# EDGAR Filing Document

**Accession Number:** 0001879754
**File Stem:** 0001185185-26-000864
**Filing Date:** 2026-3
**Character Count:** 212064
**Document Hash:** a3fe3c4f3dae8c065eae8d18959f3053
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001185185-26-000864.hdr.sgml**: 20260313

**ACCESSION NUMBER**: 0001185185-26-000864

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 104

**CONFORMED PERIOD OF REPORT**: 20250930

**FILED AS OF DATE**: 20260313

**DATE AS OF CHANGE**: 20260313

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** EShallGo Inc.
- **CENTRAL INDEX KEY:** 0001879754
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 000000000
- **STATE OF INCORPORATION:** E9
- **FISCAL YEAR END:** 0331

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-42154
- **FILM NUMBER:** 26752674

**BUSINESS ADDRESS:**
- **STREET 1:** 12F BLOCK 16, NO.1000 JINHAI ROAD
- **STREET 2:** PUDONG NEW DISTRICT
- **CITY:** SHANGHAI
- **STATE:** F4
- **ZIP:** 201206
- **BUSINESS PHONE:** 011864006005800

**MAIL ADDRESS:**
- **STREET 1:** 12F BLOCK 16, NO.1000 JINHAI ROAD
- **STREET 2:** PUDONG NEW DISTRICT
- **CITY:** SHANGHAI
- **STATE:** F4
- **ZIP:** 201206

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 6-K**

**REPORT OF FOREIGN PRIVATE ISSUER**

**PURSUANT TO RULE 13a-16 OR 15d-16**

**UNDER THE SECURITIES EXCHANGE ACT OF 1934**

**For the month of March 2026**

**Commission File Number: 001-42154**

**ESHALLGO INC**

**No. 37, Haiyi Villa, Lane 97, Songlin Road**

**Pudong New District**

**Shanghai, China 200120**

**+86 400 100 7299**

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F ☒ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Form 40-F ☐

 **INFORMATION CONTAINED IN THIS FORM 6-K REPORT**

Eshallgo Inc (the "Company") is filing its unaudited financial results for the six months ended September 30, 2025 and to discuss its recent corporate developments. Attached as exhibits to this Report on Form 6-K are:

● the Management's Discussion and Analysis of Financial Condition and Results of Operations for the Six Months Ended September 30, 2025 and 2024 as Exhibit 99.1;

● the unaudited interim condensed consolidated financial statements and related notes as Exhibit 99.2; and

● interactive data file disclosure as Exhibit 101 in accordance with Rule 405 of Regulation S-T.

**CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS**

This report on Form 6-K and the exhibits hereto contain "forward-looking statements" for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that represent the Company's beliefs, projections and predictions about future events. All statements other than statements of historical fact are "forward-looking statements," including any projections of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management's beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. Words such as "may", "will", "should", "could", "would", "predicts", "potential", "continue", "expects", "anticipates", "future", "intends", "plans", "believes", "estimates" and similar expressions, as well as statements in the future tense, identify forward-looking statements.

These statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause the Company's actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievements described in or implied by such statements. Actual results may differ materially from expected results described in the Company's forward-looking statements, including with respect to correct measurement and identification of factors affecting the Company's business or the extent of their likely impact, and the accuracy and completeness of the publicly available information with respect to the factors upon which the Company's business strategy is based or the success of the Company's business.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the times by which, the Company's performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and management's belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, those factors discussed more fully under the caption "Risk Factors" as well as other risks and factors identified from time to time in the Company's SEC filings.

**Exhibit Index**

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 99.1 | [Management's Discussion and Analysis of Financial Condition and Results of Operations for the Six Months Ended September 30, 2025 and 2024](ehgoex99-1.htm) |
| 99.2 | [Unaudited Interim Condensed Consolidated Financial Statements for the Six Months Ended September 30, 2025 and 2024](ehgoex99-2.htm) |
| 101.INS\* | Inline XBRL Instance Document. |
| 101.SCH\* | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF\* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB\* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE\* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104\* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

---

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | **Eshallgo Inc.** | **Eshallgo Inc.** |
| Date: March 13, 2026 | By: | */s/ Qiwei Miao* |
|  | Name: | Qiwei Miao |
|  | Title: | Chief Executive Officer |

---

## Exhibit 99.1

**Exhibit 99.1**

*The following discussion of the financial condition and results of operations is based upon and should be read in conjunction with the unaudited financial results and statements of Eshallgo Inc (the "Company," "we," "our," or "us") for the six (6) months ended September 30, 2025, furnished as Exhibit 99.1. to this report.*

**Key Factors that Affect Our Results of Operations**

We believe the following key factors may affect our financial condition and results of operations:

 

***Our Ability to Strength Our Competitive Advantages***

Through EShallGo's overall market layout method, service-oriented approach as well as the gradual and in-depth advancement of independent research and development tools, we will change the traditional sales-oriented model in the industry to more comprehensively and accurately tend customer needs, improve service quality, achieve time efficiency, and enhance customer satisfaction. While our long-term strategy is to shift our revenue mix towards higher-margin maintenance services, our results for the current period show that revenue growth was primarily driven by a significant increase in sale of equipment. Maintenance service revenue declined during the period. Our ability to successfully implement this strategy greatly affects our profitability.

 

***Our Ability to Control Costs and Expenses and Improve Our Operating Efficiency***

Our business growth is dependent on our ability to attract and retain qualified and productive employees, identify business opportunities, secure new contracts with customers, and our ability to control costs and expenses to improve our operating efficiency. Our inventory costs (mostly including purchased equipment, equipment parts and supplies) have a direct impact on our profitability. Our success is dependent, in part, on our ability to reduce our exposure to increase in those costs through a variety of ways, while maintaining and improving margins and market share. Our business is also subject to price volatility and labor cost and other inflationary pressures, which may, in turn, result in an increase in the amount we pay for sourced products. In addition, our staffing costs (including payroll and employee benefit expense) and administrative expenses also have a direct impact on our profitability. Our ability to drive the productivity of our staff and enhance our operating efficiency affects our profitability.

 

***A Severe or Prolonged Slowdown in the Global or Chinese Economy Could Materially and Adversely Affect Our Business and Our Financial Condition***

 ****

The rapid growth of the Chinese economy has slowed down since 2012 and this slowdown may continue in the future. There is considerable uncertainty over trade conflicts between the United States and China and the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world's leading economies, including the United States and China. The withdrawal of these expansionary monetary and fiscal policies could lead to a contraction. There continue to be concerns over unrest and terrorist threats in the Middle East, Europe, and Africa, which have resulted in volatility in oil and other markets. There are also concerns about the relationships between China and other Asian countries, which may result in or intensify potential conflicts in relation to territorial disputes. The eruption of armed conflict could adversely affect global or Chinese discretionary spending, either of which could have a material and adverse effect on our business, results of operation in financial condition. Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any severe or prolonged slowdown in the global or Chinese economy would likely materially and adversely affect our business, results of operations and financial condition. In addition, continued turbulence in the international markets may adversely affect our ability to access capital markets to meet liquidity needs.

**Cash Transfers within our Corporate Structure**

Eshallgo Inc (the "Eshallgo") is a holding company with no operations of its own. We conduct our operations in China primarily through the VIEs in China. 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. 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.

Eshallgo 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. Junzhang Monarch Limited, or 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.

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. 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.

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. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. 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.

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. The laws and regulations of the PRC do not prohibit the transfer of cash from Eshallgo to Eshallgo HK or from Eshallgo HK to Eshallgo, provided that each transfer shall comply with PRC foreign exchange laws and regulations. There are no restrictions or limitation under the laws of Hong Kong imposed on the conversion of HK dollar into foreign currencies and the remittance of currencies out of Hong Kong or across borders and to U.S investors.

Current PRC regulations permit our PRC subsidiaries to pay dividends to Eshallgo HK only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of the VIEs and their subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.

Eshallgo is permitted under the laws of Cayman Islands to provide funding to our subsidiaries in Hong Kong and PRC through loans or capital contributions without restrictions on the amount of the funds. Our subsidiary in Hong Kong is also permitted under the laws of Hong Kong SAR to provide funding to Eshallgo through dividend distribution without restrictions on the amount of the funds. Current PRC regulations permit Shanghai Eshallgo Enterprise Development (Group) Co., Ltd. or Eshallgo WFOE or the WFOE, to pay dividends to the Company only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. As of the date of this annual report, our Company, our subsidiaries, and the VIEs have not distributed any earnings or settled any amounts owed under the VIE Agreements. Our Company, our subsidiaries, and the VIEs do not have any plan to distribute earnings or settle amounts owed under the VIE Agreements in the foreseeable future. As of the date of this annual report, none of our subsidiaries or VIEs have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders. We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. If we determine to pay dividends on any of our ordinary shares in the future, as a holding company, we will depend on receipt of funds from our PRC subsidiary and from the VIEs to our PRC subsidiary in accordance with the VIE Agreements.

The structure of cash flows within our organization, and as summary of the applicable regulations, is as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Our equity structure adopt s
both a direct holding structure and contractual structure. Eshallgo directly controls Shanghai Eshallgo WFOE, and Hong Kong company, Eshallgo
HK. Eshallgo WFOE is the primary beneficiary of Junzhang Shanghai and Junzhang Beijing through a series of contractual agreements, under
which Eshallgo WFOE has the exclusive right to provide to Junzhang Beijing or Junzhang Shanghai consulting, technical or other services
and their respective intellectual property rights in exchange for payments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Within our direct holding structure, the cross-border transfer of funds within our corporate group is
legal and compliant with the laws and regulations of the PRC. After foreign investors' funds entered Eshallgo at the close of the
initial public offering, the funds could be directly transferred to Eshallgo HK, and then transferred to subordinate operating entities
through the WFOE. Within our contractual structure, the transfer of funds between the WFOE and VIEs are also legal and compliant with
the laws and regulations of the PRC

If the Company intends to distribute dividends, the VIEs will transfer the dividends to Eshallgo WOFE, which then will transfer the dividends to Eshallgo HK in accordance with the laws and regulations of the PRC, and then Eshallgo HK will transfer the dividends to Eshallgo, and the dividends will be distributed from Eshallgo to all shareholders respectively in proportion to the shares they hold, regardless of whether the shareholders are U.S. investors or investors in other countries or regions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. In the reporting periods presented in this annual report, no cash and other asset transfers have occurred
among the Company, its subsidiaries and the VIEs; and no dividends or distributions of a VIE have been made to the Company to date between
the holding company and its subsidiaries, or to investors. For the foreseeable future, the Company intends to use the earnings for research
and development, to develop new products and to expand its operations. As a result, we do not expect to pay any cash dividends. Furthermore,
besides the potential tax consequences mentioned below, although we do not anticipate any difficulties or limitations on our ability to
transfer cash between the holding company and the subsidiaries, or between the VIEs and the subsidiaries in the future, we have not installed
any cash management policies that dictate how funds are transferred between the holding company, the subsidiaries and the VIEs. To the
extent cash in the business is in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds may not be available to fund operations or for
other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of the
holding company, our subsidiaries, or the consolidated VIEs by the PRC government to transfer cash.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Our PRC subsidiary's ability to distribute dividends is based upon its distributable earnings. Current
PRC regulations permit our PRC subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if
any, determined in accordance with PRC accounting standards and regulations. In addition, each of our PRC subsidiaries is required to
set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of
each of their registered capitals. These reserves are not distributable as cash dividends.

A. <u>Operating Results</u> 

 ****

***Comparison of Results of Operations for the Six Months Ended September 30, 2025 and 2024***

The following table summarizes our operating results as reflected in our unaudited condensed consolidated statements of loss and comprehensive loss during the six months ended September 30, 2025 and 2024, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such periods.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended September 30,** | **For the Six Months Ended September 30,** | **For the Six Months Ended September 30,** | **For the Six Months Ended September 30,** | **For the Six Months Ended September 30,** | **For the Six Months Ended September 30,** |
|  | **2025** | **2025** | **2024** | **2024** | **Variance** | **Variance** |
|  |<br>**Amount** | **% of**<br>**revenue** |<br>**Amount** | **% of**<br>**revenue** | **Amount** | **% of** |
| **REVENUE** | $7790265 | 100.0% | $6712478 | 100.0% | $1077787 | 16.1% |
| **COST OF REVENUE** | 6443221 | 82.7% | 5136132 | 76.5% | 1307089 | 25.4% |
| **GROSS PROFIT** | 1347044 | 17.3% | 1576346 | 23.5% | (229302) | (14.5)% |
| **Operating expenses** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Selling expenses | 1128805 | 14.5% | 2593603 | 38.6% | (1464798) | (56.5)% |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | 8023242 | 103.0% | 1985107 | 29.6% | 6038135 | 304.2% |
| &nbsp;&nbsp;&nbsp;Research and development expenses | 84242 | 1.1% | 9999 | 0.1% | 74243 | 742.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 9236289 | 118.6% | 4588709 | 68.3% | 4647580 | 101.3% |
| **Loss from operations** | (7889245) | (101.3)% | (3012363) | (44.9)% | (4876882) | 161.9% |
| **Other income** | 324287 | 4.2% | 36275 | 0.5% | 288012 | 794.0% |
| **Loss before income tax provision** | (7564958) | (97.1)% | (2976088) | (44.3)% | (4588870) | 154.2% |
| **Provision for income taxes** | 19510 | 0.3% | 27044 | 0.4% | (7534) | (27.9)% |
| **Net loss** | (7584468) | (97.4)% | (3003132) | (44.7)% | (4581336) | 152.6% |
| &nbsp;&nbsp;&nbsp;Less: net (loss)income attributable to non-controlling interest | (283326) | (3.6)% | 155986 | 2.3% | (439312) | (281.6)% |
| **NET LOSS ATTRIBUTABLE TO ESHALLGO INC** | $(7301142) | (93.8)% | $(3159118) | (47.1)% | $(4142024) | 131.1% |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended September 30,** | **For the Six Months Ended September 30,** | **For the Six Months Ended September 30,** | **For the Six Months Ended September 30,** | **For the Six Months Ended September 30,** | **For the Six Months Ended September 30,** |
|  | **2025** | **2025** | **2024** | **2024** | **Variance** | **Variance** |
|  |<br>**Amount** | **% of**<br>**revenue** |<br>**Amount** | **% of**<br>**revenue** |<br>**Amount** |<br>**% of** |
| **Revenue** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Sale of equipment | $6873504 | 88.2% | $5480454 | 81.6% | $1393050 | 25.4% |
| &nbsp;&nbsp;&nbsp;Maintenance service | 377585 | 4.8% | 595531 | 8.9% | (217946) | (36.6)% |
| &nbsp;&nbsp;&nbsp;Lease of equipment | 536401 | 6.9% | 632556 | 9.4% | (96155) | (15.2)% |
| &nbsp;&nbsp;&nbsp;Finance income from sales type leases | 2775 | 0.0% | 3937 | 0.1% | (1162) | (29.5)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenue | 7790265 | 100.0% | 6712478 | 100.0% | 1077787 | 16.1% |
| **Cost of Revenue** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Cost of sale of equipment | 6239507 | 90.8% | 4858971 | 88.7% | 1380536 | 28.4% |
| &nbsp;&nbsp;&nbsp;Costs of maintenance service | 34821 | 9.2% | 52171 | 8.8% | (17350) | (33.3)% |
| &nbsp;&nbsp;&nbsp;Costs of lease of equipment | 168893 | 31.5% | 224990 | 35.6% | (56097) | (24.9)% |
| &nbsp;&nbsp;&nbsp;Cost of finance income from sales type leases |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost of revenue | 6443221 | 82.7% | 5136132 | 76.5% | 1307089 | 25.4% |
| **Gross Profit** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Sale of equipment | 633997 | 9.2% | 621483 | 11.3% | 12514 | 2.0% |
| &nbsp;&nbsp;&nbsp;Maintenance service | 342764 | 90.8% | 543360 | 91.2% | (200596) | (36.9)% |
| &nbsp;&nbsp;&nbsp;Lease of equipment | 367508 | 68.5% | 407566 | 64.4% | (40058) | (9.8)% |
| &nbsp;&nbsp;&nbsp;Finance income from sales type leases | 2775 | 100.0% | 3937 | 100.0% | (1162) | (29.5)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total gross profit | $1347044 | 17.3% | $1576346 | 23.5% | $(229302) | (14.5)% |

---

***Revenue***

Our total revenues increased by $1,077,787, or 16.1%, to $7,790,265 for the six months ended September 30, 2025 from $6,712,478 for the six months ended September 30, 2024. The increase in our revenues was primarily attributable to the following reasons:

● The revenues from sale of equipment increased by $1,393,050, or 25.4%, to $6,873,504 for the six months ended September 30, 2025 from $5,480,454 for the six months ended September 30, 2024. The increase was primarily attributable to the following reasons: (i) sales of office equipment increased by $540,812, or 14.0%, to $4,394,930 for the six months ended September 30, 2025 from $3,854,118 for the six months ended September 30, 2024; and (ii) sales of consumable materials, parts and others increased by $852,238, or 52.4%, to $2,478,574 for the six months ended September 30, 2025 from $1,626,336 for the six months ended September 30, 2024. The increase was mainly due to increased sales of equipment resulted from business expansion by three of our entities in Suzhou, Changzhou and Zibo. These three entities are relatively new, and their business operation and customer base has grown rapidly in the six months ended September 30, 2025.

● Our revenue from maintenance service decreased by $217,946, or 36.6%, to $377,585 for the six months ended September 30, 2025 from $595,531 for the six months ended September 30, 2024. 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 decrease was primarily attributable to the following reasons: (i) the revenue from full coverage and repair service increased by $31,660, or 28.0%, to $144,805 for the six months ended September 30, 2025 from $113,145 for the six months ended September 30, 2024; and (ii) the revenue from other service decreased by $249,606, or 51.7%, to $232,780 for the six months ended September 30, 2025 from $482,386 for the six months ended September 30, 2024. The decrease in maintenance service was mainly due to declined customer orders for ad hoc software and system services for the six months ended September 30, 2025.

● Our revenue from leasing of equipment decreased by $96,155, or 15.2%, to $536,401 for the six months ended September 30, 2025 from $632,556 for the six months ended September 30, 2024. The decrease was mainly due to reduced lease prices we offered to our customers for six months ended September 30, 2025. Our customers are more sensitive to prices than before, hence prices discounts were given to our customers. Meanwhile, many of our customers prefer to lease used machines instead of new machines, as the prices of used machines are lower.

● Finance income is generated from sales type leases. The finance income decreased by $1,162, or 29.5%, to $2,775 in the six months ended September 30, 2025 from $3,937 in the six months ended September 30, 2024.

 ****

 ****

***Cost of Revenue***

Cost of equipment sold primarily included the costs to purchase the office equipment, inducing the freight expenses and ordering expenses. 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.

Our total costs of revenues increased by $1,307,089, or 25.4%, to $6,443,221 for the six months ended September 30, 2025 from $5,136,132 for the six months ended September 30, 2024. The increase in our costs was primarily attributable to the following reasons:

● Our cost of revenues from sale of equipment increased by $1,380,536, or 28.4%, to $6,239,507 for the six months ended September 30, 2025 from $4,858,971 for the six months ended September 30, 2024. The increase was primarily attributable to the following reasons: (i) the cost of sale of office equipment increased by $633,169, or 18.1%, to $4,131,323 for the six months ended September 30, 2025 from $3,498,154 for the six months ended September 30, 2024; and (ii) the cost of sale of consumable materials, parts and others increased by $747,367, or 54.9%, to $2,108,184 for the six months ended September 30, 2025 from $1,360,817 for the six months ended September 30, 2024. The percentage increase in cost of revenue from sale of equipment was higher than the percentage increase in revenue from sale of equipment, as discussed in greater details below.

● Our cost of revenues from maintenance service decreased by $17,350, or 33.3%, to $34,821 for the six months ended September 30, 2025 from $52,171 for the six months ended September 30, 2024, primarily due to the following reasons: (i) the cost of revenues from full coverage and repair service increased by $2,527, or 12.9%, to $22,133 for the six months ended September 30, 2025 from $19,606 for the six months ended September 30, 2024; and (ii) the cost of revenues from other service decreased by $19,877, or 61.0%, to $12,688 for the six months ended September 30, 2025 from $32,565 for the six months ended September 30, 2024. The decrease in cost of revenue from maintenance service was in line with the decrease in revenue from maintenance service.

● Our cost of revenues from lease of equipment decreased by $56,097, or 24.9%, to $168,893 for the six months ended September 30, 2025 from $224,990 for the six months ended September 30, 2024. The percentage decrease in cost of revenue from lease of equipment was higher than the percentage decrease in revenue from lease of equipment, as discussed in greater details below.

 ****

***Gross Profit***

Our total gross profit decreased by $229,302, or 14.5%, to $1,347,044 for the six months ended September 30, 2025 from $1,576,346 for the six months ended September 30, 2024. Our overall gross profit margin decreased by 6.2% to 17.3% for the six months ended September 30, 2025 from 23.5% for the six months ended September 30, 2024.

The decrease in our gross profit and gross margin was primarily attributable to the following reasons:

● The gross profit from sales of equipment increased by $12,514, or 2.0%, to $633,997 for the six months ended September 30, 2025 from $621,483 for the six months ended September 30, 2024. The increase in gross profit consists: (i) the gross profit for sales of office equipment decreased by $92,357, or 25.9%, to $263,607 for the six months ended September 30, 2025 from $355,964 for the six months ended September 30, 2024; and (ii) the gross profit for sales of consumable material, parts and others increased by $104,871, or 39.5%, to $370,390 for the six months ended September 30, 2025 from $265,519 for the six months ended September 30, 2024. The increase in gross profit was primarily due to the increase in revenue from sales of equipment. The gross margin of sales of equipment remained relatively stable with a slight decrease of 2.1 percentage points, from 11.3% for the six months ended September 30, 2024 to 9.2% for the six months ended September 30, 2025. Our customers are more sensitive to prices than ever, and we also faced increased competition from our rivals, hence, prices discounts were given to our customers which led to a decreased gross profit margin for the six months ended September 30, 2025.

● The gross profit of maintenance service decreased by $200,596, or 36.9%, to $342,764 for the six months ended September 30, 2025 from $543,360 for the six months ended September 30, 2024. The decrease in gross profit consists: (i) the gross profit from full coverage and repair services increased by $29,133, or 31.1%, to $122,672 for the six months ended September 30, 2025 from $93,539 for the six months ended September 30, 2024; and (ii) the gross profit from other services decreased by $229,729, or 51.1%, to $220,092 for the six months ended September 30, 2025 from $449,821 for the six months ended September 30, 2024. The decrease in gross profit was primarily due to the decrease in revenue from maintenance service. The gross margin of maintenance service remained relatively stable with a slight decrease of 0.4 percentage points, from 91.2% for the six months ended September 30, 2024 to 90.8% for the six months ended September 30, 2025.

● The gross profit from lease of equipment decreased by $40,058, or 9.8%, to $367,508 for the six months ended September 30, 2025 from $407,566 for the six months ended September 30, 2024, which was due to the decrease in revenue from lease of equipment. The gross margin of lease of equipment increased by 4.1 percentage points, from 64.4% for the six months ended September 30, 2024 to 68.5% for the six months ended September 30, 2025. While ensuring our quality of leasing services, we have tried to improve our profit margin by selecting more cost-effective consumables in our leasing package. Hence, our gross margin of lease of equipment increased during the six months ended September 30, 2025 as compared to the same period last year.

 ****

***Operating Expenses***

The following table sets forth the breakdown of our operating expenses for the six months ended September 30, 2025 and 2024:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** |
|  | **2025** | **2025** | **2024** | **2024** | **Variance** | **Variance** |
|  |<br>**Amount** | **% of**<br>**revenue** |<br>**Amount** | **% of**<br>**revenue** |<br>**Amount** |<br>**% of** |
| **Total Revenue** | $7790265 | 100.0% | $6712478 | 100.0% | $1077787 | 16.1% |
| **Operating Expenses** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Selling expenses | 1128805 | 14.5% | 2593603 | 38.6% | (1464798) | (56.5)% |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | 8023242 | 103.0% | 1985107 | 29.6% | 6038135 | 304.2% |
| &nbsp;&nbsp;&nbsp;Research and development expenses | 84242 | 1.1% | 9999 | 0.1% | 74243 | 742.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | $9236289 | 118.6% | $4588709 | 68.3% | $4647580 | 101.3% |

---

***Selling expenses***

Our selling expenses primarily include stock-based compensation expense, salaries and welfare benefit expenses paid to our sales personnel, consulting and professional expenses, office, utility, and other expenses, and expenses incurred for our business travel and meals.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** |
|  | **2025** | **2025** | **2024** | **2024** | **Variance** | **Variance** |
|  | **Amount** | **% of** | **Amount** | **% of** | **Amount** | **% of** |
| **Selling Expenses** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense | $442704 | 39.2% | $2048200 | 79.0% | $(1605496) | (78.4)% |
| &nbsp;&nbsp;&nbsp;Consulting and professional service fees | 62618 | 5.5% |  |  | 62618 | 100.0% |
| &nbsp;&nbsp;&nbsp;Travel and meals | 101437 | 9.0% | 51052 | 2.0% | 50385 | 98.7% |
| &nbsp;&nbsp;&nbsp;Salary, employee insurance and welfare expenses | 407430 | 36.1% | 368781 | 14.2% | 38649 | 10.5% |
| &nbsp;&nbsp;&nbsp;Office, utility and other expenses | 114616 | 10.2% | 125570 | 4.8% | (10954) | (8.7)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total selling expenses | $1128805 | 100.0% | $2593603 | 100.0% | $(1464798) | (56.5)% |

---

Our selling expenses decreased by $1,464,798, or 56.5%, to $1,128,805 for the six months ended September 30, 2025 from $2,593,603 for the six months ended September 30, 2024, primarily attributable to (i) a decrease in our stock-based compensation expense by $1,605,496, or 78.4%, for the six months ended September 30, 2025 as compared to the same period last year. We adopted equity incentive plan to award our consultants or key employees for their best efforts in our successful initial public offering, stock-based compensation expense decreased as less equity incentive was awarded to our sales personnel in the six months ended September 30, 2025; (ii) an increase in consulting and professional service fees by $62,618, or 100.0%, for the six months ended September 30, 2025 as compared to the same period last year, as we engaged a professional service company to conduct market analysis and design marketing and promotional strategies, and visual identity (such as logo, packaging etc.) for our newly established subsidiary in the U.S.; (iii) an increase in travel and meals expenses by $50,385, or 98.7%, for the six months ended September 30, 2025 as compared to the same period last year, and an increase in salary, employee insurance and welfare expenses by $38,649, or 10.5%, for the six months ended September 30, 2025 as compared to the same period last year, which was mainly due to the increased travel and entertainment activities and increased number of sales personnel as we tried to expand our business and seek business opportunities with new customers; and (iv) a decrease in office, utility and other expenses by $10,954, or 8.7%, for the six months ended September 30, 2025, as compared to the same period last year. As a percentage of revenues, our selling expenses accounted for 14.5% and 38.6% of our total revenue for the six months ended September 30, 2025 and 2024, respectively.

 ****

 ****

***General and administrative expenses***

Our general and administrative expenses primarily consist of stock-based compensation expense, allowance for credit losses/doubtful accounts, employee salaries, welfare and insurance expenses, consulting and professional service fees, office and utility expenses, and business travel and meals expenses.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** |
|  | **2025** | **2025** | **2024** | **2024** | **Variance** | **Variance** |
|  | **Amount** | **% of** | **Amount** | **% of** | **Amount** | **% of** |
| **General and Administrative Expenses** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense | $4818458 | 60.1% | $30000 | 1.6% | $4788458 | 15961.5% |
| &nbsp;&nbsp;&nbsp;Allowance for credit losses/doubtful accounts | 1265198 | 15.8% | 125485 | 6.3% | 1139713 | 908.2% |
| &nbsp;&nbsp;&nbsp;Salary, employee insurance and welfare expenses | 1057206 | 13.2% | 772309 | 38.9% | 284897 | 36.9% |
| &nbsp;&nbsp;&nbsp;Consulting and professional service fees | 431464 | 5.4% | 606263 | 30.5% | (174799) | (28.8)% |
| &nbsp;&nbsp;&nbsp;Office, utility and other expenses | 450916 | 5.5% | 451050 | 22.7% | (134) | (0.0)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total general and administrative expenses | $8023242 | 100.0% | $1985107 | 100.0% | $6038135 | 304.2% |

---

Our general and administrative expenses increased by $6,038,135, or 304.2%, to $8,023,242 for the six months ended September 30, 2025 from $1,985,107 for the six months ended September 30, 2024, primarily attributable to (i) an increase in our stock-based compensation expense by $4,788,458, or 15,961.5%, for the six months ended September 30, 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, as well as compensation for consulting services provided. The increase in stock-based compensation expense was due to equity incentive awarded for consulting services provided during the six months ended September 30, 2025; (ii) an increase in allowance for credit losses and doubtful accounts by $1,139,713, or 908.2%, for the six months ended September 30, 2025 as compared to the same period last year. Due to the slow recovery of economy in China, our accounts receivable turnover days increased due to extended credits given to some of our customers, and we also entered into some long-term repayment agreements with our debtors. The allowance is determined based on individual customer financial health analysis, historical collection trend and management's best estimate of specific losses on individual exposure. We periodically review our allowance level in order to ensure our methodology used to determine allowances is reasonable and we will put more efforts into debt collection through strengthened monitoring of the uncollected receivable balance; (iii) an increase in our salary and welfare expenses by $284,897, or 36.9%, for the six months ended September 30, 2025 as compared to the same period last year, primarily due to the increased director compensation as well as increased salary and welfare expenses for entities in Suzhou and Zibo that were not in operation in the same period last year; (iv) a decrease in our consulting and professional fees by $174,799, or 28.8%, for the six months ended September 30, 2025 as compared to the same period last year, primarily due to the decreased fees paid for professional services such as audit services and financial consulting services during the six months ended September 30, 2025; and (v) a decrease in office, utility and other expenses by $134, for the six months ended September 30, 2025 as compared to the same period last year. As a percentage of revenues, general and administrative expenses were 103.0% and 29.6% of our revenue for the six months ended September 30, 2025 and 2024, respectively.

 ****

***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 Six Months ended September 30,** | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** | **For the Six Months ended September 30,** |
|  | **2025** | **2025** | **2024** | **2024** | **Variance** | **Variance** |
|  | **Amount** | **% of** | **Amount** | **% of** | **Amount** | **% of** |
| **Research and Development Expenses** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Salary, employee insurance and welfare expenses | $10007 | 11.9% | $9999 | 100.0% | $8 | 0.1% |
| &nbsp;&nbsp;&nbsp;Others | 74235 | 88.1% |  |  | 74235 | 100.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total research and development expenses | $84242 | 100.0% | $9999 | 100.0% | $74243 | 742.5% |

---

Our research and development expenses increased by $74,243, or 742.5%, to $84,242 for the six months ended September 30, 2025 from $9,999 for the six months ended September 30, 2024. The increase is primarily attributable to the increased research and development activities towards products and system development, and we invested more resources during the six months ended September 30, 2025. As a percentage of revenues, research and development expenses were 1.1% and 0.1% of our revenue for the six months ended September 30, 2025 and 2024, respectively.

 ****

***Interest expense, Net***

Our net interest expense was $81,545 for the six months ended September 30, 2025 as compared to net interest income of $2,232 for the six months ended September 30, 2024. We issued convertible debentures with an accredited investor, the increase in net interest expense was mainly due to interest expense recorded for the convertible debentures.

 ****

***Amortization of Debt Issuance Costs***

As mentioned above, we issued convertible debentures with an accredited investor, and issuance costs is recorded as deferred financing costs and amortized subsequently during the contractual period. For the six months ended September 30, 2025, the amortization of debt issuance costs expenses was $465,004.

 ****

***Gain on Derivative Liabilities***

As mentioned above, we issued convertible debentures with an accredited investor, and we determined the embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative liability at fair value with changes in fair value recorded in earnings. For the six months ended September 30, 2025, gain on derivative liabilities was $867,251.

 ****

***Net Loss***

As a result of the foregoing, we reported a net loss of $7,584,468 for the six months ended September 30, 2025, representing a $4,581,336, or 152.6% increase from a net loss of $3,003,132 for the six months ended September 30, 2024.

 ****

***Net (Loss) Income Attributable to Non-controlling Interest***

One of our main operating entities, Junzhang Shanghai owns 55% shares of twenty subsidiaries and WOFE owns 55% shares of 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. The net loss (income) attributed to non-controlling interest increased by $439,312, or 281.6%, from net income attributed to non-controlling interest of $155,986 for the six months ended September 30, 2024 to net loss attributed to non-controlling interest of $283,326 for the six months ended September 30, 2025, which was due to the overall decrease in profitability.

 ****

***Net Loss Attributable to Eshallgo Inc***

As a result of the foregoing, we reported a net loss attributable to Eshallgo of $7,301,142 for the six months ended September 30, 2025, representing a $4,142,024, or 131.1% increase from a net loss attributable to Eshallgo of $3,159,118 for the six months ended September 30, 2024.

B. <u>Liquidity and Capital Resources</u> 

On July 3, 2024, we closed our IPO (the "Offering") of 1,250,000 Class A ordinary shares at a public offering price of $4.00 per Class A ordinary share for the total gross proceeds of $5.0 million before deducting underwriting discounts and other related expenses. The Offering was conducted on a firm commitment basis. 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. Our Class A Ordinary Shares began trading on Nasdaq Capital Market under the ticker symbol "EHGO" on July 2, 2024.

On November 29, 2024, we entered into a securities purchase agreement with an accredited investor (the "Debenture Holder") to place Convertible Debentures (the "Debentures," each, a "Debenture") with a maturity date of November 28, 2025, which is 364 days after the issuance of the first Debenture, in the aggregate principal amount of up to $5,000,000 at a purchase price equal to 95% of the principal amount (the "Transaction"), provided that in case of an event of default, the Debentures may become, at the Debenture Holder's election, immediately due and payable. The Debentures bear an interest rate of 5% per annum which shall be increased to 18% per annum in the event of default. The initial closing of the Transaction in the principal amount of $1,500,000 in Debenture occurred on November 29, 2024. The second closing of the Transaction in the principal amount of $2,000,000 in Debenture occurred on December 19, 2024. The third closing of the Transaction in the principal amount of $1,500,000 in Debenture occurred on December 30, 2024. For the six months ended September 30, 2025, a total of $465,004 in amortization of the debt issuance costs was recorded on the unaudited condensed consolidated statements of loss and comprehensive loss. As of September 30, 2025, shares of our Class A ordinary share totaling 2,759,163 were issued by us to the Debenture Holder with principal and interests equaling to $2,449,521. The Convertible Debentures balance was $1,769,482, with a carrying value of $1,866,809, net of deferred financing costs of $97,327 was recorded in the accompanying unaudited condensed consolidated balance sheets as of September 30, 2025. The derivative liability associated with these notes were $293,641 as of September 30, 2025. We recognized a gain of $867,251 from the change in fair value of the derivative liability for the six months ended September 30, 2025.

As of September 30, 2025, we had $4,004,126 in cash and cash equivalents as compared to $7,600,300 as of March 31, 2025. We also had $4,629,500 in accounts receivable. Our accounts receivable primarily include balance due from customers for our office equipment sold and services provided and accepted by customers. Collected accounts receivable will be used as working capital in our operations, if necessary.

As of September 30, 2025, we had short-term investments of $1,989,712, including accrued interests of $41,005. 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. 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 unaudited condensed consolidated statements of loss and comprehensive loss as interest income.

As of September 30, 2025, our inventory balance amounted to $2,254,471, 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 September 30, 2025, we had $140,445 in short-term bank loans. We expect that we will be able to renew all of the existing bank loans upon their maturity based on our past experience and outstanding credit history.

As of September 30, 2025, our working capital balance was $15,450,841. In assessing our liquidity, management monitors and analyzes our cash and cash equivalents, our ability to generate sufficient revenue in the future, and our operating and capital expenditure commitments. 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 unaudited condensed consolidated financial statements were issued. However, if we were to experience an adverse operating environment or incur unanticipated capital expenditures, or if we decided to accelerate our growth, then additional financing may be required. Our capital expenditures, including infrastructure to support ongoing operational initiatives have been and will continue to be significant. We cannot guarantee, however, that additional financing, if required, would be available at all or on favorable terms. Such financing may include the use of additional debt or the sale of additional equity securities. 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. 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.

The following table sets forth summary of our cash flows for the periods indicated:

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| | | |
|:---|:---|:---|
|  | **For the<br> Six Months Ended<br> September 30,** | **For the<br> Six Months Ended<br> September 30,** |
|  | **2025** | **2024** |
| Net cash used in operating activities | $(4225941) | $(3310) |
| Net cash provided by (used in) investing activities | 359457 | (4740236) |
| Net cash provided by financing activities | 214461 | 4262523 |
| Effect of exchange rate change on cash, cash equivalents and restricted cash | 55851 | 101065 |
| Net decrease in cash, cash equivalents and restricted cash | (3596172) | (379958) |
| Cash, cash equivalents and restricted cash, beginning of period | 7600438 | 5362101 |
| Cash, cash equivalents and restricted cash, end of period | $4004266 | $4982143 |

---

***Operating Activities***

Net cash used in operating activities was $4,225,941 for the six months ended September 30, 2025, primarily derived from a net loss of $7,584,468 for the period, reconciled by issuance of Class A Ordinary Share for services of $4,260,000, stock-based compensation of $1,001,162, allowance for credit losses and doubtful accounts of $1,265,198, gain on derivative liabilities of $867,251 and amortization of debt issuance cost of $465,004, and net changes in our operating assets and liabilities, which mainly included an increase in advance to third-party and related party vendors of $1,819,297 as we increased our advance to vendors to secure supplies in anticipation of increased sales in the coming months, and increase in accounts receivable of $1,023,115, which was mainly due to increased sales, especially business expansion by three of our entities in Suzhou, Changzhou and Zibo.

Net cash used in operating activities was $3,310 for the six months ended September 30, 2024, primarily derived from a net loss of $3,003,132 for the period, reconciled by stock-based compensation of $2,078,200, and net changes in our operating assets and liabilities, which mainly included an increase in accounts receivable-related parties of $327,586, which was resulted from increased sales to our related parties. A decrease in inventories of $218,768 as we try to minimize inventory backlog and improve inventory turnover rate during the economic downturn, and an increase in accounts payable of $189,726 because of the extended payment period we requested from our suppliers

 ****

***Investing Activities***

Net cash provided by investing activities amounted to $359,457 for the six months ended September 30, 2025, and primarily included the redemption of short-term investments of $1,546,490, payment made for short-term loans to third parties of $493,443, purchase of short-term investments of $416,979 and payments made to related parties of $190,517.

Net cash used in investing activities amounted to $4,740,236 for the six months ended September 30, 2024, and primarily included the payments made to related parties of $2,439,307 and purchase of short-term investments of $1,557,033, payment made for short-term loans to third parties of $546,438 and payment made for long-term loans to third parties of $146,483.

 

***Financing Activities***

Net cash provided by financing activities amounted to $214,461 for the six months ended September 30, 2025, and primarily included proceeds from loans from related parties of $202,136.

Net cash provided by financing activities amounted to $4,262,523 for the six months ended September 30, 2024, and primarily included net proceeds from initial public offerings, net of issuance costs of $4,336,972 and payments made for deferred offering costs of $183,071.

**Contractual obligations**

As of September 30, 2025, our contractual obligations were as follows:

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| | | | |
|:---|:---|:---|:---|
| <br>**Contractual obligations** |<br>**Total** | **Less than**<br>**1 year** |<br>**Thereafter** |
| Future lease payments <sup>(1)</sup> | $514408 | $222753 | $27808 |
| Short-term bank loan <sup>(2)</sup> | 140445 | 140445 |  |
| Total | $654853 | $363198 | $27808 |

---

(1) We lease office space and warehouse space for the VIEs and the
subsidiaries in various major cities in the PRC. As of September 30, 2025, our future lease payments totaled $514,408.

(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 September 30, 2025 and March 31, 2025.

C. <u>Research and Development, Patents and Licenses, etc.</u> 

See "Item 4. Information on the Company—B. Business Overview—Intellectual Property."

D. <u>Trend Information</u> 

Other than as disclosed below and elsewhere in this report, we are not aware of any trends, uncertainties, demands, commitments, or events for the period from April 1, 2025 to September 30, 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.

E. <u>Critical Accounting Estimates and Policies</u> 

Our discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements. These financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenue and expenses, to disclose contingent assets and liabilities on the date of the unaudited condensed consolidated financial statements, and to disclose the reported amounts of revenue and expenses incurred during the financial reporting period. The most significant estimates and assumptions include the assessment of the expected credit losses for receivables, valuation of inventories, the recoverability of long-lived assets, realization of deferred tax assets, and the revenue recognition of leasing of equipment. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. 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 unaudited condensed consolidated financial statements

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 unaudited condensed 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. The roll-rate method stratifies the receivables balance by delinquency stages and projected forward in one-year increments using historical roll rate. In each year of the simulation, losses on the receivables are captured, and the ending delinquency stratification serves as the beginning point of the next iteration. This process is repeated on a yearly rolling basis. The loss rate calculated for each delinquency stage is then applied to respective receivables balance. We adjust the allowance that is determined by the roll-rate method for both current conditions and forecast of economic conditions. When establishing the loss rate, we make the assessment on various factors, including historical experience, creditworthiness of debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from, the debtors. Changes in these factors may result in material increase or decrease in amount of credit losses for accounts receivable for the period, which could be material to the financial operation results. The factors that have an effect on loss rate like creditworthiness of debtors, reasonable and supportable forecasts of future economic conditions are constantly changing according to the objective environment, therefore, it is a critical accounting policy.

As of September 30, 2025 and March 31, 2025, allowance for credit losses for accounts receivable amounted to$1,138,664 and $668,195, respectively, allowance for credit losses for long-term accounts receivable amounted to $103,788 and $101,820, respectively, allowance for credit losses for long-term other receivable amounted to $1,053,939 and $818,191, 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 $435,995 and $144,251, respectively, and allowance for credit losses for finance receivable amounted to $11,698 and $13,247, 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 September 30, 2025 by $55,124, $1,038, $14,781, $14,878 and $1,088, respectively. 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 September 30, 2025 by $57,682, $1,038, $14,781, $13,854 and $1,088, respectively.

 

 

***Inventories, net***

Inventory allowance involves estimating potential future inventory write-downs or losses. These estimates are typically based on management's judgment and historical data, but factors such as future market conditions and changes in demand can affect the accuracy of these estimates. Therefore, the estimation of inventory allowance carries a high degree of uncertainty. Inventory is a significant component of the Company's balance sheet, and changes in inventory allowance directly affect the total assets and net income of the company. If the inventory allowance is underestimated, it may lead to overstatement of assets and inflated profits; conversely, overestimation may result in understated assets and reduced profits. And therefore, it is a critical accounting policy. The inventory reserve amounted $22,772 and $18,182 as of September 30, 2025 and March 31, 2025, respectively. Each 1% increase (decrease) in our estimates would increase (decrease) our inventory reserve as of September 30, 2025 by $22,772.

 

***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. Future market conditions, technological changes, and economic environment can all affect the accuracy of these estimates. Therefore, the estimation of property and equipment impairment carries a high degree of uncertainty. Property and equipment is a significant component of our balance sheet, and changes in property and equipment impairment directly affect the total assets and net income of the company. If the property and equipment impairment is underestimated, it may lead to overstatement of assets and inflated profits; conversely, overestimation may result in understated assets and reduced profits. Determining property and equipment impairment requires substantial judgment and estimation by management, including forecasting future cash flows, selecting discount rates, and determining the useful life of assets. 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 six months ended September 30, 2025 and 2024.

 

***Revenue recognition***

We have multiple types of revenue streams and each revenue stream require us to apply the judgements in determining the methodology and accounting treatment for financial reporting purpose based on U.S. GAAP. Changes in these judgements may result in material increase or decrease in amount of revenue recognition for the period, which could be material to the financial operation results. We will continue execute its diversified operations strategy and seek other bossiness opportunities in addition to the original scope of business, therefore, it will still be a critical accounting policy in the foreseeable future.

 

***Income taxes***

Deferred tax assets and liabilities are recognized for expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carry forwards. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. When we determine and quantify the valuation allowances, we consider such factors as projected future taxable income, the availability of tax planning strategies, the historical taxable income/losses in prior years, and future reversals of existing taxable temporary differences. The assumptions used in determining projected future taxable income require significant judgment. Actual operating results in future years could differ from the current assumptions, judgements and estimates. Changes in these estimates and judgements may result in material increase or decrease in the provision for income tax expenses, which could be material to the financial position and results of operations. It is difficult to determine whether or when we and our subsidiaries will become profitable in the future, therefore, it will still be a critical accounting policy in the foreseeable future.

## Exhibit 99.2

?xml version='1.0' encoding='ASCII'?

**Exhibit 99.2**

**ESHALLGO INC AND SUBSIDIARIES**

**UNAUDITED** **CONDENSED CONSOLIDATED BALANCE SHEETS**

**(Expressed in U.S. dollars, except for the number of shares)** 

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
|  | (Unaudited) | |
| **ASSETS** |  |  |
| **CURRENT ASSETS:** |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents (including amounts of the consolidated VIEs of $2,287,645 and $3,745,251 as of September 30, 2025 and March 31, 2025, respectively) | $4004126 | $7600300 |
| &nbsp;&nbsp;&nbsp;Restricted cash (including amounts of the consolidated VIEs of $140 and $138 as of September 30, 2025 and March 31, 2025, respectively) | 140 | 138 |
| &nbsp;&nbsp;&nbsp;Short-term investments (including amounts of the consolidated VIEs of $1,989,475 and $3,093,976 as of September 30, 2025 and March 31, 2025, respectively) | 1989712 | 3094208 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net (including amounts of the consolidated VIEs of $4,191,754 and $3,809,698 as of September 30, 2025 and March 31, 2025, respectively) | 4629500 | 3976391 |
| &nbsp;&nbsp;&nbsp;Accounts receivable - related parties (including amounts of the consolidated VIEs of $77,818 and $245,492 as of September 30, 2025 and March 31, 2025, respectively) | 77818 | 245492 |
| &nbsp;&nbsp;&nbsp;Advance to vendors, net (including amounts of the consolidated VIEs of $2,586,751 and $1,289,198 as of September 30, 2025 and March 31, 2025, respectively) | 2691484 | 1451280 |
| &nbsp;&nbsp;&nbsp;Advance to vendors - related parties (including amounts of the consolidated VIEs of $312,417 and $50 as of September 30, 2025 and March 31, 2025, respectively) | 312417 | 50 |
| &nbsp;&nbsp;&nbsp;Inventories, net (including amounts of the consolidated VIEs of $1,787,072 and $1,584,425 as of September 30, 2025 and March 31, 2025, respectively) | 2254471 | 1800020 |
| &nbsp;&nbsp;&nbsp;Due from related parties (including amounts of the consolidated VIEs of $1,322,071 and $1,240,828 as of September 30, 2025 and March 31, 2025, respectively) | 3418847 | 3197017 |
| &nbsp;&nbsp;&nbsp;Long-term accounts receivable, net - current portion (including amounts of the consolidated VIEs of $84,279 and $82,681 as of September 30, 2025 and March 31, 2025, respectively) | 84279 | 82681 |
| &nbsp;&nbsp;&nbsp;Long-term other receivable, net - current portion (including amounts of the consolidated VIEs of $64,383 and $89,050 as of September 30, 2025 and March 31, 2025, respectively) | 64383 | 89050 |
| &nbsp;&nbsp;&nbsp;Finance receivables, net - current portion (including amounts of the consolidated VIEs of $55,328 and $70,801 as of September 30, 2025 and March 31, 2025, respectively) | 55328 | 70801 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets, net (including amounts of the consolidated VIEs of $1,513,193 and $1,112,065 as of September 30, 2025 and March 31, 2025, respectively) | 1941725 | 1363793 |
| **TOTAL CURRENT ASSETS** | **21524230** | **22971221** |
| &nbsp;&nbsp;&nbsp;Property and equipment, net (including amounts of the consolidated VIEs of $290,415 and $352,212 as of September 30, 2025 and March 31, 2025, respectively) | 379438 | 385415 |
| &nbsp;&nbsp;&nbsp;Right-of-use assets, net (including amounts of the consolidated VIEs of $104,472 and $104,390 as of September 30, 2025 and March 31, 2025, respectively) | 377626 | 434188 |
| &nbsp;&nbsp;&nbsp;Deferred tax assets, net (including amounts of the consolidated VIEs of $6,375 and $5,613 as of September 30, 2025 and March 31, 2025, respectively) | 6375 | 5613 |
| &nbsp;&nbsp;&nbsp;Long-term other receivable, net - non-current portion (including amounts of the consolidated VIEs of $414,589 and $591,803 as of September 30, 2025 and March 31, 2025, respectively) | 414589 | 591803 |
| &nbsp;&nbsp;&nbsp;Finance receivables, net - non-current portion (including amounts of the consolidated VIEs of $41,724 and $46,852 as of September 30, 2025 and March 31, 2025, respectively) | 41724 | 46852 |
| &nbsp;&nbsp;&nbsp;Other non-current assets, net (including amounts of the consolidated VIEs of $211,371 and $374,201 as of September 30, 2025 and March 31, 2025, respectively) | 211371 | 374201 |
| **TOTAL NONCURRENT ASSETS** | **1431123** | **1838072** |
| **TOTAL ASSETS** | $**22955353** | $**24809293** |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| **CURRENT LIABILITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Short-term bank loan (including amounts of the consolidated VIEs of $140,445 and $137,781 as of September 30, 2025 and March 31, 2025, respectively) | $140445 | $137781 |
| &nbsp;&nbsp;&nbsp;Accounts payable (including amounts of the consolidated VIEs of $939,900 and $787,746 as of September 30, 2025 and March 31, 2025, respectively) | 1381281 | 1003053 |
| &nbsp;&nbsp;&nbsp;Accounts payable - related parties (including amounts of the consolidated VIEs of $24,137 and $140,261 as of September 30, 2025 and March 31, 2025, respectively) | 24137 | 140261 |
| &nbsp;&nbsp;&nbsp;Convertible note payable (including amounts of the consolidated VIEs of $nil and $nil as of September 30, 2025 and March 31, 2025, respectively) | 1769482 | 2391945 |
| &nbsp;&nbsp;&nbsp;Derivative liability (including amounts of the consolidated VIEs of $nil and $nil as of September 30, 2025 and March 31, 2025, respectively) | 293641 | 2032530 |
| &nbsp;&nbsp;&nbsp;Deferred revenue (including amounts of the consolidated VIEs of $950,081 and $876,905 as of September 30, 2025 and March 31, 2025, respectively) | 1092527 | 999182 |
| &nbsp;&nbsp;&nbsp;Payroll payable (including amounts of the consolidated VIEs of $255,727 and $223,035 as of September 30, 2025 and March 31, 2025, respectively) | 327940 | 294669 |
| &nbsp;&nbsp;&nbsp;Taxes payable (including amounts of the consolidated VIEs of $237,176 and $251,185 as of September 30, 2025 and March 31, 2025, respectively) | 240324 | 218342 |
| &nbsp;&nbsp;&nbsp;Due to related parties (including amounts of the consolidated VIEs of $106,012 and $121,825 as of September 30, 2025 and March 31, 2025, respectively) | 374342 | 132620 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities (including amounts of the consolidated VIEs of $101,046 and $90,676 as of September 30, 2025 and March 31, 2025, respectively) | 131355 | 233883 |
| &nbsp;&nbsp;&nbsp;Deferred tax liabilities (including amounts of the consolidated VIEs of $5,281 and $6,413 as of September 30, 2025 and March 31, 2025, respectively) | 5843 | 6964 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities - current portion (including amounts of the consolidated VIEs of $163,112 and $150,615 as of September 30, 2025 and March 31, 2025, respectively) | 292072 | 275213 |
| **TOTAL CURRENT LIABILITIES** | **6073389** | **7866443** |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities - non-current portion (including amounts of the consolidated VIEs of $69,200 and $64,797 as of September 30, 2025 and March 31, 2025, respectively) | 202158 | 258974 |
| &nbsp;&nbsp;&nbsp;Due to a related party - non-current (including amounts of the consolidated VIEs of $nil and $nil as of September 30, 2025 and March 31, 2025, respectively) | 94098 | 126759 |
| **TOTAL NONCURRENT LIABILITIES** | **296256** | **385733** |
| **TOTAL LIABILITIES** | **6369645** | **8252176** |
| **COMMITMENTS AND CONTINGENCIES** |  |  |
| **SHAREHOLDERS' EQUITY** |  |  |
| &nbsp;&nbsp;&nbsp;Class A ordinary share, par value $0.0001 per share, 90,000,000 shares authorized, 23,838,163 and 17,842,778 shares issued and outstanding as of September 30, 2025 and March 31, 2025, respectively | 2384 | 1784 |
| &nbsp;&nbsp;&nbsp;Class B ordinary share, par value $0.0001 per share, 10,000,000 shares authorized, 5,856,000 shares issued and outstanding as of September 30, 2025 and March 31, 2025, respectively | 586 | 586 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 21062521 | 13754806 |
| &nbsp;&nbsp;&nbsp;Statutory reserves | 647250 | 646794 |
| &nbsp;&nbsp;&nbsp;Accumulated deficits | (10370735) | (3069137) |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (687330) | (864735) |
| **TOTAL SHAREHOLDERS' EQUITY** | **10654676** | **10470098** |
| &nbsp;&nbsp;&nbsp;Non-controlling interest | 5931032 | 6087019 |
| **TOTAL EQUITY** | **16585708** | **16557117** |
| **TOTAL LIABILITIES AND EQUITY** | $**22955353** | $**24809293** |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**ESHALLGO INC AND SUBSIDIARIES** 

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS** 

**(Expressed in U.S. dollars, except for the number of shares)** 

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> September 30,** | **For the Six Months Ended<br> September 30,** |
|  | **2025** | **2024** |
| **REVENUE** |  |  |
| &nbsp;&nbsp;&nbsp;Revenue - third parties | $7685885 | $6042781 |
| &nbsp;&nbsp;&nbsp;Revenue - related parties | 104380 | 669697 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total revenue** | **7790265** | **6712478** |
| **COST OF REVENUE** |  |  |
| &nbsp;&nbsp;&nbsp;Cost of revenue - third parties | 6373999 | 4679515 |
| &nbsp;&nbsp;&nbsp;Cost of revenue - related parties | 69222 | 456617 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total cost of revenue** | **6443221** | **5136132** |
| **GROSS PROFIT** | **1347044** | **1576346** |
| **OPERATING EXPENSES** |  |  |
| Selling expenses | 1128805 | 2593603 |
| General and administrative expenses | 8023242 | 1985107 |
| Research and development expenses | 84242 | 9999 |
| Total operating expenses | **9236289** | **4588709** |
| **LOSS FROM OPERATIONS** | **(7889245)** | **(3012363)** |
| **OTHER INCOME, NET** |  |  |
| Interest (expense) income, net | (81545) | 2232 |
| Investment income | 14831 | 28957 |
| Other (expenses) income, net | (11246) | 5086 |
| Amortization of debt issuance costs | (465004) |  |
| Gain on derivative liabilities | 867251 |  |
| Total other income, net | **324287** | **36275** |
| **LOSS BEFORE INCOME TAX PROVISION** | **(7564958)** | **(2976088)** |
| **PROVISION FOR INCOME TAXES** | 19510 | 27044 |
| **NET LOSS** | **(7584468)** | **(3003132)** |
| &nbsp;&nbsp;&nbsp;Less: net (loss) income attributable to non-controlling interest | (283326) | 155986 |
| **NET LOSS ATTRIBUTABLE TO ESHALLGO INC** | $**(7301142)** | $**(3159118)** |
| **COMPREHENSIVE LOSS** |  |  |
| Net loss | (7584468) | (3003132) |
| Foreign currency translation gain | 292419 | 521102 |
| Comprehensive loss | **(7292049)** | **(2482030)** |
| Less: Comprehensive (loss) income attributable to non-controlling interest | (168312) | 371101 |
| **COMPREHENSIVE LOSS ATTRIBUTABLE TO ESHALLGO INC** | $**(7123737)** | $**(2853131)** |
| **Loss per common share - basic and diluted** | $**(0.26)** | $**(0.15)** |
| **Weighted average shares - basic and diluted** | **28587486** | **21108288** |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**ESHALLGO INC AND SUBSIDIARIES** 

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY** 

**FOR THE SIX MONTHS ENDED SEPTEMBER 30, 202** **5 AND 2024**

**(Expressed in U.S. dollars, except for the number of shares)**

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary Shares** | **Ordinary Shares** | **Ordinary Shares** | **Ordinary Shares** | | | | | | | |
|  | **Class A**<br>**Shares** |<br>**Amount** | **Class B**<br>**Shares** |<br>**Amount** |<br>**Additional**<br>**Paid in**<br>**Capital** |<br>**Statutory**<br>**Reserves** | **Retained**<br>**Earnings**<br>**(Accumulated**<br>**Deficits)** | **Accumulated**<br>**Other**<br>**Comprehensive**<br>**Income (loss)** |<br>**Total**<br>**Shareholders'**<br>**Equity** |<br>**Non-**<br>**controlling**<br>**Interest** |<br>**Total**<br>**Equity** |
| **Balance as of March 31, 2024** | 14629000 | $1463 | 5856000 | $586 | $3175965 | $645538 | $7730437 | $(811556) | $10742433 | $6365433 | $17107866 |
| Issuance of Class A Ordinary Share | 1250000 | 125 |  |  | 3823678 |  |  |  | 3823803 |  | 3823803 |
| Refund of capital contribution - capital reduction |  |  |  |  |  |  |  |  |  | (179185) | (179185) |
| Issuance of Class A Ordinary Share for services |  |  |  |  | 2078200 |  |  |  | 2078200 |  | 2078200 |
| Net (loss) income) for the period |  |  |  |  |  |  | (3159118) |  | (3159118) | 155986 | (3003132) |
| Appropriation to statutory reserve |  |  |  |  |  | 1928 | (1928) |  |  |  |  |
| Foreign currency translation gain |  |  |  |  |  |  |  | 305987 | 305987 | 215115 | 521102 |
| **Balance as of September 30, 202** **4** | 15879000 | 1588 | 5856000 | $586 | 9077843 | 647466 | 4569391 | (505569) | 13791305 | 6557349 | 20348654 |
| **Balance as of March 31, 202** **5** | 17842759 | $1784 | 5856000 | $586 | $13754806 | $646794 | $(3069137) | $(864735) | $10470098 | $6087019 | $16557117 |
| Capital contribution |  |  |  |  |  |  |  |  |  | 12325 | 12325 |
| Issuance of Class A Ordinary Share for convertible note | 2326404 | 233 |  |  | 2046920 |  |  |  | 2047153 |  | 2047153 |
| Issuance of Class A Ordinary Share for management and employees | 469000 | 47 |  |  | 1001115 |  |  |  | 1001162 |  | 1001162 |
| Issuance of Class A Ordinary Share for services | 3200000 | 320 |  |  | 4259680 |  |  |  | 4260000 |  | 4260000 |
| Net loss for the period |  |  |  |  |  |  | (7301142) |  | (7301142) | (283326) | (7584468) |
| Appropriation to statutory reserve |  |  |  |  |  | 456 | (456) |  |  |  |  |
| Foreign currency translation gain |  |  |  |  |  |  |  | 177405 | 177405 | 115014 | 292419 |
| **Balance as of September 30, 202** **5** | 23838163 | $2384 | 5856000 | $586 | $21062521 | $647250 | $(10370735) | $(687330) | $10654676 | $5931032 | $16585708 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**ESHALLGO INC AND SUBSIDIARIES**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Expressed in U.S. dollars, except for the number of shares)**

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> September 30,** | **For the Six Months Ended<br> September 30,** |
|  | **2025** | **2024** |
| **Cash flows from operating activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $(7584468) | $(3003132) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 137151 | 130559 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss (gain) from disposal of property and equipment | (6150) | 878 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of right-of-use assets | 81063 | 77387 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allowance for credit losses and doubtful accounts | 1265198 | 125485 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision (reversal) of inventory reserve | 4195 | (2188) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 1001162 | 2078200 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuance of Class A Ordinary Share for services | 4260000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax benefit | (1890) | (8826) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued interest income | 11664 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on derivative liabilities | (867251) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt issuance cost | 465004 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued interest expense for convertible note payable | 88048 |  |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (1023115) | 239785 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable-related parties, net | 170637) | (327586) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | (450335) | 218768 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advance to vendors | (1510160) | (222024) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advance to vendors-related parties | (309137) | 121688 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (166749) | (63265) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term accounts receivable |  | 30552 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finance receivables | 24424 | 46552 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other non-current assets |  | 5557 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 355132 | 189726 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable-related parties | (117607) | 37582 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 73266 | 156803 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payroll payable | 28104 | 57614 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes payable | 16778 | (6581) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | (104363) | 176923 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | (66542) | (63767) |
| **Net cash used in operating activities** | (4225941) | (3310) |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of property and equipment | (93044) | (50975) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from disposal of property and equipment | 6950 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment made for short-term loans to third parties | (493443) | (546438) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment made for long-term loans to third parties |  | (146483) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of short-term investments | (416979) | (1557033) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Redemption of short-term investments | 1546490 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments made to related parties | (190517) | (2439307) |
| **Net cash provided by (used in) investing activities** | 359457 | (4740236) |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from short-term bank loan |  | 29961 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net proceeds from initial public offerings, net of issuance costs |  | 4436972 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Refund of capital contribution - capital reduction |  | (31158) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital contribution | 12325 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments made for deferred offering costs |  | (183071) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from loans from related parties | 202136 | 9819 |
| **Net cash provided by financing activities** | 214461 | 4262523 |
| **Effect of changes of foreign exchange rates on cash, cash equivalents and restricted cash** | 55851 | 101065 |
| **Net decrease in cash, cash equivalents and restricted cash** | (3596172) | (379958) |
| **Cash, cash equivalents and restricted cash, beginning of period** | 7600438 | 5362101 |
| **Cash, cash equivalents and restricted cash, end of period** | $4004266 | $4982143 |
| **Reconciliation of cash, cash equivalents and restricted cash, beginning of period** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $7600438 | $5362101 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted cash | - |  |
| **Cash, cash equivalents and restricted cash, end of period** | 7600438 | $5362101 |
| **Reconciliation of cash, cash equivalents and restricted cash, end of period** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $4004126 | $4682143 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted cash | 140 | 300000 |
| **Cash, cash equivalents and restricted cash, end of period** | $4004266 | $4982143 |
| **Supplemental disclosure of cash flow information** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for income tax | $29799 | $38993 |
| **Supplemental non-cash financing activity:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Right of use assets obtained in exchange for operating lease liabilities | $16780 | $5783 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reduction of right-of-use assets and operating lease obligations due to early termination of lease agreement | $— | $11219 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred IPO cost offset with additional paid-in capital | $— | $613169 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION**

 ****

***Business***

Eshallgo Inc ("Eshallgo" or the "Company"), through its wholly-owned subsidiaries and entities controlled through contractual arrangements, is engaged in the business of sales and leasing of office equipment, and related maintenance services in the People's Republic of China ("PRC").

 ****

***Organization***

Eshallgo Inc was incorporated as an exempted company with limited liability under the laws of the Cayman Islands on June 16, 2021.

Eshallgo Inc owns 100% of the equity interests of Junzhang Monarch Limited ("Eshallgo HK"), a limited liability company formed under the laws of Hong Kong on June 30, 2021.

On July 22, 2021, Shanghai Eshallgo Enterprise Development (Group) Co. ("Eshallgo WFOE") was incorporated pursuant to PRC laws as a wholly foreign owned enterprise of Eshallgo HK.

On April 1, 2025, ESHALLGO USA, INC. ("Eshallgo USA") was incorporated in the State of California, it is a subsidiary which owned 75% by Eshallgo and 25% by Eshallgo WFOE. Eshallgo USA commenced active business operation in March 2026.

Eshallgo and Eshallgo HK are currently not engaging in any active business operations and merely acting as holding companies.

Prior to the reorganization described below, Mr. Zhidan Mao, the chairman of the board of directors, and his close family members, were the controlling shareholders of the following entities: (1) Junzhang Digital Technology (Shanghai) Co., Ltd. ("Junzhang Shanghai"), formed in Shanghai City, China on April 23, 2015; (2) Junzhang Digital Technology (Beijing) Co., Ltd. ("Junzhang Beijing"), formed in Beijing City, China on June 9, 2021. Junzhang Shanghai and Junzhang Beijing were all formed as limited liability companies pursuant to PRC laws. Junzhang Shanghai and Junzhang Beijing are primarily engaged in the business of providing customers a comprehensive range of office equipment solution services in the PRC. Junzhang Shanghai has one wholly-owned subsidiary and twenty other subsidiaries with 55% majority ownership, located across China. Junzhang Shanghai and its subsidiaries and Junzhang Beijing are collectively referred to as the "Eshallgo Operating Companies" below.

Upon the completion of the Reorganization as disclosed below, the Company has subsidiaries in countries and jurisdictions in Cayman Islands, Hong Kong, and the PRC. Details of the subsidiaries of the Company as of September 30, 2025 were set out below:

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| | | | | |
|:---|:---|:---|:---|:---|
| <br>**Name of Entity** | **Date of**<br>**Incorporation** | **Place of**<br>**Incorporation** | **% of**<br>**Ownership** | <br>**Principal Activities** |
| Eshallgo Inc | June 16, 2021 | Cayman Islands | Parent, 100% | Investment holding |
| Junzhang Monarch Limited | June 30, 2021 | Hong Kong | 100% | Investment holding |
| ESHALLGO USA, INC. | April 1, 2025 | The United States | 100% | Sale, leasing, and maintenance of office equipment |
| Shanghai Eshallgo Enterprise Development (Group) Co., Ltd. | July 22, 2021 | Shanghai, PRC | 100% | WFOE, Investment holding<br> Sale, leasing, and maintenance of office equipment |
| Junzhang Digital Technology (Shanghai) Co., Ltd. | April 23, 2015 | Shanghai, PRC | VIE | Sale, leasing, and maintenance of office equipment |
| Junzhang Digital Technology (Beijing) Co., Ltd. | June 9, 2021 | Beijing, PRC | VIE | Sale, leasing, and maintenance of office equipment |
| Shanghai Lixin Office Equipment Co., Ltd. ("Lixin") | September 5, 2008 | Shanghai, PRC | 100% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| ESHALLGO Office Supplies (Shanghai) Co., Ltd. ("Shanghai") | October 30, 2015 | Shanghai, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Changchun ESHALLGO Information Technology Co, Ltd. ("Changchun") | March 10, 2016 | Changchun, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Shijiazhuang ESHALLGO Information Technology Co, Ltd. ("Shijiazhuang") | February 26, 2016 | Shijiazhuang, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Guangzhou ESHALLGO Office Equipment Leasing Co., Ltd. ("Guangzhou") | July 12, 2016 | Guangzhou, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Tianjin ESHALLGO Office Equipment Leasing Co., Ltd. ("Tianjin") | December 6, 2016 | Tianjin, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Ningbo Haishu ESHALLGO Junzhang Digital Technology Co., Ltd. ("Ningbo") | October 19, 2016 | Ningbo, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Zhengzhou Junzhang Office Equipment Co., Ltd. ("Zhengzhou") | October 30, 2017 | Zhengzhou, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Chengdu Junzhang digital Technology Co., Ltd. ("Chengdu") | August 15, 2016 | Chengdu, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Hefei Junzhang EESHALLGO Digital Products Co., Ltd. ("Hefei") | July 27, 2017 | Hefei, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Chongqing ESHALLGO Office Equipment Co., Ltd. ("Chongqing") | December 30, 2016 | Chengdu, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Beijing ESHALLGO Technology Development Co., Ltd. ("Beijing") | March 28, 2016 | Beijing, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Harbin ESHALLGO Information Technology Co., Ltd. ("Harbin") | April 5, 2016 | Harbin, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Xi'an ESHALLGO Information Technology Co., Ltd. ("Xi'an") | March 22, 2017 | Xi'an, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Shenzhen ESHALLGO Information Technology Co., Ltd.("Shenzhen") | August 19, 2016 | Shenzhen, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Shanghai Changyun Industrial Development Co., Ltd. ("Changyun") | December 29, 2020 | Shanghai, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Hangzhou ESHALLGO Information Technology Co., Ltd. ("Hangzhou") | January 22, 2016 | Hangzhou, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Kunming ESHALLGO Information Technology Co., Ltd. ("Kunming") | January 12, 2017 | Kunming, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Qingdao ESHALLGO Information Technology Co., Ltd. ("Qingdao") | March 29, 2016 | Qingdao, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Qinghai ESHALLGO Information Technology Co., Ltd. ("Qinghai") | June 21, 2018 | Qinghai, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Junzhang Digital Technology (Nanjing) Co., Ltd. ("Nanjing")˄ | May 12, 2021 | Nanjing, PRC | 55% owned by Junzhang Shanghai | Sale, leasing, and maintenance of office equipment |
| Junzhang Digital Technology (Suzhou) Co., Ltd. ("Su Zhou") | March 11, 2022 | Jiangsu, PRC | 55% owned by WFOE | Sale, leasing, and maintenance of office equipment |
| Junzhang Digital Technology (Changzhou) Co., Ltd. ("Changzhou") | June 9, 2022 | Jiangsu, PRC | 55% owned by WFOE | Sale, leasing, and maintenance of office equipment |
| Zibo ESHALLGO Information Technology Co., Ltd. ("Zibo") | July 25, 2022 | Shandong, PRC | 55% owned by WFOE | Sale, leasing, and maintenance of office equipment |

---

˄: the entity was dissolved on October 15, 2024.

 ****

***Reorganization***

A reorganization of the Company's legal structure ("Reorganization") was completed on December 3, 2021. The Reorganization involved the formation of Eshallgo, Eshallgo HK and Eshallgo WFOE, and signing of certain contractual arrangements between Eshallgo WFOE, the shareholders of the Eshallgo Operating Companies and the Eshallgo Operating Companies. Consequently, the Company became the ultimate holding company of Eshallgo HK, Eshallgo WFOE, Junzhang Shanghai, and Junzhang Beijing.

On July 30, 2021, Eshallgo WFOE entered into a series of contractual arrangements with the shareholders of Junzhang Beijing. On December 3, 2021, Eshallgo WFOE entered into a series of contractual arrangements with the shareholders of Junzhang Shanghai. These agreements include Equity Interest Pledge Agreements, an Exclusive Business Cooperation Agreement, Exclusive Option Agreements, Powers of Attorney, and Spouse Consents (collectively the "VIE Agreements"). Pursuant to these VIE Agreements, Eshallgo WFOE has the exclusive right to provide to the Eshallgo Operating Companies consulting services related to business operations including technical and management consulting services. The VIE agreements are designed to render WFOE as the primary beneficiary of and entitle Eshallgo of rights to consolidate Junzhang Beijing and Junzhang Shanghai for accounting purposes. As a result of our direct ownership in Eshallgo WFOE and signing of these VIE Agreements, we believe that the Eshallgo Operating Companies should be treated as Variable Interest Entities ("VIEs") under the Statement of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810 Consolidation and we are regarded as the primary beneficiary of the VIEs. We treat the VIEs as our consolidated entities under ASC 810.

The Reorganization has been accounted for as a recapitalization among entities under common control since the same controlling shareholders controlled all these entities before and after the Reorganization. The consolidation of the Company and its subsidiaries has been accounted for at historical cost.

<u>The VIE contractual arrangements</u>

The Company's main operating entities, Junzhang Shanghai and its subsidiaries and Junzhang Beijing (or the "Eshallgo Operating Companies" as referred above), are controlled through contractual arrangements by the Company.

 

*Eshallgo WFOE has entered into the following arrangements with its VIEs*

 

*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. 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 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 shareholders, Junzhang Beijing and Junzhang Shanghai shall not have any right to terminate this agreement in any event unless otherwise required by PRC laws.

*Exclusive Business Cooperation Agreement*

Eshallgo WFOE and Junzhang Beijing, and Eshallgo WFOE and Junzhang Shanghai entered into exclusive business cooperation agreements, pursuant to which Eshallgo WFOE has the exclusive right to provide to Junzhang Beijing or Junzhang Shanghai technical support, consulting services and other services related to, among other things, design and development, operation maintenance, product consulting, and management and marketing consulting. Eshallgo WFOE has the exclusive ownership of intellectual property rights created as a result of the performance of this agreement. Junzhang Beijing and Junzhang Shanghai agree to pay Eshallgo WFOE service fees at an amount as determined by Eshallgo WFOE. This agreement will remain effective upon execution, and unless terminated in accordance with the provisions of this agreement or terminated in writing by Eshallgo WFOE. Junzhang Beijing and Junzhang Shanghai shall not have any right to terminate this agreement in any event unless otherwise required by PRC laws. 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.

 

*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. Each of the shareholders of Junzhang Beijing and Junzhang Shanghai undertake that, without the prior written consent of Eshallgo WFOE, they may not increase or decrease the registered capital or change its structure of registered capital in other manners, dispose of its assets or beneficial interest in the material business or allow the encumbrance thereon of any security interest, incur any debts or guarantee liabilities, enter into any material purchase agreements, enter into any merger, acquisition or investments, amend its articles of association, distribute dividends to any of the shareholders or provide any loans to third parties. The exclusive option agreement will remain effective until all equity interests in Junzhang Beijing or Junzhang Shanghai held by the shareholders of Junzhang Beijing and Junzhang Shanghai are transferred or assigned to Eshallgo WFOE Cor its designated person(s). The shareholders of Junzhang Beijing and Junzhang Shanghai shall not have any right to terminate this agreement in any event unless otherwise required by PRC laws.

 

*Shareholders' Power of Attorney*

Under each Power of Attorney, each Shareholder authorizes Eshallgo WFOE to act on their behalf as their exclusive agent and attorney with respect to all rights as shareholders, including but not limited to: (a) the attendance of the shareholder's meeting; (b) exercising all the shareholder's rights, including voting, that shareholders are entitled to under the PRC laws and the Articles of Association of QQJ Network, including but not limited to the sale or transfer or pledge or disposition of shares in part or in whole; and (c) designating and appointing on behalf of shareholders the legal representative, the executive director and/or director, supervisor, general manager and other senior management members of Junzhang Beijing and Junzhang Shanghai.

Each of the Powers of Attorney shall be irrevocable and continuously valid from the date of its execution, and shall remain effective so long as the relevant Shareholder is a shareholder of Junzhang Beijing and Junzhang Shanghai.

 

*Spousal Consent Letters*

The spouses of the Shareholders of Junzhang Beijing and Junzhang Shanghai have each signed a spousal consent letter, pursuant to which, the signing spouse unconditionally and irrevocably has agreed to the execution by his or her spouse of the above-mentioned Equity Interest Pledge Agreement, Exclusive Option Agreement and Power of Attorney, and that his or her spouse may perform, amend or terminate such agreements without his or her consent. In addition, in the event that the spouse obtains any equity interest in Junzhang Beijing and Junzhang Shanghai held by his or her spouse for any reason, he or she agrees to be bound by and sign any legal documents substantially similar to the contractual arrangements entered into by his or her spouse, as may be amended from time to time.

A VIE is an entity which has a total equity investment that is insufficient to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity or obligation to absorb the expected losses of the entity. The variable interest holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiary of, and must consolidate, the VIE, because it met the condition under accounting principles generally accepted in the United States of America ("U.S. GAAP") to consolidate the VIE.

Eshallgo WFOE is deemed to have a controlling financial interest in and be the primary beneficiary of the Eshallgo Operating Companies because it has both of the following characteristics:

● The power to direct activities of the Eshallgo Operating Companies that most significantly impact such entities' economic performance, and

● The obligation to absorb losses of, and the right to receive benefits from, the Eshallgo Operating Companies that could potentially be significant to such entities.

Pursuant to these contractual arrangements, the Eshallgo Operating Companies shall pay service fees equal to all of their net profit after tax payments to Eshallgo WFOE. Accordingly, Eshallgo WFOE has the right to receive substantially all of the Eshallgo Operating Companies' economic benefits for accounting purposes. Such contractual arrangements are designed so that the operations of the Eshallgo Operating Companies are solely for the benefit of Eshallgo WFOE and ultimately, the Company, and therefore the Company must consolidate the Eshallgo Operating Companies under U.S. GAAP.

Risks associated with the VIE structure

The Company believes that the contractual arrangements with the VIEs and the shareholders of the VIEs are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company's ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could:

● revoke the business and operating licenses of the Company's PRC subsidiary and the VIEs;

● discontinue or restrict the operations of any related-party transactions between the Company's PRC subsidiary and the VIEs;

● limit the Company's business expansion in China by way of entering into contractual arrangements;

● impose fines or other requirements with which the Company's PRC subsidiary and the VIEs may not be able to comply;

● require the Company or the Company's PRC subsidiary and the VIEs to restructure the relevant ownership structure or operations; or

● restrict or prohibit the Company's use of the proceeds from public offering to finance the Company's business and operations in China.

The Company's ability to conduct its office equipment solution service businesses may be negatively affected if the PRC government were to carry out of any of the aforementioned actions. As a result, the Company may not be able to consolidate the VIEs in its unaudited condensed consolidated financial statements as it may lose the ability to exercise its rights as the primary beneficiary over the VIEs and it may lose the ability to receive economic benefits from the VIEs. The Company, however, does not believe such actions would result in the liquidation or dissolution of the Company, its PRC subsidiaries and the VIEs. The Company and Eshallgo HK are essentially holding companies and do not have active operations through September 30, 2025. As a result, total assets and liabilities presented on the unaudited condensed consolidated balance sheets and revenue, expenses, and net loss presented on the unaudited condensed consolidated statement of loss and comprehensive loss as well as the cash flows from operating, investing and financing activities presented on the unaudited condensed consolidated statement of cash flows are substantially the financial position, operating results and cash flow of Eshallgo WFOE and its subsidiaries and the VIEs and VIE's subsidiaries. The Company has not provided any financial support to the VIEs for the six months ended September 30, 2025 and 2024.

The following financial statement amounts and balances of the VIEs were included in the accompanying unaudited condensed consolidated financial statements after elimination of intercompany transactions and balances:

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| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| **ASSETS** |  |  |
| **CURRENT ASSETS:** |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $2287645 | $3745251 |
| &nbsp;&nbsp;&nbsp;Restricted cash | 140 | 138 |
| &nbsp;&nbsp;&nbsp;Short-term investments | 1989475 | 3093976 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 4191754 | 3809698 |
| &nbsp;&nbsp;&nbsp;Accounts receivable - related parties | 77818 | 245492 |
| &nbsp;&nbsp;&nbsp;Advance to vendors, net | 2586751 | 1289198 |
| &nbsp;&nbsp;&nbsp;Advance to vendors - related parties | 312417 | 50 |
| &nbsp;&nbsp;&nbsp;Inventories, net | 1787072 | 1584425 |
| &nbsp;&nbsp;&nbsp;Due from related parties | 1322071 | 1240828 |
| &nbsp;&nbsp;&nbsp;Long-term accounts receivable, net - current portion | 84279 | 82681 |
| &nbsp;&nbsp;&nbsp;Long-term other receivable, net - current portion | 64383 | 89050 |
| &nbsp;&nbsp;&nbsp;Finance receivables, net | 55328 | 70801 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets, net | 1513193 | 1112065 |
| **TOTAL CURRENT ASSETS** | **16272326** | **16363653** |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | 290415 | 352212 |
| &nbsp;&nbsp;&nbsp;Right-of-use assets, net | 104472 | 104390 |
| &nbsp;&nbsp;&nbsp;Deferred tax assets, net | 6375 | 5613 |
| &nbsp;&nbsp;&nbsp;Long-term receivable - other receivable, net - non-current portion | 414589 | 591803 |
| &nbsp;&nbsp;&nbsp;Finance receivables, net | 41724 | 46852 |
| &nbsp;&nbsp;&nbsp;Other non-current assets, net | 211371 | 374201 |
| **TOTAL NONCURRENT ASSETS** | **1068946** | **1475071** |
| **TOTAL ASSETS** | $**17341272** | $**17838724** |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| **CURRENT LIABILITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Short-term bank loan | $140445 | $137781 |
| &nbsp;&nbsp;&nbsp;Accounts payable | 939900 | 787746 |
| &nbsp;&nbsp;&nbsp;Accounts payable - related parties | 24137 | 140261 |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 950081 | 876905 |
| &nbsp;&nbsp;&nbsp;Payroll payable | 255727 | 223035 |
| &nbsp;&nbsp;&nbsp;Taxes payable | 237176 | 251185 |
| &nbsp;&nbsp;&nbsp;Due to related parties | 106012 | 121825 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | 101046 | 90676 |
| &nbsp;&nbsp;&nbsp;Deferred tax liabilities | 5281 | 6413 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities - current portion | 163112 | 150615 |
| **TOTAL CURRENT LIABILITIES** | **2922917** | **2786442** |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities - non-current portion | 69200 | 64797 |
| **TOTAL NONCURRENT LIABILITIES** | **69200** | **64797** |
| **TOTAL LIABILITIES** | $**2992117** | $**2851239** |

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| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> September 30,** | **For the Six Months Ended<br> September 30,** |
|  | **2025** | **2024** |
| Net revenue | $6624444 | $6192252 |
| Net loss | $(1088258) | $(5932) |

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| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> September 30,** | **For the Six Months Ended<br> September 30,** |
|  | **2025** | **2024** |
| Net cash (used in) provided by operating activities | $(2223904) | $1172301 |
| Net cash provided by (used in) investing activities | 337224 | (3341270) |
| Net cash provided by financing activities | 372720 | 60601 |
| Effect of exchange rate change on cash and cash equivalents | 56356 | 93396 |
| Net decrease in cash and cash equivalents | (1457604) | (2014972) |
| Cash and cash equivalents, beginning of period | 3745389 | 5310244 |
| Cash and cash equivalents, end of period | $2287785 | $3295272 |

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**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 ****

***Basis of presentation and principles of consolidation***

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included in the Company's unaudited condensed consolidated financial statement. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Form 20-F for the fiscal years ended March 31, 2025 and 2024, which was filed on August 14, 2025. The accompanying unaudited condensed consolidated financial statements include the financial statements of the Company, its wholly owned subsidiaries, and entities it controlled through VIE agreements. All inter-company balances and transactions are eliminated upon consolidation. Operating results for the six months ended September 30, 2025 and 2024 are not necessarily indicative of the results that may be expected for the full year.

 ****

***Non-controlling interest***

For the Company's consolidated subsidiaries and the VIEs, non-controlling interests are recognized to reflect the portion of equity that is not attributable, directly or indirectly, to the Company as the controlling shareholder. Non-controlling interests are classified as a separate line item in the equity section of the Company's unaudited condensed consolidated balance sheets and have been separately disclosed in the Company's unaudited condensed consolidated statements of loss and comprehensive loss to distinguish the interests from that of the controlling shareholder.

As of September 30, 2025 and March 31, 2025, non-controlling interest equity consisted of the following:

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| | | | |
|:---|:---|:---|:---|
| | | **As of** | **As of** |
| <br>**Entity** | **Percentage of**<br>**ownership of**<br>**non-controlling interest** | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Shanghai | &nbsp;&nbsp;&nbsp;&nbsp; 45% | $33576 | $65652 |
| Beijing | 45% | 910063 | 867501 |
| Qinghai | 45% | 162523 | 193753 |
| Harbin | 45% | 374624 | 436332 |
| Zhengzhou | 45% | 245742 | 277424 |
| Chengdu | 45% | 279492 | 268966 |
| Guangzhou | 45% | 328754 | 310888 |
| Changchun | 45% | 252742 | 275496 |
| Hefei | 45% | 189983 | 278903 |
| Hangzhou | 45% | 421623 | 437487 |
| Tianjin | 45% | 534253 | 477013 |
| Shenzhen | 45% | 97650 | 122690 |
| Qingdao | 45% | 93365 | 93626 |
| Kunming | 45% | 798503 | 740138 |
| Xi'an | 45% | 170986 | 174271 |
| Shijiazhuang | 45% | 641522 | 652868 |
| Ningbo | 45% | 191982 | 192754 |
| Chongqing | 45% | 131265 | 156366 |
| Changyun <sup>(1)</sup> | 45% | 47005 | 48995 |
| Suzhou | 45% | 14778 | 10800 |
| Changzhou | 45% | 3503 | 5096 |
| Zibo | 45% | 7098 |  |
| Total non-controlling interest |  | $5931032 | $6087019 |

---

(1) On March 17, 2023, the shareholders of the Changyun approved a reduction of its registered capital from
RMB5.0 million ($699,007) to RMB1.0 million ($139,801). RMB704,000 ($98,220) of capital contribution was returned to the NCI during the
year ended March 31, 2024 and the remaining of RMB1,096,000 ($179,185) of capital contribution was fully returned to the NCI during the
year ended March 31, 2025.

 ****

***Use of estimates***

In preparing the unaudited condensed consolidated financial statements in conformity U.S. GAAP, the management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These accounting estimates used in the preparation of the unaudited condensed consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. These estimates are based on management's best available information including current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. Significant estimates required to be made by management include, but are not limited to, assessment of the expected credit losses for financial assets, valuation of inventories, useful lives of property and equipment and intangible assets, the recoverability of long-lived assets, realization of deferred tax assets, fair value of the derivative liability, implicit interest rate of operating leases, and the revenue recognition of leasing of equipment. As a result, actual results may be different from these estimates.

 ****

***Risks and uncertainties***

The main operations of the Company are located in the PRC. Accordingly, the Company's business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the economy in the PRC. The Company's results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, such experience may not be indicative of future results.

The Company's business, financial condition and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt the Company's operations.

 ****

***Cash and cash equivalents***

Cash include cash on hand and deposits held by banks that can be added or withdrawn without limitation. The Company maintains its bank accounts in the PRC, Hongkong and the United States. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents.

 ****

***Restricted cash***

Cash that is restricted as to withdrawal or for use or pledged as security is reported separately on the face of the unaudited condensed consolidated balance sheets, and is included in the total cash and restricted cash in the unaudited condensed consolidated statements of cash flows. The Company's restricted cash represents bank deposits designated for specific purposes, primarily for payments to specified third parties.

 ****

***Short-term investments***

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. 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 unaudited condensed consolidated statements of loss and comprehensive loss as investment income.

As of September 30, 2025 and March 31, 2025, the Company had short-term investments balance of $1,989,712 and $3,094,208, including accrued interests of $41,005 and $62,788, respectively.

 ****

***Credit losses***

On April 1, 2023, the Company adopted Accounting Standards Update ("ASU") 2016-13 "Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments," by using a modified retrospective transition method, which replaces the incurred loss impairment methodology with an expected loss methodology that is referred to as the current expected credit loss methodology. The expected credit loss impairment model requires the entity to recognize its estimate of expected credit losses for affected financial assets using an allowance for credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The adoption of ASU 2016-13 did not have a material impact on the Company's financial statements.

The Company's accounts receivable from third parties and related parties, due from related parties, finance receivable, long-term accounts receivable, long-term other receivable, loans and security deposits which is included in current and non-current prepaid expenses and other assets line item in the unaudited condensed consolidated balance sheets are within the scope of ASC Topic 326. The Company uses the roll-rate method to measure the expected credit losses of accounts receivable, finance receivable and long-term other receivable on a collective basis when similar risk characteristics exist. The roll-rate method stratifies the receivables balance by delinquency stages and projected forward in one-year increments using historical roll rate. In each year of the simulation, losses on the receivables are captured, and the ending delinquency stratification serves as the beginning point of the next iteration. This process is repeated on a yearly rolling basis. The loss rate calculated for each delinquency stage is then applied to respective receivables balance. The management adjusts the allowance that is determined by the roll-rate method for both current conditions and forecasts of economic conditions. For security deposits and loans to third parties, the Company uses the loss-rate method to evaluates the expected credit losses on an individual basis. When establishing the loss rate, the Company makes the assessment on various factors, including historical experience, current economic conditions and other factors that may affect its ability to collect from the debtors. The Company also provides specific provisions for allowance when facts and circumstances indicate that the receivable is unlikely to be collected.

Expected credit losses are included in general and administrative expenses in the unaudited condensed consolidated statements of loss and comprehensive loss. After all attempts to collect a receivable have failed, the receivable is written off against the allowance.

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***Accounts receivable, net***

Accounts receivable, net represent the amounts that the Company has an unconditional right to consideration, which are stated at the original amount less an allowance for credit losses. Allowance for credit losses for accounts receivable amounted to $1,138,664 and $668,195 as of September 30, 2025 and March 31, 2025, respectively.

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***Advances to suppliers, net***

Advance to suppliers consists of balances paid to suppliers for purchase of office equipment, equipment parts and suppliers and others that have not been used against purchases. Advance to suppliers are short-term in nature and are reviewed periodically to determine whether their carrying value has become impaired. The Company considers the assets to be impaired if the utilization of the advance becomes doubtful. The Company continually assesses the credit quality of its suppliers and the factors that affect the credit risk and the supplier's capability of fulfilling the future purchase orders and then records specific allowances for those advances based on the specific facts and circumstances. Allowance for doubtful accounts amounted to $585,275 and $266,351 as of September 30, 2025 and March 31, 2025, respectively.

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***Prepaid expenses and other current assets, net***

Prepaid expenses and other current assets consist of prepaid social security-employee portion, loans to third parties which are used for short-term funding to support various third-party suppliers and employees, security deposits primarily include security deposits paid to landlords for the Company's leased offices as well as security deposits paid to the Company's suppliers, deferred initial public offering costs and others. Loans to third parties, other receivable and security deposits are within the scope of ASC Topic 326, allowance for credit losses for loans to third parties amounted to $431,520 and $80,877 as of September 30, 2025 and March 31, 2025, respectively, allowance for credit losses for other receivable amounted to $3,595 and $3,526 as of September 30, 2025 and March 31, 2025, respectively.

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***Finance receivable, net***

Finance receivables consist of receivables in relation to sales-type leases resulting from the sales of equipment. Finance receivables is recorded upon the inception of the lease, and consists the minimum lease payments, net of the unearned interest income and allowance for credit losses. It is recognized as current or non-current assets in the balance sheets based on the duration of the remaining lease terms. Allowance for credit losses amounted to $11,698 and $13,247 as of September 30, 2025 and March 31, 2025, respectively.

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***Inventories, net***

Inventories, primarily consisting of purchased equipment, equipment parts and supplies, are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Cost of inventory is determined using the weighted average cost method. The Company periodically evaluates inventories against their net realizable value, and reduces the carrying value of those inventories that are obsolete or in excess of the forecasted usage to their estimated net realizable value based on various factors including aging and future demand of each type of inventories. The Company recorded inventory reserve of $22,772 and $18,182 as of September 30, 2025 and March 31, 2025, respectively.

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***Property and equipment, net***

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment are provided using the straight-line method over their expected useful lives, as follows:

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| | |
|:---|:---|
|  | **Useful Life** |
| Electronic equipment | 3 years |
| Machinery and equipment | 5 years |
| Motor vehicles | 4 years |
| Office furniture | 5 years |
| Leasehold improvement | Lesser of useful life and lease term |

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Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the unaudited condensed consolidated statements of loss and comprehensive loss in other income (expenses).

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***Leases***

The VIEs, Junzhang Shanghai, Junzhang Beijing and their subsidiaries entered into various operating lease agreements with different landlords to lease office space and warehouse space in major cities in the PRC. All of these leases are accounted for as operating leases, under the adoption of ASC Topic 842 ("Topic 842").

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets, current portion of operating lease liabilities, and non-current portion of operating lease liabilities on the Company's unaudited condensed consolidated balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and includes initial direct costs incurred. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expenses for minimum lease payments are recognized on a straight-line basis over the lease term. All operating lease right-of-use assets are reviewed for impairment annually. There was no impairment for operating lease right-of-use lease assets for the six months ended September 30, 2025 and 2024.

The Company has elected the short-term lease practical expedient, and therefore operating lease right-of-use assets and liabilities do not include leases with a lease term of twelve months or less.

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***Impairment of long-lived assets***

Long-lived assets with finite lives, primarily consists of property and equipment and right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset's carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no impairments of these assets for the six months ended September 30, 2025 and 2024.

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***Fair value of financial instruments***

ASC Topic 820, "Fair Value Measurements and Disclosures," defines Fair Value ("FV"), and establishes a three-level valuation hierarchy for disclosures of FV measurement that enhances disclosure requirements for FV measures. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

● Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

● Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data.

● Level 3 — inputs to the valuation methodology are unobservable.

Unless otherwise disclosed, the fair value of the Company's financial instruments, including cash and cash equivalents, accounts receivable, net, accounts receivable due from related parties, due from related parties, prepaid expenses and other current assets, short-term bank loan, accounts payable, accounts payable due to related parties, deferred revenue, payroll payable, due to related parties, and accrued expenses and other current liabilities approximate the fair value of the respective assets and liabilities as of September 30, 2025 and March 31, 2025 based upon the short-term nature of the assets and liabilities. The Company carries short-term investments in wealth management products at fair value, which are measured at Level 2.

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***Foreign currency translation***

The functional currency for Eshallgo is the U.S. Dollar ("US$"). Eshallgo HK uses Hong Kong dollar ("HK$") as its functional currency. However, Eshallgo, and Eshallgo HK currently only serve as the holding companies and did not have active operations as of the date of this report. The Company operates its business through WFOE and the VIEs in the PRC through September 30, 2025. The functional currency of WFOE and the VIEs is the Renminbi ("RMB"). Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction.

The reporting currency of the Company is the US$, and the accompanying unaudited condensed consolidated financial statements have been expressed in US$. In accordance with ASC Topic 830-30, "Translation of Financial Statements", Assets and liabilities of the Company are translated at the exchange rate at each reporting period end date. Equity is translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets. Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations.

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

The following table outlines the currency exchange rates that were used in creating the financial statements in this report:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended<br> September 30, 2025** | **For the Six Months Ended<br> September 30, 2025** | **For the Six Months Ended<br> September 30, 2024** | **For the Six Months Ended<br> September 30, 2024** | **March 31, 2025** | **March 31, 2025** |
|  | **Period-end <br> spot rate** | **Average<br> rate** | **Period-end<br> spot rate** | **Average<br> rate** | **Year-end <br> spot rate** | **Average<br> rate** |
| US$ against RMB | US$1=RMB 7.1203 | US$1=RMB 7.1946 | US$1=RMB 7.0149 | US$1=RMB 7.2008 | US$1=RMB 7.2579 | US$1=RMB 7.2168 |
| US$ against HK$ | US$1= HK$7.7813 | US$1= HK$7.8126 | US$1= HK$7.7702 | US$1= HK$7.8083 | US$1= HK$7.7793 | US$1= HK$7.7928 |

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***Revenue recognition***

The Company generates its revenues primarily through sales of equipment and provision of services and recognizes revenue in accordance with ASC 606. ASC 606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

Revenue amount represents the invoiced value, net of a value-added tax (the "VAT"). Revenues under bundled arrangements are allocated considering the relative standalone selling prices of the performance obligations included in the bundled arrangement.

More specifically, revenue related to the Company's products and services is generally recognized as follows:

 

*<u>Revenue from sales of equipment</u>*

Revenues from the sale of equipment directly to end customers and distributors, including those from sales-type leases (see "*Revenue from leasing of equipment*" below), are recognized when obligations under the terms of a contract with our customer are satisfied and control has been transferred to the customer. For equipment placements that require the Company to install the product at the customer location, it has two promises, which are to transfer the products and to provide the installation services. The installation required is not complex and can be completed simultaneously together with delivery of the products and is considered to be immaterial in the context of the contract with the customer. For such arrangements, there is one performance obligation in each contract, which is to provide the requested equipment to the customer and the total consideration under the contract is recognized as revenue when the goods have been delivered and installed at the customer location.

The Company does not offer its customer warranties that can be purchased separately, and the warranties only provide its customers with the peace of mind that the Company will fix or possibly replace the equipment if the original one was faulty, the Company determines that its warranty is assurance-type warranty. Since an assurance-type warranty guarantees the functionality of a product, the warranty is not accounted for as a separate performance obligation, and thus no transaction price is allocated to it.

No significant returns, refund and other similar obligations during the six months ended September 30, 2025 and 2024.

 

*<u>Revenue from leasing of equipment</u>*

The Company records rental income from the leasing of equipment in accordance with ASC 842. The two primary lease accounting provisions the Company assesses for the classification of transactions as sales-type or operating leases are: (1) a review of the lease term to determine if it is equal to or greater than 75% of the economic life of the equipment and (2) a review of the present value of the minimum lease payments to determine if they are equal to or greater than 90% of the fair market value of the equipment at the inception of the lease. Lease arrangements that meet these conditions are accounted for as sales-type leases and sales profit or loss at lease inception is recognized as noted above for sales of equipment. Lease arrangements that do not meet these conditions are accounted for operating leases. The revenue from an operating lease is recognized on a straight-line basis over the term of the lease.

A significant portion of the Company's lease to end customers are made through bundled lease arrangements that typically include equipment, financing and maintenance components for which the customer pays a single negotiated fixed minimum monthly payment for all elements over the contractual lease term. These arrangements also typically include an incremental, variable component for excess page volumes consumed. When the customer prints more than the maximum monthly page volume stated in the contract, the Company will charge excess page volume consumed, which are often expressed in terms of price-per-page. Revenue related to the excess page charges is calculated based on actual excess page volume consumed by price-per-page and is recognized when excess pages were used by the customer. The fixed minimum monthly payments are multiplied by the number of months in the contract term to arrive at the total fixed minimum payments that the customer is obligated to make (fixed payments) over the lease term. In applying the lease accounting methodology, the Company only considers the fixed payments for purposes of allocating to the relative fair value elements of the contract.

Revenues under bundled arrangements contains multiple performance obligations, including the lease and non-lease performance obligations. Under sales-type lease, for such bundled arrangements, revenues are allocated considering the relative standalone selling prices of the lease and non-lease deliverables included in the bundled arrangement. Lease deliverables include the equipment and financing, which are recognized on a straight-line basis over the term of the lease, while non-lease deliverables generally consist of supplies and maintenance services, which are generally recognized over the term of the lease as maintenance services revenue as noted below under "Revenue from maintenance services". The allocation for the lease deliverables begins by allocating revenues to equipment and financing based on their standalone selling price, and the remaining amounts are allocated to the supplies and maintenance services.

For operating lease, since the lease component, if accounted for separately, would be classified as an operating lease, and maintenance services associated with lease are also transfer to the customers over the term of the lease. As both criteria are met, the Company makes the accounting policy election in accordance with ASC 842-10-15-42A, and therefore, the Company chooses to not separate non-lease components from lease components and, instead, to account for each separate lease component and the non-lease components associated with that lease component as a single component.

The Company considers the economic life of most of the products to be five years and there is no significant after-market for the used equipment. The Company believes five years is representative of the period during which the equipment is expected to be economically usable, with normal service, for the purpose for which it is intended. Residual values are not significant.

With respect to their standalone selling price, the Company performs an analysis based on cash selling prices during the applicable period. The cash selling prices are compared to the range of values determined for the leases. The range of cash selling prices must be reasonably consistent with the lease selling prices in order for the Company to determine that such lease prices are indicative of standalone selling price.

No significant returns, refund and other similar obligations during the six months ended September 30, 2025 and 2024.

 

*<u>Financing:</u>*

Finance income attributable to sales-type leases is recognized on the accrual basis using the effective interest method.

 

*<u>Revenue from maintenance services</u>*

The Company provides maintenance services for which the customer pays a single negotiated fixed minimum monthly payment for all elements over the contractual term. These arrangements typically include implementation, configuration, training, technical support, and repair of the office equipment, which to ensure the functionality of the machines. These services represent a single performance obligation as they are highly interdependent and interrelated and cannot be separately identifiable. The fixed minimum monthly payments are multiplied by the number of months in the contract term to arrive at the total fixed minimum payments that the customer is obligated to make (fixed payments) over the contractual term. Revenues from maintenance and technical support services are recognized over time as such services are performed in a straight-line basis.

No significant returns, refund and other similar obligations during the six months ended September 30, 2025 and 2024.

 

*<u>Revenue disaggregation</u>*

The Company's disaggregation of revenues for the six months ended September 30, 2025 and 2024 are as the following:

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| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Revenue from sales of equipment | $6873504 | $5480454 |
| Revenue from maintenance services | 377585 | 595531 |
| Revenue from leasing of equipment | 536401 | 632556 |
| Revenue from financing | 2775 | 3937 |
| Total revenue | $7790265 | $6712478 |
| *Timing of revenue recognition* |  |  |
| Equipment transferred at a point in time | 6873504 | 5480454 |
| Services rendered over time | 916761 | 1232024 |
| Total revenue | $7790265 | $6712478 |

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All the Company's revenue are generated in the PRC.

 

*<u>Contract assets and liabilities</u>*

The Company does not have contract assets as of September 30, 2025 and March 31, 2025. Contract liabilities represent payment has been made from the Company' customers in advance of the delivery of products or services. The Company's contract liabilities, which are reflected in its unaudited condensed consolidated balance sheets as deferred revenue of $1,092,527 and $999,182 as of September 30, 2025 and March 31, 2025, respectively. The amount of revenue recognized in the six months ended September 30, 2025 and 2024 that was included in the opening deferred revenue was $163,914 and $143,056, respectively. All unsatisfied performance obligation will be performed within the next twelve months and no significant financing component is involved.

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***Costs of revenue***

Cost of equipment sold primarily included the costs to purchase the office equipment, inducing the freight-in expenses and ordering expenses. For operating lease, cost of leasing of office equipment primarily included the depreciation expense of equipment leased, and the handling and shipping costs. Cost of maintenance and repair services primarily included 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.

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***Research and development expenses***

Research and development costs relating to the development of new processes, including significant improvements and refinements to existing processes, are expensed when incurred in accordance with the FASB ASC 730, "Research and Development." The research and development costs primarily comprise employee costs, consultant fees, travel and transportation fees, and depreciation to property, plant and equipment used in the research and development activities. For the six months ended September 30, 2025 and 2024, total research and development expense were $84,242 and $9,999, respectively.

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***Employee benefits***

The Company's subsidiaries in the PRC participate in a government-mandated multi-employer employee benefits plan pursuant to which pension, work-related injury benefits, maternity insurance, medical insurance, unemployment benefit and housing fund are provided to eligible full-time employees. The relevant labor regulations require the Company's subsidiaries and the VIEs in the PRC to pay the local labor and social welfare authorities monthly contributions based on the applicable benchmarks and rates stipulated by the local government. The contributions to the plan are expensed as incurred. Employee social security and welfare benefits included as expenses in the accompanying unaudited condensed consolidated statements of loss and comprehensive loss amounted to $202,037 and $194,574 for the six months ended September 30, 2025 and 2024, respectively.

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***Income taxes***

The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the unaudited condensed consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

An uncertain tax position is recognized only if it is "more likely than not" that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties or interest relating to income taxes have been incurred during the six months ended September 30, 2025 and 2024. The Company does not believe that there was any uncertain tax provision on September 30, 2025 and March 31, 2025. The Company's subsidiaries and the VIEs in China are subject to the income tax laws of the PRC. The Company's subsidiary in Hong Kong is subject to the profit taxes in Hong Kong. The Company's subsidiary in the United States is subject to the tax law of the United States. No significant income was generated outside the PRC for the six months ended September 30, 2025 and 2024. According to PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or withholding agent. The statute of limitations will be extended five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB0.1 million is specifically listed as a special circumstance). In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion.

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***Value added tax ("VAT")***

The Company is a general taxpayer and is subject to applicable VAT tax rate of 5% to 13%. VAT is reported as a deduction to revenue when incurred. Entities that are VAT general taxpayers are allowed to offset qualified input VAT tax paid to suppliers against their output VAT liabilities.

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***Loss per share***

The Company computes loss per share ("EPS") in accordance with ASC 260, "Earnings per Share" ("ASC 260"). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net loss divided by the weighted average common shares outstanding for the period. Diluted presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. As of September 30, 2025 and March 31, 2025, there were no dilutive shares.

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***Comprehensive loss***

Comprehensive loss consists of two components, net loss and other comprehensive income. The foreign currency translation gain or loss resulting from translation of the financial statements expressed in RMB and HK$ to US$ is reported in foreign currency translation gain in the unaudited condensed consolidated statements of loss and comprehensive loss.

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***Statement of cash flows***

In accordance with ASC 230, "Statement of Cash Flows", cash flows from the Company's operations are calculated in functional currency and translated into the reporting currency using the average exchange rate in the period. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.

***Related parties and transactions***

The Company identifies related parties, and accounts for, discloses related party transactions in accordance with ASC 850, "Related Party Disclosures" and other relevant SEC rules and regulations.

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence. Transactions between related parties commonly occurring in the normal course of business are considered to be related party transactions.

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***Derivative liabilities***

The Company enters into convertible debt agreements, and is required to evaluate embedded conversion features within convertible debt under ASC 815 "Derivatives and Hedging". The Company determines the embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative liability at fair value with changes in fair value recorded in earnings. The Company estimates the fair value of the derivative liability at the inception of the financial instruments, at the date of conversions to equity and at each reporting date, recording a derivative liability, and a gain or loss on change in derivative liability as applicable. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility and variable conversion prices based on market prices as defined in the respective agreements. These inputs are subject to significant changes from period to period and to management's judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.

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***Share-based compensation***

Share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense with graded vesting on a straight–line basis over the requisite service period for the entire award. The Company has elected to recognize compensation expenses using the valuation model estimated at the grant date based on the award's fair value.

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***Segment reporting***

In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker ("CODM") and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment's profit or loss in assessing segment performance and deciding how to allocate resources. The Company adopted this ASU commencing April 1, 2024 and the adoption of the ASU did not have a material impact on the Company's financial statements.

ASC Topic 280, "Segment Reporting," requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's Chief Operating Decision Maker ("CODM") organizes segments within the Company for making operating decisions assessing performance and allocating resources. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. The Company's CODM has been identified as the Chief Executive Officer, who reviews consolidated results including revenue, gross profit and operating profit at a consolidated level only. The Company does not distinguish between markets for the purpose of making decisions about resources allocation and performance assessment. Therefore, the Company has only one operating segment and one reportable segment. Management determined the Company's operations constitute a single reportable segment. This reflects the fact that our CODM continues to evaluate our financial information and resources, and continues to assess the performance of these resources, on a consolidated basis. All required financial segment information is therefore included in our unaudited condensed consolidated financial statements. Majority of the Company's assets were located in the PRC and 100% of the Company's revenues were derived from its wholly owned subsidiaries, and the VIEs and VIEs' subsidiaries located in the PRC, hence, no disclosure of geographic areas is required for the six months ended September 30, 2025 and 2024.

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***Recent accounting pronouncements***

The Company is an "emerging growth company" ("EGC") as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Under the JOBS Act, EGC can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. As a result, the Company's operating results and financial statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised accounting standards.

In October 2023, the FASB issued ASU No. 2023-06, "Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative". This standard was issued in response to the SEC's disclosure update and simplification initiative, which affects a variety of topics within the Accounting Standards Codification. The amendments apply to all reporting entities within the scope of the affected topics unless otherwise indicated. This ASU will become effective for each amendment on the date on which the SEC removes the related disclosure from its regulations. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective for any entity. The Company is currently evaluating the impact of adopting this ASU on its financial statements.

In November 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures. This ASU requires entities to 1. disclose amounts of (a) purchase of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and, (e) depreciation, depletion, and amortization recognized as part of oil-and gas-producing activities, 2. include certain amounts that are already required to be disclosed under current Generally Accepted Accounting Principles in the same disclosures as other disaggregation requirements, 3. disclose a qualitative description of the amounts remaining in relevant expense captions that are not necessarily disaggregated quantitatively, and 4. disclose the total amount of selling expenses, in annual reporting periods, an entity's definition of selling expense. The ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Additionally, in January 2025, the FASB issued ASU No. 2025-01 to clarify the effective date of ASU 2024-03. The standard provides guidance to expand disclosures related to the disaggregation of income statement expenses. The standard requires, in the notes to the financial statements, disclosure of specified information about certain costs and expenses which includes purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. The Company plans to adopt this guidance effective April 1, 2027 and the Company is currently evaluating the impact of adopting this ASU on its financial statements.

In November 2024, the FASB issued ASU No. 2024-04, "Debt-Debt with Conversions and Other Option". This ASU is intended to clarify requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. This ASU is effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company plans to adopt this guidance effective April 1, 2026 and the Company is currently evaluating the impact of adopting this ASU on its financial statements.

In July 2025, the FASB issued ASU No. 2025-05, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets". This ASU provides a practical expedient for all entities related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under Topic 606. The standard is effective for annual periods beginning after December 15, 2025. Early adoption of ASU 2025-05 is permitted and should be applied prospectively. The Company plans to adopt this guidance effective April 1, 2026 and the Company is currently evaluating the impact of adopting this ASU on its financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The purpose of this update is to improve the clarity and organization of interim reporting guidance and to enhance the disclosure requirements applicable to interim financial statements. ASU 2025-11 does not change the fundamental principles of interim reporting but clarifies the scope and presentation of required disclosures. A public business entity shall apply for interim reporting periods within annual reporting periods beginning after December 15, 2027. An entity other than a public business entity shall apply for interim reporting periods within annual reporting periods beginning after December 15, 2028. The Company plans to adopt this guidance effective April 1, 2028 and the Company is currently evaluating the impact of adopting this ASU on its financial statements.

Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the unaudited condensed consolidated financial statements upon adoption. The Company does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its unaudited condensed consolidated financial condition, results of operations, cash flows or disclosures.

**NOTE 3 — ACCOUNTS RECEIVABLE, NET**

Accounts receivable, net consists of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Accounts receivable | $5768164 | $4644586 |
| Less: allowance for credit loss | (1138664) | (668195) |
| Accounts receivable, net | $4629500 | $3976391 |

---

The Company's accounts receivable primarily include balance due from customers when the Company's products have been sold and delivered to customers or service rendered to customers, which has not been collected as of the balance sheet dates.

Allowance for credit loss movement is as follows:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Beginning balance | $668195 | $133449 |
| Additions | 452824 | 538494 |
| Reversal |  | (41) |
| Foreign currency translation adjustments | 17645 | (3707) |
| Ending balance | $1138664 | $668195 |

---

**NOTE 4 — LONG-TERM RECEIVABLE, NET**

 

*Long-term accounts receivable, net*

On December 20, 2020, Junzhang Shanghai and one of its subsidiaries entered into two repayment agreements with their customer Shanghai Puli Printing Co., Ltd ("Shanghai Puli") to extend the repayment dates of Shanghai Puli's account receivable balance totaling RMB 6,422,747 ($935,170) to June 30, 2022 and December 31, 2025 respectively. The repayment will be made quarterly and annually respectively. The long-term accounts receivable bears interest at the annual rate of 2% on the unpaid balance. On March 29, 2022, these two entities entered into an amended repayment agreement with Shanghai Puli to extend the repayment dates of Shanghai Puli's account receivable balance as of March 31, 2022 totaling RMB 3,019,507 ($413,903) to December 31, 2023 and March 31, 2026 respectively. The long-term accounts receivable bears interest at the annual rate of 1% on the unpaid balance and the repayment will be made annually. One of the long-term accounts receivables due on December 31, 2023 has been fully collected. As of September 30, 2025 and March 31, 2025, the allowance for credit losses was $103,788 and $101,820, respectively, and total outstanding balance of the current portion of long-term accounts receivable, net was $84,279 and $82,681, respectively.

 

*Long-term other receivable, net*

The Company and Junzhang Shanghai entered into a repayment agreement with their vendor Shanghai Mingzhe Office Equipment Co., Ltd. ("Mingzhe") and the legal representative of Mingzhe. Pursuant to the agreement, the Company had accounts receivable due from Mingzhe and advance to vendor made to Mingzhe totaling RMB 7,733,396 ($1,065,517). Mingzhe agreed to repay the total amount semiannually till June 30, 2027, and the long-term other receivable bears interest at the annual rate of 2% on the unpaid balance. As of September 30, 2025 and March 31, 2025, the allowance for credit losses was $903,992 and $671,088, respectively, and total outstanding balance of the long-term other receivable, net was $135,917 and $344,304 respectively.

The Company provided shot-term funding to support two of its third-party suppliers, however, loans were not repaid by the third-party suppliers upon maturity. The Company commenced lawsuits against these two third-party suppliers ("defendants") in the People's Court of Xi'an Beilin District, Shaanxi Province (the "Court"). Based on the Civil Mediation Settlement of the Court, the Company and the defendants reached to agreements, that the outstanding loans will be repaid by July 1, 2030 by installments. As of September 30, 2025 and March 31, 2025, the allowance for credit losses was $149,947 and $147,103, respectively, and total outstanding balance of the long-term other receivable, net was $343,055 and $336,549, respectively.

**NOTE 5 — ADVANCE TO VENDORS, NET**

Advance to vendors, net consists of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Prepayment for goods | $3262248 | $1703313 |
| Other prepayments | 14511 | 14318 |
| Less: allowance for doubtful accounts | (585275) | (266351) |
| Advance to vendors, net | $2691484 | $1451280 |

---

Allowance for doubtful accounts for advance to vendors movement is as follows:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Beginning balance | $266351 | $175135 |
| Additions | 310532 | 92604 |
| Foreign currency translation adjustments | 8392 | (1388) |
| Ending balance | $585275 | $266351 |

---

**NOTE 6 — INVENTORIES, NET**

Inventories, net consists of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Purchased office equipment for sale | $1326282 | $1015852 |
| Equipment parts and supplies | 893293 | 755735 |
| Other supplies | 57668 | 46615 |
| Subtotal | 2277243 | 1818202 |
| Less: inventory reserve | (22772) | (18182) |
| Inventories, net | $2254471 | $1800020 |

---

The Company periodically evaluates inventories against their net realizable value, and reduces the carrying value of those inventories that are obsolete or in excess of the forecasted usage to their estimated net realizable value based on various factors including aging and future demand of each type of inventories.

**NOTE 7 — PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET**

Prepaid expenses and other current assets, net consist of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Prepaid social security-employee portion | $3588 | $5711 |
| Loans to third parties and employees <sup>(a)</sup> | 1770722 | 1022178 |
| Security deposits | 99029 | 101004 |
| VAT recoverable <sup>(b)</sup> | 149569 | 49972 |
| Prepaid expenses <sup>(c)</sup> | 318114 | 230648 |
| Others | 35818 | 38683 |
| Subtotal | 2376840 | 1448196 |
| Less: allowance for credit loss | (435115) | (84403) |
| Prepaid expenses and other current assets, net | $1941725 | $1363793 |

---

(a) Loans
to third-parties and employees are mainly used for short-term funding to support various third-party suppliers and employees. These loans
bear no interest and have terms of no more than one year. As of September 30, 2025 and March 31, 2025, the allowance for credit
losses was $431,520 and $80,877, respectively. For loans to third parties and employees, approximately 19.1%, or $338,039 of the September
30, 2025 balances have been subsequently collected as of February 28, 2026.

(b) Entities that are VAT general taxpayers are allowed to offset
qualified input VAT tax paid to suppliers against their output VAT liabilities. When the output VAT exceeds the input VAT, the difference
is remitted to tax authorities; whereas when the input VAT exceeds the output VAT, the difference is treated as VAT recoverable which
can be carried forward to offset future net VAT payables.

(c) Prepaid expenses primarily include prepaid professional expenses
in relation to consulting services.

**NOTE 8 — FINANCE RECEIVABLES, NET**

Finance receivables, net which consists of installment of sales-type leases, were as follows:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Gross receivables | $114033 | $137617 |
| Unearned income | (5283) | (6717) |
| &nbsp;&nbsp;&nbsp;Subtotal | 108750 | 130900 |
| Provision for credit loss | (11698) | (13247) |
| Finance receivables, net | 97052 | 117653 |
| Less: finance receivables, net – current | (55328) | (70801) |
| Finance receivables, net – non-current | $41724 | $46852 |

---

The allowance for credit losses represents an estimate of the losses expected to be incurred by the Company from its finance receivables.

As of September 30, 2025, future minimum lease receivables under non-cancelable sales-type lease agreement are as follows:

---

| | |
|:---|:---|
|  | **Lease**<br>**Receivable** |
| 2026 | $59626 |
| 2027 | 40422 |
| 2028 | 13849 |
| 2029 | 136 |
| Total | $114033 |

---

**NOTE 9 — PROPERTY AND EQUIPMENT, NET**

Property and equipment, net, consists of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Electronic equipment | $124426 | $58055 |
| Machinery and equipment | 1224709 | 1154638 |
| Office furniture | 60988 | 59831 |
| Motor vehicles | 271452 | 269668 |
| Leasehold improvement | 273089 | 267911 |
| Subtotal | 1954664 | 1810103 |
| Less: accumulated depreciation | (1575226) | (1424688) |
| Property and equipment, net | $379438 | $385415 |

---

Depreciation expense was $137,151 and $130,559 for the six months ended September 30, 2025 and 2024, respectively.

Machinery and Equipment represents the equipment on operating lease, and the accumulated depreciation were as follows:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Equipment on operating lease | $1224709 | $1154638 |
| Less: accumulated depreciation | (976255) | (888849) |
| Equipment on operating lease, net | $248454 | $265789 |

---

**NOTE 10 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES**

Accrued expenses and other current liabilities consist of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Customer security deposit <sup>(1)</sup> | $61834 | $64101 |
| Service fees payable <sup>(2)</sup> | 30311 | 114839 |
| Rent payable | 24576 | 14390 |
| Due to employees and other |  | 21300 |
| Others | 14634 | 19253 |
| Accrued expenses and other current liabilities | $131355 | $233883 |

---

(1) Customer security deposit mainly includes deposits paid by customers of leasing equipment business.

(2) Service fees payable primarily includes unpaid audit, legal and accounting related professional service
fees.

**NOTE 11 — RELATED PARTY TRANSACTIONS**

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. 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 |
| 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 me member of the non-controlling shareholders who own 45% of Suzhou |
| Jialiang Wang | The non-controlling shareholders who own 45% of Zibo |

---

***a. Accounts receivable - related parties***

Accounts receivable - related parties consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Hangzhou Shilian Office Equipment Co., Ltd | $24762 | $— |
| Shanghai Tuwen Office Equipment Co., Ltd. | 22553 | 166236 |
| Anhui New Yalian Office Equipment Co., Ltd. | 18477 | 64812 |
| Xuancheng Jinshida Modern Office Equipment Co., Ltd. | 7802 | 12823 |
| Hebei Leading Future Technology Co., Ltd. | 3943 | 1345 |
| Others | 281 | 276 |
| Accounts receivable - related parties | $77818 | $245492 |

---

For accounts receivable due from related parties, approximately 33.1%, or $25,789 of the September 30, 2025 balances have been subsequently collected as of February 28, 2026.

 ****

***b. Advance to vendors - related parties***

Advance to vendors - related parties consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Qinghai Chengchuang Ideal Trading Co. Ltd. | $171802 | $— |
| Qinghai Jiayuan Mingyue Trade Co., Ltd. | 140445 |  |
| Others | 170 | 50 |
| Advance to vendors - related parties | $312417 | $50 |

---

The Company periodically makes purchase advances to various vendors, including the related party suppliers. For advance to vendors made to related parties, approximately 17.3%, or $384,365 of the September 30, 2025 balances have been subsequently utilized as of February 28, 2026.

 ****

***c. Due from related parties***

Due from related parties consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Qiwei Miao | $1122515 | $1105383 |
| Zhidan Mao | 698557 | 594363 |
| Hangzhou Shilian Office Equipment Co., Ltd | 562621 | 530458 |
| Ningbo Lihong Information System Engineering Co., Ltd. | 436782 | 158448 |
| Chun Lyu | 311698 | 291495 |
| Yun Li |  | 148402 |
| Shanghai Yaodun Science and Technology Development Center (Limited Partnership) | 144865 | 142117 |
| Eshallgo Electrical Equipment (Shanghai) Co., Ltd. | 140445 | 137781 |
| Qingdao Lixing Technology Co., Ltd. |  | 68891 |
| Others | 1364 | 19679 |
| Due from related parties | $3418847 | $3197017 |

---

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. For amount due from related parties, approximately 16.0%, or $547,625 of the September 30, 2025 balances have been subsequently collected as of February 28, 2026.

 ****

 ****

***d. Accounts payable - related parties***

Accounts payable - related parties consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Qingdao Lixing Technology Co., Ltd. | $23135 | $90946 |
| Yue Yan (Shanghai) Digital Technology Co., Ltd. |  | 31679 |
| Hangzhou Shilian Office Equipment Co., Ltd |  | 16020 |
| Others | 1002 | 1616 |
| Accounts payable - related parties | $24137 | $140261 |

---

All these accounts payable to related parties occurred in the ordinary course of business and are payable upon demand without interest.

 ****

***e. Due to related parties***

Due to related parties consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Jialiang Wang | $255951 | $— |
| Peidong Xia | 103227 | 114358 |
| Hongkong Eshallgo Holding Group Co., Limited | 9739 | 10285 |
| Others | 5425 | 7977 |
| Due to related parties | $374342 | $132620 |

---

Amount due to related parties are advances from various related parties for working capital during the Company's normal course of business. These advances are unsecured, non-interest bearing and due on demand.

 **

***f. Due to a related party – non-current***

 **

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Zhongyang Pan | $94098 | $126759 |
| Due to a related party - non-current | $94098 | $126759 |

---

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 three years with maturity date on December 15, 2027. The loan bears a fixed interest rate of 3.0% per annum.

 ****

***g. Sales to related parties***

Sales to related parties consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> September 30,** | **For the Six Months Ended<br> September 30,** |
|  | **2025** | **2024** |
| Hangzhou Shilian Office Equipment Co., Ltd | $49956 | $87603 |
| Ningbo Lihong Information System Engineering Co., Ltd. | 22356 | 48533 |
| Anhui New Yalian Office Equipment Co., Ltd. | 19281 | 168751 |
| Xuancheng Jinshida Modern Office Equipment Co., Ltd. | 8407 |  |
| Hebei Leading Future Technology Co., Ltd. | 2401 | 32360 |
| Shanghai Tuwen Office Equipment Co., Ltd. | 1868 | 208059 |
| Kunming Jinbi Office Equipment Co., Ltd. |  | 24641 |
| Qinghai Jiayuan Mingyue Trade Co., Ltd. |  | 89554 |
| Others | 111 | 10196 |
| Sales to related parties | $104380 | $669697 |

---

***h. Purchases from related parties***

Purchases from related parties consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> September 30,** | **For the Six Months Ended<br> September 30,** |
|  | **2025** | **2024** |
| Shanghai Tuwen Office Equipment Co., Ltd. | $147308 | $27495 |
| Kunming Jinbi Office Equipment Co., Ltd. |  | 401337 |
| Yue Yan (Shanghai) Digital Technology Co., Ltd. | 6255 |  |
| Others |  | 2488 |
| Purchases from related parties | $153563 | $431320 |

---

***i. Loan transactions with related parties***

Loan transactions with related parties consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | | **For the Six Months Ended** | **For the Six Months Ended** |
|  | | **September 30,** | **September 30,** |
|  | <br>**Nature** | **2025** | **2024** |
| Ningbo Lihong Information System Engineering Co., Ltd. | Payments made to a related party | $(272426) | $(305522) |
| Zhidan Mao | Payments made to a related party | (97295) | (301110) |
| Hangzhou Shilian Office Equipment Co., Ltd | Payments made to a related party | (21683) | (138874) |
| Qiwei Miao | Payments made to a related party | (16698) | (1021847) |
| Qingdao Lixing Technology Co., Ltd. | Collection from (payments made to) a related party | 69496 | (167863) |
| Yun Li | Collection from a related party | 149707 |  |
| Jialiang Wang | Proceeds from a related party | 253306 |  |
| Qinghai Chengchuang Ideal Trading Co. Ltd. | Payments made to a related party |  | (215269) |
| Shanghai Yaodun Science and Technology Development Center (Limited Partnership) | Payments made to a related party |  | (138874) |
| Eshallgo Electrical Equipment (Shanghai) Co., Ltd. | Payments made to a related party |  | (138874) |
| Anhui New Yalian Office Equipment Co., Ltd. | Collection from a related party |  | 64170 |
| Others | Payment/repayment made to related parties | (52788) | (65425) |
| Total |  | $11619 | $(2429488) |

---

**NOTE 12 — LEASES**

**(a) Lessee**

The VIEs, Junzhang Shanghai, Junzhang Beijing and their subsidiaries, entered into various operating lease agreements with different landlords to lease office space and warehouse space in major cities in the PRC. The Management believes that all the leases are operating leases.

The table below presents the operating lease related assets and liabilities recorded on the balance sheets.

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Operating lease right-of-use lease assets | $377626 | $434188 |
| Operating lease liabilities – current | $292072 | $275213 |
| Operating lease liabilities – non-current | 202158 | 258974 |
| Total operating lease liabilities | $494230 | $534187 |

---

The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of September 30, 2025 and March 31, 2025:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Remaining lease term and discount rate: |  |  |
| Weighted average remaining lease term (years) | 2.27 | 2.74 |
| Weighted average discount rate | 3.69% | 3.64% |

---

During the six months ended September 30, 2025 and 2024, the Company incurred total operating lease expenses of $135,834 and $101,021, respectively.

As of September 30, 2025, future minimum lease payments under non-cancelable operating lease agreement are as follows:

---

| | |
|:---|:---|
| Remaining of 2026 | $222753 |
| 2027 | 156196 |
| 2028 | 83930 |
| 2029 | 12598 |
| 2030 | 11123 |
| Thereafter | 27808 |
| Total lease payments | 514408 |
| Less: imputed interest | (20178) |
| Total | $494230 |

---

**(b) Lessor**

The components of lease income are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | | **For the Six Months Ended** | **For the Six Months Ended** |
|  | | **September 30,** | **September 30,** |
|  | <br>**Location in disaggregation of revenue** | **2025** | **2024** |
| Revenue from sales type leases | Sales of equipment | $21915 | $8880 |
| Financing income on lease receivables | Financing | 2775 | 3937 |
| Lease income - operating leases | Leasing of equipment | 393399 | 508013 |
| Variable lease income | Leasing of equipment | 143002 | 124543 |
| Revenue from maintenance services | Maintenance services | 27216 | 47542 |
| Total lease income |  | $588307 | $692915 |

---

Profit at lease commencement on sales type leases was estimated to be approximately $3,000 and $5,000 for the six months ended September 30, 2025 and 2024, respectively.

**NOTE 13 — CONCENTRATIONS**

A majority of the Company's revenue and expense transactions are denominated in RMB and a significant portion of the Company and VIEs' assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People's Bank of China ("PBOC"). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.

As of September 30, 2025 and March 31, 2025, $2,318,776 and $3,826,068, respectively, of the Company's cash was on deposit at financial institutions in the PRC, where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure.

As of September 30, 2025 and March 31, 2025, $141,178 and $828,208, respectively, of the Company's cash was on deposit at financial institutions in the Hong Kong, which were insured by the Hong Kong Deposit Protection Board for compensation up to a limit of HK$800,000 (approximately $103,000) if the bank with which an individual/a company hold its eligible deposit fails.

As of September 30, 2025 and March 31, 2025, $1,458,364 and $2,885,258 respectively, of the Company's cash was on deposit at financial institutions in the United States, which were insured by the Federal Deposit Insurance Corporation for compensation up to a limit of $250,000 if the bank with which an individual/a company hold its eligible deposit fails.

For the six months ended September 30, 2025 and 2024, the Company's substantial assets were located in the PRC and the Company's substantial revenues were derived from its subsidiaries and VIEs located in the PRC.

For the six months ended September 30, 2025 and 2024, no single customer accounted for more than 10% of the Company's total revenue.

As of September 30, 2025, one customer accounted for 14.2% the total accounts receivable balance. As of March 31, 2025, one customer accounted for 10.1% the total accounts receivable balance.

For the six months ended September 30, 2025, one vendor accounted for 11.2% of the Company's total purchase. For the six months ended September 30, 2024, no vendor accounted for more than 10% of the Company's total purchase.

As of September 30, 2025, two vendors accounted for 12.6% and 11.0% of the total accounts payable balance, respectively. As of March 31, 2025, two vendors accounted for 12.8% and 10.5% of the total accounts payable balance, respectively.

**NOTE 14 — SHORT-TERM BANK LOAN**

On January 8, 2025, the Company entered into a loan agreement with Bank of China to borrow RMB 1.0 million ($140,445) as working capital for one year with maturity date on January 7, 2026. The loan bears a fixed interest rate of 3.27% per annum. The loan was repaid in full upon maturity.

**NOTE 15 — CONVERTIBLE DEBENTURE**

On November 29, 2024, the Company entered into a securities purchase agreement (the "Securities Purchase Agreement") with an accredited investor (the "Debenture Holder") to place Convertible Debentures (the "Debentures," each, a "Debenture") with a maturity date of November 28, 2025, which is 364 days after the issuance of the first Debenture, in the aggregate principal amount of up to $5,000,000 at a purchase price equal to 95% of the principal amount (the "Transaction"), provided that in case of an event of default, the Debentures may become, at the Debenture Holder's election, immediately due and payable. The Debentures bear an interest rate of 5% per annum which shall be increased to 18% per annum in the event of default. The initial closing of the Transaction in the principal amount of $1,500,000 in Debenture occurred on November 29, 2024. The second closing of the Transaction in the principal amount of $2,000,000 in Debenture occurred on December 19, 2024. The third closing of the Transaction in the principal amount of $1,500,000 in Debenture occurred on December 30, 2024.

For the six months ended September 30, 2025 and 2024, a total of $465,004 and $ nil in amortization of the debt issuance costs was recorded on the unaudited condensed consolidated statements of loss and comprehensive loss. As of September 30, 2025 and March 31, 2025, shares of the Company's Class A ordinary share totaling 2,759,163 and 432,759 were issued by the Company to the Debenture Holder equaling principal and interests amounted to $2,449,521 and $439,575, respectively. The Convertible Debentures balance was $1,769,482, with a carrying value of $1,866,809, net of deferred financing costs of $97,327 was recorded in the accompanying unaudited condensed consolidated balance sheets as of September 30, 2025. The derivative liability associated with these notes were $293,641 and $2,032,530 as of September 30, 2025 and March 31, 2025, respectively. The Company recognized a gain of $867,251 and $ nil from the change in fair value of the derivative liability for the six months ended September 30, 2025 and 2024, respectively.

**NOTE 16 — TAXES**

**(a) Corporate Income Taxes ("CIT")**

 

*<u>Cayman Islands</u>*

Under the current tax laws of the Cayman Islands, the Company is not subject to tax on its income or capital gains. In addition, no Cayman Islands withholding tax will be imposed upon the payment of dividends by the Company to its shareholders.

<u>Hong Kong</u>

Eshallgo HK is incorporated in Hong Kong and is subject to profit taxes in Hong Kong at a rate of 8.25% on assessable profits up to HK$2,000,000, and 16.5% on any part of assessable profits over HK$2,000,000.

PRC

Eshallgo WFOE, Junzhang Shanghai and Junzhang Beijing are incorporated in the PRC, and are subject to the PRC Enterprise Income Tax Laws ("EIT Laws") and are taxed at the statutory income tax rate of 25%, with special preferable tax holiday.

EIT grants preferential tax treatment to High and New Technology Enterprises ("HNTEs"). Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement that they re-apply for their HNTE status every three years. The VIE, Junzhang Shanghai, is qualified as HNTE and has renewed its HNTE certificate in 2021. Therefore, Junzhang Shanghai is eligible to enjoy a preferential tax rate of 15% from 2021 to 2023 to the extent it has taxable income under the EIT Law. However, as Junzhang Shanghai was also qualified as a small low-profit enterprise, it chose to enjoy the preferential tax rate of 5% for small low-profit enterprises since the year ended March 31, 2024.

For the six months ended September 30, 2025 and 2024, Junzhang Shanghai's subsidiaries, are recognized as small low-profit enterprises. According to the relevant PRC tax policies, once an enterprise meets certain requirements and is identified as a small-scale minimal profit enterprise, the taxable income not more than RMB3 million is subject to a reduced effective rate of 5% during the period from January 1, 2023 to December 31, 2027.

The estimated tax savings as a result of the Company's preferential tax rates for the six months ended September 30, 2025 and 2024 amounted to $64,796 and $125,354, respectively. Per share effect of the tax savings were $0.002 and $0.01 for the six months ended September 30, 2025 and 2024, respectively.

The United States

The Company's subsidiary in the United States are subject to the United States federal corporate income tax rate of 21%. The Company is also subject to state jurisdiction of California that have corporate tax rates of 8.84%.

 

*(i) The components of the provision for income taxes from Cayman Islands, the United States, Hong Kong, and China are as follows:*

 

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> September 30,** | **For the Six Months Ended<br> September 30,** |
|  | **2025** | **2024** |
| Current tax provision |  |  |
| Cayman Islands | $— | $— |
| The United States |  |  |
| Hong Kong |  |  |
| China | 21400 | 35870 |
|  | 21400 | 35870 |
| Deferred tax benefit |  |  |
| Cayman Islands |  |  |
| The United States |  |  |
| Hong Kong |  |  |
| China | (1890) | (8826) |
|  | (1890) | (8826) |
| Provision for income taxes | $19510 | $27044 |

---

The following table reconciles the China statutory rates to the Company's effective tax rate for the six months ended September 30, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> September 30,** | **For the Six Months Ended<br> September 30,** |
|  | **2025** | **2024** |
| China Statutory income tax rate | 25.0% | 25.0% |
| Non-taxable items |  | (0.1)% |
| Foreign tax rate differential | (18.9)% | (20.4)% |
| Effect of tax holiday and preferential tax rate | (4.7)% | (3.6)% |
| Change in valuation allowance | (1.7)% | (1.7)% |
| Others |  | (0.1)% |
| Effective tax rate | (0.3)% | (0.9)% |

---

The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. According to PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or withholding agent. The statute of limitations will be extended five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB0.1 million is specifically listed as a special circumstance). In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion.

**(b) Deferred tax assets and liabilities**

The tax effects of temporary differences that give rise to significant portions of the deferred taxes were as follows:

---

| | | |
|:---|:---|:---|
| <br>**Deferred tax assets** | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Allowance for credit loss | $168068 | $100603 |
| Reserve for inventory | 1131 | 909 |
| Unutilized marketing expenditure | 1008 | 989 |
| Operating lease liabilities | 24712 | 26709 |
| Net operating loss carried forward | 276176 | 233046 |
| Total deferred tax assets | 471095 | 362256 |
| Valuation allowance | (446383) | (335547) |
| Deferred tax assets, net of valuation allowance | $24712 | $26709 |
| Net off deferred tax liabilities | (18337) | (21096) |
| Deferred tax assets, net | $6375 | $5613 |

---

---

| | | |
|:---|:---|:---|
| <br>**Deferred tax liabilities** | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Finance lease | $5299 | $6351 |
| Right-of-use assets | 18881 | 21709 |
| Deferred tax liabilities | 24180 | 28060 |
| Net off deferred tax assets | (18337) | (21096) |
| Deferred tax liabilities, net | $5843 | $6964 |

---

Movement of the valuation allowance:

---

| | | |
|:---|:---|:---|
| <br>**Valuation allowance** | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Beginning balance | $335547 | $445403 |
| Current year addition (reduction) | 103272 | (108274) |
| Exchange difference | 7564 | (1582) |
| Ending balance | $446383 | $335547 |

---

As of September 30, 2025 and March 31, 2025, the Company's PRC entities had net operating loss carryforwards of approximately $5.5 million and $4.7 million, respectively, which will be available to offset future taxable income. As of September 30, 2025, these carryforwards will expire from 2026 through 2031 if not used. The Company periodically evaluates the likelihood of the realization of deferred tax assets, and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. Management considers new evidence, both positive and negative, that could affect the Company's future realization of deferred tax assets including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes and other relevant factors. The Company determined that it is more likely than not that its deferred tax assets derived from the net operating loss carried forward could not be realized due to uncertainty on future earnings in Junzhang Shanghai and some of its subsidiaries and the Company provided a 100% allowance for the deferred tax assets of these entities as of September 30, 2025.

**(c) Taxes payable**

Taxes payable consist of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **March 31,**<br>**2025** |
| Income tax payable | $95659 | $78257 |
| Value added tax payable | 142729 | 137640 |
| Other taxes payable | 1936 | 2445 |
| Total taxes payable | $240324 | $218342 |

---

**(d) Uncertain tax position**

The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of September 30, 2025 and March 31, 2025, the Company did not have any unrecognized uncertain tax positions and the Company does not believe that its unrecognized tax benefits will change over the next twelve months. For the six months ended September 30, 2025 and 2024, the Company did not incur any interest and penalties related to potential underpaid income tax expenses.

**NOTE 17 — SHAREHOLDERS' EQUITY**

 

*Ordinary shares*

Eshallgo was incorporated as an exempted company with limited liability under the laws of the Cayman Islands on June 16, 2021. The Company is authorized to issue 90,000,000 shares of Class A ordinary share, par value $0.0001 per share, and 10,000,000 shares of Class B ordinary share, par value $0.0001 per share. Holders of Class A Ordinary Shares and Class B Ordinary Shares vote together as one class on all matters submitted to a vote by the shareholders at any general meeting of the Company and have the same rights except each Class A Ordinary Share is entitled to one (1) vote and each Class B Ordinary Share is entitled to ten (10) votes. Also, each Class B Ordinary Share is convertible into one (1) Class A Ordinary Share at any time at the option of the holder thereof but Class A Ordinary Shares are not convertible into Class B Ordinary Shares.

As of March 31, 2022, there were 14,144,000 shares of Class A ordinary share issued and outstanding, and 5,856,000 shares of Class B ordinary share issued and outstanding. This reflects the retrospective presentation of the share issuance on July 28, 2021, August 14, 2021 and December 2, 2021, due to the recapitalization among entities under common control.

On September 5, 2022, the Company entered into a subscription agreement with certain investors, including two related parties (the "Investors") whereby the Company agreed to sell, and the Investors agreed to purchase 285,000 Class A ordinary shares (the "Shares") at a purchase price of $2.0 per share. The total proceeds of $552,892 were fully received and the Shares were issued to the Investor on October 12, 2022.

In August 2023, the Company entered into private placement subscription agreements with certain investors, whereby the Company agreed to sell, and the Investors agreed to purchase a total of 200,000 Class A ordinary shares at a purchase price of $2.3 per share. The total proceeds of $458,341 were fully received and the Shares were issued to the Investors on August 30, 2023.

 ****

***Initial Public Offering***

On July 3, 2024, the Company closed its IPO (the "Offering") of 1,250,000 Class A ordinary shares at a public offering price of $4.00 per Class A ordinary share for the total gross proceeds of $5.0 million before deducting underwriting discounts and other related expenses of $1,176,197. The Offering was conducted on a firm commitment basis. In addition, the Company has 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. The Company's Class A ordinary shares began trading on Nasdaq Capital Market under the ticker symbol "EHGO" on July 2, 2024.

 ****

***Statutory reserve and restricted net assets***

The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC ("PRC GAAP"). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity's registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the board of directors. The statutory reserve may be applied against prior year losses, if any, and may be used for general business expansion and production or increase in registered capital, but are not distributable as cash dividends.

Relevant PRC laws and regulations restrict the Company's PRC subsidiary and VIEs from transferring a portion of their net assets, equivalent to their statutory reserves and their share capital, to the Company in the form of loans, advances or cash dividends. Only PRC entities' accumulated profits may be distributed as dividends to the Company without the consent of a third party.

The payment of dividends by entities organized in China is subject to limitations, procedures and formalities. Regulations in the PRC currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China. The results of operations reflected in the unaudited condensed consolidated financial statements prepared in accordance with U.S GAAP may differ from those in the statutory financial statements of the WFOE and VIEs. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by State Administration of Foreign Exchange.

In light of the foregoing restrictions, Eshallgo WFOE and the VIEs are restricted in their ability to transfer their net assets to the Company. Foreign exchange and other regulations in the PRC may further restrict Eshallgo WFOE and the VIEs from transferring funds to the Company in the form of dividends, loans and advances. As of September 30, 2025 and March 31, 2025, restricted net assets of Eshallgo WFOE and the VIEs amounted to $6,775,264 and $5,674,808, respectively.

**NOTE 18 — SHARE-BASED COMPENSATION**

 

*Shares issued to management and employees* 

On September 12, 2024, the Company adopted a 2024 equity incentive plan (the "2024 Plan") to motivate, attract and retain directors, consultants or key employees to exert their best efforts on behalf of the Company and link their personal interests to those of the Company's shareholders. The 2024 Plan has a maximum number of 2,000,000 Class A ordinary shares of the Company available for issuance pursuant to all awards under the 2024 Plan.

The Company entered into agreements with certain consultants on September 20, 2024 and granted them a total of 931,000 Class A ordinary shares, and entered into agreements with certain key employees on October 15, 2024, and granted them a total of 600,000 Class A ordinary shares. These shares are granted as awards for their services during the Company's successful IPO, the total value of the shares was $3,410,200 based on the closing stock price of $2.20 and $2.27 on the respective grant dates. The 1,531,000 Class A ordinary shares were fully issued on November 1, 2024.

The Company entered into agreements with certain consultants on April 16, 2025 and April 17, 2025 and granted them a total of 170,000 Class A ordinary shares, and entered into agreements with certain key employees on April 21, 2025, and granted them a total of 299,000 Class A ordinary shares. These shares are granted as awards for their services during the Company's successful IPO, the total value of the shares was $510,276 based on the closing stock price of $1.07, $1.10 and $1.09 on the respective grant dates. The 469,000 Class A ordinary shares were fully issued on April 29, 2025.

The share-based compensation expense recorded for these shares issued was $1,001,162 and $2,048,200 for the six months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, the unrecognized share-based compensation expense of these shares issued was $246,864, which is expected to be recognized over a weighted average period of approximately 0.46 years.

 

 

*Restricted Shares for services*

On August 13, 2024, the Company approved the grant of 200,000 restricted shares with a value of $360,000 based on the closing stock price of $1.80 to a consultant as consideration for his consulting service for one year. The vesting period of these shares was nine months from the date of contracts. The 200,000 restricted shares were fully issued on August 13, 2024.

On September 30, 2024, the Company entered into agreements with two third party companies for their consulting service with a period of one year, and the Company granted each of the two third party companies 1,000,000 restricted shares with a value of $2,080,000 based on the closing stock price of $2.08 as consideration for their consulting services. The vesting period of these shares was six months from the date of contracts. The 2,000,000 restricted shares were fully issued on October 29, 2024.

On December 1, 2024, the Company entered into an agreement with a third party company for its consulting service with a period of one year, and the Company granted this third party company 1,000,000 restricted shares with a value of $4,060,000 based on the closing stock price of $4.06 as consideration for its consulting services. The vesting period of these shares was six months from the date of contract. The 1,000,000 restricted shares were fully issued on March 4, 2025.

The share-based compensation expense recorded for these restricted shares issued for service was $4,260,000 and $30,000 for the six months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, the unrecognized share-based compensation expense of these restricted shares issued was $676,667, which is expected to be recognized over a weighted average period of approximately 0.17 years.

**NOTE 19 — SUBSEQUENT EVENTS**

As disclosed in Note 15, the Company entered into a securities purchase agreement with the Debenture Holder to place Convertible Debentures, with a maturity date of November 28, 2025 in the aggregate principal amount of $5,000,000. On October 17, 2025 the Company and the Debenture Holder entered into a floor price adjustment agreement (the "Letter Agreement"), pursuant to which the floor price of the Debentures was reduced to $0.40. The Securities Purchase Agreement, the Debentures, the Letter Agreement and any other agreements executed by the Company and the Holder in connection with the issuance of the Debentures are collectively referred to as the "Transaction Documents". On December 16, 2025 and January 12, 2026, the Company entered into two forbearance agreements (each a "Forbearance Agreement" and collectively the "Forbearance Agreements") with the Debenture Holder, pursuant to which the Company acknowledged the existing defaults as described in the Forbearance Agreements (the "Existing Defaults"), and the Debenture Holder agreed to forbear from exercising its rights and remedies under the Transaction Documents or applicable law in respect of or arising out of the Existing Defaults, subject to the conditions, amendments and modifications contained herein for the period commencing from December 16, 2025 and ending on February 12, 2026, so long as (i) the Company strictly complies with the terms of this Agreement, and (ii) there is no occurrence or existence of any other Event of Default, other than the Existing Defaults. As consideration for the Holder forbearing to exercise its rights under the Transaction Documents, the Company has paid to the Debenture Holder a total of $125,000 under the Forbearance Agreements, which shall not be applied to the principal and interest due and outstanding under the Debentures. As of the date of this report, shares of the Company's Class A ordinary share totaling 2,317,177 were subsequently issued by the Company to the Debenture Holder equaling principal and interests amounted to $1,115,521, and cash amounted to $800,000 were repaid to the Debenture Holder.

On January 9, 2026 and January 12, 2026, the Company borrowed RMB 1.0 million ($140,445) and RMB 0.24 million ($33,707) as working capital from Bank of China for one year. Both the loans have maturity date on January 8, 2027. The loans bear a fixed interest rate of 3.07% per annum.

The Company evaluated the subsequent events through March 13, 2026, and concluded that there are no other material reportable subsequent events except disclosed above that would have required adjustment or disclosure in the financial statements.