AAQL 10-K & 10-Q changes, risk factors and insider trading

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.

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.

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.

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.

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.

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.

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.

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.

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.

During the three months ended June 30, 2026 and 2025, the Company generated revenues of $730,117 and $291,438, respectively, representing an increase of $438,679. This overall increase, as well as the complete shift in revenue mix, is a direct result of our previously disclosed strategic transition. For the three months ended June 30, 2025, our revenue consisted entirely of legacy online platform services. In the current year period ended June 30, 2026, those legacy services were completely phased out, and our revenue was generated entirely from our new core business model: proprietary health/beauty products ($743,969) and therapy services ($(13,852).

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 in fiscal year ended March 31, 2026, 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.

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.