 2024 ​ $ 33,552 — — — ​ $ 33,552 Chief Executive Officer 2023 ​ $ 32,793 — — — ​ $ 32,793 Chun Lyu 2024 ​ $ 16,776 — — — ​ $ 16,776 Chief Financial Officer 2023 ​ $ 15,768 — — — ​ $ 15,768 ​ Employment Agreements Our employment agreements with our officers generally provide for employment for a specific term and pay annual salary, health insurance, pension insurance, and paid vacation and family leave time.
Summary Compensation Table The following table sets forth certain information with respect to compensation for the years ended March 31, 2025 and 2024, earned by or paid to our chief executive officer and principal executive officer, our principal financial officer, and our other most highly compensated executive officers whose total compensation exceeded US$100,000 (the “named executive officers”). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Share All Other ​ ​ ​ ​ Fiscal ​ Salary ​ Bonus ​ Awards ​ Compensation ​ Total Name and Principal Position ​ Year ​ ($) ​ ($) ​ ($) ​ ($) ​ ($) Zhidan Mao 2025 ​ $ 201,948 — — — ​ $ 201,948 Chairman 2024 ​ $ 30,183 — — — ​ $ 30,183 Qiwei Miao 2025 ​ $ 188,244 — — — ​ $ 188,244 Chief Executive Officer 2024 ​ $ 33,552 — — — ​ $ 33,552 Chun Lyu 2025 ​ $ 64,399 10,000 — — ​ $ 74,399 Chief Financial Officer 2024 ​ $ 16,776 — — — ​ $ 16,776 ​ Employment Agreements Our employment agreements with our officers generally provide for employment for a specific term and pay annual salary, health insurance, pension insurance, and paid vacation and family leave time.
Employees As of March 31, 2024, we have a total of 128 employees in the following departments: ​ ​ ​ ​ As of ​ ​ March 31, ​ ​ 2024 Administration 23 Research and Development 6 Technicians 56 Business Operations 43 Total 128 ​ Under PRC regulations, Junzhang Shanghai, Junzhang Beijing and their respective subsidiaries are required to participate in various statutory employee benefit plans, including social insurance funds, such as a pension contribution plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing provident fund.
Employees As of March 31, 2025, we have a total of 147 employees in the following departments: ​ ​ ​ ​ As of ​ ​ March 31, ​ ​ 2025 Administration 24 Research and Development 2 Technicians 48 Business Operations 73 Total 147 ​ Under PRC regulations, Junzhang Shanghai, Junzhang Beijing and their respective subsidiaries are required to participate in various statutory employee benefit plans, including social insurance funds, such as a pension contribution plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing provident fund.
The calculations in the table below are based on 15,879,000 Class A ordinary shares and 5,856,000 Class B ordinary shares issued and outstanding as of the date hereof. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Combined ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Voting ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Power of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Combined ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Voting ​ and ​ ​ ​ Amount of ​ ​ ​ Amount of ​ ​ ​ Power ​ Class B ​ ​ ​ Beneficial ​ Percentage ​ Beneficial ​ Percentage ​ of Class A ​ Ordinary ​ ​ ​ Ownership ​ Ownership ​ Ownership ​ Ownership ​ and ​ Shares as a ​ Named Executive Officers and Directors (Class A) (Class A) (Class B) (Class B) Class B Percentage (3) ​ Directors and Named Executive Officers: ​ ​ ​ ​ ​ ​ Zhidan Mao, Chairman (1) — 0 % 3,619,008 61.80 % 36,190,080 48.62 % Qiwei Miao, Chief Executive Officer and Director (2) ​ ​ ​ ​ 2,236,992 38.20 % 22,369,920 30.05 % Chun Lyu, Chief Financial Officer — 0 % — 0 % — 0 % Xiaohui Wu, Director (3) 800,000 5.04 % — 0 % — 1.07 % Weimin Xu, Independent Director — 0 % — 0 % — 0 % Weibo Weng, Independent Director — 0 % — 0 % — 0 % Kewa Luo, Independent Director — 0 % — 0 % — 0 % All directors and executive officers as a group (6 persons) 800,000 5.04 % 5,856,000 100 % 58,560,000 79.74 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 5% Beneficial Owners: ​ JUNZHANG DIGTAL LIMITED (1) — 0 % 3,619,008 61.80 % 36,190,080 48.62 % MAGIC IDEAL LIMITED (2) — 0 % 2,236,992 38.20 % 22,369,920 30.05 % MASSIVE HONOR LIMITED (4) 2,944,000 18.54 % — 0 % 2,944,000 3.95 % IMPRESSIVE SHINE LIMITED (5) 2,684,000 16.90 % — 0 % 2,684,000 3.61 % (1) Through JUNZHANG DIGTAL LIMITED.
The calculations in the table below are based on 23,838,163 Class A ordinary shares and 5,856,000 Class B ordinary shares issued and outstanding as of the date hereof. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Combined ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Voting ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Power of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Combined ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Voting ​ and ​ ​ ​ Amount of ​ ​ ​ Amount of ​ ​ ​ Power ​ Class B ​ ​ ​ Beneficial ​ Percentage ​ Beneficial ​ Percentage ​ of Class A ​ Ordinary ​ ​ ​ Ownership ​ Ownership ​ Ownership ​ Ownership ​ and ​ Shares as a ​ Named Executive Officers and Directors (Class A) (Class A) (Class B) (Class B) Class B Percentage (3) ​ Directors and Named Executive Officers: ​ ​ ​ ​ ​ ​ Zhidan Mao, Chairman (1) — 0 % 3,619,008 61.80 % 36,190,080 43.92 % Qiwei Miao, Chief Executive Officer and Director (2) ​ ​ ​ ​ 2,236,992 38.20 % 22,369,920 27.15 % Chun Lyu, Chief Financial Officer — 0 % — 0 % — 0 % Xiaohui Wu, Director (3) 800,000 3.38 % — 0 % — 0.97 % Weimin Xu, Independent Director — 0 % — 0 % — 0 % Weibo Weng, Independent Director — 0 % — 0 % — 0 % Kewa Luo, Independent Director — 0 % — 0 % — 0 % All directors and executive officers as a group (6 persons) 800,000 3.38 % 5,856,000 100 % 58,560,000 72.04 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 5% Beneficial Owners: ​ JUNZHANG DIGTAL LIMITED (1) — 0 % 3,619,008 61.80 % 36,190,080 43.92 % MAGIC IDEAL LIMITED (2) — 0 % 2,236,992 38.20 % 22,369,920 27.15 % MASSIVE HONOR LIMITED (4) 2,944,000 12.35 % — 0 % 2,944,000 3.57 % IMPRESSIVE SHINE LIMITED (5) 2,684,000 11.26 % — 0 % 2,684,000 3.26 % (1) Through JUNZHANG DIGTAL LIMITED.
Name Age Position(s) Zhidan Mao ​ 60 ​ Chairman Qiwei Miao ​ 46 ​ Chief Executive Officer and Director Chun Lyu ​ 40 ​ Chief Financial Officer Xiaohui Wu ​ 50 ​ President and Director Weimin Xu ​ 59 ​ Independent Director, Audit and Compensation Committee Chair Weibo Weng ​ 64 ​ Independent Director and Nominating Committee Chair Kewa Luo ​ 40 ​ Independent Director ​ 114 Table of Contents Zhidan Mao , Chairman Mr.
Name Age Position(s) Zhidan Mao ​ 61 ​ Chairman Qiwei Miao ​ 48 ​ Chief Executive Officer and Director Chun Lyu ​ 42 ​ Chief Financial Officer Xiaohui Wu ​ 52 ​ President and Director Weimin Xu ​ 61 ​ Independent Director, Audit and Compensation Committee Chair Weibo Weng ​ 66 ​ Independent Director and Nominating Committee Chair Kewa Luo ​ 42 ​ Independent Director ​ 125 Table of Contents Zhidan Mao , Chairman Mr.
Added
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation In connection with this amended 2024 Annual Report, the Company considered whether the Restatement required recovery of erroneously awarded incentive based compensation pursuant to the Company’s clawback policy.
Added
The Company concluded that the Restatement does not impact related performance metrics used for executive management’s compensation and therefore no recovery of incentive-based compensation was required. ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

14 edited+8 added−6 removed2 unchanged
Advance to vendors - related parties Advance to vendors - related parties consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2024 ​ 2023 Qinghai Chengchuang Ideal Trading Co.
Advance to vendors - related parties Advance to vendors - related parties consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2025 ​ 2024 Qinghai Chengchuang Ideal Trading Co.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 7.A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees — 6.E. Share Ownership.” The company’s major shareholders do have different voting rights than the other shareholders. 7.B.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 7.A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees — 6.E. Share Ownership.” The company’s major shareholders do have different voting rights than the other shareholders. 134 Table of Contents 7.B.
Purchases from related parties Purchases from related parties consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ March 31, ​ 2024 2023 2022 Kunming Jinbi Office Equipment Co., Ltd. ​ $ 468,385 ​ $ 684,327 ​ $ 1,105,972 Youshi Innovation Business Group Co., Ltd. ​ 50,325 ​ 67,417 ​ 31,672 Yue Yan (Shanghai) Digital Technology Co., Ltd. ​ 35,649 ​ — ​ — Ningbo Lihong Information System Engineering Co., Ltd. ​ 21,466 ​ — ​ — Shanghai Tuwen Office Equipment Co., Ltd. ​ 6,477 ​ 6,043 ​ 317,917 Qingdao Lixing Technology Co., Ltd. ​ 4,328 ​ 18,204 ​ 130,075 Shanghai Mingzhe Office Equipment Co., Ltd. ​ — ​ 1,570,180 ​ 2,405,974 Hebei Shilong Digital Technology Co., Ltd. ​ — ​ 124,587 ​ 360,517 Others ​ 3,507 ​ 25,802 ​ 155,058 Purchases from related parties ​ $ 590,137 ​ $ 2,496,560 ​ $ 4,507,185 ​ h .
Purchases from related parties Purchases from related parties consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ March 31, ​ 2025 2024 2023 Shanghai Tuwen Office Equipment Co., Ltd. ​ $ 122,789 ​ $ 6,477 ​ $ 6,043 Ningbo Lihong Information System Engineering Co., Ltd. ​ 6,896 ​ 21,466 ​ — Kunming Jinbi Office Equipment Co., Ltd. ​ — ​ 468,385 ​ 684,327 Youshi Innovation Business Group Co., Ltd. ​ — ​ 50,325 ​ 67,417 Yue Yan (Shanghai) Digital Technology Co., Ltd. ​ — ​ 35,649 ​ — Qingdao Lixing Technology Co., Ltd. ​ — ​ 4,328 ​ 18,204 Shanghai Mingzhe Office Equipment Co., Ltd. ​ — ​ — ​ 1,570,180 Hebei Shilong Digital Technology Co., Ltd. ​ — ​ — ​ 124,587 Others ​ 9,289 ​ 3,507 ​ 25,802 Purchases from related parties ​ ​ 138,974 ​ ​ 590,137 ​ ​ 2,496,560 ​ 138 Table of Contents i.
Ltd. ​ $ 105,732 ​ $ — Shanghai Tuwen Office Equipment Co., Ltd. ​ 38,770 ​ 26,209 Qingdao Lixing Technology Co., Ltd. ​ 31,195 ​ — Shanghai Mingzhe Office Equipment Co., Ltd. ​ — ​ 495,643 Qinghai Jiayuan Mingyue Trade Co., Ltd. ​ — ​ 102,471 Others ​ 14,036 ​ 52 Advance to vendors - related parties ​ $ 189,733 ​ $ 624,375 ​ The Company periodically makes purchase advances to various vendors, including the related party suppliers.
Ltd. ​ $ — ​ $ 105,732 Shanghai Tuwen Office Equipment Co., Ltd. ​ — ​ 38,770 Qingdao Lixing Technology Co., Ltd. ​ — ​ 31,195 Others ​ 50 ​ 14,036 Advance to vendors - related parties ​ $ 50 ​ $ 189,733 ​ The Company periodically makes purchase advances to various vendors, including the related party suppliers.
Sales to related parties Sales to related parties consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ March 31, ​ 2024 2023 2022 Anhui New Yalian Office Equipment Co., Ltd. ​ $ 155,599 ​ $ 165,224 ​ $ 141,137 Shanghai Tuwen Office Equipment Co., Ltd. ​ 92,214 ​ 115,189 ​ 311,872 Ningbo Lihong Information System Engineering Co., Ltd. ​ 88,365 ​ 122,526 ​ 24,988 Hebei Leading Future Technology Co., Ltd. ​ 46,295 ​ 160 ​ 68,179 Qingdao Lixing Technology Co., Ltd. ​ 31,930 ​ — ​ — Youshi Innovation Business Group Co., Ltd. ​ 28,683 ​ — ​ 136,566 Kunming Jinbi Office Equipment Co., Ltd. ​ 17,147 ​ — ​ — Xuancheng Jinshida Modern Office Equipment Co., Ltd. ​ 8,807 ​ 40,018 ​ 88,640 Qinghai Jiayuan Mingyue Trade Co., Ltd. ​ — ​ 75,818 ​ — Hebei Shilong Digital Technology Co., Ltd. ​ — ​ 1,295 ​ 134,737 Others ​ 15,816 ​ 25,048 ​ 19,369 Sales to related parties ​ $ 484,856 ​ $ 545,278 ​ $ 925,488 ​ 125 Table of Contents g.
Sales to related parties Sales to related parties consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ March 31, ​ 2025 2024 2023 Anhui New Yalian Office Equipment Co., Ltd. ​ $ 347,621 ​ $ 155,599 ​ $ 165,224 Shanghai Tuwen Office Equipment Co., Ltd. ​ 232,774 ​ 92,214 ​ 115,189 Hangzhou Shilian Office Equipment Co., Ltd ​ 142,957 ​ 15,330 ​ — Ningbo Lihong Information System Engineering Co., Ltd. ​ 95,743 ​ 88,365 ​ 122,526 Hebei Leading Future Technology Co., Ltd. ​ 49,252 ​ 46,295 ​ 160 Xuancheng Jinshida Modern Office Equipment Co., Ltd. ​ 16,682 ​ 8,807 ​ 40,018 Qingdao Lixing Technology Co., Ltd. ​ ​ 1,961 ​ ​ 31,930 ​ ​ — Youshi Innovation Business Group Co., Ltd. ​ — ​ 28,683 ​ — Kunming Jinbi Office Equipment Co., Ltd. ​ — ​ 17,147 ​ — Qinghai Jiayuan Mingyue Trade Co., Ltd. ​ — ​ — ​ 75,818 Hebei Shilong Digital Technology Co., Ltd. ​ — ​ — ​ 1,295 Others ​ 3,581 ​ 486 ​ 25,048 Sales to related parties ​ $ 890,571 ​ $ 484,856 ​ $ 545,278 ​ h.
Payments made to a related party ​ $ (239,521) ​ $ — ​ $ — Anhui New Yalian Office Equipment Co., Ltd. Collections received from (payments made to) a related party ​ 40,886 ​ (110,109) ​ — Shanghai Mingzhe Office Equipment Co., Ltd.
Ltd. ​ Collections received from (payments made to) a related party ​ ​ 237,405 ​ ​ (239,521) ​ ​ — Anhui New Yalian Office Equipment Co., Ltd. ​ Collections received from (payments made to) a related party ​ ​ 64,028 ​ ​ 40,886 ​ ​ (110,109) Zhongyang Pan ​ Proceeds from a related party ​ ​ 127,481 ​ ​ — ​ ​ — Peidong Xia ​ Proceeds from a related party ​ ​ 115,010 ​ ​ — ​ ​ — Shanghai Mingzhe Office Equipment Co., Ltd.
Kunming Jinbi Office Equipment Co., Ltd. ​ The general manager of this entity is the Supervisor of Kunming Qinghai Jiayuan Mingyue Trade Co., Ltd. ​ An entity partially owned by the non-controlling shareholder who owns 45% of Qinghai Anhui New Yalian Office Equipment Co., Ltd. ​ An entity partially owned by the Company’s minority shareholder Xuancheng Jinshida Modern Office Equipment Co., Ltd. ​ An entity partially owned by the Company’s minority shareholder Youshi Innovation Business Group Co., Ltd. ​ An entity partially owned by the non-controlling shareholder who owns 45% of Beijing Ningbo Lihong Information System Engineering Co., Ltd. ​ An entity partially owned by the Company’s minority shareholder Yue Yan (Shanghai) Digital Technology Co., Ltd. ​ An entity owned by the officer of the Company Qinghai Chengchuang ideal Trading Co.
Related Party Transactions (FS footnote) The Company’s relationships with related parties who had transactions with the Company are summarized as follows: ​ ​ ​ Name of Related Party Relationship to the Company Shanghai Tuwen Office Equipment Co., Ltd. ​ An entity partially owned by the non-controlling shareholder who own 45% of Changyun Shanghai Yaodun Science and Technology Development Center (Limited Partnership) ​ An entity owned by the Company’s chairman and CEO Qingdao Lixing Technology Co., Ltd. ​ An entity partially owned by the Supervisor of Qingdao Kunming Jinbi Office Equipment Co., Ltd. ​ The general manager of this entity is the Supervisor of Kunming Qinghai Jiayuan Mingyue Trade Co., Ltd. ​ An entity partially owned by the non-controlling shareholder who owns 45% of Qinghai Anhui New Yalian Office Equipment Co., Ltd. ​ An entity partially owned by the Company’s minority shareholder Xuancheng Jinshida Modern Office Equipment Co., Ltd. ​ An entity partially owned by the Company’s minority shareholder Ningbo Lihong Information System Engineering Co., Ltd. ​ An entity partially owned by the Company’s minority shareholder Yue Yan (Shanghai) Digital Technology Co., Ltd. ​ An entity owned by the officer of the Company Qinghai Chengchuang ideal Trading Co.
For advance to vendors made to related parties, all of the March 31,2024 balances have been subsequently utilized as of July 31, 2024. c. Due from related parties Due from related parties consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2024 ​ 2023 Qinghai Chengchuang Ideal Trading Co.
For advance to vendors made to related parties, all of the March 31,2025 balances have been subsequently utilized as of August 14, 2025. c.
Accounts receivable - related parties Accounts receivable - related parties consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2024 ​ 2023 Anhui New Yalian Office Equipment Co., Ltd. ​ $ 132,399 ​ $ 167,774 Hebei Leading Future Technology Co., Ltd. ​ 48,604 ​ — Shanghai Tuwen Office Equipment Co., Ltd. ​ 30,780 ​ 158,358 Qinghai Jiayuan Mingyue Trade Co., Ltd. ​ — ​ 53,027 Xuancheng Jinshida Modern Office Equipment Co., Ltd. ​ 7,619 ​ 84,962 Hebei Shilong Digital Technology Co., Ltd. ​ — ​ 133,460 Others ​ 13,218 ​ 26,030 Accounts receivable - related parties ​ $ 232,620 ​ $ 623,611 ​ For accounts receivable due from related parties, approximately 98.7%, or $229,661 of the March 31,2024 balances have been subsequently collected as of July 31, 2024. b.
Accounts receivable - related parties Accounts receivable - related parties consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2025 ​ 2024 Shanghai Tuwen Office Equipment Co., Ltd. ​ $ 166,236 ​ $ 30,780 Anhui New Yalian Office Equipment Co., Ltd. ​ 64,812 ​ 132,399 Xuancheng Jinshida Modern Office Equipment Co., Ltd. ​ 12,823 ​ 7,619 Hebei Leading Future Technology Co., Ltd. ​ 1,345 ​ 48,604 Others ​ 276 ​ 13,218 Accounts receivable - related parties ​ $ 245,492 ​ $ 232,620 ​ For accounts receivable due from related parties, approximately 90.5%, or $222,281 of the March 31, 2025 balances have been subsequently collected as of August 14, 2025. b.
Ltd. ​ $ 237,230 ​ $ — Anhui New Yalian Office Equipment Co., Ltd. ​ 63,981 ​ 109,862 Shanghai Mingzhe Office Equipment Co., Ltd. ​ — ​ 218,404 Others ​ 65,550 ​ 13,580 Due from related parties ​ $ 366,761 ​ $ 341,846 ​ The Company historically loaned funds to its related parties for business purposes.
Ltd. ​ ​ — ​ ​ 237,230 Anhui New Yalian Office Equipment Co., Ltd. ​ — ​ 63,981 Others ​ 19,679 ​ — Due from related parties ​ $ 3,197,017 ​ $ 366,761 ​ The Company historically loaned funds to its related parties for business purposes. The balance due from related parties is typically interest-free and due upon demand.
Related Party Transactions (FS footnote) The Company’s relationships with related parties who had transactions with the Company are summarized as follows: ​ ​ ​ Name of Related Party Relationship to the Company Shanghai Tuwen Office Equipment Co., Ltd. ​ An entity partially owned by the non-controlling shareholder who own 45% of Changyun Shanghai Mingzhe Office Equipment Co., Ltd. ​ An entity partially owned by the officer of Lixin before April 1, 2023, the entity ceased to be a related party to the Company since April 1, 2023.
Ltd. ​ An entity partially owned by the director of Qinghai Hangzhou Shilian Office Equipment Co., Ltd ​ An entity partially owned by the non-controlling shareholder who own 45% of Hangzhou Hebei Leading Future Technology Co., Ltd. ​ The Supervisor of this entity is the non-controlling shareholders who own 45% of Shijiazhuang Hongkong Eshallgo Holding Group Co., Limited ​ An entity owned by the Company’s CEO and Director Eshallgo Electrical Equipment (Shanghai) Co., Ltd. ​ Shareholder of the Company Shanghai Mingzhe Office Equipment Co., Ltd. ​ An entity partially owned by the officer of Lixin before April 1, 2023, the entity ceased to be a related party to the Company since April 1, 2023.
Due to related parties Due to related parties consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2024 ​ 2023 Shanghai Yaodun Science and Technology Development Center (Limited Partnership) ​ $ — ​ $ 141,020 Others ​ 7,348 ​ 36,847 Due to related parties ​ $ 7,348 ​ $ 177,867 ​ Amount due to related parties are advances from related various related parties for working capital during the Company’s normal course of business.
Due to related parties Due to related parties consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2025 ​ 2024 Peidong Xia ​ $ 114,358 ​ $ — Hongkong Eshallgo Holding Group Co., Limited ​ ​ 10,285 ​ ​ — Others ​ 7,977 ​ 7,348 Due to related parties ​ $ 132,620 ​ $ 7,348 ​ Amount due to related parties are advances from related various related parties for working capital during the Company’s normal course of business.
The balance due from related parties is typically interest-free and due upon demand. For amount due from related parties, approximately 82.1%, or $301,210 of the March 31,2024 balances have been subsequently collected as of July 31, 2024. 124 Table of Contents d.
For amount due from related parties, approximately 33.9%, or $1,084,279 of the March 31, 2025 balances have been subsequently collected as of August 14, 2025, the remaining balance is expected to be fully received by December 31, 2025. 136 Table of Contents d.
(Xin Xi Cheng Branch) ​ $ — ​ $ 1,285 Others ​ 1,387 ​ 8,245 Accounts payable - related parties ​ $ 1,387 ​ $ 9,530 ​ All these accounts payable to related parties occurred in the ordinary course of business and are payable upon demand without interest. e.
Accounts payable - related parties Accounts payable - related parties consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2025 ​ 2024 Qingdao Lixing Technology Co., Ltd. ​ $ 90,946 ​ $ — Yue Yan (Shanghai) Digital Technology Co., Ltd. ​ ​ 31,679 ​ ​ ​ Hangzhou Shilian Office Equipment Co., Ltd ​ ​ 16,020 ​ ​ — Others ​ 1,616 ​ 1,387 Accounts payable - related parties ​ $ 140,261 ​ $ 1,387 ​ All these accounts payable to related parties occurred in the ordinary course of business and are payable upon demand without interest. e.
Removed
Shanghai Yaodun Science and Technology Development Center ​ An entity owned by the Company’s chairman and CEO Qingdao Lixing Technology Co., Ltd. ​ An entity partially owned by the Supervisor of Qingdao Qingdao Lixing Technology Co., Ltd. (Xin Xi Cheng Branch) ​ Subsidiary of Qingdao Lixing Technology Co., Ltd.
Added
Youshi Innovation Business Group Co., Ltd. ​ An entity partially owned by the non-controlling shareholder who owns 45% of Beijing, the entity ceased to be a related party to the Company since April 1, 2024.
Removed
Ltd. ​ An entity partially owned by the director of Qinghai ​ 123 Table of Contents a.
Added
Zhidan Mao ​ Chairman Qiwei Miao ​ Chief Executive Officer and Director Chun Lyu ​ Chief Financial Officer Yun Li ​ The non-controlling shareholders who own 45% of Qinghai Peidong Xia ​ The non-controlling shareholders who own 45% of Changyun Zhongyang Pan ​ Family member of the non-controlling shareholders who own 45% of Suzhou ​ ​ 135 Table of Contents a.
Removed
Accounts payable - related parties Accounts payable - related parties consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2024 ​ 2023 Qingdao Lixing Technology Co., Ltd.
Added
Due from related parties Due from related parties consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2025 ​ 2024 Qiwei Miao ​ $ 1,105,383 ​ $ 59,669 Zhidan Mao ​ 594,363 ​ — Hangzhou Shilian Office Equipment Co., Ltd ​ ​ 530,458 ​ ​ — Chun Lyu ​ ​ 291,495 ​ ​ 1,523 Ningbo Lihong Information System Engineering Co., Ltd. ​ ​ 158,448 ​ ​ — Yun Li ​ ​ 148,402 ​ ​ — Shanghai Yaodun Science and Technology Development Center (Limited Partnership) ​ ​ 142,117 ​ ​ 4,358 Eshallgo Electrical Equipment (Shanghai) Co., Ltd. ​ ​ 137,781 ​ ​ — Qingdao Lixing Technology Co., Ltd. ​ ​ 68,891 ​ ​ — Qinghai Chengchuang ideal Trading Co.
Removed
Loan transactions with related parties Loan transactions with related parties consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ ​ ​ March 31, ​ Nature 2024 2023 2022 Qinghai Chengchuang Ideal Trading Co. Ltd.
Added
Due to a related party – non-current ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2025 ​ 2024 Zhongyang Pan ​ $ 126,759 ​ $ — Due to a related party - non-current ​ $ 126,759 ​ $ — ​ Amount due to a related party – non-current is loan borrowed from the related party for working capital during the Company’s normal course of business for threes year with maturity date on December 15, 2027.
Removed
Collections received from (payments made to) a related party ​ 209,702 ​ (218,895) ​ — Hebei Shilong Digital Technology Co., Ltd. Collections received from a related party ​ — ​ — ​ 158,929 Ningbo Lihong Information System Engineering Co., Ltd.
Added
The loan bears a fixed interest rate of 3.0% per annum. 137 Table of Contents g.
Removed
Collections received from a related party ​ — ​ 65,668 ​ 62,325 Shanghai Yaodun Science and Technology Development Center (Limited Partnership) Proceeds from (repayments of) loans from a related party ​ (135,402) ​ (106,014) ​ 232,158 Others Proceeds/collection from (payment/repayment made to) related parties ​ (81,105) ​ 35,510 ​ 68,044 Total ​ ​ ​ $ (205,440) ​ $ (333,840) ​ $ 521,456 ​ ​
Added
Loan transactions with related parties Loan transactions with related parties consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ ​ ​ March 31, ​ Nature 2025 2024 2023 Qiwei Miao Payments made to a related party ​ $ (1,045,660) ​ $ (53,507) ​ $ — Zhidan Mao Payments made to a related party ​ (596,096) ​ — ​ — Hangzhou Shilian Office Equipment Co., Ltd Payments made to a related party ​ (533,479) ​ — ​ — Chun Lyu Payments made to a related party ​ (289,677) ​ — ​ — Ningbo Lihong Information System Engineering Co., Ltd.
Added
Collections received from (payments made to) a related party ​ (159,351) ​ — ​ 65,668 Yun Li ​ Collections received from (payments made to) a related party ​ ​ (149,247) ​ ​ — ​ ​ — Shanghai Yaodun Science and Technology Development Center (Limited Partnership) ​ Payments made to a related party ​ ​ (142,927) ​ ​ (135,402) ​ ​ (106,014) Eshallgo Electrical Equipment (Shanghai) Co., Ltd. ​ Payments made to a related party ​ ​ (138,566) ​ ​ — ​ ​ — Qingdao Lixing Technology Co., Ltd. ​ Payments made to a related party ​ ​ (69,283) ​ ​ — ​ ​ — Qinghai Chengchuang Ideal Trading Co.
Added
Collections received from (payments made to) a related party ​ — ​ 209,702 ​ (218,895) Others Proceeds/collection from (payment/repayment made to) related parties ​ (4,484) ​ (27,598) ​ 35,510 Total ​ ​ ​ $ (2,584,846) ​ $ (205,440) ​ $ (333,840) ​ ​