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

Our independent auditors have added an explanatory paragraph to their audit opinion issued in connection with our financial statements included in this annual report which states that the financial statements were prepared assuming that we would continue as a going concern. As discussed in Note 3 to the consolidated financial statements included herein, we hadincurred negative cash flows from operating activities $418,525, accumulated deficit from recurringa net lossesloss $2,284,025 incurred$9,680 for the financial year ended May 31, 2026, and had an accumulated deficit of $7,657,185 and negative net assets of $1,624,018 as of May 31, 2025.These2026. These conditions raise substantial doubt about our ability to continue as a going concern. We believe withWith the viability of business strategy plans such as Flash Lion e-commerce sales model, Cloud chain (including Wechat, REDnote and Tik Tok’s short videos e-commerce sales modelmodel, and the financial support from the substantial shareholder and director (supported by a financial support letter), will generate sufficient fund to meetcover ournext daily12 months cash demands. However, there can be no assurance that the business strategy we will be successful and generate sufficient fund. The audited consolidated financial statements included in this report do not include any adjustments that might result from the outcome of this uncertainty.

The Company incurred a net loss of $2,284,025$9,680 and $2,135,674,$2,284,025 for the years ended May 31, 20252026 and 2024,2025, respectively. We have generated very very limited revenue. Our current operations are small with a short history. We may be unable to achieve our performance targets, which will will impact the Company’s operating results. Our ability to achieve profitability depends on the competitiveness of our products and and services as well as our ability to control costs and to provide new products and services to meet the market demands and attract new new customers. Due to the numerous risks and uncertainties associated with the development of our business, we cannot guarantee that we will be able to achieve profitability in the short-term or long-term. The Company continues to focus on increasing its revenue through the the sale of motor oil and auto parts products on itse-commerce onlinesales platformmodel “Flashsuch Lionas Mall”,Tik andTok to reduce its costs of goods sold, streamlining its overhead costs, or obtaining financing from its stockholders or directors. Management may seek additional funds, primarily through the issuance of equity securities for cash and loans from potential investors and controlling stockholders, to operate our business and estimates that additional capital will be necessary to support our operations and growth.

OurMost of our customers are not required to place minimum monthly or annual orders for our products.products, only a small number of customers under an old brand name management service contract is required to place minimum monthly or annual orders. There is no assurance as to the timing or quantity of purchases by any of our customers or that any of our distributors will continue to purchase products from us in at the same frequencies and volumes as they may have in the past. To be able to sell our products on a timely basis, we need to maintain adequate inventory levels of the desired products, but we cannot predict the frequency or size of orders by a substantial portion of our customers. If we fail to meet our shipping schedules, we could damage our relationships with distributors or retailers, increase our shipping costs or cause sales opportunities to be delayed or lost, which would unfavorably impact our future sales and adversely affect our operating results. In addition, if the inventory of our products held by our distributors or retailers is too high, they will not place orders for additional products, which would also unfavorably impact our future sales and adversely affect our operating results.

We acquire and importpurchase most of our engine oil from distributors of Germany and Malaysia, and contract with local suppliers to supply auto parts and other other products. We do not have full control over the product making activities procedure of the engine oil, auto parts and other products. Significant delays and defects in our products resulting from the activities of our product makers may have a material adverse effect on our Company’s results of operations and financial condition.

We rely on a combination of trademark and trade secret laws and non-disclosure agreements and other methods to protect our intellectual property rights. We own a number of trademarks in China, all of which have been properly registered with regulatory agencies such as the State Intellectual Property Office and Trademark Office. This intellectual property has allowed our products to earn market share in the financial servicescurrent and supplyfuture chainautomotive solutions industries.industry.

WeOur are an automobile exhaust cleaner and parts wholesaler, as well as an auto detailing store consultancy company. Our business mainly divided into threetwo sectors, namely sales of automobileautomotive exhaust cleanerproducts and parts, provision of auto detailing store consultancy services and authorizationmanagement fee on our brand name “Chejiangling / Teenage Hero Car”. Through various acquisitions of high-quality upstream and downstream companies in the industry, the Company creates a complete industrial chain to reduce costs and enhance competitiveness.

During the year 20242026 and 2025, the Company conducted its business in generally fourtwo revenue streams: Brand name management fees, exhaust gas cleaners, motor oilfees and autosales parts.of automotive products.

RevenueFor totalled of $458,632 for the year ended May 31, 2025,2026, athe decreaserevenue is $531,606, an increase of $1,860,080$72,974 or 80.2%,16%, as compared to that for the year ended May 31, 2025 2024 of $2,318,712.$458,632. The decrementincrement is mainly due to the decrease ofincrease revenue of automobileautomotive exhaustproducts cleaner$198,308 $555,194,and offset decrease of brand name management fees $1,007,214, motor oil and spare parts $292,480, and others $5,192.$125,334.

CostFor of revenue totalled of $85,975 for the year ended May 31, 2025,2026, athe decreasecost of $586,662revenue is $175,396, an increase of $89,421 as compared to that of May 31, 20242025 of $672,637.$85,975. The decrementincrement is mainly due to the decreaseincrease in sales of exhaust gas cleaners $405,100, motor oil and& spareauto parts $180,294,$55,405, fuel additive cleaner $25,457, exhaust gas cleaner $9,654 and offset decrease of others $1,268. $1,095.

Gross profit was $372,657$356,210 for the year ended May 31, 2025,2026, a decrease of $1,273,418,$16,447 or 4%, as compared to that of May 31, 20242025 of $1,646,075.$372,657. The decrement primarily due to the change of product mix, decrease inof brand name management fees $1,007,214,$125,334 offset increase of motor oil & auto parts $21,890, introduction of new product fuel additive cleaners $62,296, increased sales of exhaust gas cleaners $150,094, motor oil and spare parts $112,186,$23,890 and others $3,924. $811.

Net loss totalledof $2,284,025$9,680 and $2,135,674$2,284,025 for the year ended May 31, 20252026 and 20242025 respectively, that is ana increasedecrease of net loss of $148,351,$2,274,345, primarily primarily due to the above changes of revenues and expenses.

Cash flow used in financing activities is $17,321 for the year ended May 31, 2026, compared to cash flow provided by financing activities is $423,172 for the year ended May 31, 2025, compared to cash flow used in financing activities $56,012 for the year ended May 31, 2024, reflecting ana increasedecrease cash flow of $479,184.$440,493. The increasedecrease was mainly due to increase decrease in proceeds from share issuance $369,728, increased of advance to related parties $38,221$18,374 and decreased of advances $71,235.from directors $52,391.

Information included in this Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are not statements of historical facts, but rather reflect our current expectations concerning future events and results. We generally use the words “believes,” “expects,” “intends,” “plans,” “anticipates,” “likely,” “will” and similar expressions to identify forward-looking statements. Such forward-looking statements, including those concerning our expectations, involve risks, uncertainties and other factors, some of which are beyond our control, which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and factors include, but are not limited to, those factors set forth in our Report for the period ended NovemberFebruary 30,28, 20252026 and the condensed consolidated financial statements included in this Report. Except as required by applicable law, including the securities laws of the United States, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this Report.

For the three months period ended NovemberFebruary 30,28, 2025,2026, we generated total revenue of $65,402$145,267 that included brand name administrative fee $17,667,$1,126, motor oil and auto parts $47,715$110,356 and exhaust gas cleaner & others $20.$33,785.

Total revenues for three months ended NovemberFebruary 30,28, 20252026 were $65,402$145,267 compared to $100,875$64,541 for the three months ended NovemberFebruary 30,28, 2024,2025, which decreasedincreased by $35,473.$80,726. Due to the slowhigher marketdemand activity,during Chinese New Year Festival, motor oil and auto part increased by $106,674, exhaust gas cleaner & other increased by $33,785 respectively, and offset brand name administrative fee decreased by $23,386, motor oil and auto parts $12,031 and others $56.$59,733.

We earned the brand name administrative fees from our customers, who pay one-time fixed fee RMB100,000, RMB200,000 and RMB300,000 for one year, RMB90,000 for one to three years and RMB200,000 for one to five years for exchange of (1) the right to use the brand name “Chejiangling / Teenage Hero Car” and “ECXJ”, (2) the right to receive 10% of other new shops’ brand name permission fee, (3) the right to receive 5% of other new shops’ selling, and (4) the right to receive 20% of other new shops’ administrative fee. The fee is not be refundable.

Cost of revenue consist primarily of costs associated with the purchase of goods. For three months ended NovemberFebruary 30,28, 20252026 compared to three months ended NovemberFebruary 30,28, 2024.2025.

Cost of revenue for the three months ended NovemberFebruary 30,28, 20252026 were $29,899$75,124 compared to $35,433$2,443 as of ended NovemberFebruary 30,28, 2024,2025, aan decrementincrement of $5,534.$72,681. Due to the slowhigher marketdemand activity,during Chinese New Year Festival, motor oil and auto parts decreasedincreased by $5,513$62,958 and exhaust gas cleaner & others $21increased by $9,723 respectively.

Gross profit for the three months ended NovemberFebruary 30,28, 20252026 is $35,503$70,143 compared to $65,442$62,098 as of NovemberFebruary 30,28, 2024,2025, aan decrementincrement of $29,939$8,045 is mainly due to the decreaseincreased of revenue from brand name administrative fee and sales of motor oil and auto parts.parts, exhaust gas cleaner & others and decrease of revenue from brand name administrative fee.

For three months ended NovemberFebruary 30,28, 20252026 compared to three months ended NovemberFebruary 30,28, 20242025:

Selling and Distribution expenses for the three months ended NovemberFebruary 30,28, 20252026 were $54,957$94,459 compared to $48,624$46,766 as of NovemberFebruary 30,28, 2024,2025, an increase of $6,333$47,693 is due to increase in payroll costs $9,306,$24,325, entertainmentsales commission $21,711, transportation $1,893, travelling expenses $786,$1,146, office expenses $1,136, consultancy fee $150, other expenses $636, and offset decreasewith decreased in consultancy fees $1,759, transportation $916, officepromotion expenses $543, travelling expenses $238,$2,567 and othersentertainment expenses $303.$737.

For three months ended NovemberFebruary 30,28, 20252026 compared to three months ended NovemberFebruary 30,28, 20242025:

G&A expenses for the three months ended NovemberFebruary 30,28, 20252026 were $78,781$74,900 compared to $123,570$79,983 as of NovemberFebruary 30,28, 2024,2025, a decrease of $44,789$5,083 was primarily due to the decrease of payroll costs $4,044, stock written off $3,632, consultancy fees $33,574, rental $3,665,$993, travelling expenses $3,218, payroll costs $2,788, others$550 $9,348 and offset with increase in entertainment expenses $1,588, office expenses $7,804.$1,138, rental $933, R&D expenses $114 and other expenses $363.

WeThere recordedwere anno income tax of $0 and tax expense $37,017occurred for the period ended NovemberFebruary 30,28, 20252026 and 2024, respectively.2025.

Net loss $98,298$99,214 and $143,693$64,638 occurred for the three months ended NovemberFebruary 30,28, 20252026 and 20242025 respectively, due to the factors discussed above.

Cash flow provided by operating activities is $16,212$129,802 for the sixnine months ended NovemberFebruary 30,28, 2025,2026, as compared to cash flow used in operating activities $397,664$395,784 for the sixnine months ended NovemberFebruary 30,28, 2024,2025, reflecting an increase of cash flow $413,876.$525,586. The increase is due to net loss decreased by $40,186,$5,610, increased of advance received $390,344, accrued liabilities and other payables $243,214,$143,322, advanceprepayments received $147,441, inventory$16,689, $21,356, operating lease liabilities $8,026$9,757, inventory $8,349, deposits and other payables $1,034, and offset cash outflow of accounts payable $35,199, $32,344, amortization of right-use of assets $7,301, $8,810, income tax refund $3,475, impairment of intangible assets $1,597,$3,180, accounts receivable $1,209, prepayment, deposit and other receivable $773 and depreciation $268. $501.

Cash flow used in investing activities is $0 for the sixnine months ended NovemberFebruary 30,28, 20252026 as compared to $1,592$3,175 for the sixnine months ended NovemberFebruary 30,28, 2024,2025, reflecting an increase of cash flow $1592.$3,175. The increase is due to no investment in development costs incurred in the sixnine months months ended NovemberFebruary 30,28, 2025.2026.

Cash flow provided by financing activities is $30,250$3,524 and $394,463$394,584 for the sixnine months ended NovemberFebruary 30,28, 20252026 and 20242025 respectively, reflecting a decrease of cash flow $364,213.$391,060. The decrease in net cash provided by financing activities was mainly due to decrease in proceeds from share issuance $369,728 and offsetadvances increasefrom inrelated cashparties flow $5,515.$21,332.

Our contractual obligations as of NovemberFebruary 30,28, 20252026 are as follows:

Other than as shown above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of NovemberFebruary 30,28, 2025.2026.