Annual Report for Fiscal Year Ending March 31, 2026 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our results of operations and cash flows for the years ended March 31, 2026 and 2025, and financial conditions as of March 31, 2026, and 2025 should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Form 10-K.

Overview

Antiaging Quantum Living Inc. (FKA: Achison Inc.) (the "Company", "us", "we" or "our") was incorporated under the laws of the State of New York on December 29, 2014.

On July 1, 2019, Lansdale Inc., the principal stockholder of the Company ("Seller") and an entity controlled by the Company's former President, Mr. Wanjun Xie, entered into a Stock Purchase Agreement (the "Agreement") with Dazhong 368 Inc., (the "Buyer"), pursuant to which, a total of 9,000,000 shares of Class A common stock of the Company were transferred to the Buyer, representing approximately 90% of the Company's issued and outstanding shares of Class A common stock, resulting in a change of the control of the Company. Mr. Dingshan Zhang was appointed as the President and CEO of the Company on the same date.

On April 10, 2023, Mr. Barry Wan acquired control of 29,215,000 restricted shares of Class A common stock (the "Purchased Shares") of the Company, representing approximately 97% of the Company's total issued and outstanding common stock from Dazhong 368 Inc and Sophia 33 Inc, two New York corporations controlled by the Company's then President, Chief Executive Officer and sole director, Dingshan Zhang (the former President) pursuant to the terms of a Stock Purchase Agreement by and among the parties thereto (the "Stock Purchase Agreement"). Pursuant to the Stock Purchase Agreement, Mr. Wan paid an aggregate purchase price of four hundred thousand dollars ($400,000.00) to Mr. Zhang in exchange for the purchased shares. The foregoing transaction resulted in a change of control of the Company, with Mr. Wan acquiring 97% of the Company's outstanding Class A common stock held through New Lite Ventures LLC, a New York LLC. Both before and after the transactions, the Company had 29,995,000 shares of its Class A common stock outstanding.

In connection with the transaction, on April 10, 2023, Mr. Dingshan Zhang resigned from all positions he held with the Company. On April 10, 2023, Ms. Jing Wan was appointed by our majority shareholder as our Chief Executive Officer, Chief Financial Officer, President and Director. On June 16, 2023, Mr. Barry Wan consented to act as the new Chief Executive Officer and Chief Financial Officer after Ms. Jing Wan resigned. The Company changed its name to Antiaging Quantum Living Inc. on June 14, 2023.

The change in control with respect to the Company was effectuated to better reflect its new business direction, with the intention of acquiring businesses involved in healthcare management and insurance services.

In line with this expansion, the Company established AAQL Inc. AAQL HK Limited Dao Ling Doctor Hangzhou, Dao Ling Doctor Zhejiang, and Dao Ling Doctor Huzhou entities.

On July 25, 2024, the Board of Directors of the Company approved the appointment of J&S Associate PLT to be the new independent registered public accounting firm for the financial period ending June 30, 2024. This appointment addressed the vacancy created by the resignation of PWN LLP as the Company's former independent registered public accounting firm.

On September 6, 2024, the holders of a majority of the issued and outstanding voting securities of the Company approved an amendment to its Certificate of Incorporation increase in the number of authorized shares of common stock of the Company from thirty million (30,000,000) shares of common stock, par value $0.001 per share, to six billion (6,000,000,000) shares of common stock, par value $0.00001 per share. Upon the effectiveness of the Authorized Capital Increase, the shares of common stock will be categorized as follows: 1,200,000,000 Class A shares, 1,200,000,000 Class B shares, 1,200,000,000 Class C shares, 1,200,000,000 Class D shares, and 1,200,000,000 Class E shares. On the same day, the Certificate of Amendment to the Certificate of Incorporation of the Company was filed with New York State Department effectuating the Authorized Capital Increase.

During the fiscal year ended March 31, 2026, the Company initiated a strategic transition to shift its core business model away from third-party agency and technical platform operations to focus exclusively on the supply and distribution of proprietary brand health products and therapy services. Pursuant to board authorization in June 2025, the Company ceased its online platform technical operation support and maintenance services in staggered phases, concluding in September 2025 and January 2026.

We view this transition as a vital strategic pivot to enhance our brand value and establish long-term control over our product supply chain. However, this shift materially impacts our near-term consolidated financial results and the comparability of our historical financial statements to future periods.

Results of Operation for the years ended March 31, 2026 and 2025

		2026				2025				$ Changed				% Changed
Revenue			1,034,385				817,898				216,487				26.47	%
Cost of revenues			332,262				389,381				(57,119	)			-14.67	%
Gross profit			702,123				428,517				273,606				63.85	%
Gross margin			67.9	%			52.4	%
Selling, general and administrative expenses			1,537,524				1,218,476				319,048				26.18	%
Loss from operations			(835,401	)			(789,959	)			(45,442	)			5.75	%
Other income (loss)			14,415				69,550				(55,135	)			-79.27	%
Income tax expenses			16,660				-				16,660				100.0	%
Net loss			(837,646	)			(720,409	)			(117,237	)			16.27	%

During the years ended March 31, 2026 and 2025, the Company generated revenues of $1,034,385 and $817,898, respectively. Of this total, $711,607 (or 68.8%) in FY 2026 and $817,898 (or 100%) in FY 2025 was derived from our historical online platform technical operation support and maintenance services. The increase in revenue was primarily driven by the introduction of new therapy services and health/beauty product sales in FY 2026. As part of a strategic transition during the year, the Company ceased its historical online platform services to focus entirely on therapy services (which generated $141,828 in FY 2026) and proprietary health/beauty products (which generated $180,950 in FY 2026).

Cost of revenues was $332,262 and $389,381 for the years ended March 31, 2026 and 2025, respectively. Gross profit increased to $702,123 (gross margin of 67.9%) for the year ended March 31, 2026, as compared to gross profit of $428,517 (gross margin of 52.4%) for the year ended March 31, 2025. Gross margin improved from 52.4% to 67.9% primarily because our new therapy services and proprietary products carry higher profit margins compared to the labor-intensive technical operation support and maintenance services we provided in FY 2025.

The Company incurred operating expenses of $1,537,524 and $1,218,476 for the years ended March 31, 2026 and 2025, respectively. Operating expenses generally consists of rent and facility expenses, wages and salaries, legal and professional fees. The increase in operating expenses was mainly due to the increase in rental and facility costs.

For the year ended March 31, 2026, the Company had gain from extinguishment of liability of $10,771, in addition to interest income of $163 and subsidy income of $3,480, as compared to year ended March 31, 2025, the Company received renovation subsidy of $69,471 in addition to interest income of $79.

For the year ended March 31, 2026, our net loss was $837,646 compared to a net loss of $720,409 for the year ended March 31, 2025. The increase in net loss is mainly due to the increased operating expenses.

Historically, the delivery of our technical and platform services did not utilize dedicated, standalone operational teams or separate infrastructure. Instead, these services were supported by highly integrated, centralized corporate resources, including shared administrative personnel, centralized accounting and sales teams, and shared server infrastructure.

Following the cessation of the technical services, the Company has retained these shared personnel and infrastructural resources in their entirety. We have repurposed these assets to support the expansion and scaling of our continuing proprietary health products and therapy service lines. Consequently, while our consolidated revenues will materially decrease in the near term due to the loss of the technical service revenue, our general and administrative (G&A) expenses and overall operating cost structure will not experience a proportional decrease.

Because these centralized resources have been retained and absorbed by our continuing operations, and should expect near-term margin compression as our retained organizational overhead is now supported by a smaller, albeit strategically refocused, revenue base.

Equity and Capital Resources

As of March 31, 2026, we had an accumulated deficit of $2,247,358 and working capital deficit of $459,038, compared to accumulated deficit of $1,409,712 and a working capital of $132,689 as of March 31, 2025. The decrease in the working capital was primarily driven by a $460,000 increase in due to related parties.

Historically, the Company has financed its operations and alleviated working capital deficiencies primarily through advances from a principal shareholder and director. While there is no formal written commitment or binding agreement in place, the shareholder has historically provided necessary funding and has indicated the intent to continue providing financial support to fund the Company's operations and meet its obligations as they become due.

Promissory Notes and November 2025 Assignments and Amendments

During fiscal 2025 and continuing into fiscal 2026, the Company funded a portion of its operations through the issuance of several promissory notes to multiple lenders. These included: (i) a note issued to Barry Wan in the principal amount of $428,789.50; (ii) a note issued to New Lite Ventures LLC in the principal amount of $29,571.00; (iii) two notes originally issued by the Company's PRC subsidiaries, Antiaging Doctor Hangzhou Holding Ltd. and Dao Ling Doctor (Zhejiang) Health Management Limited, to Hemeihui E-Commerce Co., Ltd., in the principal amounts of $538,568.00 and $287,174.00, respectively; and (iv) a note issued to Tairan Baohe Insurance Sales Co., Ltd. in the principal amount of $383,598.00. The Tairan Baohe note was subsequently repaid in full and is no longer outstanding.

On November 25, 2025, the Company entered into four separate Assignment and Amendment of Promissory Note agreements with respect to the outstanding notes other than the repaid Tairan Baohe note. Under these agreements, each applicable noteholder assigned its rights and interests in the notes to either Atlantic Equity Holdings Inc. or Empire Street Capital Inc., and the notes were amended to provide for the automatic conversion of the outstanding principal balances into shares of the Company's Class A Common Stock at a fixed conversion price of $0.30 per share. No additional proceeds were received by the Company in connection with these amendments, assignments, or conversions. Upon the issuance of the conversion shares, the applicable notes were deemed fully satisfied and extinguished.

The Company's net loss was partially offset by non-cash expenses which primarily included $134,792 in depreciation and amortization, and $332,320 in amortization related to right-of-use (ROU) assets associated with leased office and retail spaces and leasehold improvements. Operating cash activities was further impacted by an $216,624 increase in inventories and a $92,753 increase in advances to suppliers, which were partially offset by a $317,479 increase in accounts payables and accrued expense, resulting in net cash used in operating activities for the years ended March 31, 2026.

During the years ended March 31, 2026 and 2025, the Company purchased fixed assets and intangible assets totaling $162,434 and $63,345, respectively.

During the years ended March 31, 2026 and 2025, the Company received advances of $460,000 and $364,303 from related parties for working capital purposes, which shareholders are prepared to provide additional funding as needed. The Company also borrowed $nil and $803,734 from an unrelated third party during the years ended March 31, 2026 and 2025, respectively.

On December 31, 2024, a total of $1,284,103 debt owed to related party and third party were converted into long-term notes payable, representing a non-cash financing activity. On March 31, 2025, the Company entered into Tripartite Debt Assignment Agreements with Mr. Barry Wan (a related party) and the unrelated third-party original lender, pursuant to which certain loans and notes totaling $1,216,440 were legally assigned to Mr. Wan.

As of March 31, 2026, we held approximately $503,486 in cash and cash equivalents. Our liabilities are primarily funded by shareholder loans and unrelated parties' loans, which do not require immediate repayment. Operations are continuing as usual, and management is committed to implementing expense control measures in the near term to support liquidity.

Going Concern Assessment

The Company demonstrates adverse conditions that raise substantial doubt about the Company's ability to continue as a going concern. These adverse conditions are negative financial trends, specifically cash outflow from operating activities, operating losses, accumulated deficit and other adverse key financial ratios.

Management's plan to alleviate the substantial doubt about the Company's ability to continue as a going concern include attempting to improve its business profitability, its ability to generate sufficient cash flow from its operations and execute the business plan of the Company in order to meet its operating needs on a timely basis. However, there can be no assurance that these plans and arrangements will be sufficient to fund the Company's ongoing capital expenditures and other requirements.

Historically, the Company has financed its operations and alleviated working capital deficiencies primarily through advances from a principal shareholder and director. While there is no formal written commitment or binding agreement in place, the shareholder has historically provided necessary funding and has indicated the intent to continue providing financial support to fund the Company's operations and meet its obligations as they become due.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions included in footnote 2 of our financial statements is critical to an understanding of our financial statements.

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The Company determines revenue recognition by applying the following steps: 1) identification of the contract, or contracts, with a customer; 2) identification of the performance obligations in the contract; 3) determination of the transaction price; 4) allocation of the transaction price to the performance obligations in the contract; and 5) recognition of revenue when, or as, we satisfy a performance obligation.

Sales of goods

The Company generates revenue from the sale of health and beauty products, dietary supplements, and proprietary branded health foods. Goods are sold directly to consumers through the Company's mobile application ("App") and physical retail stores, as well as distributed wholesale to third-party e-commerce platforms and partners. In January 2026, the Company began transitioning its business model to become a primary product supplier of proprietary brands to enhance its control over the health and wellness supply chain.

A formal contract is established when a customer places an order. The Company's single performance obligation is the delivery of the ordered goods. The transaction price is generally fixed at the time of the order. Revenue is recognized at a point in time when the goods are delivered to (or physically purchased at) retail stores, drop-shipped, and accepted by the customer, as control transfers at that time.

The Company's policy allows for product returns, which are treated as variable consideration. Provisions for estimated sales returns are assessed and adjusted at the end of each reporting period based on historical return rates and experience, which are generally immaterial. The Company records contract liabilities, such as customer advances, when payments are received prior to the delivery and acceptance of goods.

Offline physical therapy services

The Company provides offline physical therapy and related health services through its physical retail stores. Customers may purchase these services on a single-use (pay-on-demand) basis or through multi-session package deals that are valid for a one-year period. A formal contract is established upon payment.

For single-use services, the Company has a single performance obligation to provide the therapy session. Revenue is recognized at a point in time when the service is rendered to the customer.

For multi-session package deals, the Company has a stand-ready obligation to provide services over the one-year validity period. Payments received in advance are initially recorded as contract liabilities (customer advances). Revenue is recognized over time as the services are utilized by the customer.

During the systems transition period for the year ended March 31, 2026, precise customer-level usage tracking was limited. Consequently, management utilized a critical accounting estimate to determine the proportional performance of these obligations based on a sample of available historical usage records applied to cohorts of contracts grouped by payment date. Management applies a constraint to these estimates to ensure it is highly probable that a significant reversal of cumulative revenue recognized will not occur. Revenue is recognized ratably based on this constrained estimate, with any remaining unconstrained balance recognized when the rights legally expire at the end of the one-year period. Changes to these estimation methods could materially impact the timing of revenue recognition.

Online platform technical operation support and maintenance services

Prior to January 2026, the Company provided technical operation support and maintenance services for online platforms, ensuring platform functionality, continuous availability, and technical support for end-users.

Revenue from these services was recognized ratably over each service period as the services were rendered, or upon completion of the service, depending on the nature of the arrangement. Billing frequency varied (e.g., weekly, monthly, quarterly, or upon completion) as specified in the respective contracts. Service fees were determined based on contract terms and structured as fixed fees, milestone-based pricing, or as a percentage of gross transaction value (GTV) generated from the customer's e-commerce platform. Each billing period or completed service cycle represented a distinct performance obligation, with revenue recognized upon completion and invoicing. The major direct cost of providing these services was wages and salaries. In instances where payments were received in advance, they were recorded as contract liabilities (deferred revenue) until the services were delivered.

Effective January 2026, the Company formally ceased providing these technical operation support and maintenance services. Because these services were supported by highly integrated, centralized corporate resources that have been retained by the Company, the cessation of this service line does not qualify for presentation as a discontinued operation.

Principal vs. Agent Consideration

For each revenue stream, the Company is a principal because it controls the specified goods or services before they are transferred to the customer. As a principal, the Company is primarily responsible for fulfilling the contractual obligations, has discretion in establishing the price, and bears the risk of inventory or service provision until completion; therefore, revenue is recognized on a gross basis for each active revenue stream.