# EDGAR Filing Document

**Accession Number:** 0001816815
**File Stem:** 0001493152-26-003270
**Filing Date:** 2026-1
**Character Count:** 617236
**Document Hash:** ac51510acb899372ce0fcb019b626520
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001493152-26-003270.hdr.sgml**: 20260123

**ACCESSION NUMBER**: 0001493152-26-003270

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 114

**CONFORMED PERIOD OF REPORT**: 20250930

**FILED AS OF DATE**: 20260123

**DATE AS OF CHANGE**: 20260122

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Bon Natural Life Ltd
- **CENTRAL INDEX KEY:** 0001816815
- **STANDARD INDUSTRIAL CLASSIFICATION:** MEDICINAL CHEMICALS & BOTANICAL PRODUCTS [2833]
- **ORGANIZATION NAME:** 03 Life Sciences
- **EIN:** 000000000
- **STATE OF INCORPORATION:** E9
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-40517
- **FILM NUMBER:** 26552684

**BUSINESS ADDRESS:**
- **STREET 1:** ROOM 601, BLOCK C, GAZELLE VALLEY, NO.69
- **STREET 2:** JINYE ROAD, HIGH-TECH ZONE, XIAN
- **CITY:** SHAANXI
- **STATE:** F4
- **ZIP:** 710076
- **BUSINESS PHONE:** 0086-29-88346301

**MAIL ADDRESS:**
- **STREET 1:** ROOM 601, BLOCK C, GAZELLE VALLEY, NO.69
- **STREET 2:** JINYE ROAD, HIGH-TECH ZONE, XIAN
- **CITY:** SHAANXI
- **STATE:** F4
- **ZIP:** 710076

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

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 20-F**

**(Mark One)**

**☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934**

**OR**

**☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the fiscal year ended September 30, 2025**

**OR**

**☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the transition period from ___________ to ___________

**OR**

**☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

Date of event requiring this shell company report:

Commission file number: **<u>001-40517</u>**

**BON NATURAL LIFE LIMITED**

(Exact Name of Registrant as Specified in Its Charter)

**<u>Not Applicable</u>**

(Translation of Registrant's Name Into English)

**<u>Cayman Islands</u>**

(Jurisdiction of Incorporation or Organization)

**Room 601, Block C, Gazelle Valley, No.69, Jinye Road**

**High-Tech Zone, Xi'an, Shaanxi, China**

**People's Republic of China 710060**

(Address of Principal Executive Offices)

**Yongwei Hu, Chairman and Chief Executive Officer**

**Room 601, Block C, Gazelle Valley, No.69, Jinye Road**

**High-Tech Zone, Xi'an, Shaanxi, China**

**People's Republic of China 710060**

**Tel: + 0086-29-88346301**

**bonnatural@appchem.cn**

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of Each Class** | **Trading Symbol(s)** | **Name of Each Exchange On Which Registered** |
| Class A Ordinary Shares, $0.025 par value | BON | NASDAQ Capital Market |

---

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report (September 30, 2025): 6,086,971 Class A ordinary shares, 2,041,839 Class B ordinary shares, 0 preferred shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of "large accelerated filer, "accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐ Accelerated Filer ☐ Non-Accelerated Filer ☒ Emerging Growth Company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☒ International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ Other ☐

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D 1(b). ☐

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Not Applicable

**Annual Report on Form 20-F**

**Year Ended September 30, 2025**

**<u>**TABLE OF CONTENTS**</u>**

---

| | | | |
|:---|:---|:---|:---|
|  |  |  | Page |
| [PART I](#pk_001) |  |  |  |
| ITEM 1. | [IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS](#pk_002) | [IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS](#pk_002) | 2 |
|  | A. | [Directors and Senior Management](#pk_003) | 2 |
|  | B. | [Advisors](#pk_004) | 2 |
|  | C. | [Auditors](#pk_005) | 2 |
| ITEM 2. | [OFFER STATISTICS AND EXPECTED TIMETABLE](#pk_006) | [OFFER STATISTICS AND EXPECTED TIMETABLE](#pk_006) | 2 |
|  | A. | [Offer Statistics](#pk_007) | 2 |
|  | B. | [Method and Expected Timetable](#pk_008) | 2 |
| ITEM 3. | [KEY INFORMATION](#pk_009) | [KEY INFORMATION](#pk_009) | 2 |
|  | A. | [Selected Financial Data](#pk_010) | 5 |
|  | B. | [Capitalization and Indebtedness](#pk_011) | 6 |
|  | C. | [Reasons for the Offer and Use of Proceeds](#pk_012) | 6 |
|  | D. | [Risk Factors](#pk_013) | 6 |
| ITEM 4. | [INFORMATION ON THE COMPANY](#pk_014) | [INFORMATION ON THE COMPANY](#pk_014) | 32 |
|  | A. | [History and Development of the Company](#pk_015) | 32 |
|  | B. | [Business Overview](#pk_016) | 38 |
|  | C. | [Organizational Structure](#lt_001) | 62 |
|  | D. | [Property, Plants and Equipment](#lt_002) | 64 |
| ITEM 4A. | [UNRESOLVED STAFF COMMENTS](#lt_003) | [UNRESOLVED STAFF COMMENTS](#lt_003) | 64 |
| ITEM 5. | [OPERATING AND FINANCIAL REVIEW AND PROSPECTS](#lt_004) | [OPERATING AND FINANCIAL REVIEW AND PROSPECTS](#lt_004) | 65 |
|  | A. | [Operating Results](#lt_005) | 65 |
|  | B. | [Liquidity and Capital Resources](#lt_006) | 77 |
|  | C. | [Research and Development, Patents and Licenses, Etc.](#lt_007) | 79 |
|  | D. | [Trend Information](#lt_008) | 79 |
|  | E. | [Off Balance Sheet Arrangements](#lt_009) | 79 |
|  | F. | [Tabular Disclosure of Contractual Obligations](#lt_010) | 79 |
|  | G. | [Safe Harbor](#lt_011) | 80 |
| ITEM 6. | [DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](#lt_012) | [DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](#lt_012) | 81 |
|  | A. | [Directors and Senior Management](#lt_013) | 81 |
|  | B. | [Compensation](#lt_014) | 84 |
|  | C. | [Board Practices](#lt_015) | 84 |
|  | D. | [Employees](#lt_016) | 86 |
|  | E. | [Share Ownership](#lt_017) | 87 |
| ITEM 7. | [MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](#lt_018) | [MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](#lt_018) | 88 |
|  | A. | [Major Shareholders](#lt_019) | 88 |
|  | B. | [Related Party Transactions](#lt_020) | 88 |
|  | C. | [Interests of Experts and Counsel](#lt_021) | 89 |

---

i

---

| | | | |
|:---|:---|:---|:---|
| ITEM 8. | [FINANCIAL INFORMATION](#lt_022) | [FINANCIAL INFORMATION](#lt_022) | 89 |
|  | A. | [Consolidated Statements and Other Financial Information](#lt_023) | 89 |
|  | B. | [Significant Changes](#lt_024) | 90 |
| ITEM 9. | [THE OFFER AND LISTING](#lt_025) | [THE OFFER AND LISTING](#lt_025) | 90 |
|  | A. | [Offer and Listing Details](#lt_026) | 90 |
|  | B. | [Plan of Distribution](#lt_027) | 90 |
|  | C. | [Markets](#lt_028) | 90 |
|  | D. | [Selling Shareholders](#lt_029) | 90 |
|  | E. | [Dilution](#lt_030) | 90 |
|  | F. | [Expenses of the Issue](#lt_031) | 90 |
| ITEM 10. | [ADDITIONAL INFORMATION](#lt_032) | [ADDITIONAL INFORMATION](#lt_032) | 91 |
|  | A. | [Share Capital](#lt_033) | 91 |
|  | B. | [Memorandum and Articles of Association](#lt_034) | 91 |
|  | C. | [Material Contracts](#lt_035) | 93 |
|  | D. | [Exchange Controls](#lt_036) | 93 |
|  | E. | [Taxation](#lt_037) | 95 |
|  | F. | [Dividends and Paying Agents](#lt_038) | 101 |
|  | G. | [Statement by Experts](#lt_039) | 101 |
|  | H. | [Documents on Display](#lt_040) | 101 |
|  | I. | [Subsidiary Information](#lt_041) | 102 |
| ITEM 11. | [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](#lt_042) | [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](#lt_042) | 102 |
| ITEM 12. | [DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES](#lt_043) | [DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES](#lt_043) | 102 |
|  | A. | [Debt Securities](#lt_044) | 102 |
|  | B. | [Warrants and Rights](#lt_045) | 103 |
|  | C. | [Other Securities](#lt_046) | 103 |
|  | D. | [American Depositary Shares](#lt_047) | 103 |
| [PART II](#lt_048) |  |  | 104 |
| ITEM 13. | [DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES](#lt_049) | [DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES](#lt_049) | 104 |
| ITEM 14. | [MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS](#lt_050) | [MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS](#lt_050) | 104 |
| ITEM 15. | [CONTROLS AND PROCEDURES](#lt_051) | [CONTROLS AND PROCEDURES](#lt_051) | 104 |
|  | A. | [Disclosure Controls and Procedures](#lt_052) | 104 |
|  | B. | [Management's Annual Report on Internal Control Over Financial Reporting](#lt_053) | 105 |
|  | C. | [Attestation Report of the Registered Public Accounting Firm](#lt_054) | 105 |
|  | D. | [Changes in Internal Controls over Financial Reporting](#lt_055) | 105 |

---

ii

---

| | | |
|:---|:---|:---|
| ITEM 16A. | [AUDIT COMMITTEE FINANCIAL EXPERT](#lt_056) | 105 |
| ITEM 16B. | [CODE OF ETHICS](#lt_057) | 105 |
| ITEM 16C. | [PRINCIPAL ACCOUNTANT FEES AND SERVICES](#lt_058) | 106 |
| ITEM 16D. | [EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES](#lt_059) | 106 |
| ITEM 16E. | [PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS](#lt_060) | 106 |
| ITEM 16F. | [CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT](#lt_061) | 106 |
| ITEM 16G. | [CORPORATE GOVERNANCE](#lt_062) | 106 |
| ITEM 16H. | [MINE SAFETY DISCLOSURE](#lt_063) | 107 |
| ITEM 16L. | [DISCLOSUSRE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](#lt_064) | 107 |
| ITEM 16J. | [INSIDER TRADING POLICIES](#lt_065) | 107 |
| ITEM 16K. | [CYBERSECURITY](#lt_066) | 107 |
| [PART III](#lt_067) | | 108 |
| ITEM 17. | [FINANCIAL STATEMENTS](#lt_068) | 108 |

---

iii

**INTRODUCTORY NOTES**

**Use of Certain Defined Terms**

Except as otherwise indicated by the context and for the purposes of this Annual Report only, references in this Annual Report to:

● "App-Chem Health" are to Shaanxi App-Chem Health Industry Co., Ltd., one of our wholly owned subsidiaries incorporated on April 17, 2006 in Tongchuan City in accordance with PRC laws;

● "App-Chem Ag-tech" are to Shaanxi App-Chem Ag-tech Co., Ltd., one of our wholly owned subsidiaries incorporated on April 19, 2013 in Dali County, Shaanxi Province in accordance with PRC laws;

● "App-Chem Guangzhou" are to App-Chem Bio (Tech) (Guangzhou) Co., Ltd., one of our wholly owned subsidiaries incorporated on April 27, 2018 in Guangzhou City in accordance with PRC laws;

● "Bon Natural Life," "the Company," "we," "us," "our company" or "our" are to Bon Natural Life Limited a Cayman Islands corporation, its subsidiaries and its consolidated affiliated entities;

● Bon Natural Life U.S.A." are to Bon Natural Life U.S.A. Limited, one of our wholly owned subsidiaries incorporated on February 7, 2023 in accordance with the laws and regulations in the State of Nevada;

● "Bozhou DT" are to Bozhou Dietary Therapy Health Technology Co., Ltd., one of our wholly owned subsidiaries incorporated on March 9, 2023 in accordance with PRC laws;

● "China" or the "PRC" are to the People's Republic of China, including Hong Kong and Macau, and excluding, for the purposes of this Annual Report only, Taiwan;

● "Class A Ordinary Shares" or "Shares" are to our Class A ordinary shares, par value $0.025 per share;

● "C lass B Ordinary Shares" are to our Class B ordinary shares, par value $0.001 per share;

● "Operating subsidiaries" or "PRC subsidiaries" are to Xi'an App-Chem Bio(Tech) Co., Ltd., a PRC company, and its subsidiary entities incorporated in the PRC;

● "Tea Essence" are to Tea Essence Limited, one of our wholly owned subsidiaries incorporated on January 9, 2020 in accordance with the laws and regulations in Hong Kong;

● "Tea Essence (Hangzhou)" are to Tea Essence Health Tech (Hangzhou) Co., Ltd., one of our wholly owned subsidiaries incorporated in Hangzhou City on March 9, 2023 in accordance with PRC laws;

● "Tianjin YHX" are to Tianjin Yonghexiang Bio(Tech) Co., Ltd., one of our subsidiaries incorporated on September 16, 2019 in accordance with PRC laws, with 51% equity ownership interest owned by Xi'an App-Chem. On June 26, 2025, App-Chem sold 51% equity ownership of Tianjin YHX for the consideration of RMB 1.

● "Tongchuan DT" are to Tongchuan Dietary Therapy Health Technology Co., Ltd., one of our wholly owned subsidiaries incorporated on May 22, 2017 in Tongchuan City in accordance with PRC laws;

● "Xi'an App-Chem" are to Xi'an App-Chem Bio(Tech) Co., Ltd., an entity incorporated in the PRC or, depending on the context, Xi'an App-Chem Bio(Tech) Co., Ltd. and its subsidiaries;

● "Xi'an CMIT" are to Xi'an Cell and Molecule Information Technology Limited, one of our Wholly Foreign-Owned Enterprises incorporated in the PRC;

● "Xi'an YH" are to Xi'an Yanhuang TCM Medical Research & Development Co., Ltd., one of our wholly owned subsidiaries incorporated on September 15, 2009 in Xi'an City in accordance with PRC laws;

● "Xi'an DT" are to Xi'an Dietary Therapy Medical Technology Co., Ltd, one of our subsidiaries incorporated on April 24, 2015 in accordance with PRC laws, with 75% equity ownership interest owned by Xi'an App-Chem;

● "Xi'an Youpincui" are to Xi'an Youpincui Biotechnology Co., Ltd., another of our Wholly Foreign-Owned Enterprises incorporated in the PRC; and

● "YongJinAn" are to YongJinAn Group Limited, one of our wholly owned subsidiaries we acquired in on September 19, 2024, which was incorporated in Hong Kong in accordance with Hong Kong laws.

● "Xianyang DT" are to Xianyang Dietary Therapy Pharmaceutical Technology Co., LTD, one of our wholly owned subsidiaries incorporated on April 16, 2025 in Xianyang City in accordance with PRC laws.

**Cautionary Note Regarding Forward-Looking Statements**

In addition to historical information, this Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. We use words such as "believe," "expect," "anticipate," "project," "target," "plan," "optimistic," "intend," "aim," "will" or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; and any statements regarding future economic conditions or performance, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements. Potential risks and uncertainties include, among other things, the possibility that we may not be able to maintain or increase our net revenues and profits due to our failure to anticipate consumer preferences and develop new products, our failure to execute our business expansion plan, changes in domestic and foreign laws, regulations and taxes, changes in economic conditions, uncertainties related to China's legal system and economic, political and social events in China, a general economic downturn, a downturn in the securities markets, and other risks and uncertainties which are generally set forth under Item 3 "Key information—D. Risk Factors" and elsewhere in this Annual Report.

Readers are urged to carefully review and consider the various disclosures made by us in this Annual Report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this Annual Report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

**PART I**

---

| | |
|:---|:---|
| **ITEM 1.** | **IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS** |

---

**A.** **Directors and Senior Management** 

Not applicable.

**B.** **Advisors** 

Not applicable.

**C.** **Auditors** 

Not applicable.

---

| | |
|:---|:---|
| **ITEM 2.** | **OFFER STATISTICS AND EXPECTED TIMETABLE** |

---

**A.** **Offer Statistics** 

Not applicable.

**B.** **Method and Expected Timetable** 

Not applicable.

---

| | |
|:---|:---|
| **ITEM 3.** | **KEY INFORMATION** |

---

We are a Cayman Islands holding company that conducts all of our operations and operates our business in China through our PRC subsidiaries. Holders of our Class A and or Class B Ordinary Shares do not own equity securities of our subsidiaries that have substantive business operations in China, but instead are holders of equity securities of a Cayman Islands holding company. Such structure involves unique risks to investors in our ordinary shares. Although we own and control our PRC operating subsidiaries, investors in our ordinary shares may never hold equity interests directly in our operating entities. Please see "*Risks Related to Our Corporate Structure*" beginning on page 11 of this report (the "Annual report") or additional information.

We face various legal and operational risks and uncertainties related to being based in and having all of our operations in China. The PRC government has significant authority to exert influence on the ability of a China-based company, such as us, to conduct its business, accept foreign investments or list on an U.S. or other foreign exchanges. For example, we face risks associated with regulatory approvals of offshore offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy. Such risks could result in a material change in our operations and/or the value of our ordinary shares or could significantly limit or completely hinder our ability to offer or continue to offer ordinary shares and/or other securities to investors and cause the value of such securities to significantly decline or be worthless. For a detailed description of risks related to doing business in China, see generally, "*Risks Related to Legal Uncertainty and Doing Business in China*" beginning on page 11 of this Annual Report.

Holding Foreign Companies Accountable Act

The recently enacted Holding Foreign Companies Accountable Act ("HFCAA"), together with a recent joint statement by the United States Securities and Exchange Commission ("SEC") and the PCAOB call for additional stringent criteria to be applied to emerging market companies by assessing the qualification of non-U.S. auditors who are not inspected by the PCAOB. Under the HFCAA, our securities may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor is not subject to inspection by the PCAOB for three consecutive years, and this ultimately could result in our Ordinary Shares being delisted from trading on any U.S. stock exchange. On December 29, 2022, President Biden signed the Consolidated Appropriations Act, 2023, which, among other things, amended the HFCAA to reduce the time period under the HFCAA to two consecutive years instead of three consecutive years.

Pursuant to the HFCAA, the PCAOB issued a Determination Report on December 16, 2021 (the "2021 Determination Report") which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in mainland China because of a position taken by one or more authorities in mainland China. Our auditor, located in China, is not subject to the 2021 Determination Report. On August 26, 2022, the China Securities Regulatory Commission ("CSRC"), the Ministry of Finance of China, and the PCAOB signed a protocol governing inspections and investigations of audit firms based in China and Hong Kong. On December 15, 2022, the PCAOB issued a new Determination Report (the "2022 Determination Report") which: (1) vacated the 2021 Determination Report and (2) concluded that the PCAOB has been able to conduct inspections and investigations completely in the PRC in 2022. Although the 2022 Determination Report reversed the conclusion of the 2021 Determination Report with respect to PCAOB's ability to conduct inspections and investigations completely of the registered public accounting firms headquartered in mainland China and Hong Kong, the 2022 Determination Report cautions, however, that authorities in the PRC might take positions at any time that would prevent the PCAOB from continuing to inspect or investigate completely. As required by the HFCAA, if in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will act expeditiously to consider whether it should issue a new determination.

The audit report included in this Annual Report for the year ended September 30, 2025 was issued by YCM CPA INC. ('YCM"), which is a U.S.-based accounting firm that is registered with the PCAOB. YCM was not subject to the 2021 Determination Report. We have no intention of dismissing YCM in the future or of engaging any auditor not based in the U.S. and not subject to regular inspection by the PCAOB.

Cash Flows Within Our Organization

We have established clear policies and procedures to ensure effective cash oversight. Our management team is directly responsible for supervising cash management, while our finance department is responsible for establishing guidelines and procedures to be followed by all departments and operating entities. When a department or operating entity requires cash, they must first submit a cash demand plan to designated management members within our company. The plan outlines the specific amount and timing of the requested funds, and the designated management member evaluates the request based on available sources of cash and the priority of needs. Once approved, the cash allocation is sent to our finance department for a second review and further approval. To further ensure effective cash management, we regularly review our cash position and make adjustments as necessary to maximize the use of available funds. We also maintain a close relationship with our banking partners to stay informed of any changes in banking regulations or requirements that could affect our cash management activities.

The structure of cash flows within the entities in our corporate organization, and the applicable regulations, are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Our equity structure is a direct holding structure, that is, the overseas entity listed in the U.S., Bon Natural Life, directly controls Xi'an CMIT and Xi'an Youpincui (the "WFOEs") and other domestic operating entities through the Hong Kong company, Tea Essence. See "Corporate History and Structure" for additional details.

&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 conducted in compliance with the laws and regulations of the PRC. After foreign investors' funds enter Bon Natural Life following an offering of securities, the funds can be directly transferred to Tea Essence, and then transferred to subordinate operating entities through the WFOE.

If were to distribute dividends, we would transfer the dividends to Tea Essence in accordance with the laws and regulations of the PRC, and then Tea Essence will transfer the dividends to Bon Natural Life, and the dividends will be distributed from Bon Natural Life 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. As of September 30, 2025, the only cash transfers from Bon Natural Life Limited to its subsidiaries have been as follows: 1) On June 29, 2021, $9 million was transferred from Bon Natural Life to our Hong Kong subsidiary and then transferred to our WOFE as a capital contribution. These funds were then transferred to our subsidiary in the PRC. 2) On July 9, 2021, $1 million was transferred from Bon Natural Life to our Hong Kong subsidiary and then further transferred to our WOFE as a capital contribution. These funds were then transferred to our subsidiary in the PRC in August 2021. 3) On January 17, 2023, $630,000 was transferred from Bon Natural Life to our Hong Kong subsidiary and then transferred to our WOFE as a capital contribution. These funds were then transferred to our subsidiary in the PRC in January 2023. 4) On April 7, 2025, $2 million was transferred from Bon Natural Life to our Hong Kong subsidiary and then to our subsidiary in the PRC. Other than the foregoing, there have been no intercompany cash transfers from Bon Natural Life to our subsidiaries or from our subsidiaries to Bon Natural Life.

To date, none of our subsidiaries have made any dividends or distributions to Bon Natural Life and we have 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 to shareholders in the foreseeable future.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Under Cayman Islands law, the Company may pay dividends on its shares out of either profit or share premium amounts, provided that in no circumstance may a dividend be paid if such payment would result in the Company being unable to pay its debts as they become due in the ordinary course of business. If we decide to pay dividends in the future, as a holding company, we will depend on receiving dividends from our PRC subsidiaries.

Current PRC regulations permit our direct PRC subsidiary, or WFOE, to pay dividends to Tea Essence Limited (HK), our Hong Kong subsidiary, only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Cash dividends, if any, on our Ordinary Shares would be paid in U.S. dollars. The PRC government also imposes control on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange ("SAFE") in the PRC, as long as certain procedural requirements are met. Approval from appropriate government authorities is required if RMB is converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may, at its discretion, impose restrictions on access to foreign currencies for current account transactions and, if this occurs in the future, we may not be able to pay dividends in foreign currencies (i.e., U.S. dollars) to our shareholders. Furthermore, if our PRC entities incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. Due to the above restrictions, if we are unable to receive payments from our PRC operating entities, we would not be able to pay dividends to our shareholders, should we desire to do so in the future.

PRC Government Permissions and Approvals

We believe that we have obtained all material licenses and permits from the PRC government authorities for our business operations in the PRC. To date, we have not been denied any such licenses and permits. However, we cannot assure you that we will always be able to successfully obtain, update or renew all the licenses or permits required for our business in a timely manner or that these licenses or permits are sufficient to conduct all of our present or future business operations. If we (i) do not receive or maintain required permissions or approvals, (ii) inadvertently conclude that such permissions or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and we are required to obtain such permissions or approvals in the future, we could be subject to fines, legal sanctions or an order to suspend or business operations, which may materially and adversely affect our business, financial condition and results of operations.

On February 17, 2023, the China Securities Regulatory Commission (the "CSRC") promulgated the Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies (the "Overseas Listing Trial Measures") and relevant five guidelines, which became effective on March 31, 2023. According to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer securities or list in overseas markets, either directly or indirectly, are required to fulfill the filing procedure with the CSRC. At a press conference held for these new regulations, officials from the CSRC clarified that the domestic companies that have already been listed overseas before the effective date of the Overseas Listing Trial Measures (i.e. March 31, 2023) shall be deemed as existing issuers, or the Existing Issuers. Existing Issuers are not required to complete the filling procedures immediately, and they shall be required to file with the CSRC when subsequent matters such as refinancing are involved.

As an Existing Issuer under the Overseas Listing Trial Measures, we would only be required to complete the filing procedures with the CSRC in connection with a new securities offering conducted after March 31, 2023. Given that the Overseas Listing Trial Measures were recently promulgated, however, there remain substantial uncertainties as to their interpretation, application, and enforcement. We cannot guarantee that new rules or regulations promulgated in the future will not impose any additional requirement on us or otherwise tighten the PRC domestic regulations on companies indirectly listed overseas.

To the extent that we are subject to any CSRC approval, filing, other governmental authorization or requirements, whether in connection with future securities offerings or otherwise, we cannot assure you that we could obtain such approval, complete such filing, or meet other requirements in a timely manner or at all. If we fail to obtain such approval if and when needed or complete such filings or meet other requirements in a timely manner, the Chinese regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operations in China, delay or restrict the repatriation of the proceeds from securities offerings into China, force a delisting of our ordinary shares, or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of our securities.

The Cybersecurity Review Measures provide that an online platform operator, which possesses personal information of at least one million users, must apply for a cybersecurity review by the CAC if it intends to be listed in foreign countries. Because we currently do not possess more than one million users' personal information, we do not believe that we are or will be subject to the cybersecurity review by the CAC. In addition, to date, we have not been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor have we received any inquiry, notice, or sanction related to cybersecurity review under the Cybersecurity Review Measures.

**A.** **Selected Financial Data** 

The following table presents selected financial data regarding our business. It should be read in conjunction with our consolidated financial statements and related notes contained elsewhere in this annual report and the information under Item 5 "Operating and Financial Review and Prospects." The selected consolidated statements of income and comprehensive income data for the fiscal years ended September 30, 2025 and 2024, and the selected consolidated statements of financial position data as of September 30, 2025 and 2024 have been derived from our audited consolidated financial statements that are included in this annual report beginning on page F-1.

Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. The selected financial data information is only a summary and should be read in conjunction with the historical consolidated financial statements and related notes contained elsewhere herein. The financial statements contained elsewhere fully represent our financial condition and operations; however, they are not indicative of our future performance.

**Balance Sheet Data (Presented in $USD)**

---

| | | |
|:---|:---|:---|
|  | **As of September 30,** | **As of September 30,** |
|  | **2025** | 2024 |
| Current assets | $**45760451** | $39793857 |
| Total assets | $**85185615** | $61765432 |
| Current liabilities | $**26308460** | $16445832 |
| Total liabilities | $**27187876** | $17415893 |
| Total equity | $**57997739** | $44349539 |
| Total liabilities and equity | $**85185615** | $61765432 |

---

**Statements of Operations Data (Presented in $USD)**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended September 30,** | **For the years ended September 30,** | **For the years ended September 30,** |
|  | **2025** | 2024 | 2023 |
| Revenue | $**18670684** | $23844556 | $29522353 |
| Gross profit | $**3878821** | $7110009 | $8840027 |
| Operating expenses | $**(5502036)** | $(5236475) | $(2903566) |
| (Loss) income from operations | $**(1623215)** | $1873534 | $5936461 |
| Other expenses | $**(86802)** | $(1157595) | $(363594) |
| Provision for income taxes | $**(339414)** | $(351179) | $(1002298) |
| Net (loss) income | $**(2049431)** | $345248 | $4552682 |
| Net (loss) income attributable to Bon Natural Life Limited | $**(1994768)** | $398172 | $4595982 |
| (Loss) earnings per share, basic | $**(0.72)** | $4.17 | $125.72 |
| Earnings per share, diluted | $**(0.72)** | $4.14 | $124.92 |
| Weighted average ordinary shares outsanding - basic | $**2755232** | $95513 | $36558 |
| Weighted average ordinary shares outsanding - diluted | $**2755232** | $96114 | $36792 |

---

**B.** **Capitalization and Indebtedness** 

Not applicable.

**C.** **Reasons for the Offer and Use of Proceeds** 

Not applicable.

**D.** **Risk Factors** 

*An investment in our capital stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this Annual Report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.*

**Risks Related To Our Financial Condition and Business Model**

**Because we conduct all of our operations in China, our business is subject to the complex and rapidly evolving laws and regulations there. The Chinese government may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value of our Ordinary Shares, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.**

As a business operating in China, we are subject to the laws and regulations of the PRC, which can be complex and evolve rapidly. The PRC government has the power to exercise significant oversight and discretion over the conduct of our business, and the regulations to which we are subject may change rapidly and with little notice to us or our shareholders. The PRC legal system is based on written statutes. Unlike common law systems, it is a system in which legal cases have limited value as precedents. In the late 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past four decades has significantly increased the protections afforded to various forms of foreign or private-sector investment in China. As relevant laws and regulations are relatively new and the PRC legal system continues to rapidly evolve with little advance notice, however, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties. The PRC government has the power to exercise significant oversight and discretion over the conduct of our business, and the regulations to which we are subject may change rapidly and with little notice to us or our shareholders. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and inconsistently with our current policies and practices. New laws, regulations, and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:

● Delay or impede our development,

● Result in negative publicity or increase our operating costs,

● Render it difficult or impossible for us to raise capital through new securities offerings, thus hindering our development,

● Require significant management time and attention, and

● Subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business practices.

The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise unfavorably impact the ability or manner in which we conduct our business and could require us to change certain aspects of our business to ensure compliance, which could decrease demand for our products, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business, financial condition and results of operations could be adversely affected, and any such action could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

**Our failure to appropriately respond to changing consumer preferences and demand for new products or product enhancements could significantly harm our customer relationships and product sales and harm our financial condition and operating results.**

Our business is subject to changing consumer trends and preferences, especially with respect to weight management; targeted nutrition; energy, sports, and fitness; and other nutrition products. Our continued success depends in part on our ability to anticipate and respond to these changes, and we may not respond in a timely or commercially appropriate manner to such changes. Furthermore, the nutritional supplement industry is characterized by rapid and frequent changes in demand for products and new product introductions and enhancements. Our failure to accurately predict these trends could negatively impact consumer opinion of our products and cause the loss of sales. Our short term new product development primarily focuses on health supplements, such as various powder drink products seeking to i) boost immunity; ii) prevent indigestion; iii) prevent respiratory infection; iv) prevent allergic skin reaction; v) improve sleep quality; vi) prevent memory loss and vii) alleviate anxiety. Our products have not been approved as effective in treating or preventing any health conditions and/or diseases by a regulatory agency in the PRC. In terms of product enhancements, we are also working on increasing the purity of our bioactive food ingredients, such as our ultra-pure stachyose as a dietary supplement for infants, flavanols to seek intestine health improvement, procyanidin b2 to seek to promote hair growth, and high soluble and low residue sclareolide to seek weight management. The success of our new product offerings and enhancements depends upon a number of factors, including our ability to:

● accurately anticipate customer needs;

● innovate and develop new products or product enhancements that meet these needs;

● successfully commercialize new products or product enhancements in a timely manner;

● price our products competitively;

● manufacture and deliver our products in sufficient volumes and in a timely manner; and

● differentiate our product offerings from those of our competitors.

If we do not introduce new products or make enhancements to meet the changing needs of our customers in a timely manner, some of our product offerings could be rendered obsolete, which could negatively impact our revenues, financial condition and operating results.

**If we are unable to build sufficient distribution network to meet increasing demand of our products, our ability to execute on our business plan as outlined in this Annual Report will be impaired.**

We sell our products through our direct sales force and distribution channel. Although our sales and distribution satisfy our existing business needs, they might be insufficient to meet demand for our products as we continue to grow our business, which could result in harm to our sales and business operations, financial condition and results of operations. To mitigate such risk, we intent to invest our internally generated cash from operations and capital to be raised to add additional teams to our direct sales force, expand our geographic reach with new distribution channels into other provinces within China and overseas, and establish more sales online. If our planned efforts to expand our sales and distribution channels are not effective, our ability to execute on our business plan and to realize continued growth with be impaired.

**Production difficulties, quality control problems, inaccurate forecasting and reliance on third-party suppliers could harm our business.**

Production difficulties, quality control problems, inaccurate forecasting and our reliance on third party suppliers to manufacture and deliver products that meet our specifications in a timely manner could harm our business. We could experience production difficulties with respect to our products, including the availability of raw materials, components, packaging and products that do not meet our specifications and quality control standards. These production difficulties and quality problems could result in stock outages or shortages in our markets with respect to such products, harm our sales, or create inventory write-downs for unusable products.

**The inability to obtain adequate supplies of raw materials for products at favorable prices, or at all, could have a material adverse effect on our business, financial condition, or results of operations.**

We acquire our raw materials for the manufacture of our products from third-party suppliers. Materials used in manufacturing our products are purchased through purchase order, often invoking pre-negotiated supply agreements. We have very few long-term agreements for the supply of these materials. There is a risk that any of our suppliers could discontinue selling raw materials to us. Although we believe that we could establish alternate sources for most of our products, any delay in locating and establishing relationships with other sources could result in product shortages or back orders for products, with a resulting loss of net sales. In certain situations, we may be required to alter our products or to substitute different products from another source. There can be no assurance that suppliers will provide the raw materials that are needed by us in the quantities that we request or at the prices that we are willing to pay. Because we do not control the actual production of certain raw materials, we are also subject to delays caused by any interruption in the production of these materials, based on conditions not within our control, including weather, crop conditions, transportation interruptions, strikes by supplier employees, and natural disasters or other catastrophic events.

**Our products have not been clinically proven to be safe or effective, and our quality control efforts are limited to ensuring ingredient and product purity and certain safety measures. If our products, or similar products distributed by other companies, were proven or asserted to be unsafe or ineffective, our business would be harmed.**

Our products include nutritional supplements that are made from vitamins, minerals, herbs, and other substances for which there is a long history of human consumption. Some of our products contain innovative ingredients or combinations of ingredients. Although we believe that all of our products are safe when taken as directed, there is little long-term experience with human consumption of certain of these product ingredients or combinations of ingredients in concentrated form. We have not conducted clinical trials on the safety or efficacy of our products, and no government agency with authority has made any determination regarding their safety or efficacy. Our inspection and quality control efforts are limited to ensuring ingredient and product purity and quality. We follow industry best practices by inspecting sourced raw materials and finished products and formulating our products and in accordance to "ISO22000 Food Safety Management System-Procurement Control Procedure", "People's Republic of China National Standard-Powder Drink", and "People's Republic of China Domestic Trade Industry Standard-Tablet Candy". In addition to our self-inspections, we use authorized national food quality control and safety inspection agencies to inspect our raw materials and finished products. These inspections and practices, however, do not constitute proof or assurance that our products are safe or effective. We could be adversely affected in the event that our products, or similar products distributed by other companies, were proven or are asserted to be ineffective or harmful to consumers or in the event of adverse publicity associated with any illness or other adverse effects resulting from consumers' use or misuse of our products or similar products of our competitors.

**We may face increased competition from new and existing firms with greater capital resources, which could cause our market share and profitability to decline if we do not successfully meet competitive challenges.**

Because of the strong prospects and recent growth of our existing business, we may face new direct competition from some counterparts engaged in other categories of the natural products and ingredients business, such as Chenguang Biotech from China, which is engaged in natural colors, Layn, which engaged in natural sweeteners, and European counterparts like Koninklijke DSM N.V., Symrise AG, and Givaudan SA. These firms may seek to compete directly with Xi'an App-Chem in its existing businesses to some extent. The size, financial strength, technology foundation and development capabilities of the above-mentioned companies are strong, and potential competition from these firms will be a key competitive challenge in the near future. In addition, large and well-developed food and food ingredient companies may seek to enter the nutritional health space. These companies may challenge us by seeking to secure key raw material sources for their products and to acquire stability, reliability and cost advantages for their supply chains. Because of the strong capital and brand strength of such companies, they might pose challenges to us in the future. If we are unable to continue to expand, innovate, and collaborate to improve our market position in the face of new competition, our market share, revenues, and profitability will be adversely affected.

**If we do not obtain substantial additional financing, our ability to execute on our business plan as outlined in this Annual Report will be impaired.**

Our plans for business expansion and development are dependent upon our raising significant additional capital. Our plans call for significant new investments in research and development, marketing, expanded productions capacity, and working capital for raw materials and other items. Management estimates that our capital needs for expansion will be approximately $30 million. We will be required to seek additional investments, loans or debt financing to fully pursue our business plans. Such additional investment may not be available to us on terms which are favorable or acceptable. Should we be unable to meet our full capital needs, our ability to fully implement our business plan will be impaired.

**If we are unable to retain key personnel and hire new key personnel, we may not be able to implement our business plan.**

Our ability to succeed depends upon the experience and contributions of our key personnel, and in particular, our founder and CEO, Mr. Hu. The loss of the services of these individuals, if they are not adequately replaced, could have a substantial adverse effect on our financial condition, results of operations, and prospects. Our future success will also depend on our ability to identify, attract, and retain additional qualified personnel as we expand our operations. There is no guarantee that we will be successful in identifying, attracting, and retaining such personnel. Consequently, the loss of any of those individuals may have a substantial effect on our future success or failure. We may have to recruit qualified personnel with competitive compensation packages, equity participation, and other benefits that may affect the working capital available for our operations. Management may have to seek to obtain outside independent professionals to assist them in assessing the merits and risks of any business proposals as well as assisting in the development and operation of many company projects. No assurance can be given that we will be able to obtain such needed assistance on terms acceptable to us. Our failure to attract additional qualified employees or to retain the services of key personnel could have a material adverse effect on our operating results and financial condition.

**Negative publicity may harm our brand and reputation and have a material adverse effect on our business.**

Negative publicity about us, including our services, management, business model and practices, compliance with applicable rules, regulations and policies, or our network partners may materially and adversely harm our brand and reputation and have a material adverse effect on our business. We cannot assure you that we will be able to defuse any such negative publicity within a reasonable period of time, or at all. Additionally, allegations, directly or indirectly against us, may be posted on the internet by anyone on a named or anonymous basis, and can be quickly and widely disseminated. Information posted may be inaccurate, misleading and adverse to us, and it may harm our reputation, business or prospects. The harm may be immediate without affording us an opportunity for redress or correction. Our reputation may be negatively affected as a result of the public dissemination of negative and potentially inaccurate or misleading information about our business and operations, which in turn may materially adversely affect our relationships with our customers, employees or business partners, and adversely affect the price of our Shares.

**Because we are an "emerging growth company," we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies."**

We are an "emerging growth company" as defined under the *Jumpstart our Business Startups Act* ("JOBS Act"). We will remain an "emerging growth company" for up to five years, or until the earliest of:

&nbsp;&nbsp;&nbsp;&nbsp;(i) the last day of the first
 fiscal year in which our total annual gross revenues exceed $1.235 billion,

(ii) the date that we become
 a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if
 the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most
 recently completed second fiscal quarter, or

(iii) the date on which we have
 issued more than $1 billion in non-convertible debt during the preceding three-year period.

As an "emerging growth company", we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to:

● not being required to comply with the auditor attestation requirements of section 404(b) of the *Sarbanes-Oxley Act* ("Sarbanes Oxley") (we also will not be subject to the auditor attestation requirements of section 404(b) as long as we are a "smaller reporting company", which includes issuers that had a public float of less than $75 million as of the last business day of their most recently completed second fiscal quarter);

● reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and

● exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

In addition, section 107 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period provided in section 7(a)(2)(B) of the Securities Act of 1933 (the "Securities Act") for complying with new or revised accounting standards. Under this provision, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to "opt out" of such extended transition period and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

**Risks Related to Our Corporate Structure**

**Our current corporate structure and business operations may be affected by the newly enacted Foreign Investment Law.**

On March 15, 2019, the National People's Congress approved the Foreign Investment Law, which came into effect on January 1, 2020. Along with the Foreign Investment Law, the Implementing Rules of Foreign Investment Law promulgated by the State Council and the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Foreign Investment Law promulgated by the Supreme People's Court became effective on January 1, 2020. Since the Foreign Investment Law and its current implementation and interpretation rules are relatively new, uncertainties still exist in relation to their further application and improvement.

The Foreign Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities that operate in industries specified as either "restricted" or "prohibited" from foreign investment in a "negative list". It is unclear whether the "negative list" to be published pursuant to the Foreign Investment Law will differ from the current Special Administrative Measures for Market Access of Foreign Investment (Negative List) (2021 Version). The Foreign Investment Law provides that foreign-invested entities operating in "restricted" industries will require market entry clearance and other approvals from relevant PRC government authorities. As of the date hereto, the current business activities of our PRC subsidiaries are not within the "negative list", and foreign investors are allowed to hold 100% equity interests of our PRC subsidiaries under the Foreign Investment Law. We have no plans at the present to substantially change our PRC subsidiaries' business activities in the future. However, it's uncertain whether we will engage in business activities that are in the "negative list", as the "negative list" may be amended from time to time.

**Risks Related to Legal Uncertainty and Doing Business in China**

**Because our operations are in China, our business is subject to the complex and rapidly evolving laws and regulations there. The Chinese government may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value of our ordinary shares.**

As our business operations are mainly conducted in China, we are subject to the laws and regulations of the PRC, which can be complex and evolve rapidly. The PRC legal system is based on written statutes. Unlike common law systems, it is a system in which legal cases have limited value as precedents. In the late 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past four decades has significantly increased the protections afforded to various forms of foreign or private-sector investment in China.

As relevant laws and regulations are relatively new and the PRC legal system continues to rapidly evolve with little advance notice, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties. The PRC government has the power to exercise significant oversight and discretion over the conduct of our business, and the regulations to which we are subject may change rapidly and with little notice to us or our shareholders. As a result, the application, interpretation, and enforcement of new and existing laws and regulations in the PRC are often uncertain. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and inconsistently with our current policies and practices. New laws, regulations, and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:

● Delay or impede our development,

● Result in negative publicity or increase our operating costs,

● Require significant management time and attention, and

● Subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business practices.

The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise unfavorably impact the ability or manner in which we conduct our business and could require us to change certain aspects of our business to ensure compliance, which could decrease demand for our products, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business, financial condition and results of operations could be adversely affected as well as materially decrease the value of our ordinary shares.

**If the Chinese government chooses to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, such action could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.**

Recent statements by the Chinese government have indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in China based issuers. PRC has recently proposed new rules that would require companies collecting or holding large amounts of data to undergo a cybersecurity review prior to listing in foreign countries, a move that would significantly tighten oversight over China-based internet giants. On July 10, 2021, the CAC issued a revised draft of the Measures for Cybersecurity Review for public comments, which required that, among others, in addition to "operator of critical information infrastructure", any "data processor" controlling personal information of no less than one million users which seeks to list in a foreign stock exchange should also be subject to cybersecurity review, and further elaborated the factors to be considered when assessing the national security risks of the relevant activities. Later on December 28, 2021, the Measures for Cybersecurity Review (2021 version) was promulgated and became effective on February 15, 2022, which iterates that any "online platform operators" controlling personal information of more than one million users which seeks to list in a foreign stock exchange should also be subject to cybersecurity review. On November 14, 2021, the CAC published the Network Internet Data Protection Draft Regulations (draft for comments), which reiterates that data handlers that process the personal information of more than one million users listing in a foreign country should apply for a cybersecurity review.

Our business does not involve the collection of user data, implicate cybersecurity, or involve any other type of restricted industry and we do not believe we are among the "operator of critical information infrastructure", "data processor", "online platform operators" or "data handler" as mentioned above. However, since the Measures for Cybersecurity Review (2021 version) was newly adopted and the Network Internet Data Protection Draft Regulations (draft for comments) is in the process of being formulated, it is unclear on how it will be interpreted, amended and implemented by the relevant PRC governmental authorities. Thus we could not assure you that we will not be deemed as the "operator of critical information infrastructure", "data processor", "online platform operators" or "data handler" as mentioned above. We believe that, as of the date of this Annual Report, the Company and its subsidiaries, (1) are not required to obtain permissions or approvals from any PRC authorities to operate or issue our Ordinary Shares to foreign investors; and (2) are not subject to permission requirements from the China Securities Regulatory Commission (the "CSRC"), the Cyberspace Administration of China (the "CAC") or any other entity that is required to approve of our operations. As of the date of this Annual Report, we and our PRC subsidiaries have not been involved in any investigations on cybersecurity review initiated by the CAC or related governmental regulatory authorities, and have not received any requirements to obtain permissions from any PRC authorities to issue our ordinary shares to foreign investors or were denied such permissions by any PRC authorities. Uncertainties still exist due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future. Any future action by the PRC government expanding the categories of industries and companies whose foreign securities offerings are subject to review by the CRSC or the CAC could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless.

**If the Chinese government were to impose new requirements for approval from the PRC Authorities to issue our ordinary shares to foreign investors or list on a foreign exchange, such action could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.**

Recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the "Opinions on Severely Cracking Down on Illegal Securities Activities According to Law," or the Opinions, which was made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters.

On December 24, 2021, the CSRC released the Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments) and the Measures for the Overseas Issuance of Securities and Listing Record-Filings by Domestic Enterprises (Draft for Comments), which were published for public comments only with the comment period expired on January 23, 2022. The Draft Rules Regarding Overseas Listing lay out the filing regulation arrangement for both direct and indirect overseas listing, and clarify the determination criteria for indirect overseas listing in overseas market.

The Draft Rules Regarding Overseas Listing stipulate that the Chinese-based companies, or the issuer, shall fulfill the filing procedures within three working days after the issuer makes an application for initial public offering and listing in an overseas market. The required filing materials for an initial public offering and listing should include at least the following: record-filing report and related undertakings; regulatory opinions, record-filing, approval and other documents issued by competent regulatory authorities of relevant industries (if applicable); and security assessment opinion issued by relevant regulatory authorities (if applicable); PRC legal opinion; and prospectus.

In addition, an overseas offering and listing is prohibited under any of the following circumstances: (1) if the intended securities offering and listing is specifically prohibited by national laws and regulations and relevant provisions; (2) if the intended securities offering and listing may constitute a threat to or endangers national security as reviewed and determined by competent authorities under the State Council in accordance with law; (3) if there are material ownership disputes over the equity, major assets, and core technology, etc. of the issuer; (4) if, in the past three years, the domestic enterprise or its controlling shareholders or actual controllers have committed corruption, bribery, embezzlement, misappropriation of property, or other criminal offenses disruptive to the order of the socialist market economy, or are currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations; (5) if, in past three years, directors, supervisors, or senior executives have been subject to administrative punishments for severe violations, or are currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations; (6) other circumstances as prescribed by the State Council. The Administration Provisions defines the legal liabilities of breaches such as failure in fulfilling filing obligations or fraudulent filing conducts, imposing a fine between RMB 1 million and RMB 10 million, and in cases of severe violations, a parallel order to suspend relevant business or halt operation for rectification, revoke relevant business permits or operational license.

However, as of the date of this Annual Report, the Draft Rules Regarding Overseas Listing have not yet gone into effect, it is still uncertain how PRC governmental authorities will regulate overseas listing in general and whether we are required to obtain any specific regulatory approvals or to fulfill any record-filing requirements. The Draft Rules Regarding Overseas Listing, if enacted, may subject us to additional compliance requirement in the future, and we cannot assure you that we will be able to get the clearance of filing procedures under the Draft Rules Regarding Overseas List on a timely basis, or at all. If we do not receive any required approvals or record-filing or if we incorrectly conclude that approvals or record-filing are not required or if the CSRC or other regulatory agencies promulgate new rules, explanations or interpretations requiring that we obtain their prior approvals or ex-post record-filing for this offering and any follow-on offering, we may be unable to obtain such approvals and record-filing which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors.

Furthermore, the PRC government authorities may strengthen oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers like us. Such actions taken by the PRC government authorities may intervene or influence our operations at any time, which are beyond our control. Therefore, any such action may adversely affect our operations and significantly limit or hinder our ability to offer or continue to offer securities and reduce the value of such securities.

As of the date of this Annual Report, we and our PRC subsidiaries have not been involved in any investigations on cybersecurity review initiated by the Cyber Administration of China or related governmental regulatory authorities, and have not received any requirements to obtain permissions from any PRC authorities to issue our Ordinary Shares to foreign investors or were denied such permissions by any PRC authorities. However, given the current PRC regulatory environment, it is uncertain when and whether we or our PRC subsidiaries, will be required to obtain permission from the PRC government to list on U.S. exchanges in the future, and even when such permission is obtained, whether it will be denied or rescinded.

We have been closely monitoring regulatory developments in China regarding any necessary approvals from the CSRC or other PRC governmental authorities required for overseas listings, including this offering. As of the date of this Annual Report, except for the potential uncertainties disclosed above, we have not received any inquiry, notice, warning, sanctions or regulatory objection to this offering from the CSRC or other PRC governmental authorities. However, there remains significant uncertainty as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offerings and other capital markets activities. If it is determined in the future that the approval of the CSRC, the CAC or any other regulatory authority is required for this offering, the offering will be delayed until we have obtained the relevant approvals. There is also the possibility that we may not be able to obtain or maintain such approval or that we inadvertently concluded that such approval was not required. If the approval was required while we inadvertently concluded that such approval was not required or if applicable laws and regulations or the interpretation of such were modified to require us to obtain the CSRC approval in the future, we may face sanctions by the CSRC, the CAC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operations in China, delay or restrict the repatriation of the proceeds from this offering into China or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of our securities. The CSRC, the CAC, or other PRC regulatory agencies also may take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of our ordinary shares. Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that settlement and delivery may not occur. In addition, if the CSRC, the CAC or other regulatory PRC agencies later promulgate new rules requiring that we obtain their approvals for this offering, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding such an approval requirement could have a material adverse effect on the trading price of our securities.

**Changes in China's economic, political or social conditions or government policies could have a material adverse effect on our business and operations.**

All of our assets and operations are located in China. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic and social conditions in China generally. The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over China's economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.

While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy, and the rate of growth has been slowing since 2012. Any adverse changes in economic conditions in China, in the policies of the Chinese government or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect our business and operating results, lead to reduction in demand for our services and adversely affect our competitive position. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. In addition, in the past the Chinese government has implemented certain measures, including interest rate adjustment, to control the pace of economic growth. These measures may cause decreased economic activity in China, which may adversely affect our business and operating results.

**We may incur material product liability claims, which could increase our costs and harm our financial condition and operating results.**

Our ingestible products include stachyose extracts, apple polyphenol and other ingredients and are classified as foods or raw materials of dietary supplements and, unlike prescription medication, our product formulas are not subject to pre-market regulatory approval with respect to medical efforts in China in which our products are distributed. Our products could contain contaminated substances, and some of our products contain some ingredients that do not have long histories of human consumption. We rely upon published and unpublished safety information including clinical studies on ingredients used in our products. These studies include "The toxicology and safety of apple polyphenol extract" [available at https://www.sciencedirect.com/science/article/abs/pii/S0278691504000493?via%3Dihub], "Public Announcement Regarding Haematococcus Pluvialis and Other New Resource Food" [Evaluation Division of Food Safety Standard and Inspection," No. 17 issued on October 29, 2010] *[available at http://www.nhc.gov.cn/sps/s7891/201011/7957c2f1326c4990b5e67ce2d3ceb783.shtml?from=singlemessage&isappinstalled=0]* (indicating that Stachyose is a safe ordinary food) and other reports by independent research institutions. In addition, stachyose is permitted for ordinary food production by the Ministry of Health of China. We do not, however, conduct or sponsor clinical studies of our products. Previously unknown adverse reactions resulting from human consumption of these ingredients could occur. As a marketer of dietary and nutritional supplements and other products that are ingested by consumers or applied to their bodies, we may be subjected to various product liability claims, including that (i) the products contain contaminants, (ii) the products include inadequate instructions as to their uses, or (iii) the products include inadequate warnings concerning side effects and interactions with other substances. It is possible that widespread product liability claims could increase our costs, and adversely affect our revenues and operating income.

**Food safety regulations regarding the raw ingredients for our products may restrict, inhibit or delay our ability to sell our products.**

Before 2018, the China Food and Drug Administration, or the **CFDA**, had the regulatory authority to oversee, administer and enforce all laws, regulations and rules concerning the food industry business operations in China. After the institutions reformed, the CFDA has been abolished, and relevant regulatory authority has been taken over by the State Administration for Market Regulation, or the **SAMR**, under the State Council.

The food industry is subject to extensive regulations in China. The PRC laws and regulations governing the food industry primarily consist of the *PRC Food Safety Law* (2009), as last amended in 2018; the *Implementation Regulation for the Food Safety Law of PRRC* (2009), or the *Food Safety Regulation*, as amended in 2019; the *Administrative Measures for Food Production Licensing* (2010), or the *Food Production Licensing Rule*, as amended in 2020; and the *Administrative Measures for Food Business Licensing* (2015), or the *Food Business Licensing Rule***,** as amended in 2017. Under the *PRC Food Safety Law* and the *Food Safety Regulation*, food product manufacturers and business operators shall obtain the required food production permits; food producers and business operators are subject to regular quality inspection and supervision by the local governmental agencies and their product permits may be revoked if they no longer meet the standards and requirements for food production and operation; food-producing enterprises shall establish and implement food safety management systems, such as ingredient inspection and acceptance, production process safety management, storage management, equipment management, and substandard product management systems; and packaging of pre-packed food shall bear a label which states manufacturing permit serial number; among other things. The State Council implements a licensing system for food product manufacture and distribution. According to the *Food Production Licensing Rule*, a food production license must be obtained prior to engaging in food production activities in the PRC. The *Food Business Licensing Rule* requires food business operators to obtain a food business license for each business entity engaging in food business operations. We have obtained the required Food Production Licenses and Food Business Licenses for related products. In order for our business to continue, we must continue to comply with all government inspection and licensing requirements. If we were to have an unsatisfactory inspection, or otherwise fail to comply with government safety regulations in all respects, our ability to continue operations and to continue to sell our products may be inhibited or delayed. Additionally, the term of Food Production Licenses and Food Business Licenses is 5 years. We have been closely monitoring the status of all the permits and have applied for renewal before the relevant licenses expired. The failure to renew the relevant licenses and/or registrations may subject us to fines or sanctions which will have negative impact on our production.

**Any disruption of our factories or our suppliers' factories could materially and adversely affect our business and results of operations.**

Currently, our products are primarily produced at our factories located in China. We also rely on our suppliers to produce raw materials and components of our products. Nevertheless, natural disasters or other unanticipated catastrophic events, including storms, fires, explosions, earthquakes, terrorist attacks and wars, as well as changes in governmental planning for the land where our factories or our suppliers' factories are located could significantly impair our ability to manufacture our products and operate our business. Catastrophic events could also destroy the inventories stored in and those suppliers' factories. The occurrence of any catastrophic event could result in the temporary or long-term closure of manufacturing facilities, and severely disrupt our business operations.

In addition, the factories are subject to fire control and environmental inspections and regulations. As of the date of this Annual Report, we cannot assure you that all the factories were in strict compliance with such fire control and environmental inspections and regulations based on our knowledge. If such facilities fail to rectify and pass the fire control and environmental inspections or comply with relevant fire control and environmental requirements relating to production activities in a timely manner, they may be subject to fines, cohesive rectification, suspension and closure, which may materially and adversely affect the production of our factories and in turn may impact our business. In the event of any changes in the PRC laws and/or regulations and/or government policies on environmental protection and more stringent requirements are imposed on Company, we may have to incur extra costs and expenses to comply with such requirements and our business and results of operations may be adversely affected. In addition, such facilities are also subject to health and safety laws and regulations imposed by the PRC governmental authorities to ensure a healthy and safe production environment. Failure to comply with the existing and future health and safety laws and regulations could subject the factories to monetary damages and fines, disruption to production plans, suspension of their operations, which may in turn materially and adversely affect our business operations. Furthermore, if any on-site personnel at such facilities is suspected of having any communicable diseases, such as COVID-19, such facilities may be subject to temporary closure and quarantine requirements, which may in turn materially and adversely affect our business operations.

Furthermore, various special equipment, such as boilers, pressure vessels, pressure pipes, and elevators, was in use on-site in these factories, which involve a high degree of safety risks. Proprietors using special equipment shall, before or within 30 days after such special equipment is put into use, handle registration with the department in charge of the supervision and administration of special equipment safety and obtain the registration license. The operators and relevant managerial staff may not engage in corresponding operations or management until they pass certain examination and acquire the certificates of special operators. As of the date of this Annual Report, we cannot assure you that all such special equipment has been registered with the local governmental authorities as legally required or all operators and relevant managerial staff have obtained relevant qualifications. Failure to comply with such regulations may subject the factories to orders to take corrective action within a stipulated time, fines and suspension of their operations, which may in turn materially and adversely affect our business operations.

Besides, some of our factories are located on leased properties. Though such leases are renewable upon expiration, our ability to renew existing leases upon their expiration is crucial to our production activities, operations and profitability. If we are unable to negotiate for a renewal of the relevant leases, we may be forced to relocate our production bases and it may be difficult and costly to replace or relocate our factories and equipment on a timely basis. We have not registered the lease agreement relating to our factories and offices with the PRC governmental authorities as required by PRC law and thus we may be ordered by the PRC government authorities to rectify such noncompliance or we may be subject to fines imposed by PRC government authorities. See also "We are subject to risks relating to our leased properties."

If we experience any unanticipated disruptions to us or our suppliers or if we are unable to renew our current leases, our production will be severely disrupted, which may in turn materially and adversely affect our business, financial condition and results of operations.

**We are subject to risks relating to our leased properties.**

We lease certain real properties from third parties primarily for our production facilities and offices in China, and such lease agreements for these properties have not been registered with the PRC governmental authorities as required by PRC law. Although the failure to do so does not in itself invalidate the leases, we may be ordered by the PRC government authorities to rectify such noncompliance and, if such noncompliance is not rectified within a given period of time, we may be subject to fines imposed by PRC government authorities ranging from RMB1,000 and RMB10,000 for each lease agreement that has not been registered with the relevant PRC governmental authorities.

The ownership certificates or other similar proof of our leased properties have not been provided to us by the relevant lessors. Therefore, we cannot assure you that such lessors are entitled to lease the relevant real properties to us. If the lessors are not entitled to lease the real properties to us and the owners of such real properties decline to ratify the lease agreements between us and the respective lessors, we may not be able to enforce our rights to lease such properties under the respective lease agreements against the owners. As of the date of this Annual Report, we are not aware of any claim or challenge brought by any third parties concerning the use of our leased properties without obtaining proper ownership proof. If our lease agreements are claimed as null and void by third parties who are the real owners of such leased real properties, we could be required to vacate the properties, in the event of which we could only initiate the claim against the lessors under relevant lease agreements for indemnities for their breach of the relevant leasing agreements. We cannot assure you that suitable alternative locations are readily available on commercially reasonable terms, or at all, and if we are unable to relocate our officers in a timely manner, our operations may be interrupted.

**We may not be able to protect our intellectual property rights.**

We rely on a combination of trademark, fair trade practice, patent, copyright and trade secret protection laws in China. Intellectual property protection may not be sufficient in China. Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce our patent rights in China. In addition, policing any unauthorized use of our intellectual property is difficult, time-consuming and costly and the steps we have taken may be inadequate to prevent the misappropriation of our intellectual property. In the event that we resort to litigation to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion of our managerial and financial resources. We can provide no assurance that we will prevail in such litigation. In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. Any failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.

**Uncertainties with respect to the PRC legal system could adversely affect us.**

The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value.

In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past four decades has significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy. These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us.

Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention.

**You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the report based on foreign laws.**

We are a company incorporated under the laws of the Cayman Islands, we conduct substantially all of our operations in China, and substantially all of our assets are located in China. In addition, all our senior executive officers reside within China for a significant portion of the time and most are PRC nationals. As a result, it may be difficult for our shareholders to effect service of process upon us or those persons inside China. In addition, China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the Cayman Islands and many other countries and regions. Therefore, recognition and enforcement in China of judgments of a court in any of these non-PRC jurisdictions in relation to any matter not subject to a binding arbitration provision may be difficult or impossible.

Shareholder claims that are common in the United States, including securities law class actions and fraud claims, generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. According to Article 177 of the *PRC Securities Law* which was amended in December 2019, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. Accordingly, without the consent of the competent PRC securities regulators and relevant authorities, no organization or individual may provide the documents and materials relating to securities business activities to overseas parties, leaving no mechanism to obtain information or conduct an investigation, if necessary.

**We may rely on dividends and other distributions on equity paid by our operating subsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiary to make payments to us could have a material and adverse effect on our ability to conduct our business.**

We are a Cayman Islands holding company and we rely principally on dividends and other distributions on equity from our operating subsidiary for our cash requirements, including for services of any debt we may incur. Our subsidiary's ability to distribute dividends is based upon its distributable earnings. Current PRC regulations permit our operating subsidiary 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, our operating subsidiary and its subsidiaries are required to set aside at least 10% of their after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of their registered capital. These reserves are not distributable as cash dividends. A company may discontinue the contribution when the aggregate sum of the statutory surplus reserve is more than 50% of its registered capital. The statutory common reserve fund of a company shall be used to cover the losses of the company, expand the business and production of the company or be converted into additional capital. Subject to above-referenced limitations and at the discretion of board of directors, the accumulated profits after appropriation of statutory surplus reserve available for dividends were $16,626,207 and $18,741,685 as of September 30, 2025 and 2024, respectively. If our operating subsidiary incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to us. Any limitation on the ability of our operating subsidiary to distribute dividends or other payments to its shareholders could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business. As of September 30, 2025, the statutory surplus reserves of our operating subsidiary and its subsidiaries, as percentage of their respective registered capitals, ranged from 2% to 41% and averaged 25% in the aggregate.

To address the persistent capital outflow and the RMB's depreciation against the U.S. dollar in the fourth quarter of 2016, the People's Bank of China and the State Administration of Foreign Exchange, or SAFE, have implemented a series of capital control measures in the subsequent months, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. For instance, the *Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification*, or the *SAFE Circular 3*, issued on January 26, 2017, provides that the banks shall, when dealing with dividend remittance transactions from domestic enterprise to its offshore shareholders of more than US$50,000, review the relevant board resolutions, original tax filing form and audited financial statements of such domestic enterprise based on the principal of genuine transaction. The PRC government may continue to strengthen its capital controls and our PRC subsidiary's dividends and other distributions may be subject to tightened scrutiny in the future. Any limitation on the ability of our PRC subsidiary to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

In addition, the *PRC Enterprise Income Tax Law* and its implementation rules provide that a withholding tax at a rate of 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC resident enterprises are tax resident. Pursuant to the *Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income*, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10% if, among other requirements, the Hong Kong enterprise directly holds at least 25% of the PRC enterprise. Under the *Circular of the State Administration of Taxation on the Issues concerning the Application of the Dividend Clauses of Tax Agreements*, or *SAT Circular 81*, promulgated by the State Administration of Taxation, or the SAT, on February 20, 2009, a Hong Kong resident enterprise must meet the following conditions, among others, in order to apply the reduced withholding tax rate: (i) it must be a company; (ii) it must directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (iii) it must have directly owned such required percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends. Nonresident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax. Instead, nonresident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. Accordingly, our Hong Kong subsidiary may be able to benefit from the 5% withholding tax rate for the dividends it receives from our PRC subsidiary, if it satisfies the conditions prescribed under the *SAT Circular 81,* and other relevant tax rules and regulations. However, if the relevant tax authorities consider the transactions or arrangements we have are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust the favorable withholding tax in the future. Accordingly, there is no assurance that the reduced 5% will apply to dividends received by our Hong Kong subsidiary from our PRC subsidiary. This withholding tax will reduce the amount of dividends we may receive from our PRC subsidiary.

**The custodians or authorized users of our controlling non-tangible assets, including chops and seals, may fail to fulfill their responsibilities, or misappropriate or misuse these assets.**

Under the PRC laws, legal documents for corporate transactions, including agreements and contracts, are executed using the chop or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed with relevant PRC market regulation authorities.

In order to secure the use of our chops and seals, we have established internal control procedures and rules for using these chops and seals. In any event that the chops and seals are intended to be used, the responsible person will submit the application which will then be verified and approved by authorized employees in accordance with our internal control procedures and rules. In addition, in order to maintain the physical security of our chops, we generally have them stored in secured locations accessible only to authorized employees. Although we monitor such authorized employees, the procedures may not be sufficient to prevent all instances of abuse or negligence. There is a risk that our employees could abuse their authority, for example, by entering into a contract not approved by us or seeking to gain control of one of our subsidiaries. If any employee obtains, misuses or misappropriates our chops and seals or other controlling non-tangible assets for whatever reason, we could experience disruption to our normal business operations. We may have to take corporate or legal action, which could involve significant time and resources to resolve and divert management from our operations.

**PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of any securities offerings to make loans to or make additional capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business.**

We are an offshore holding company conducting our operations in China through our PRC subsidiary. We may make loans to our PRC subsidiary subject to the approval from governmental authorities and limitation of amount, or we may make additional capital contributions to our PRC subsidiary in China.

Any loans to our PRC subsidiary in China, which is treated as foreign-invested enterprises under PRC laws, are subject to PRC regulations and foreign exchange loan registrations. For example, loans by us to our PRC subsidiary in China to finance their activities cannot exceed statutory limits and must be registered with the local counterpart of the SAFE. In addition, a foreign-invested enterprise shall use its capital pursuant to the principle of authenticity and self-use within its business scope. The capital of a foreign-invested enterprise shall not be used for the following purposes: (i) directly or indirectly used for payment beyond the business scope of the enterprises or the payment prohibited by relevant laws and regulations; (ii) directly or indirectly used for investment in securities investments other than banks' principal-secured products unless otherwise provided by relevant laws and regulations; (iii) the granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) paying the expenses related to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises).

SAFE promulgated the Circular of the State Administration of Foreign Exchange on Reforming the Management Approach regarding the Settlement of Capital of Foreign-invested Enterprises, or SAFE Circular 19, effective June 2015, in replacement of the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, the Circular of the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening the Administration of Foreign Exchange Businesses, and the Circular on Further Clarification and Regulation of the Issues Concerning the Administration of Certain Capital Account Foreign Exchange Businesses. Although SAFE Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested enterprise to be used for equity investments within China, it also reiterates the principle that RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. Thus, it is unclear whether SAFE will permit such capital to be used for equity investments in China in actual practice. SAFE promulgated the Circular of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or SAFE Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. Violations of SAFE Circular 19 and SAFE Circular 16 could result in administrative penalties. SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to transfer any foreign currency we hold, including the net proceeds from an offering of our securities, to our PRC subsidiary, which may adversely affect our liquidity and our ability to fund and expand our business in China.

On October 23, 2019, SAFE issued the Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment, or SAFE Circular 28, which took effect on the same day. SAFE Circular 28, subject to certain conditions, allows foreign-invested enterprises whose business scope does not include investment, or the non-investment foreign-invested enterprises, to use their capital funds to make equity investments in China. Since SAFE Circular 28 was issued only recently, its interpretation and implementation in practice are still subject to substantial uncertainties.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans to our PRC subsidiary or future capital contributions by us to our PRC subsidiary in China. As a result, uncertainties exist as to our ability to provide prompt financial support to our PRC subsidiary when needed. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we may receive from any securities offerings and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

**Although the audit reports included in this Annual Report was issued by U.S. auditors who are currently inspected by the PCAOB, if it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors would be deprived of the benefits of such inspection and our ordinary shares may be delisted or prohibited from trading.**

The audit report included in this Annual Report for the year ended September 30, 2025 was issued by YCM CPA INC. ('YCM"), which is a U.S.-based accounting firm that is registered with the PCAOB and can be inspected by the PCAOB. We have no intention of dismissing YCM in the future or of engaging any auditor not based in the U.S. and not subject to regular inspection by the PCAOB. As an auditor of companies that are registered with the SEC and publicly traded in the United States and a firm registered with the PCAOB, our auditor is required under the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. If we were to engage a different auditor in the future, we would engage an auditor that is U.S.-based and subject to full PCAOB inspection with all materials related to the audit of our financial statements accessible to the PCAOB. There is no guarantee, however, that any future auditor engaged by the Company would remain subject to full PCAOB inspection during the entire term of our engagement. In such case, we will engage a new qualified and fully inspected auditor, which may result in us delaying or restating our financial statements.

Pursuant to the Holding Foreign Companies Accountable Act (the "HFCAA"), enacted in December 2020, if the SEC determines that an issuer has filed audit reports issued by a registered public accounting firm that has not been subject to inspection for the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit its securities from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 29, 2022, President Biden signed the Consolidated Appropriations Act, 2023, which, among other things, amended the HFCAA to reduce the time period under the HFCAA to two consecutive years instead of three consecutive years.

On December 16, 2021, the PCAOB issued the Determination Report which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) China of the China or Hong Kong, because of a position taken by one or more authorities in China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. On December 15, 2022, the PCAOB issued a new Determination Report which: (1) vacated the December 16, 2021 Determination Report; and (2) concluded that the PCAOB has been able to conduct inspections and investigations completely in the PRC in 2022. The December 15, 2022 Determination Report cautions, however, that authorities in the PRC might take positions at any time that would prevent the PCAOB from continuing to inspect or investigate completely. As required by the HFCAA, if in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will act expeditiously to consider whether it should issue a new determination.

Should the PCAOB be unable to fully conduct inspection of our auditor's work papers in China, it will make it difficult to evaluate the effectiveness of our auditor's audit procedures or equity control procedures. Investors may consequently lose confidence in our reported financial information and procedures or quality of the financial statements, which would adversely affect us and out securities.

**Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.**

The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China's foreign exchange policies. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, the Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future.

Significant revaluation of the Renminbi may have a material and adverse effect on your investment. For example, to the extent that we need to convert U.S. dollars we receive from any securities offerings into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount available to us.

Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency.

**Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.**

The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenues in Renminbi. Under our current corporate structure, our Cayman Islands holding company primarily relies on dividend payments from our operating subsidiary, such as our PRC subsidiary to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of the SAFE by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our PRC subsidiary in China may be used to pay dividends to our company. However, approval from or registration with appropriate governmental authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use cash generated from the operations of our PRC subsidiary to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our Shares.

**Certain PRC regulations may make it more difficult for us to pursue growth through acquisitions.**

Among other things, the *Rules on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors*, or the *M&A Rules*, promulgated by six PRC regulatory agencies in 2006 and amended in 2009, established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. The *M&A Rules* require, among other things, that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor acquires control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that have or may have an impact on the national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. Moreover, the *Anti-Monopoly Law* promulgated by the Standing Committee of the NPC which became effective in 2008 requires that transactions that are deemed concentrations and involve parties with specified turnover thresholds must be cleared by the MOFCOM before they can be completed. In addition, PRC national security review rules which became effective in September 2011 require acquisitions by foreign investors of PRC companies engaged in military-related or certain other industries that are crucial to national security be subject to security review before consummation of any such acquisition. We may pursue potential strategic acquisitions that are complementary to our business and operations. Complying with the requirements of these regulations to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval or clearance from the MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

**PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into our PRC subsidiary, limit our PRC subsidiary's ability to increase its registered capital or distribute profits to us, or may otherwise adversely affect us.**

In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents' Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, to replace the Circular on Relevant Issues Concerning Foreign Exchange Administration for Domestic Residents' Financing and Roundtrip Investment through Offshore Special Purpose Vehicles, or SAFE Circular 75, which ceased to be effective upon the promulgation of SAFE Circular 37. SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities) to register with local branches of SAFE in connection with their direct or indirect offshore investment activities. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future.

Under *SAFE Circular 37*, PRC residents who control, or have prior to the implementation of SAFE Circular 37 controlled, directly or indirectly of offshore special purpose vehicles, or SPVs, will be required to register such investments with the SAFE or its local branches. The term "control" under *SAFE Circular 37* is broadly defined as the operation rights, beneficiary rights or decision-making rights acquired by PRC residents in the SPVs, by means of acquisition, trust, proxy, voting rights, repurchase, convertible bonds or other arrangements. In addition, any PRC resident who is a direct or indirect shareholder of an SPV, is required to update its filed registration with the local branch of SAFE with respect to that SPV, to reflect any material change. Moreover, any subsidiary of such SPV in China is required to urge the PRC resident shareholders to update their registration with the local branch of SAFE. If any PRC shareholder of such SPV fails to make the required registration or to update the previously filed registration, the subsidiary of such SPV in China may be prohibited from distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited from making additional capital contribution into its subsidiary in China. On February 13, 2015, the SAFE promulgated a *Circular on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment*, or *SAFE Circular 13*, which became effective on June 1, 2015. Under *SAFE Circular 13*, applications for foreign exchange registration of inbound foreign direct investment and outbound overseas direct investment, including those required under the *SAFE Circular 37*, will be filed with qualified banks instead of the SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of the SAFE.

These regulations may have a significant impact on our present and future structuring and investment. We have requested or intend to take all necessary measures to require our shareholders who to our knowledge are PRC residents to make the necessary applications, filings and amendments as required under these regulations. However, we may not at all times be fully aware or informed of the identities of all our shareholders or beneficial owners that are required to make such registrations, and we may not always be able to compel them to comply with all relevant foreign exchange regulations. We further intend to structure and execute our future offshore acquisitions in a manner consistent with these regulations and any other relevant legislation. However, because it is presently uncertain how the SAFE regulations and any future legislation concerning offshore or cross-border transactions will be interpreted and implemented by the relevant government authorities in connection with our future offshore financings or acquisitions, we cannot provide any assurances that we will be able to comply with, qualify under, or obtain any approvals required by the regulations or other legislation. Furthermore, we cannot assure you that any PRC shareholders of our company or any PRC company into which we invest will be able to comply with those requirements. Any failure or inability by such individuals or entities to comply with SAFE regulations may subject us to fines or legal sanctions, such as restrictions on our cross-border investment activities or our PRC subsidiary's ability to distribute dividends to, or obtain foreign exchange-denominated loans from, our company or prevent us from making distributions or paying dividends. As a result, our business operations and our ability to make distributions to you could be materially and adversely affected.

Furthermore, as these foreign exchange regulations are still relatively new and their interpretation and implementation have been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant governmental authorities. For example, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect our financial condition and results of operations. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

**Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans of overseas, publicly listed company may subject the PRC plan participants or us to fines and other legal or administrative sanctions.**

Pursuant to *SAFE Circular 37*, PRC residents who participate in share incentive plans in overseas non-publicly-listed companies may submit applications to SAFE or its local branches for the foreign exchange registration with respect to offshore special purpose companies before they obtain the incentive shares or exercise the share options. In the meantime, our directors, executive officers and other employees who are PRC citizens or who are non-PRC citizens residing in the PRC for a continuous period of not less than one year, subject to limited exceptions, and who have been granted incentive share awards by us, may follow the *Circular of the State Administration of Foreign Exchange on Issues Relating to the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Listed Company*, or the *SAFE Circular 7*, promulgated by the SAFE in 2012. Pursuant to the *SAFE Circular 7*, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be the PRC subsidiaries of such overseas listed company, and complete certain other procedures. In addition, an overseas entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests. Since We are an overseas listed company pursuant to the *SAFE Circular 7*, our executive officers and other employees who are PRC citizens or non-PRC citizen residing in the PRC for a continuous period of not less than one year and who have been granted options will be subject to these regulations. Failure to complete the SAFE registrations may subject them to fines of up to RMB300,000 for entities and up to RMB50,000 for individuals, and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiary and limit our PRC subsidiary's ability to distribute dividends to us.

The SAT has issued certain circulars concerning employee share options and restricted shares. Under these circulars, our employees working in China who exercise share options or are granted restricted shares will be subject to PRC individual income tax. Our PRC subsidiary has obligations to file documents related to employee share options or restricted shares with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options. If our employees fail to pay or we fail to withhold their income taxes according to relevant laws and regulations, we may face sanctions imposed by the tax authorities or other PRC governmental authorities.

**If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.**

Under the *PRC Enterprise Income Tax Law* and its implementation rules, an enterprise established outside of the PRC with "de facto management body" within the PRC is considered a "resident enterprise" and will be subject to the enterprise income tax on its global income at the rate of 25%. The implementation rules define the term "de facto management body" as the body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. In 2009, the SAT issued the *Circular of the State Administration of Taxation on Issues Concerning the Identification of Chinese-controlled Overseas Registered Enterprises as Resident Enterprises in accordance with the Actual Standards of Organizational Management*, or the *SAT Circular 82*, which provides certain specific criteria for determining whether the "de facto management body" of a PRC-controlled enterprise that is incorporated offshore is located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT's general position on how the "de facto management body" text should be applied in determining the tax resident status of all offshore enterprises. According to *SAT Circular 82*, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its "de facto management body" in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the places where the senior management and senior management departments responsible for the daily production, operation and management of the enterprise perform their duties are mainly located within the territory of the PRC; (ii) decisions relating to the enterprise's financial matters (such as money borrowing, lending, financing and financial risk management) and human resource matters (such as appointment, dismissal and salary and wages) are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise's primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC. In addition, the SAT issued the *Bulletin of the State Administration of Taxation on Printing and Distributing the Administrative Measures for Income Tax on Chinese-controlled Resident Enterprises Incorporated Overseas (Trial Implementation)* in 2011, providing more guidance on the implementation of *SAT Circular 82*. This bulletin clarifies matters including resident status determination, post determination administration, and competent tax authorities. In January 2014, the SAT issued the *Bulletin of the State Administration of Taxation on Issues concerning the Determination of Resident Enterprises Based on the Standards of Actual Management Institutions*, or *SAT Bulletin 9*. According to *SAT Bulletin 9*, a Chinese-controlled offshore incorporated enterprise that satisfies the conditions prescribed under the *SAT Circular 82* for being recognized as a PRC tax resident must apply for being recognized as a PRC tax resident to the competent tax authority at the place of registration of its main investor within the territory of China.

We believe that Bon Natural Life Limited is not a PRC resident enterprise for PRC tax purposes. See "Regulation—Regulations Relating to Tax—Enterprise Income Tax." However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term "de facto management body." If the PRC tax authorities determine that Bon Natural Life Limited or any of our offshore subsidiaries is a PRC resident enterprise for enterprise income tax purposes, we and our offshore subsidiary will be subject to PRC enterprise income on their worldwide income at the rate of 25%, which would materially reduce our net income. Furthermore, if we are treated as a PRC tax resident enterprise, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises. In addition, non-resident enterprise shareholders may be subject to PRC tax on gains realized on the sale or other disposition of ordinary shares, if such income is treated as sourced from within the PRC. Furthermore, if we are deemed a PRC resident enterprise, dividends payable to our non-PRC individual shareholders and any gain realized on the transfer of ordinary shares by such shareholders may be subject to PRC tax at a rate of 20% unless a reduced rate is available under an applicable tax treaty. It is unclear whether non-PRC shareholders of Bon Natural Life Limited would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that Bon Natural Life Limited is treated as a PRC resident enterprise.

**We may incur liability for unpaid taxes, including interest and penalties.**

In the normal course of business, our Company may be subject to challenges from various business location's, such as PRC taxing authorities regarding the amounts of taxes due. PRC taxing authorities may take the position that the Company owes more taxes than it has paid. It is possible that the tax liability of the Company for past taxes may be higher than those amounts, if the PRC authorities determine that we are subject to interest and penalties or that we have not paid the correct amount. To the extent our Company is unable to settle its tax liabilities as scheduled, or interest and penalties on unpaid tax liabilities assessed by tax authorities greatly exceed management's estimates, our financial condition and operating results may be negatively impacted.

**We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.**

On February 3, 2015, the SAT issued a Bulletin of State Administration of Taxation on Several Issues concerning the Enterprise Income Tax on the Indirect Transfer of Properties by Non-resident Enterprises, or SAT Bulletin 7, which came into effect on February 3, 2015, but will also apply to cases where their PRC tax treatments are not yet concluded. Pursuant to SAT Bulletin 7, an ''Indirect Transfer'' of PRC assets, including a transfer of equity interests in an unlisted non-PRC holding company of a PRC resident enterprise, by non-PRC resident enterprises may be re-characterized and treated as a direct transfer of the underlying PRC assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise.

On October 17, 2017, the SAT issued the Bulletin of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Bulletin 37, which came into effect on December 1, 2017. The SAT Bulletin 37 further clarifies the practice and procedure of the withholding of non-resident enterprise income tax.

Where a non-resident enterprise transfers taxable assets in China indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise as either transferor or transferee, or the PRC entity whose equity is transferred, may report such Indirect Transfer to the relevant tax authority. Under the "substance over form" principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to penalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes.

We face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved. Our company may be subject to filing obligations or taxed if our company is transferor in such transactions, and we may be subject to withholding obligations if our company is a transferee in such transactions, under *SAT Bulletin 7* and *SAT Bulletin 37*. For transfer of shares in our company by investors that are non-PRC resident enterprises, our PRC subsidiary may be requested to assist in the filing under *SAT Bulletin 7* and *SAT Bulletin 37*. As a result, we may be required to expend valuable resources to comply with *SAT Bulletin 7* and *SAT Bulletin 37* or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.

**If our preferential tax treatments and government subsidies are revoked or become unavailable or if the calculation of our tax liability is successfully challenged by the PRC tax authorities, we may be required to pay tax, interest and penalties in excess of our tax provisions.**

The Chinese government has provided tax incentives to our operating subsidiary in China, including reduced enterprise income tax rates. For example, under the *PRC Enterprise Income Tax Law* and its implementation rules, the statutory enterprise income tax rate is 25%. However, the income tax of an enterprise that has been determined to be a high and new technology enterprise can be reduced to a preferential rate of 15%. According to the Administrative Measures for the Accreditation of High-tech Enterprises promulgated by three PRC regulatory agencies, including SAT, the qualification of high and new enterprise is effective for a renewable three-year permitted. If our operating subsidiary fails to renew the qualification of high and new enterprise, it will be subject to the statutory enterprise income tax rate of 25%. In addition, our operating subsidiary enjoys local government subsidies. Any increase in the enterprise income tax rate applicable to our PRC subsidiary or our operating subsidiary in China, or any discontinuation, retroactive or future reduction or refund of any of the preferential tax treatments and local government subsidies currently enjoyed by our operating subsidiary in China, could adversely affect our business, financial condition, and results of operations.

Further, in the ordinary course of our business, we are subject to complex income tax and other tax regulations, and significant judgment is required in the determination of a provision for income taxes. Although we believe our tax provisions are reasonable, if the PRC tax authorities successfully challenge our position and we are required to pay tax, interest, and penalties in excess of our tax provisions, our financial condition and results of operations would be materially and adversely affected.

**Our failure to fully comply with PRC labor-related laws may expose us to potential penalties.**

Companies operating in China are required to participate in mandatory employee social security schemes that are organized by municipal and provincial governments, including pension insurance, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing provident funds. Such schemes have not been implemented consistently by the local governments in China given the different levels of economic development in different locations, but generally require us to make contributions to employee social security plans at specified percentages of the salaries, bonuses and certain allowances of our eligible full-time employees, up to a maximum amount specified by the local government from time to time. We have accrued in financial statements but not made full contributions to the social insurance and housing provident funds in accordance for our eligible full-time employees as required by the relevant PRC laws and regulations. As the date of this Annual Report, none of our subsidiaries had received any notice from local authorities or any claim or request from the employees in this regard. Our failure to make full contributions to social insurance and to comply with applicable PRC labor-related laws regarding housing funds may subject us to late payment penalties and other fines or labor disputes, and we could be required to make up the contributions for these plans, which may adversely affect our financial condition and results of operations.

According to applicable PRC laws and regulations, employers must open social insurance registration accounts and housing provident fund accounts and pay social insurance and housing provident funds for employees. Our PRC subsidiary or some its subsidiaries have not opened social insurance registration accounts or housing provident fund accounts. We may be subject to penalties imposed by the local social insurance authorities and the local housing provident fund management centers for failing to discharge our obligations in relation to payment of social insurance and housing provident funds as an employer.

**Our failure to fully comply with PRC construction-related laws may expose us to potential penalties.**

Our PRC subsidiary has rented a factory in Weinan, Shaanxi for use as our Weinan Raw Materials and Ingredients Production Site (See "History and Organizational Structure—Property, Plants, and Equipment — Weinan Raw Materials and Ingredients Production Site"). The landlord constructed some buildings of this production site without obtaining the planning permits, construction permits, or going through the completion filing, fire safety filing, or environmental protection procedures in accordance with the PRC laws and regulations. Such failure to comply with the relevant laws and regulations may subject us to administrative penalties, including but not limited to paying fines, being required to stop using or demolishing such buildings. As the date of this Annual Report, our PRC subsidiary and its subsidiaries have not received any notice or any claim from the local authorities with respect to such buildings. We will urge the landlord to apply for relevant permits and handle relevant procedures or filings with the local authorities.

Such buildings are mostly used as the warehouses. If the local authorities require us to stop using such buildings, we will need to rent new warehouses, which may affect our normal operations and cause operating losses. But we believe that the amount of the loss will not exceed 3% of the Company's sale revenues. In addition, the lease term of this production site will expire on December 31, 2025. At that time, we may not renew the lease of this production site and may transfer the production to a new production base.

**Risks Related to our Securities**

**The trading price for our Shares may fluctuate significantly, which could result in substantial losses to investors.**

Our Shares are listed on the Nasdaq Capital Market under the symbol "BON." We can provide no assurance that the trading price of our Shares will not decline. As a result, investors in our securities may experience a significant decrease in the value of their Shares.

The trading price of our Shares can be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States. In addition to market and industry factors, the price and trading volume for our Shares may be highly volatile for factors specific to our own operations, including the following:

● variations in our revenues, earnings and cash flow;

● announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;

● announcements of new offerings, solutions and expansions by us or our competitors;

● changes in financial estimates by securities analysts;

● detrimental adverse publicity about us, our services or our industry;

● additions or departures of key personnel;

● release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and

● potential litigation or regulatory investigations.

Any of these factors may result in large and sudden changes in the volume and price at which our Shares will trade.

In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management's attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

**If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding our Shares, the market price for our Shares and trading volume could decline.**

The trading market for our Shares will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade our Shares, the market price for our Shares would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our Shares to decline.

**The sale or availability for sale of substantial amounts of our Shares could adversely affect their market price.**

Sales of substantial amounts of our Shares in the public market, or the perception that these sales could occur, could adversely affect the market price of our Shares and could materially impair our ability to raise capital through equity offerings in the future. Shares held by our existing shareholders may be sold in the public market in the future subject to the restrictions in Rule 144 and Rule 701 under the Securities Act. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our Shares.

**Because we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our Shares for return on your investment.**

We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our Shares as a source for any future dividend income.

Our board of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our Shares will likely depend entirely upon any future price appreciation of our Shares. There is no guarantee that our Shares will appreciate in value or even maintain the price at which you purchased the Shares. You may not realize a return on your investment in our Shares and you may even lose your entire investment in our Shares.

**You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.**

We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies Law (2020 Revision) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States. To the extent we choose to follow home country practice with respect to corporate governance matters, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Law of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see "Description of Share Capital—Differences in Corporate Law."

**Certain judgments obtained against us by our shareholders may not be enforceable.**

We are a Cayman Islands company and substantially our primary assets are located outside of the United States. Substantially our primary operations are currently conducted in China. In addition, all of our current directors and officers are nationals and residents of countries other than the United States. Substantially all of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding the relevant laws of the Cayman Islands and China, see "Enforceability of Civil Liabilities."

**We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.**

Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: (i) the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC; (ii) the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; (iii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iv) the selective disclosure rules by issuers of material nonpublic information under Regulation FD.

We are required to file an Annual Report on Form 20-F within four months of the end of each fiscal year. In addition, we will continue to publish our results on a quarterly basis through press releases, distributed pursuant to the rules and regulations of the Nasdaq Stock Exchange. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information, which would be made available to you, were you investing in a U.S. domestic issuer.

**As a foreign private issuer, we are permitted to, and we will, rely on exemptions from certain Nasdaq Stock Exchange corporate governance standards applicable to domestic U.S. issuers. This may afford less protection to holders of our shares.**

We are exempted from certain corporate governance requirements of the Nasdaq Stock Exchange by virtue of being a foreign private issuer. We are required to provide a brief description of the significant differences between our corporate governance practices and the corporate governance practices required to be followed by domestic U.S. companies listed on the Nasdaq Stock Exchange. The standards applicable to us are considerably different than the standards applied to domestic U.S. issuers. For instance, we are not required to:

● have a majority of the board be independent (although all of the members of the audit committee must be independent under the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act);

● have a compensation committee or a nominating or corporate governance committee consisting entirely of independent directors;

● have regularly scheduled executive sessions with only independent directors; or

● have executive sessions of solely independent directors each year.

We have relied on and intend to continue to rely on some of these exemptions. As a result, you may not be provided with the benefits of certain corporate governance requirements of the Nasdaq Stock Exchange.

**If we fail to establish and maintain proper internal financial reporting controls, our ability to produce accurate financial statements or comply with applicable regulations could be impaired.**

Our management has completed an assessment of the effectiveness of our internal controls over financial reporting, and our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. In the course of auditing our consolidated financial statements for the years ended September 30, 2025 and 2024, we identified several material weaknesses in our internal control over financial reporting and other control deficiencies as of September 30, 2025. A "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses identified to date relate to a lack of accounting staff and resources with appropriate knowledge of generally accepted accounting principles in the United States ("U.S. GAAP") and SEC reporting and compliance requirements.

Following the identification of the material weaknesses and control deficiencies, we have taken remedial measures including (i) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework; (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel; and (iii) setting up an internal audit function as well as engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal control.

As of the date of this Annual Report, we have not fully addressed the above-referenced weaknesses. However, we have made progress in implementing remedial measures, specifically:

● We have hired two additional mid-level financial staff in late 2020, one of whom has been staffed in financial reporting unit and the other in internal control department. In addition, we appointed Mr. Xin Ma as our CFO on November 12, 2025, who has extensive financial and tax experience in public companies in the U.S. with U.S. Certified Public Accountant qualifications.

● Since September 30, 2020, the management team, including our chief executive officer, Mr. Yongwei Hu and other management team members of our PRC subsidiary and its subsidiaries in the PRC have held internal meetings, discussions, trainings, and seminars on a monthly basis to review our financial statements and operational performance and to identify areas to improve our internal control procedures.

● We have appointed directors and established an audit committee;

The implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting, and we cannot conclude that they have been fully remedied. Our failure to correct theses material weaknesses or our failure to discover and address any other material weaknesses could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our ordinary shares, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud. In addition, once we cease to be an "emerging growth company" as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

**There can be no assurance that we will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of our ordinary shares.**

A non-U.S. corporation will be a passive foreign investment company, or PFIC, for any taxable year if either (1) at least 75% of its gross income for such year consists of certain types of "passive" income; or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income (the "asset test"). Based on our current and expected income and assets, we do not presently expect to be a PFIC for the current taxable year or the foreseeable future. However, no assurance can be given in this regard because the determination of whether we are or will become a PFIC is a fact-intensive inquiry made on an annual basis that depends, in part, upon the composition of our income and assets. Fluctuations in the market price of our Shares may cause us to become a PFIC for the current or subsequent taxable years because the value of our assets for the purpose of the asset test may be determined by reference to the market price of our Shares. The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets.

If we were to be or become a PFIC for any taxable year during which a U.S. Holder (as defined in "Taxation—United States Federal Income Tax Considerations") holds our ordinary shares, certain adverse U.S. federal income tax consequences could apply to such U.S. Holder. See "Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Rules."

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|:---|:---|
| **ITEM 4.** | **INFORMATION ON THE COMPANY** |

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**A.** **History and Development of the Company** 

We commenced our natural products and ingredients business through Xi'an App-Chem Bio(Tech) Co., Ltd. ("Xi'an App-Chem"), a corporation formed in the People's Republic of China in April of 2006. On April 23, 2006, Xi'an App-Chem received its Business License (Registration No.: 6101012116403) from the Xi'an Administration for Industry and Commerce.

On December 11, 2019, Bon Natural Life Limited was incorporated under the laws of the Cayman Islands as our offshore holding company to facilitate financing and offshore listing. Bon Natural Life Limited subsequently established a Wholly Foreign-Owned Enterprise ("WOFE") in PRC China, Tea Essence Health Tech (Hangzhou) Co., Ltd.(Tea Essence (Hangzhou)). Tea Essence (Hangzhou) is wholly owned by our direct subsidiary in Hong Kong, Tea Essence.

Initial Public Offering

On June 28, 2021, the Company closed its initial public offering ("IPO") of 8,800 ordinary shares, par value US$0.025 per share at a public offering price of $1,250 per share, and the Company's ordinary shares started to trade on the Nasdaq Capital Market under the ticker symbol "BON" since June 24, 2021. On July 2, 2021, the underwriters exercised its over-allotment option to purchase an additional 1,320 shares, par value US$0.025 per share at the price of $125 per share. Gross proceeds of the Company's IPO, including the proceeds from the sale of the over-allotment shares, totaled $12.65 million, before deducting underwriting discounts and other related expenses, resulting in net proceeds of approximately $11.3 million.

The following diagram illustrates our corporate structure as of the date of this Annual Report:

![](form20-fchart_001.jpg)

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

&nbsp;&nbsp;&nbsp;&nbsp;1. Our equity structure is
 a direct holding structure, that is, the overseas entity listed in the U.S., Bon Natural Life, directly controls Tea Essence (Hangzhou)
 and Xi'an Youpincui (the "WFOE") and other domestic operating entities through the Hong Kong company, Tea Essence.
 See "*Corporate History and Structure*" above for additional details.

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|:---|:---|
| 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 enter Bon Natural Life following an offering of securities, the funds can be directly transferred to Tea Essence, and then transferred to subordinate operating entities through the WFOE. |
|  | If we distribute dividends, we will transfer the dividends to Tea Essence in accordance with the laws and regulations of the PRC, and then Tea Essence will transfer the dividends to Bon Natural Life, and the dividends will be distributed from Bon Natural Life 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. |
| 3. | In the reporting periods presented in this Annual Report, no dividends or distributions of a subsidiary have been made to us. For the foreseeable future, we intend to use earnings for research and development, to develop new products and to expand its production capacity. As a result, we do not expect to pay any cash dividends. |
| 4. | Our PRC subsidiaries' ability to distribute dividends is based upon their 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. See "*Regulations Relating to Dividend Distributions*" for more information. |

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To address persistent capital outflows and the RMB's depreciation against the U.S. dollar in the fourth quarter of 2016, the People's Bank of China and the State Administration of Foreign Exchange, or SAFE, have implemented a series of capital control measures in the subsequent months, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. The PRC government may continue to strengthen its capital controls and our PRC subsidiaries' dividends and other distributions may be subject to tightened scrutiny in the future. The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. Furthermore, if our subsidiaries in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments.

In addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax at a rate of 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC central government and the governments of other countries or regions where the non-PRC resident enterprises are tax resident. Pursuant to the tax agreement between Mainland China and the Hong Kong Special Administrative Region, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10%. However, if the relevant tax authorities determine that our transactions or arrangements are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust the favorable withholding tax in the future. Accordingly, there is no assurance that the reduced 5% withholding rate will apply to dividends received by our Hong Kong subsidiary from our PRC subsidiaries. This withholding tax will reduce the amount of dividends we may receive from our PRC subsidiaries.

*Xi'an App-Chem's Operating Subsidiaries*

The table below provides a summary of Xi'an App-Chem's operating subsidiaries ("Bon Operating Companies") and their primary business functions as of the date of this Annual Report:

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|:---|:---|:---|:---|:---|
| Name of Entity | Date of Incorporation | Place of Incorporation | % of Ownership | Principal Activities |
| App-Chem Health | April 17, 2006 | Tongchuan City, PRC | 100% owned by Xi'an App-Chem | Registered owner of land with an area of 12,904.5 square meters, no other business activities |
| App-Chem Ag-tech | April 19, 2013 | Dali County, PRC | 100% owned by Xi'an App-Chem | Product manufacturing |
| App-Chem Guangzhou | April 27, 2018 | Guangzhou City, PRC | 100% owned by Xi'an App-Chem | Raw material purchase |
| Tongchuan DT | May 22, 2017 | Tongchuan City, PRC | 99% owned by Xi'an App-Chem,1% owned by App-Chem Health | Product manufacturing |
| Xi'an DT | April 24, 2015 | Xi'an City, PRC | 75% owned by Xi'an App-Chem | Research and development of product |
| Xi'an YH | September 15, 2009 | Xi'an City, PRC | 93.75% owned by Xi'an CMIT, 6.25% owned by Xi'an App-Chem | Research and development of product |
| Xianyang DT | April 16, 2025 | Xianyang City, PRC | 100% owned by Xi'an App-Chem | Technology development and sales of the products |
| Bozhou DT | March 9, 2023 | Bozhou City, PRC | 100% owned by Xi'an App-Chem | Product manufacturing |

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All of our actual business operations in China are conducted through Xi'an App-Chem and its subsidiaries. Bon Natural Life Limited (the Cayman Islands holding company offering securities through the previously filed prospectus), its immediate Hong Kong subsidiary Tea Essence and Tea Essence's subsidiary Tea Essence Tech (Hangzhou), function solely as holding companies.

**<u>Recent Developments</u>**

***Chief Financial Officer resignation and appointment***

 ****

On November 11, 2025, Wallace Lee, our Chief Financial Officer notified the Company of his intent to resign from his position as Chief Financial Officer, effective November 14, 2025. There was no known disagreement with Mr. Lee on any matter relating to our operations, policies or practices.

Effective November 12, 2025, Mr. Xin Ma was appointed as the new Chief Financial Officer of the Company to assume the responsibilities held previously by Mr. Lee.

 ****

***Reverse Split***

On April 15, 2025, the shareholders of the Company approved a reverse split at a ratio of 1-for-25 share. The Reverse Split took effective on May 19, 2025. As a result of this reverse split, there were 1,000,000,000 Class A ordinary shares authorized, par value US$0.025 each, 50,000,000 Class B ordinary shares authorized, par value US$0.001 and 50,000,000 preference shares, par value US$0.001 each.

***Public Offering***

On March 16, 2025, the Company priced a public offering for the sale of units as described below for aggregate gross proceeds to the Company of $12 million, before deducting placement agent fees and other estimated expenses payable by the Company. The company is offering 333,333 units, consisting of 28,000 ordinary units ("Ordinary Units") and 305,333 pre-funded units ("Pre-Funded Units"). Each Ordinary Unit consists of one Class A ordinary share of the Company, par value $0.025 per share ("Class A Ordinary Share"), one Series A warrant ("Series A Warrant") to purchase one Class A Ordinary Share at an exercise price of $36 per share and one Series B warrant ("Series B Warrant") to purchase one Class A Ordinary Share at an initial exercise price of $54 per share. Each Pre-Funded Unit consists of one pre-funded warrant ("Pre-Funded Warrant") to purchase one Class A Ordinary Share, one Series A Warrant and one Series B Warrant. The purchase price of each Ordinary Unit will be $36, and the purchase price of each Pre-Funded Unit will be equal to such price minus $0.025.

The Pre-Funded Warrants will be exercisable immediately upon issuance and will expire when exercised in full. The Series A Warrants and Series B Warrants will be immediately exercisable upon issuance and will expire on the three year anniversary of their initial issuance date.

The exercise price of the Series A Warrants will be reset immediately following the thirtieth (30th) trading day (the "Reset Date") following the issuance date of the Series A Warrants to a price equal to 105% of the arithmetic average of the sum of the three lowest per share volume-weighted average prices ("VWAPs") of the Class A Ordinary Shares on the Nasdaq Capital Market ("Nasdaq") for the twenty (20) trading days immediately prior to the Reset Date, provided that such price shall not be lower than $7.2 (the "Floor Price").

A holder of Series B Warrants may, at any time and in its sole discretion, exercise its Series B Warrants in whole or in part by means of a "zero exercise price" option in which the holder is entitled to receive a number of Class A Ordinary Shares equal to the product of (a) the number of shares that would be issuable upon exercise of the Series B Warrant in accordance with the terms of such warrant if such exercise were by means of a cash exercise rather than a cashless exercise and (b) the quotient obtained by dividing (i) the exercise price minus the lowest VWAP of the Class A Ordinary Shares during the 10 trading days immediately prior to the applicable exercise date (such VWAP, the "Low Price") by (ii) 50% of the Low Price. This "zero exercise price" option is only available at a time when the applicable Low Price is lower than the then applicable exercise price. At no time can the Low Price be lower than the Floor Price.

The Company used the net proceeds from the offering for sales network expansion, research and development, production capacity expansion, and working capital and other general corporate purposes.

The securities in the offering were offered pursuant to a securities purchase agreement with certain investors (the "Purchase Agreement") and the Company's registration statement on Form F-1 (File No. 333-283333), as amended, which was initially filed with the Securities and Exchange Commission (the "SEC") on November 19, 2024 and declared effective by the SEC on March 14, 2025.

Also on March 16, 2025, the Company entered into a placement agency agreement (the "Placement Agency Agreement") with Univest Securities, LLC (the "Placement Agent"), pursuant to which the Placement Agent acted as sole placement agent for the offering and received at the closing of the offering a fee of 8.0% of the gross proceeds of the offering, a non-accountable expenses allowance of 1.5% of the gross proceeds of the offering and reimbursement of up to $100,000 for its actual and accountable out-of-pocket expenses related to the offering, including any fees and disbursements of the Placement Agent's legal counsel.

The Private Placement was conducted pursuant to the exemption provided by Rule 506(b) under Regulation D. The shares were offered exclusively to "accredited investors" as defined in Rule 501 under Regulation D and the Company did not engage in any general solicitation or advertising.

***White Lion Purchase Agreement***

On September 9, 2024, we entered into an Ordinary Share Purchase Agreement (the "Purchase Agreement") with White Lion Capital, LLC ("White Lion"). Under the Purchase Agreement, the Company has the right to require White Lion to purchase, from time to time, up to a cumulative total of $10,000,000 worth of Ordinary Shares.

Additionally, the Company has the right, from time to time, to send White Lion a purchase notice requiring White Lion to purchase Ordinary Shares. The dollar amount of each purchase notice shall be limited to the lesser of: (i) 30% of the average daily trading volume for the Ordinary Shares over the preceding 5 business days; or (ii) $1,000,000 divided by the highest closing price for the Ordinary Shares over the preceding 5 business days. When sending a purchase notice to White Lion, the Company may elect to send either a "Rapid Purchase Notice" or a "VWAP Purchase Notice." In the case of a Rapid Purchase Notice, White Lion's purchase price for the Ordinary Shares shall be equal to the lowest traded price for the Ordinary Shares that occurs during the Rapid Purchase Notice Date (defined as the same day that the Rapid Purchase Notice is sent if the purchase notice and a DWAC transfer of the shares to be purchased is completed before 9:00 a.m., or the following business day if the notice and/or the DWAC transfer if completed after 9:00 a.m.). In the case of a VWAP Purchase Notice, White Lion's purchase price for the Ordinary Shares shall be equal to 91% of the lowest daily VWAP (as defined in the Agreement) for the Ordinary Shares during the VWAP Valuation Period (as defined in the Purchase Agreement) up until a total of $2,000,000 worth of ordinary shares have been purchased. Thereafter, White Lion's purchase price for the Ordinary Shares under a VWAP Purchase Notice shall be equal to 97% of the lowest daily VWAP for the Ordinary Shares during the VWAP Valuation Period. The VWAP Valuation Period is defined as 3 consecutive business days commencing on the VWAP Purchase Notice Date (defined as the same day that the VWAP Purchase Notice is sent if the purchase notice and a DWAC transfer of the shares to be purchased is completed before 9:00 a.m., or the following business day if the notice and/or the DWAC transfer if completed after 9:00 a.m.)

White Lion's obligation to purchase ordinary shares under the Purchase Agreement is subject to certain conditions and limitations, including the following:

● All shares to be issued under the Purchase Agreement must be covered by an effective registration statement and the Company must, within 90 days, which date was extended to January 31, 2025: (i) register its sale of ordinary shares to White Lion under the Purchase Agreement via a prospectus supplement to its current shelf registration statement on Form F-3, and/or (ii) register White Lion's resale of ordinary shares to be acquired under the Agreement on new registration statement.

● The Company's ability to require White Lion's purchase of ordinary shares under the Purchase Agreement is limited such that the Company may not require any purchase by White Lion to the extent that such purchase would result in White Lion beneficially owning more than 4.99% of the Ordinary Shares immediately thereafter; and

● The Company may not issue more than 793,714 ordinary shares to White Lion (equal to 19.99% of the Company's outstanding ordinary shares on the date of the Purchase Agreement) unless or until shareholder approval of such issuances is obtained.

As additional consideration to White Lion, the Company has agreed to issue White Lion $250,000 worth of ordinary shares as a commitment fee. Such commitment fee shares are issuable on the earlier of (i) the business day prior to the filing of a registration statement registering the Ordinary Shares under the Purchase Agreement, (ii) the business day prior to the filing of prospectus supplement registering the Ordinary Shares under the Purchase Agreement, or (iii) the business day prior to the date that the Investor delivers a written request to the Company for such commitment shares. Both parties agreed to terminate the agreement after expire.

***Tea Essence (Hangzhou) Transfer***

On November 28, 2024, Tea Essence (Hangzhou) and Tea Essence entered into an equity transfer agreement. Pursuant to the agreement, Tea Essence (Hangzhou) agreed to purchase 100% of the equity interest in the Xi'an Cell and Molecule in exchange for consideration of RMB 1,500,000.00.

On November 28, 2024, Tea Essence (Hangzhou) and Tea Essence entered into an equity transfer agreement. Pursuant to the agreement, Tea Essence (Hangzhou) agreed to purchase 100% of the equity interest in the Youpincui in exchange for consideration of RMB 500,000.00.

As of the closing on November 29, 2024, Tea Essence (Hangzhou) is the headquarter of the Company within mainland China.

***Gansu Disposition***

On September 30, 2024, our operating subsidiary Xi`an App-Chem Bio (Tech) Co., Ltd. and its wholly owned subsidiary, Baimeikang entered into an Asset Selling Agreement (the "Selling Agreement") with Baixiangquan. Under the Selling Agreement, which closed on November 29, 2024, App-Chem agreed to sell all the assets of Baimeikang to Baixiangquan by transferring 100% of the equity interests in Baimeikang to Baixiangquan.

***Tianjin YHX Disposal***

On June 26, 2025, App-Chem sold 51% equity ownership of Tianjin YHX for the consideration of RMB 1. The disposal does not represent a strategic shift of the Company and had no major effect on the Company's operations and financial results.

***January 16, 2025 Extraordinary General Meeting***

We held an Extraordinary General Meeting on January 16, 2025, where the shareholders of the Company voted in favor of adopting the Third Amended and Restated Memorandum and Articles of Association. Pursuant to the Third Amended and Restated Memorandum and Articles of Association (i) all of the authorized (whether issued or not issued) Ordinary Shares were re-designated and re-classified into Class A Ordinary Shares where the rights of the existing Ordinary Shares shall be the same as the Class A Ordinary Shares, and (ii) all of the authorized but unissued preference shares of par value of US$0.001 each in the Company were cancelled and a new class of shares comprising of 30,000,000 Class B Ordinary Shares, which will be convertible, at the option of the holder thereof, into the number of fully paid and non-assessable Class A Ordinary Shares on a one-for-one basis (subject to adjustment as stated in the Company's articles of association) and be entitled to one hundred (100) votes per share, such that, the Company's authorized share capital shall become US$300,000 divided into (a) 270,000,000 Class A Ordinary Shares and (b) 30,000,000 Class B Ordinary Shares. The Company also adopted the Third Amended and Restated Memorandum and Articles of Association.

Additionally, upon effectiveness of the Third Amended and Restated Memorandum and Articles of Association , the Company will repurchase (a) 2,004,427 Class A Ordinary Shares held by Mr. Yongwei Hu, our Chief Executive Officer, in consideration of the Company's new issuance of 2,004,427 Class B Ordinary Shares to Mr. Hu, and (b) 37,412 Class A Ordinary Shares held by Ms. Jing Liu, Mr. Hu's wife and a director of the Company, in consideration of the Company's new issuance of 37,412 Class B Ordinary Shares to Ms. Liu; and (ii) such issuance of 2,004,427 and 37,412 Class B Ordinary Shares to Mr. Hu and Ms. Liu, respectively, such that, as a result of the repurchase of Class A Ordinary Shares from and issuance of Class B ordinary shares to Mr. Hu and Ms. Liu, Mr. Hu would control 97.15% of the total voting power of the Company and Ms. Liu would control 1.81% of the total voting power of the Company.

The effectiveness of the Third Amended and Restated Memorandum and Articles of Association and associated reclassification of the Ordinary Shares to Class A Ordinary Shares and the exchange of the Class A Ordinary Shares held by Mr. Hu and Ms. Liu for the same number of Class B Ordinary Shares are collectively referred to as the "Dual Class Restructuring". The Dual Class Restructuring is not effective pending Nasdaq approval.

***April 15, 2025 Extraordinary General Meeting***

The Company held an extraordinary general meeting of the shareholders of the Company (the "Meeting") on April 15, 2025, at 10:00 a.m. (Beijing time) at Room 601, Block C, Gazelle Valley, No.69, Jinye Road, High-Tech Zone, Xi'an, Shaanxi, China. Holders of a total of 204,183,900 ordinary shares voted at the meeting and therefore constituted a quorum as of the record date of March 26, 2025. Each ordinary share is entitled to one vote. The final voting results for each matter submitted to a vote of shareholders at the meeting are as follows:

● Share
 Consolidation (Reverse Split)

To approve a reverse split (a "share consolidation" under Cayman Islands law) at a ratio of one (1) Class A ordinary share for every twenty five (25) Class A ordinary shares issued and outstanding (the "Reverse Split"), resulting in twenty five (25) issued and outstanding Class A ordinary shares to be consolidated into one (1) Class A ordinary share and any fractional shares resulting from the Reverse Split to be rounded to the next whole share; and incidental to the share consolidation, an amendment to the conversion rate of the Class B ordinary shares which are convertible into Class A ordinary shares on a one-to-one (1:1) basis, but will now be convertible into Class A ordinary shares at a one-to-twenty five (1:25) basis.

● Increase
 of Authorized Shares

To approve an increase of the Company's authorized share capital (the "Authorized Share Increase") such that we will have 1,000,000,000 authorized Class A ordinary shares par value US$0.025 per share, 50,000,000 authorized Class B ordinary shares, par value US$0.001 per share and a new Class of 50,000,000 authorized preference shares, par value US$0.001 per share, to become effective immediately after the Reverse Split takes effect.

● Fourth
 Amended and Restated Memorandum and Articles of Association

To approve and adopt the Fourth Amended and Restated Memorandum and Articles of Association (the "Fourth Amended M&A"), a copy of which is filed hereto as Exhibit 3.1, in its entirety and substitution for the existing amended and restated memorandum and articles of association of the Company; and that the Fourth Amended M&A to become effective immediately upon filing by the registered office provider of the Company with the Registrar of Companies of the Cayman Islands.

***Nasdaq Compliance***

 ****

On May 5, 2025, the Company received notification letters from the Listing Qualifications Staff (the "Staff") of The Nasdaq Stock Market, LLC ("Nasdaq"), stating that the Company that it was not in compliance with several continued listing requirements and was subject to delisting. Specifically, the Staff cited (i) non-compliance with the minimum bid price requirement, as set forth in Nasdaq Listing Rule 5550(a)(2) (the "Minimum Bid Requirement"); and (ii) concerns under Nasdaq Listing Rule 5101, pursuant to which Nasdaq may use its discretionary authority to delist a company where public interest concerns exist. In this case, the Staff referenced the Company's issuance of securities that resulted in significant dilution to existing stockholders in its March 2025 offering.

The Company submitted a plan of compliance (the "Compliance Plan") to Nasdaq on May 16, 2025 and appeared before the Nasdaq Hearings Panel (the "Panel") on June 5, 2025 to present its case for continued listing. On July 2, 2025, the Panel notified the Company that it granted the Company's request to continue its listing on Nasdaq, and further confirmed that the Company is now in compliance with the Minimum Bid Price Requirement.

The Panel also informed the Company that it will be subject to a Discretionary Panel Monitor for a period of one year, during which Nasdaq will monitor the Company's ongoing compliance with the continued listing requirements.

***Share Repurchase Program***

On May 31, 2025, the Company authorized a share repurchase program pursuant to a Purchase Plan Agreement (the "Agreement") by and between the Company and TradeUp Securities ("TradeUp") under which the Company may repurchase up to $1 million of its Class A ordinary shares (the "Share Repurchase Program"). The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. Share repurchases may be executed through various means in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The Share Repurchase Program does not obligate the Company to purchase any particular number of shares and there is no guarantee as to the exact number of shares that will be repurchased by the Company.

Pursuant to the Agreement, the Company appointed TradeUp as its exclusive agent to purchase securities.

The Agreement and Share Repurchase Program will terminate on the earlier of (i) the one year anniversary of the execution date, (ii) the completion of all purchases contemplated by the Share Repurchase Program, (iii) termination by written notice of either party, (iv) any legal or regulatory restriction, (v) a merger, acquisition or similar transaction of the Company, (vi) a liquidation, bankruptcy or reorganization of the Company, or (vi) failure by the Company to perform its obligations under the Agreement.

The Company will not purchase any shares outside of the Share Repurchase Program nor will it enter into any form of similar plan. The Company also agreed to customary indemnification provisions for the benefit of TradeUp.

The Company will pay TradeUp a fee of US$0.015 per share for any securities purchased.

***Key Financial Performance Indicators***

In assessing our financial performance, we consider a variety of financial performance measures, including principal growth in net revenue and gross profit, our ability to control costs and operating expenses to improve our operating efficiency and net income. Our review of these indicators facilitates timely evaluation of the performance of our business and effective communication of results and key decisions, allowing our business to respond promptly to competitive market conditions and different demands and preferences from our customers. The key measures that we use to evaluate the performance of our business are set forth below and are discussed in greater details under "Results of Operations."

**B.** **Business Overview** 

**Business**

**Overview**

Xi'an App-Chem's business focuses on the manufacturing of personal care ingredients, such as plant extracted fragrance compounds to perfume and fragrance manufacturers, natural health supplements such as powder drinks and bioactive food ingredient products mostly used as food additives and nutritional supplements by its customers. Xi'an App-Chem is devoted to providing high quality and competitive prices and a stable supply of products and services for the functional food, personal care, natural medicine and other industries. It provides these products and services for third party customers, as well as for its own proprietary brands. With "nourish life with natural essence" as the business concept, and "becoming an innovator (leader) of natural functional ingredients and an integrated supplier of great health industry" as the goal, after more than 14 years of efforts, Xi'an App-Chem has formed four technology platforms respectively for natural product large-scale separation, natural product safety improvement, natural product activity enhancement, and natural product function compounding. Its products have not been approved as effective in treating or preventing any health conditions and/or diseases by a regulatory agency in the PRC.

We were co-founded by a team of top-level executives from China's domestic natural products industry, together with experts returned from overseas. For the past 10 years, we have focused on the core needs of the natural products industry, emphasizing technological innovation and supply chain integration. We are devoted to providing a stable supply of high-quality products and services at competitive prices for the functional food, personal care, cosmetic and pharmaceutical industries. "Nourish life with natural essence" is our business concept, and "Becoming an innovative leader of natural functional ingredients and an integrated supplier for the health industry" is our goal. We have formed four technology platforms as follows:

&nbsp;&nbsp;&nbsp;&nbsp;1. Commercial
 scale natural ingredient extraction and separation platform built with technologies such as continuous dynamic extraction and molecular
 distillation and membrane separation ("Technical Platform 1");

2. Natural extraction safety
 improvement and assurance platform designed with technology to remove heavy metal, pesticide, and other harmful residues ("Technical
 Platform 2");

&nbsp;&nbsp;&nbsp;&nbsp;3. Platform of
 bioactive ingredient of natural extract enhancement built with technology seeking to increase human absorption rate of naturally
 extracted ingredients by increasing their water solubility and utilizing drug delivery system ("Technical Platform 3");
 and

4. Natural extract formulation
 technology platform based on steady state technology with focus on formulation of natural anti-oxidant and functional oligosaccharide
 to achieve stable output, high purity and absorption rate ("Technical Platform 4").

The four technical platforms are utilized throughout the production process of our products with applications illustrated as follows:

Technical Platform 1. Commercial scale natural ingredient extraction and separation platform:

● **Clary Sage concrete** is produced by continuous countercurrent extraction, from clary sage;

● **Sclareol** is produced by molecular distillation separation from clary Sage concrete;

● **Stachyose** is produced by biological enzymatic hydrolysis-membrane method efficient and continuous separation from stachys affinis; and

● **Apple polyphenol** is produced with high-efficiency membrane separation from apples.

Technical Platform 2. Natural extraction safety improvement and assurance platform:

● Solvent residues are removed in the process of producing **ambroxide** and **Sclareolides** with purity in order to maintain aroma when used in fragrance products;

● Carbendazim and other pesticide residues are removed in the process of producing **apple polyphenols** to parts per billion ("PPB") level in accordance to applicable food safety regulations; and

● Heavy metals and other metal ions are removed in producing **stachyose** and the ash content is as low as 0.01%, for product safety purpose, while improving product quality and flavor.

Technical Platform 3. Bioactive ingredient of natural extract enhancement

● Mainly used in dietary supplement products currently in early commercial development stage with applications of technology such as water solubility enhancement and drug delivery system to seek higher absorption rate by human and to yield with more active ingredients.

Technical Platform 4. Natural extract formulation technology platform

● Mainly used in dietary supplement products currently in early commercial development stage with applications of technology such as molecule steady state technology and anti-oxidants to seek consistent product quality and extended shelf life.

With the combination and application of the above technology platforms, we seek to produce products with high quality assurance.

In addition, based on our technology for rehabilitation of the human microbiome, cell death regulation, and anti-aging product development, we are able to provide products and services advantageous in terms of cost, safety, performance, function and other aspects for customers in the food, personal care, cosmetics and pharmaceutical industries.

The services provided to our customers include customized product development and formulation and after-sale and technical support. These services are value-added provided to our customers to enhance customer loyalty and our competitiveness in the marketplace.

**<u>Product Categories</u>**

Fragrance compounds:

● Clary sage extract products (Sclareol, Sclareolide, Ambroxide, Clary Sage Oil, Clary Sage Concrete);

● Lavender essential oil;

While some perfumers may still use the expensive and hard-to-find substance ambergris, which is produced in the intestines of sperm whales, the industry now increasingly uses a substance known as "ambroxide," synthesized from the compound "sclareol" found in clary sage plant. Ambroxide is used both as a fragrance and as a "fixative" for making scents linger longer in products. Made by our proprietary microbial fermentation process and molecular distillation technology, our ambroxide products are produced with higher purity and yield than industry average. Based on product testing reports, we have determined that our ambroxide products are produced with 99.5% purity and above, while the industry average is approximately 99.0%. The yield of our ambroxide production is approximately 63%. Our management believes the industry average yield for ambroxide production to be approximately 40% to 43%.

Health supplements (natural, functional active ingredients for powder drinks):

Based on our accumulations in natural functional components separation, biological activity research, product application development, natural product supply chain and other areas, we are able to provide a host of solutions for functional food (health products, nutrients, etc.), functional personal care products (whitening, moisturizing, anti-acne, etc.), natural medicine and other needs, including formulation development, ingredients supply, and product OEM. In addition, we have launched new over-the-counter products, including *Bon Natural Micro-eco Hair Repair Shampoo; Tianmei Jinghao Nutrition Powder.* We are also in the development stage of more innovative products using natural, functional ingredients intended for the precise regulation and control of the humane micro-biome. Examples include our *DuiJiuDangGe (JiuGe)* and *Gout Ease (Feng Qing Ping**)***. Our products have not been approved as effective in treating or preventing any health conditions and/or diseases by a regulatory agency in the PRC.

Bioactive food ingredients:

● Stachyose (P60, P70, P80)

● Milk thistle extracts (various solvent Silymarin, Silybin, Water-soluble silymarin and silybin);

● Apple extracts (Apple polyphenol, Apple dietary fiber, Phloridzin, Phloretin)

● Pomegranate extract products (Ellagic acid, Punicalagin,Urolithin)

Aside from macronutrients such as carbohydrates, proteins, and fatty acids, the term "bioactive food ingredients" refers to natural compounds, mainly from plant foods, with specific physiological functions. These include flavonoids, phenolic acids, organic sulfides, terpenoids and carotenoids, coenzyme Q, γ-aminobutyric acid, melatonin, and L-carnitine and other biologically active ingredients derived from animal food. These ingredients are believed to participate in the regulation of physiology and pathophysiology, such that food containing these ingredients is believed to have specific functions in addition to basic nutrition.

Our biologically active food ingredients and their main uses are as follows:

1. Apple polyphenol: widely used in high-end personal care products such as weight loss, blood lipid reduction, anti-aging beauty, whitening, anti-wrinkle and other high-end personal care products.

2. Stachyose: Stachyose is a prebiotic, which can promote the proliferation of human intestinal probiotics. It is widely used in dairy products, health drinks, personal care, health care products, ice cream, Chinese medicine, and other industries.

3. Milk thistle extract: A flavonoid derived from the plant milk thistle. It is known to have (but has not been scientifically proven to have) liver protection, anti-inflammatory, anti-tumor and blood pressure effects. It is used to seek to improve liver diseases caused by alcohol and environmental toxins.

4. Pomegranate extract: A plant-extracted polyphenol with potential effects of anti-oxidation, anti-aging, blood pressure lowering and whitening effects, and can be used in food, medicine and cosmetics.

**Our Manufacturing Process**

The following chart illustrates our main manufacturing process from raw material purchase to finish products:

![](image_002.jpg)

Our health supplements (powder drinks) are made with naturally extracted active ingredients. For example, stachyose is a single prebiotic, which seeks to accelerate proliferation of bacillus bifidus. Used together with other prebiotic bacteria, it helps greatly in adjusting intestinal bacteria groups, relieving constipation and keeping intestines youthful and perpetually healthy. Our quality control is throughout the entire production and starts souring from the farms with superior quality. The first step is anti-degradation extraction with a special protective agent followed by continuous resin chromatographic separation and purification to produce high purity stachyose.

Our fragrance compound products are plant-based natural extracts widely used as fixatives in fragrance, detergent, health supplements and tobacco flavoring. There are three different products being produced along our proprietary manufacturing process, Sclareol, Sclareolide and Ambroxide. Our manufacturing process of clary sage products can be summarized as: i) continuous countercurrent extraction to ensure faster, more efficient and higher yield than traditional extraction methods; ii) molecular distillation to improve evaporation velocity, and liquid film distribution as well as to reduce heating time and degradation of thermo-sensitive materials; iii) biological transformation with water as media, thus no chemical or heavy metal residues; followed by catalytic reduction; and iv) supramolecular crystal reconstruction to produce our fine ambroxide for use in fragrance or detergent fixatives.

An example of our bioactive food ingredients is apple polyphenols, which are major antioxidants extracted from apples and may contribute to color, flavor, odor and oxidative stability. Therefore, apple polyphenols are widely used in various applications, including health supplements, cosmetics, and food preservation. Our proprietary manufacturing process of apple polyphenols principally involves the following steps: continuous anti-oxidant extraction, and continuous resin chromatographic separation and purification.

**Intellectual Property**

*Patents*

As a result of our collection of academic and technological expertise, as of September 30, 2025, we had 17 approved patents and 1 applying patent in China, as set forth in the following table:

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| No | Patent Name | Patent No./<br> Application No. | Authorization Date/<br> Application Date | Status | Period | Holder | Type |
| 1 | Method for separating sclareol | ZL 2008 1 0231943.X | July 20, 2011 | Authorized | 20 years | Xi'an App-Chem | Invention |
| 2 | Preparation method of applephenon | ZL 2010 1 0179259.9 | October 5, 2011 | Authorized | 20 years | Xi'an App-Chem | Invention |
| 3 | Method for preparing osthole | ZL 2010 1 0531931.6 | February 8, 2012 | Authorized | 20 years | Xi'an App-Chem | Invention |
| 4 | Process for separating imperatorin from osthole extract waste liquid | ZL 2010 1 0531934.X | April 11, 2012 | Authorized | 20 years | Xi'an App-Chem | Invention |
| 5 | Method for preparing punicalagin and ellagic acid from pomegranate rind | ZL 2010 1 0531940.5 | May 23, 2012 | Authorized | 20 years | Xi'an App-Chem | Invention |
| 6 | Molecular distillation and purification method for conjugated linolenic acid | ZL 2010 1 0531945.8 | August 15, 2012 | Authorized | 20 years | Xi'an App-Chem | Invention |
| 7 | Flatstem milkvetch seed solid beverage and preparation method thereof | ZL 2010 1 0531836.6 | December 5, 2012 | Authorized | 20 years | Xi'an App-Chem | Invention |
| 8 | Method for extraction separation of rutin of tartary buckwheat | ZL 2013 1 0645312.3 | March 2, 2016 | Authorized | 20 years | Xi'an App-Chem | Invention |
| 9 | Method for synthesizing luteolin | ZL 2010 1 0531920.8 | August 22, 2012 | Authorized | 20 years | Xi'an YH | Invention |
| 10 | Method for preparing baicalin | ZL 2010 1 0531839.X | September 26, 2012 | Authorized | 20 years | Xi'an YH | Invention |
| 11 | Synthetic method of biapenem drug intermediate 4-AA | ZL 2013 1 0632993.X | July 13, 2016 | Authorized | 20 years | Xi'an YH | Invention |
| 12 | Functional instant tea and preparation technology thereof | ZL 2015 1 0294685.X | January 15, 2019 | Authorized | 20 years | Xi'an DT | Invention |
| 13 | A refinement method of proanthocyanidin B2, and the application thereof | 202210363869.7 | April 8, 2022 | Pending | 20 years | Xi'an App-Chem | Invention |
| 14 | A method for simultaneously extracting multiple active components from rosa davurica fruit pulp | ZL 2021 10775348.8 | October 14, 2022 | Authorized | 20 years | Xi'an App-Chem | Invention |
| 15 | A method for simultaneously extracting hyperoside and luteolin from rosa davurica fruit | ZL 2017 1 0949526.8 | August 25, 2020 | Authorized | 20 years | Xi'an App-Chem | Invention |
| 16 | A preparation method for anthocyanin extract from black chokeberry (Aronia Melanocarpa) fruit | ZL 2017 1 0474729.6 | November 6, 2020 | Authorized | 20 years | Xi'an App-Chem | Invention |
| 17 | An extraction method and use of lotus seed active polysaccharide, lotus seed active substances | ZL 2020 1 0502608.X | June 17, 2022 | Authorized | 20 years | Xi'an App-Chem | Invention |
| 18 | An intelligent control and regulation method for high-precision fermentation and purification of stachyose | ZL 2020 1 0502608.X | December 23, 2025 | Authorized | 20 years | Xi'an App-Chem | Invention |

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**<u>Key Suppliers and Customers</u>**

We enjoy a broad network of raw materials suppliers and customers and distributors. Our relationships with our customers and suppliers are based on standardized terms for the supply of specific products with a specific ingredient purity, referred to as content %. Payment terms are a mixture of cash on delivery and a specifically-agreed maximum days payable outstanding ("DPO").

Below is a tabular summary of our relationships with our most important suppliers:

---

| | | | |
|:---|:---|:---|:---|
| Supplier Name | Product Name | Use | Terms |
| Molbase (Shanghai) Biotechnology Co., Ltd. | Clary sage extract | Raw materials for fragrance and perfume | Procure for the Company by Molbase as the trade platform with commission fee, cash on delivery |
| Molbase (Shanghai) Biotechnology Co., Ltd. | Stachys affinis extracts | Raw materials for stachyose, one of health supplements | Procure for the Company by Molbase as the trade platform with commission fee, cash on delivery |
| Molbase (Shanghai) Biotechnology Co., Ltd. | Ambroxide | Raw materials for fragrance and perfume | Procure for the Company by Molbase as the trade platform with commission fee, cash on delivery |
| Jiaozuo Xinzhiyuan Technology Co., Ltd. | Ambroxide | Raw materials for fragrance and perfume | Content: 95%, centralized supply in specific days payable outstanding (DPO) |
| Dali Zhengxin Species Co., Ltd. | Ambroxide | Raw materials for fragrance and perfume | Content: 95%, centralized supply in specific days payable outstanding (DPO) |

---

The principal raw materials used for our production are various natural and plant-based extracts . Four suppliers accounted for 22.9%, 17.3%, 14.5% and 11.0% of our total purchases during the year ended September 30, 2025, respectively. For the year ended September 30, 2024, two suppliers accounted for approximately 50.5% and 21.4% of the total purchases, respectively For the years ended September 30, 2023, three suppliers accounted for approximately 41.8%, 29.5%, and 11.19% of the total purchases, respectively. A change in suppliers, however, could cause a delay in manufacturing and a possible loss of sales, which would adversely affect our business, financial position and results of operations.

Below is a tabular summary of our relationships with our most important customers:

---

| | | | |
|:---|:---|:---|:---|
| **Customer Name** | **Product Name** | **Application** | **Terms** |
| Tianjin Mingrunbaili Trade <br> Co., Ltd. | Clary sage extract | Fragrance and perfume | Special specification product, long-term cooperation in specific days payable outstanding (DPO) |
| Tianjin Mingrunbaili Trade <br> Co., Ltd. | Stachyose | Bioactive food ingredients | Special specification product, long-term cooperation in specific days payable outstanding (DPO) |
| Shanghai Yunsheng International Trade Co., Ltd. | Apple polyphenol | Health supplement (powder drinks) | 70% content, low pesticide residue, long-term cooperation in specific days payable outstanding (DPO) |
| Shanghai Yunsheng International Trade Co., Ltd. | Milk thistle extracts | Bioactive food ingredients | 30% content, low solvent residue, long-term cooperation in specific days payable outstanding (DPO) |
| OQEMA Ltd | Ambroxide | Fragrance and perfume | 99% content, long-term cooperation in specific days payable outstanding (DPO) |
| Symrise Private Limited | Ambroxide | Fragrance and perfume | 99% content, long-term cooperation in specific days payable outstanding (DPO) |

---

We sell our products primarily through direct distributors in the PRC and, to some extent, to overseas customers in Europe. During the year ended September 30, 2025 two customers accounted for 24.3% and 15.7% of the Company's total revenue, respectively. For the year ended September 30, 2024, three customers accounted for 38.6%, 28.0%, and 15.9% of the Company's total revenue, respectively. For the year ended September 30, 2023, three customers accounted for 42.7%, 24.7% and 13.2% of the Company's total revenue, respectively.

**<u>Marketing and Competition</u>**

***Market Focus — Raw Materials and Ingredients and Functional Health***

Our product sales are carried out by two teams within our sales department – Raw Materials and Ingredients and Functional Health. Our Raw Material Ingredients Team sells natural active ingredients such as stachyose, apple polyphenol, Ambroxide, and others to customers in the functional food and personal care industries, accounting for around 70% of the company's total sales. The Functional Health Team focuses on human micro-biome adjustment and control products, providing small and medium-sized customers in the Chinese domestic Big Health industry with one-stop solutions from product design, research and development, and procurement to OEM in digestive health, metabolic health, immune health and other fields. The Functional Health Team accounts for about 30% of the company's overall business. Our marketing efforts are focused in two areas – the international market and the domestic Chinese market. The international market is dominated by raw materials and ingredients, while the domestic market is primarily focused on functional health.

Our raw materials and ingredients businesses are promoted through exhibitions, professional journals, academic conferences, and social platforms (social broadcasting), with academic promotion of professional knowledge and general scientific knowledge being the main methods. We are committed to promoting and maintaining our brand image in the natural ingredients industry. Our brands and slogans, such as App-Chem, App-Chem Stachyose for Healthy Digestion in China ("天美水苏糖，健康中国肠"), App-Chem Cares Life ("天然至美呵护生命至美"). are well recognized and widely praised in the industry. We have established a strong and widely known reputation in the international natural products industry, especially in the field of micro-biome health.

Our functional health business focuses on adjustment and control of the micro-biome and focuses on immune health and digestion health as the target market. The Company promotes itself through exhibition, social platforms (stachyose social broadcasting), and Internet promotions (Ning Xiang Tang Nutrition Powder, and Tianmei Jinghao Nutrition Powder). Through continuous efforts, the Company has established a sound reputation in the Great Health industry and has become a preferred supplier for several leading clients both at home and abroad.

Leading Competitors

Our main competitors are suppliers of functional ingredients, nutrition food, and traditional Chinese medicine functional food in the Big Health industry. They are as follows:

Chenguang Biotech (CCGB)- a leading natural ingredients supplier in China

Chenguang Biotech Group Co., Ltd., another publicly listed company, has twenty subsidiaries and is an export- and foreign-exchange-generation-oriented enterprise which integrates intensive processing of agricultural products and extract of natural plants. It mainly develops and produces natural colors, natural spice extracts and essential oils, natural nutrition and medicinal extracts, and protein oils. Among its products, the production and sales volume of natural colors is the highest in China, and that of capsanthin the highest in the world. Its chili extracts account for over 85% of total domestic output for that product. Its lutein, beet red and other varieties occupy a significant share of world production. As of March 2020, the total market value of Chenguang Biotech Group Co., Ltd. reached ¥ 4.7 billion.

Tong Ren Tang- a leading producer of traditional Chinese medicine and health products in China

Beijing Tong Ren Tang (Group) Co., Ltd., a wholly state-owned company, is authorized by the municipal government to operate state-owned assets. It was founded in 1669, with a history of 343 years. The group adheres to the development strategy of "taking modern traditional Chinese medicine as the core, developing life and health industry, and becoming an internationally renowned modern traditional Chinese medicine group". It takes "growing, strengthening and expanding" as its policy, and takes innovation and technology as its mission. Its sales revenue, profits, export earnings and the number of overseas terminals rank first in the industry in China. Since 1997, Tong Ren Tang has maintained sustained and healthy development, with its economic indicators reaching double-digit growth for 15 consecutive years, doubling every five years. As of 2011, the group has a total asset of ¥14 billion, a sales revenue of ¥16.3 billion, a profit of ¥1.316 billion, and foreign exchange earnings of $33.92 million. It has set up 64 pharmacies and 1 overseas production and research base in 16 overseas countries and regions. Its products are sold to more than 40 overseas countries and regions.

At the same time, Tong Ren Tang's dual function of being both an economic entity and a cultural carrier has become increasingly apparent. It has achieved fruitful results in brand maintenance and promotion, cultural innovation and inheritance. The "Tong Ren Tang traditional Chinese medicine culture" has been approved as one of the first items to be included in the List of National Intangible Cultural Heritage. It has signed a strategic cooperation framework agreement with the Confucius Institute Headquarters (Hanban) to jointly promote Tong Ren Tang traditional Chinese medicine culture and has further strengthened the overseas dissemination of Tong Ren Tang Culture by using the Confucius Institute platform. As of March 2020, Tong Ren Tang's total market value reached ¥ 34.3 billion.

BY-HEALTH- a leading supplier of nutrients by indirect selling in China

Founded in October 1995, BY-HEALTH introduced dietary supplements into China's indirect selling market systematically in 2002. It has since grown rapidly into a leading brand and benchmark enterprise of dietary supplements in China. In August 2010, Yao Ming, the former international basketball superstar, signed contract to become its brand ambassador. On December 15, 2010, BY-HEALTH was listed on the Growth Enterprise Market (GEM) of Shenzhen Stock Exchange.

For more than a decade, BY-HEALTH has been adhering to differentiated global quality strategy in three steps, namely, from global raw materials procurement, to establishment of its global base for the sole purpose of supplying raw materials, and then to the establishment of a global self-owned organic farm. So far, BY-HEALTH has sources of raw materials from 23 countries and regions worldwide. It has set up 5 exclusive raw materials bases in Brazil, Australia and other places. Now, its own organic farms are under planning. BY-HEALTH will make unremitting efforts to select high-quality raw materials from all over the world, bringing together the essence of nutrition, and building a "United Nations" of nutrients that selects the best from the better. As of March 2020, the total market value of BY-HEALTH reached ¥ 27.2 billion.

Competitive Challenges and Advantages

Our competitors' main advantages are as follows:

● <u>Stronger business scale and capital strength</u> – Our main competitors are listed public companies, with relatively longer development histories, larger business scales and stronger financial strength.

● <u>Larger and more complete sales networks</u> — Since our main competitors have larger business scales, their market sales networks are accordingly wider.

● <u>Brand recognition</u> – Due to the advantages of being well-identified public companies, their high levels of marketing and promotion and, in some cases, inherited historical advantages, our main competitors have greater brand recognition.

Compared with our main competitors, our advantages are mainly reflected in the following two aspects:

● <u>More advanced technology and products</u> – Our main competitors' technologies are mainly traditional physical and chemical techniques such as extraction and separation. Relatively speaking, we employ more advanced bio-manufacturing technologies.

 In the production of ambroxide for example, unlike our main competitors who use chemical synthesis with lengthy and complex process, typically involving 10 steps, such as oxidation, crystallization and extraction at multiple stages as well as saponification reaction, we use a bio- technique that utilizes a six-step process in a mild environment, including bio-synthesis, continuous separation, reduction, extraction, cyclization and crystallization to achieve what we believe is higher yield and efficiency than the industry average. As another example, most of our competitors produce stachyose with the traditional approach, resin separation, which is a lower yield method due to its intermittent process. Our continuous process is differentiated by our use of bio-enzyme and bio-membrane separation and purification, which we believe leads to higher yield and purity.

● <u>First-mover advantage</u> – The primary market focus for our products is nutritional health and personal care adjusted and controlled by the human micro-biome. This relatively new and fast-growing product focus has been made possible by recent breakthroughs in human micro-biome technology. Unlike our main competitors, we are strongly focused on this rapidly expanding market. We believe this gives us an important first-mover advantage. We intend to use this growing market niche to achieve rapid development and growth without immediate and direct competitive pressure from larger firms. Our market network, financial strength, brand awareness, and other areas will gradually improve as the Company grows and develops. As we become as more powerful market player, we will become better positioned to compete with larger, more established companies.

**<u>Development and Expansion Strategy</u>**

The key components of our development and expansion strategy over the next two-to-three years are as follows:

Raw Material and Ingredients

Using our current projects as a foothold, we intend to expand our plants to increase productivity and enlarge our markets to ensure sustainable growth. Over the next two to three years, our raw materials and ingredients business will be centered on the Great Health market and focus on the core needs of the functional food and personal care industries. We view our current business in this area as foundation from which we can expand our plants, increase our productivity, improve our technology and equipment, optimize our supply chain, and broaden our sales channels to ensure a steady and sustainable growth. Management is committed to achieving a compound annual growth rate in this business line of no less than 30%.

In our functional health business, we intend a rapid expansion focused on the development and introduction of innovative new products. Over the next two to three years, we will continue to place an intensive focus on human micro-biome health, and actively develop a series of functional food and personal care products featuring strong and fasting-acting effects on the respiratory and gastrointestinal areas of the human micro-biome. These products will be designed to take advantage of precise adjustment and regulation of the human micro-biome. The quality raw materials produced by our own natural ingredients business will provide us a significant cost advantage in these efforts.

**Our Strengths**

Innovation in Manufacturing Methods and Product Development

● Xi'an App-Chem is a supplier of personal care ingredients, and we seek to be a leader in the bio-manufacturing of natural products and health solutions in immunity and digestion by leveraging our proprietary natural essence extraction technology to focus on human micro-biome as a therapeutic target. Together with our operating subsidiaries, we hold several patents issued by the PRC, relating primarily to composition and processing techniques for products and product ingredients.

● We use bio-manufacturing technology to produce substances such as sclareol, sclareolide, ambroxide, extracted from Clary sage (Salvia sclarea L.), a very aromatic herbaceous plant, to replace ambergris (ambroxide is a substitute of ambergris which is originated from sperm whale), novel probiotics stachyose, and natural antioxidant apple polyphenol. Our ambroxide is made using our proprietary technology, which we believe can be done at a lower cost, than the processes used by some of our competitors. Our stachyose manufacturing process features a very high productivity rate (over 1,000-ton capacity), and, we believe, a higher product purity, and faster and more extensive proliferation of probiotics than the primary competing substance, chrysanthemum powder.

● Xi'an App-Chem is listed as a key enterprise with ensured supplies in the COVID-19 prevention and control period by various Chinese government agencies during the COVID-19 pandemic due to its immunity boosting products such as stachyose. There is no proven efficacy of Stachyose in preventing, treating or controlling the spread of COVID-19. In its "COVID-19 Treatment Solution-version 7\*", issued on March 3, 2020, China's National Health Commission recommended the use of supplements regulating the human gut microbiome as one of the potential treatments for COVID-19 patients in critical condition. Xi'an App-Chem, together with other companies in bio-medicine, traditional Chinese medicine, medical equipment, information service devices and system, and PPE manufacturing businesses, was qualified to be listed as a key enterprise in COVID-19 prevention and control for its stachyose products. Stachyose, the main product of Xi'an App-Chem is the major component of the microecological regulator proposed as part of China's treatment plan for COVID-19. It has been deemed an "important raw and auxiliary material" for pandemic control related drugs and substances, thereby allowing Xi'an App-Chem to meet the qualifications for listing as a key enterprise for the potential prevention and control of the COVID-19 pandemic.

 The key enterprise selection for pandemic prevention and control is an institutional system established by a series of policies issued during February and March 2020 by the Chinese government in order to combat COVID-19. The main purpose of these policies is to ensure the stable supply of medical supplies, medicines, key raw materials, and essential living materials during this special period.

 The following types of companies are qualified to be listed as key enterprises:

○ Manufacturers of important medical supplies such as medical masks and non-medical face masks, COVID-19 test kits, infrared thermometers, intelligent monitoring and detection systems, and related drugs and medical equipment that have been requested;

○ A key enterprise that produces important daily necessities;

○ Important raw and auxiliary material manufacturers, important equipment manufacturers and related supporting enterprises required for the production of the above-mentioned materials;

○ An important medical material purchase and storage enterprise;

○ Companies that provide relevant information and communication equipment and service systems to respond to the epidemic;

○ Enterprises that undertake the above-mentioned material transportation and sales tasks in response to the epidemic; and

○ Other enterprises with key guarantees in accordance with the requirements of the State Council's joint prevention and control mechanism.

The advantages of this designation to Xi'an App-Chem include expedited governmental and regulatory approval processes to resume operations, and preferential bank loans with favorable terms.

Major supporting measures include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Priority approval of business
 reopening;

2. Priority early reopening
 for the transportation of raw materials and products;

3. Work and travel support
 for needed employees;

4. Working capital support
 for the key enterprises;

5. Preferential tax policy
 support to key enterprises; and

6. The government's
 commitment to the procurement of special protective and medical equipment.

(Items 4 and 5 are issued with official government documents; Items 1, 2, 3, and 6 are temporary support measures by local governments at all levels without documentation.)

● Our process for manufacturing apple polyphenol (a source of anti-oxidants) allows us to achieve a high product anti-oxidant content of 70% to 90%.

● Xi'an App-Chem launched new over-the-counter products, including Bon Natural Micro-eco Hair Repair Shampoo and Tianmei Jinghao Nutrition Powder. In addition, the Company is in the development stage of more innovative products using natural, functional ingredients intended for the precise regulation and control of the humane micro-biome. Examples include our  ***DuiJiuDangGe (JiuGe)*** and  ***Gout Ease (Feng Qing Ping)*** .

A Stable Supply Chain for Raw Materials for the Fragrance, Food and Beverage Industries

● Xi'an App-Chem seeks to have a stable supply chain for raw materials, which is important in the natural ingredient field. The company's management team, through its operating experience, is constantly improving their selection of various natural raw material sources, supply chain management, supplier selection, and risk and quality control.

Advantages in Cost Control

● The Company's management team believes that its bio-manufacturing technology gives it an average cost advantage in producing its natural ingredients (i.e., products such as Ambroxide, stachyose, apple polyphenol and other types of natural-ingredient products).

Professional and Efficient Sales Team and Branding

● There are twelve people in our sales team, among whom four have professional backgrounds in biology, chemistry, medicine, pharmacy, and related fields. Six of our sales professionals majored in English, international trade and related fields. Our sales professionals have an average of over five years of relevant work experience. Two of them have been stationed abroad to work on a long-term basis. With more than ten years of accumulated experience, we have forged a sales system worldwide (mainly in Europe, East Asia, and North America).

**Our Challenges**

We May Face Competition from Other Companies Currently In Other Categories of the Natural Ingredients and Health Solutions Industry.

● Because of the and recent growth of our existing business, we may face new direct competition from some counterparts engaged in other categories of the natural products and ingredients business, such as Chenguang Biotech from China, which is engaged in natural colors, Layn, which engaged in natural sweeteners, and European companies like Koninklijke DSM N.V., Symrise AG, and Givaudan SA. These firms may seek to compete directly with Xi'an App-Chem in its existing businesses. The size, financial strength, technology foundation and development capabilities of the above-mentioned companies are strong, and potential competition from these firms will be a key competitive challenge in the near future.

Larger, more Developed Food and Ingredient Companies May Seek to Compete in Our Industry in the Near Future.

● The rapid development of human micro-biome technology has resulted in rapid commercialization in the related products of immune health and digestive health, which has increasingly attracted the attention of some large-scale companies. For example, the French large-scale food company *Danone Group* recently announced that it continues to place the gut and its micro-biome at the core of its health strategy to deliver the company's mission "bringing health through food to as many people as possible." Such large companies might change the current landscape of the industry, either directly or through mergers and acquisitions. These companies may challenge us by seeking to secure key raw material sources for their products and to acquire stability, reliability and cost advantages for their supply chains. Because of the strong capital and brand strength of such companies, they might pose challenges to us in the future.

We May Face Additional Competition from New Entrants to the Health Industry

● The Big Health industry has experienced sustained and rapid growth worldwide, based on the rapid development of information technology and life science technology in recent years. Prompted by the serious emergency caused by the global COVID-19, consumers and public administrators around the world have paid more attention to basic health issues than ever before, especially to immune health. At the core of immune health, and at the core of our business focus, is the precise adjustment and control of human micro-biome by natural probiotics. This area has drawn a wide external attention, which may cause firms outside the health industry to seek market entry. In the future, some of the new entrants may become our competitive challengers.

Our Current Sales and Distribution Network May Be Insufficient to Support Our Planned Growth.

● We currently sell our products through our direct sales force and distribution channel. Although our sales and distribution network is sufficient for our existing needs, it may be insufficient to meet future product demand as we continue to grow our business. As we begin to expand our production capacity, an insufficient distribution network may hinder our ability to meet demand and to grow our revenues accordingly.

We may face new regulations in the PRC in the future

● Recently, the PRC government initiated a series of regulatory actions and made a number of public statements on the regulation of business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using a variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement. We do not believe that we are directly subject to these regulatory actions or statements, as we do not have a variable interest entity structure and our business does not involve the collection of user data, implicate cybersecurity, or involve any other type of restricted industry. Because these statements and regulatory actions are new, however, it is highly uncertain how soon legislative or administrative regulation making bodies in China will respond to them, or what existing or new laws or regulations will be modified or promulgated, if any, or the potential impact such modified or new laws and regulations will have on our daily business operations or our ability to accept foreign investments and continue to be listed on an U.S. exchange.

Our Strategy for Meeting Potential Challenges

● First, we intend to meet our possible competitive challenges by giving full play to our advantages (mainly technology, products, and supply chain) to attain greater advantage in terms of quality, cost, and supply stability. We intend to use these advantages to secure a larger market share and to boost our rapid development and expansion of our capabilities. Due to the high technical barriers to entry in our field, including the complexity of the raw materials involved and the inherent product quality challenges, we believe potential competitors seeking to enter our market will require three to five years to enter the market and launch truly competitive products. We believe this will allow us to press our advantages described above and stay ahead of new competition.

● Third, we will actively seek opportunities for collaboration and cooperation with large-scale enterprises that focus on human micro-biome-related businesses (such as Guangzhou Wanglaoji Pharmaceutical, JDB, Wahaha, Mengniu, Yili, Chr. Hansen, etc.), including cooperation in product sales, strategic business relationships, and, if possible, equity investment.

● Fourth, we intend to invest some of our available cash generated from operations and capital raising to add additional teams to our direct sales force, to expand our geographic reach with new distribution channels into other provinces within China and overseas, and to establish more sales online.

We also face other challenges, risks and uncertainties that may materially and adversely affect our business, financial condition, results of operations and prospects. You should consider the risks discussed in "Risk Factors" and elsewhere in this Annual Report before investing in our securities.

**REGULATIONS**

This section sets forth a summary of the most significant rules and regulations that affect our business activities in China and the European Union or our shareholders' rights to receive dividends and other distributions from us.

**Regulations Relating to Foreign Investment in China**

***Foreign investment law***

On March 15, 2019, the National People's Congress, or the NPC, promulgated the *Foreign Investment Law of the PRC*, or the *Foreign Investment Law*, which became effective on January 1, 2020, and replaced the *Sino-foreign Equity Joint Venture Enterprise Law*, the *Sino-foreign Cooperative Joint Venture Enterprise Law,* and the *Wholly Foreign-invested Enterprise Law*. The organization form, organization, and activities of foreign-invested enterprises shall be governed, among others, by the *PRC Company Law* and the *PRC Partnership Enterprise Law*. Foreign-invested enterprises established in accordance with the *Sino-foreign Equity Joint Venture Enterprise Law*, the *Sino-foreign Cooperative Joint Venture Enterprise Law,* and the *Wholly Foreign-invested Enterprise Law* before the implementation of the *Foreign Investment Law* may retain the original business organization and so on within five years after the implementation of the *Foreign Investment Law*. The *Foreign Investment Law* provides that that foreign investment refers to investment activities directly or indirectly conducted within China by foreign natural persons, enterprises or other entities (the "foreign investors"), which include the following forms: (a) a foreign investor, individually or collectively with other investors, establishes a foreign-invested enterprise within PRC; (b) a foreign investor acquires stock shares, equity shares, property portions, or other like rights and interests of an enterprise within PRC; (c) a foreign investor, individually or collectively with other investors, invests in a new project within the PRC; and (d) other forms of investments under laws, administrative regulations, or provisions prescribed by the State Council of the PRC.

On December 26, 2019, the State Council promulgated the *Implementing Regulations of the Foreign Investment Law of the PRC*, or the *FIE Implementing Regulations*, which became effective on January 1, 2020. The *FIE Implementing Regulations* strictly implements the legislative principles and purpose of the *Foreign Investment Law*, it emphasizes on promoting and protecting the foreign investment and refines the specific measures. On the same day, the Supreme People's Court issued the *Interpretation on the Application of the Foreign Investment Law of the PRC*, which also came into effect on January 1, 2020 and provides for interpretations on the application of laws in cases of investment contracts disputes between equal parties. This interpretation shall apply to any contractual dispute arising from the acquisition of the relevant rights and interests by a foreign investor by way of gift, division of property, the merger of enterprises, division of enterprises, etc.

According to the *FIE Implementing Regulations*, the registration of foreign-invested enterprises shall be handled by the State Administration for Market Regulation, or the SAMR or its authorized local counterparts. Where a foreign investor invests in an industry or field subject to licensing in accordance with laws, the relevant competent government department responsible for granting such license shall review the license application of the foreign investor in accordance with the same conditions and procedures applicable to PRC domestic investors unless it is stipulated otherwise by the laws and administrative regulations, and the competent government department shall not impose discriminatory requirements on the foreign investor in terms of licensing conditions, application materials, reviewing steps and deadlines, etc. However, the relevant competent government departments shall not grant the license or permit enterprise registration if the foreign investor intends to invest in the industries or fields as specified in the Special Administrative Measures for Market Access of Foreign Investment (Negative List) (2021 Version), or the Negative List 2021, without satisfying the relevant requirements. If a foreign investor invests in a prohibited field or industry as specified in the Negative List 2021, the relevant competent government department shall order the foreign investor to stop the investment activities, dispose of the shares or assets or take other necessary measures within a specified time limit, and restore to the status prior to the occurrence of the aforesaid investment, and the illegal gains, if any, shall be confiscated. If the investment activities of a foreign investor violate the special administrative measures for access restrictions on foreign investments as stipulated in the negative list, the relevant competent government department shall order the investor to make corrections within the specified time limit and take necessary measures to meet the relevant requirements. If the foreign investor fails to make corrections within the specified time limit, the aforesaid provisions regarding the circumstance that a foreign investor invests in the prohibited field or industry shall apply.

According to the Foreign Investment Law and the FIE Implementing Regulations, Xi'an CMIT and Xi'an Youpincui have registered with the High-tech Branch of Xi'an Administration Industrial and Commercial Bureau. As the industries engaged by Xi'an CMIT and Xi'an Youpincui are not listed in the *Negative List 2021*, they do not need to obtain any license from other relevant competent government departments.

**Regulations Relating to Value-Added Telecommunications Services**

***Foreign investment in value-added telecommunications***

Foreign direct investment in telecommunications companies in China is regulated by the *Administrative Provisions on Foreign-Invested Telecommunications Enterprises*, or the *FITE Regulation*, which was issued by the State Council on December 11, 2001, most recently amended on February 6, 2016. The *FITE Regulation* stipulates that a foreign-invested telecommunications enterprise in the PRC, or the FITE, must be established as a sino-foreign equity joint venture for operations in the PRC. Under the *FITE Regulation* and in accordance with WTO-related agreements, the foreign party investing in a FITE engaging in value-added telecommunications services may hold up to 50% of the ultimate equity interests of the FITE. In addition, the major foreign party as the shareholder of the FITE must satisfy a number of stringent performance and operational experience requirements, including demonstrating a good track record and experience in operating a value-added telecommunications business. The FITE that meets these requirements must obtain approvals from the Ministry of Industry and Information Technology, or the MIIT, and MOFCOM or their authorized local counterparts, which retain considerable discretion in granting approvals. Furthermore, the foreign party investing in the e-commerce business, as a type of value-added telecommunications services, has been allowed to hold up to 100% of the equity interests of the FITE based on the *Circular of the Ministry of Industry and Information Technology on Removing the Restrictions on Shareholding Held by Foreign Investors in Online Data Processing and Transaction Processing (Operating E-commerce) Business* issued on June 19, 2015, and the current effective *Catalogue of Telecommunications Services*, or the *Telecom Catalog*.

On July 13, 2006, the Ministry of Information Industry of the PRC, or the MII (which is the predecessor of the MIIT) promulgated the *Notice of the Ministry of Information Industry on Strengthening the Administration of Foreign Investment in Value-added Telecommunications Business*, or the *MII Notice*, which reiterates certain requirements of the *FITE Regulation* and strengthens the administration by the MII. Under the *MII Notice*, if a foreign investor intends to invest in PRC value-added telecommunications business, the foreign investor must establish a FITE and apply for the relevant license for value-added telecommunications services, or the VATS License. In addition, a domestic company that holds a license for the provision of value-added telecommunications services is prohibited from leasing, transferring or selling the license to foreign investors in any form, and from providing any assistance, including providing resources, sites or facilities, to foreign investors to conduct value-added telecommunications businesses illegally in China. Trademarks and domain names that are used in the provision of value-added telecommunications services must be owned by the license holder or its shareholders. The *MII Notice* also requires that each VATS License holder have appropriate facilities for its approved business operations and maintain such facilities in the business regions covered by its license. The VATS License holder shall perfect relevant measures for safeguarding the network and information, establish relevant administrative policies on information safety, set up the procedures for handling network emergencies and information safety and implement the liabilities system for information safety.

***Telecommunications regulations***

The *Telecommunications Regulations of the PRC*, or the *Telecom Regulations*, promulgated on September 25, 2000, and most recently amended on February 6, 2016, are the primary PRC laws governing telecommunications services, which set out the general framework for the provision of telecommunications services by domestic PRC companies. The *Telecom Regulations* require that telecommunications service providers shall obtain licenses prior to commencing operations. The *Telecom Regulations* distinguish basic telecommunications services and value-added telecommunications services. The *Telecom Catalog*, promulgated by MII on February 21, 2003, and amended by the MIIT on December 28, 2015, and June 6, 2019, and issued as an attachment to the *Telecom Regulations*, identifies internet information services and online data processing and transaction processing as value-added telecommunications services.

On July 3, 2017, the MIIT issued the revised Administrative Measures for the Licensing of Telecommunications Business, or the Telecom License Measures, which became effective on September 1, 2017, to supplement the Telecom Regulations. The Telecom License Measures require that an operator of value-added telecommunications services obtain a VATS License from the MIIT or its provincial-level counterparts. The term of a VATS License is five years and the license holder is subject to the annual inspection.

***Internet information services***

On September 25, 2000, the State Council promulgated the *Measures for the Administration of Internet Information Services*, or the *ICP Measures*, as amended on January 8, 2011. Under the *ICP Measures*, the internet information service is categorized into commercial internet information services and non-commercial internet services. The operators of non-commercial internet information services must file-record with relevant governmental authorities. However, the operators of commercial internet information services in China must obtain an ICP License, from the relevant governmental authorities. And the provision of particular information services, such as news, publishing, education, healthcare, medicine, and medical device must also comply with relevant laws and regulations and obtain approval from competent governmental authorities.

Internet information service providers are required to monitor their websites. They may not post or disseminate any content that falls within prohibited categories provided by laws or administrative regulations and must stop providing any such content on their websites. The PRC government may order ICP License holders that violate the content restrictions to correct those violations and revoke their ICP Licenses under serious conditions.

The MIIT released the *Circular on Regulating the Use of Domain Names in Internet Information Services* on November 27, 2017, effective from January 1, 2018, which provides that the domain names used by the internet information service provider in providing internet information services shall be registered and owned by such internet information service provider, and if the internet information service provider is a legal entity, the domain name registration shall be the legal entity (or any of its shareholders), or its principal or senior manager.

***Regulations Relating to Land Use Right and Construction***

Pursuant to the *PRC Land Administration Law* promulgated in June 1986 with the latest amendment in August 2019 (effective as of January 2020) and the *PRC Civil Code*, any entity that needs land for construction must obtain land use right and must register with local counterparts of Ministry of Natural Resources. Land use right is established at the time of registration.

According to the *Measures for the Administration of Grant and Transfer of Right to Use Urban State-owned Land* promulgated by the Ministry of Construction in December 1992 with the latest amendment in 2011, and the *PRC Law on Urban and Rural Planning* promulgated by the Standing Committee of the National People's Congress in October 2007 and became effective in January 2008 with the latest amendment in April 2019, the *Measures for Administration of Construction Permits of Construction Projects* promulgated by the Ministry of Housing and Urban-Rural Development of the PRC (or the MOHURD) in October 1999 with the latest amendment in March 2021, and the *Administrative Measures on the Filings of Inspection Upon Completion of Construction of Buildings and Municipal Infrastructure* promulgated by *the* MOHURD in October 2009, after obtaining land use right, the owner of land use right must obtain construction land planning permit, construction works planning permit from the relevant municipal planning authority, and a construction permit from relevant construction authority in order to commence construction. After a building is completed, an examination of completion by the relevant governmental authorities and experts must be organized.

Regulations on Production and Sale of Food Products

Before 2018, the China Food and Drug Administration, or the CFDA, had the regulatory authority to oversee, administer, and enforce all laws, regulations, and rules concerning the food industry business operations in China. After the institutional reforms, the CFDA has been abolished, and relevant regulatory authority has been taken over by the SAMR under the State Council.

The food industry is subject to extensive regulations in China. The PRC laws and regulations governing the food industry primarily consist of the *PRC Food Safety Law* (2009), as last amended in 2021; the *Implementation Regulation for the Food Safety Law of PRC* (2009), as amended in 2019, or the *Food Safety Regulation*; the *Administrative Measures for Food Production Licensing* (2010), as last amended in 2020, or the *Food Production Licensing Rule*; and the *Administrative Measures for Food Business Licensing* (2015), as amended in 2017, or the *Food Business Licensing Rule*. Under the *PRC Food Safety Law* and the *Food Safety Regulation*, food product manufacturers and business operators shall obtain the required food production permits; food producers and business operators are subject to regular quality inspection and supervision by the local governmental agencies and their product permits may be revoked if they no longer meet the standards and requirements for food production and operation; food-producing enterprises shall establish and implement food safety management systems, such as ingredient inspection and acceptance, production process safety management, storage management, equipment management, and substandard product management systems; and packaging of pre-packed food shall bear a label which states manufacturing permit serial number; among other things. The State Council implements a licensing system for food product manufacture and distribution. According to the *Food Production Licensing Rule*, a food production license must be obtained prior to engaging in food production activities in the PRC. The *Food Business Licensing Rule* requires food business operators to obtain a food business license for each business entity engaging in food business operations. We have obtained the required Food Production Licenses and Food Business Licenses, as set forth in the table below:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| No | License Type | License No. | License Date | Expiry Date | Holder |
| 1 | Food Production License | SC12361052300601 | August 18, 2023 | August 08, 2028 | Xi'an App-Chem |
| 2 | Food Business License | YB2610980608581 | July 18, 2023 | N/A | Xi'an App-Chem |
| 3 | Food Production License | SC10661020100062 | November 21, 2022 | November 20, 2027 | Tongchuan DT |

---

In addition to PRC laws and regulations, we strictly follow applicable safety regulations in all markets to which we sell our products. Through our subsidiary, Xi'an App-Chem, we have obtained REACH certification for our ambroxide in the European Union, and Generally Recognized as Safe List ("GRAS") certification from the FDA for our clary sage. We have obtained kosher and halal certifications for certain of our products as well.

"GRAS" is an acronym for the phrase **G**enerally **R**ecognized **A**s **S**afe. Under sections 201(s) and 409 of the U.S. Federal Food, Drug, and Cosmetic Act (the "Act"), any substance that is intentionally added to food is a food additive, that is subject to premarket review and approval by FDA, unless the substance is generally recognized, among qualified experts, as having been adequately shown to be safe under the conditions of its intended use, or unless the use of the substance is otherwise excepted from the definition of a food additive. General recognition of safety under for a substance under U.S. law may be achieved under either of two methods:

● Under sections 201(s) and 409 of the Act, and FDA's implementing regulations in 21 CFR 170.3 and 21 CFR 170.30, the use of a food substance may be GRAS either through scientific procedures or, for a substance used in food before 1958, through experience based on common use in food Under 21 CFR 170.30(b), general recognition of safety through scientific procedures requires the same quantity and quality of scientific evidence as is required to obtain approval of the substance as a food additive. General recognition of safety through scientific procedures is based upon the application of generally available and accepted scientific data, information, or methods, which ordinarily are published, as well as the application of scientific principles, and may be corroborated by the application of unpublished scientific data, information, or methods.

● Under 21 CFR 170.30(c) and 170.3(f), general recognition of safety through experience based on common use in foods requires a substantial history of consumption for food use by a significant number of consumers.

Under 21 CFR 182.20, clary sage has been generally recognized as safe for its intended use.

REACH stands for "Registration, Evaluation, Authorization and Restriction of Chemicals". REACH is the EU's regulation on preventive management of all chemicals entering its market. The regulation was issued on June 1, 2007, and implemented on June 1, 2008. According to the EU REACH regulations, companies need to submit a registration to the European Chemicals Agency (ECHA) for chemical substances (substances, substances in mixtures or substances intentionally released in articles) whose annual output or import volume exceeds 1 ton in the EU in order to continue to manufacture, import or sell the chemical within the EU. Xi'an App-Chem, sells two non-food products – sclareol glycol and ambroxide – in the EU. Both of these products have EU REACH certification, which satisfies the EU safety regulations for export and allows them to be sold in compliance with the EU market rules.

We rely upon published and unpublished safety information including clinical studies on ingredients used in our products. These studies include the following:

● "Safety and toxicity of silymarin, the major constituent of milk thistle extract: An updated review," (a study on the use of Silymarin in humans at therapeutic doses of up to 700 mg three times a day for 24 weeks.) Some gastrointestinal discomforts occurred like nausea and diarrhea.

● The toxicology and safety of apple polyphenol extract," (a study on polyphenol use in humans that included a 90-day subchronic-toxicity test).

● "Public Announcement Regarding Haematococcus Pluvialis and Other New Resource Food" [Evaluation Division of Food Safety Standard and Inspection, No. 17 issued on October 29, 2010] (evaluating the use of Stachyose as an ordinary food).

***Regulation on Product Liability***

The PRC laws and regulations governing the product liability primarily consist of the *PRC Product Quality Law* (1993), as lately amended in 2018; *Law on the Protection of the Rights and Interests of Consumers* (1993), as lately amended in 2013, or the *Consumers Protection Law*; and the *PRC Civil Code*.

Under the *PRC Product Quality Law*, producers and vendors of defective products may incur liability for losses and injuries caused by such products. There are three circumstances under which producers or vendors can have immunity from the defective product liability: 1) the defective products are never put into the market; 2) the products defect which caused the damages did not exist when the products were put into the market; 3) the exam techniques and skills were not able to find out the defects when the products were put into the market. So far, our product quality is in conformity with the national requirements and we have passed the regulatory agency's examination and also successfully obtained the certificates of GB/T 199001-2016/ISO 9001:2015, GB/T 22000-2006/ISO 22000:2005, ISO 9001:2008/GB/T 19001-2008 system.

Under the *PRC Civil Code*, manufacturers or retailers of defective products that cause property damage or physical injury to any person will be subject to civil liability. The *Consumers Protection Law* was enacted to protect the legitimate rights and interests of end-users and consumers and to strengthen the supervision and control of the quality of products.

Under the *PRC Civil Code*, a customer who suffers injury from a defective product can claim damages from either the manufacturer or vendor of the defective product. And, where personal injury is caused by tort, the tortfeasor shall compensate the victim for the reasonable costs and expenses for treatment and rehabilitation, as well as death compensation and funeral costs and expenses if it causes the death of the victim. There is no cap on monetary damages the plaintiffs may seek under the *PRC Civil Code*.

***Regulations Relating to Environmental Protection***

Pursuant to the *PRC Law on Environment Impact Assessment* promulgated in 2002, most recently amended in 2018, and the *Administrative Regulations on the Environmental Protection of Construction Projects* promulgated in 1998, most recently amended in 2017, each construction project is required to undergo an environmental impact assessment, and an environmental impact assessment report, an assessment form, or a registration form shall be filed with or approved by the relevant governmental authorities before the commencement of construction. In the event that there is a material change in respect of the construction site, scale, nature, the production techniques employed, or the measures adopted for preventing pollution and preventing ecological damage of a given project, a new environmental impact assessment document shall be filed with or approved by the relevant governmental authorities. Moreover, in accordance with the *Interim Measure on the Environmental Protection Completion Acceptance of Construction Projects* promulgated in 2017, after the completion of a construction project, the construction entity is required to conduct acceptance check of the constructed supporting environmental protection facilities and deliver an acceptance report. Failure to comply with the above-mentioned regulations may subject an enterprise to fines, suspension of the construction, and other administrative liabilities and even criminal liabilities under severe circumstances.

***Regulations Relating to Intellectual Property Rights***

The PRC government has adopted comprehensive legislation governing intellectual property rights, including copyrights, patents, trademarks, and domain names.

***Copyright.*** Copyright in China, including copyrighted software, is principally protected under the *PRC Copyright Law,* promulgated by Standing Committee of NPC in September 1990 and most recently amended in November 2020 and its implementation rules. Under the *PRC Copyright Law*, the term of protection for copyrighted software of legal persons is 50 years and ends on December 31 of the 50<sup>th</sup> year from the date of first publishing of the software.

***Patent.*** The *PRC Patent Law*, promulgated by Standing Committee of NPC in March 1984 and most recently amended in October 2020, provides for patentable inventions, utility models, and designs, which must meet three conditions: novelty, inventiveness, and practical applicability. The State Intellectual Property Office under the State Council is responsible for examining and approving patent applications. The protection period of a patent right is 10 years for utility models and designs and 20 years for inventions from the date of application.

***Trademark.*** The *PRC Trademark Law*, promulgated by the Standing Committee of NPC in August 1982 and most recently amended in April 2019 and its implementation rules protect registered trademarks. The PRC Trademark Office of State Administration of Industry and Commerce is responsible for the registration and administration of trademarks throughout China. The *PRC Trademark Law* has adopted a "first-to-file" principle with respect to trademark registration. Where registration is sought for a trademark that is identical or similar to another trademark that has already registered or given preliminary examination and approval for use in the same or similar category of commodities or services, the application for registration of such trademark may be rejected. Trademark registration is effective for a ten-year period from the date of approval of the trademark application unless otherwise revoked, which may be renewed for another ten years provided relevant application procedures have been completed within twelve months before the end of the validity period.

***Domain Name.*** Domain names are protected under the *Administrative Measures on the Internet Domain Names* promulgated by the MIIT in August 2017. The MITT is the major regulatory body responsible for the administration of the PRC internet domain names, under supervision of which the China Internet Network Information Center is responsible for the daily administration of ".cn" domain names and the Chinese domain names. Domain name registration is handled through domain name service agencies established under the relevant regulations, and applicants become domain name holders upon successful registration. We have registered http://en.appchem.cn, http://www.bnlus.com and other domain names.

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***Regulations Relating to Employment***

Pursuant to the *PRC Labor Law*, promulgated by the Standing Committee of NPC in July 1994 and most recently amended in December 2018, and the *PRC Labor Contract Law*, promulgated by the Standing Committee of NPC in June 2007 and amended in December 2012, employers must execute written labor contracts with full-time employees. If an employer fails to enter into a written employment contract with an employee within one year from the date on which the employment relationship is established, the employer must rectify the situation by entering into a written employment contract with the employee and pay the employee twice the employee's salary for the period from the day following the lapse of one month from the date of establishment of the employment relationship to the day prior to the execution of the written employment contract. All employers must comply with local minimum wage standards. Violation of the *PRC Labor Law* and the *PRC Labor Contract Law* may result in the imposition of fines and other administrative and criminal liability in the case of a serious violation.

In December 2012, the *PRC Labor Contract Law* was amended to impose more stringent requirements on the use of employees of temp agencies, who are known in China as "dispatched workers". Dispatched workers are entitled to equal pay with full-time employees for equal work. Employers are only allowed to use dispatched workers for temporary, auxiliary, or substitutive positions, and the number of dispatched workers may not exceed 10% of the total number of employees. As of the date hereof, our consolidated subsidiaries did not use dispatched workers.

Enterprises in China are required by PRC laws and regulations to participate in certain employee benefit plans, including social insurance funds, namely a pension plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan, and a maternity insurance plan, and a housing provident fund, and contribute to the plans or funds in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees as specified by the local government from time to time at locations where they operate their businesses or where they are located. According to the *PRC Social Insurance Law* (amended in 2018), an employer that fails to make social insurance contributions may be ordered to rectify the non-compliance and pay the required contributions within a stipulated deadline and be subject to a late fee of up to 0.05% of the unpaid amount per day, as the case may be. If the employer still fails to rectify the failure to make social insurance contributions within the stipulated deadline, it may be subject to a fine ranging from one to three times the amount overdue. According to the *Regulations on Management of Housing Fund* employers must not suspend or reduce the payment of housing provident funds for their employees. Under the circumstances where financial difficulties indeed exist due to which an employer is unable to pay or pay up housing provident funds, the permission of the labor union of the employer and the approval of the local housing provident funds commission must first be obtained before the employer can suspend or reduce their payment of housing provident funds. Where an employer does not open accounts of housing provident funds for its employees, the relevant authorities have the power to order such employer to do so within a prescribed period, failure of which can result in a fine of over RMB 10,000 and up to RMB 50,000 charged on the employer. An enterprise that fails to make housing fund contributions may be ordered to rectify the noncompliance and pay the required contributions within a stipulated deadline; otherwise, an application may be made to a local court for compulsory enforcement.

***Regulations Relating to Foreign Exchange***

The principal regulations governing foreign currency exchange in China are the *Foreign Exchange Administration Regulations*, most recently amended in August 2008. Payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can usually be made in foreign currencies without prior approval from the SAFE, by complying with certain procedural requirements. By contrast, approval from or registration with appropriate governmental authorities is required where the Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of foreign currency-denominated loans, direct investments, repatriation of investments and investments in securities outside of China.

On March 30, 2015, SAFE issued the Circular of the State Administration of Foreign Exchange on Reforming the Management Approach regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises, or SAFE Circular 19, most recently amended in December 2019. Pursuant to SAFE Circular 19, the foreign exchange capital of foreign-invested enterprises is subject to the discretional foreign exchange settlement, which means the foreign exchange capital in the capital account of foreign-invested enterprises upon the confirmation of rights and interests of monetary contribution by the local foreign exchange bureau (or the book-entry registration of monetary contribution by the banks) may be settled at the banks based on the actual operational needs of the enterprises. The proportion of discretionary settlement of foreign exchange capital of foreign-invested enterprises is currently 100%. SAFE can adjust such proportion in due time based on the circumstances of the international balance of payments.

SAFE promulgated the Circular of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or SAFE Circular 16, effective June 2016, which reiterates some of the rules set forth in SAFE Circular 19. SAFE Circular 16 provides that discretionary foreign exchange settlement applies to foreign exchange capital, foreign debt offering proceeds and remitted foreign listing proceeds, and the corresponding RMB capital converted from the foreign exchange may be used to extend loans to related parties or repay inter-company loans (including advances by third parties). However, there are substantial uncertainties with respect to SAFE Circular 16's interpretation and implementation in practice. SAFE Circular 19 and SAFE Circular 16 may delay or limit us from using the proceeds of offshore offerings to make additional capital contributions to our PRC subsidiary and any violations of these circulars could result in severe monetary or other penalties.

In January 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or SAFE Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profits from domestic entities to offshore entities, including (i) banks must check whether the transaction is genuine by reviewing board resolutions regarding profit distribution, original copies of tax filing records and audited financial statements, and (ii) domestic entities must retain income to account for previous years' losses before remitting any profits. Moreover, pursuant to SAFE Circular 3, domestic entities must explain in detail the sources of capital and how the capital will be used, and provide board resolutions, contracts, and other proof as a part of the registration procedure for outbound investment.

On October 23, 2019, SAFE issued Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment, or SAFE Circular 28, which took effect on the same day. SAFE Circular 28 allows non-investment foreign-invested enterprises to use their capital funds to make equity investments in China, provided that such investments do not violate the Negative List and the target investment projects are genuine and in compliance with laws. Since SAFE Circular 28 was issued only recently, its interpretation and implementation in practice are still subject to substantial uncertainties.

***Regulations on Dividend Distribution***

According to *PRC Company Law*, wholly foreign-owned companies in China may pay dividends only out of their accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, wholly foreign-owned companies are required to set aside at least 10% of their after-tax profits each year, if any, to fund a statutory reserve fund until the accumulative amount of such fund reaches 50% of its registered capital. 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 a liquidation. At the discretion of the wholly foreign-owned companies, they may allocate a portion of their after-tax profits based on PRC accounting standards to staff welfare and bonus funds. These reserve funds and staff welfare and bonus funds are not distributable as cash dividends.

***Regulations on Offshore Financing***

SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents' Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, on July 4, 2014, which replaced the former circular commonly known as SAFE Circular 75. SAFE Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents' legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a "special purpose vehicle". SAFE Circular 37 further requires an amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division, or other material events. In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiary. Furthermore, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for the evasion of foreign exchange controls. We have taken steps to notify significant beneficial owners of ordinary shares whom we know are PRC residents of their filing obligations. However, we may not at all times be fully aware or informed of the identities of all our shareholders or beneficial owners that are required to make such registrations, and we may not always be able to compel them to comply with all relevant foreign exchange regulations. As a result, we cannot assure you that all of our shareholders or beneficial owners who are PRC residents will at all times comply with, or in the future make or obtain any applicable registrations or approvals required by all relevant foreign exchange regulations.

On February 13, 2015, SAFE released Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies, or SAFE Circular 13, most recently amended in December 2019, under which local banks will examine and handle foreign exchange registration for overseas direct investment, including the initial foreign exchange registration and amendment registration, starting from June 1, 2015.

*SAFE Circular 3* stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle of a genuine transaction, banks shall check the board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years' losses before remitting the profits. Moreover, pursuant to *SAFE Circular 3*, domestic entities shall make detailed explanations of the sources of capital and utilization arrangements, and provide board resolutions, contracts, and other proof when completing the registration procedures in connection with an outbound investment.

***Regulations Relating to Stock Incentive Plans***

According to the Circular of the State Administration of Foreign Exchange on Issues Relating to the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Listed Company, or the SAFE Circular 7, which was issued on February 15, 2012, and other regulations, directors, supervisors, senior management and other employees participating in any share incentive plan of an overseas publicly-listed company who are PRC citizens or non-PRC citizens residing in China for a continuous period of not less than one year, subject to certain exceptions, are required to register with the SAFE. All such participants need to authorize a qualified PRC agent, such as a PRC subsidiary of the overseas publicly-listed company to register with the SAFE and handle foreign exchange matters such as opening accounts, transferring, and settlement of the relevant proceeds. The SAFE Circular 7 further require an offshore agent to be designated to handle matters in connection with the exercise of share options and sales of proceeds for the participants of the share incentive plans. Failure to complete the said SAFE registrations may subject our participating directors, supervisors, senior management, and other employees to fines and legal sanctions.

In addition, the SAT, has issued certain circulars concerning employee stock options and restricted shares. Under these circulars, employees working in the PRC who exercise stock options or are granted restricted shares will be subject to PRC individual income tax. The PRC subsidiaries of an overseas listed company are required to file documents related to employee stock options and restricted shares with relevant tax authorities and to withhold individual income taxes of employees who exercise their stock option or purchase restricted shares. If the employees fail to pay or the PRC subsidiaries fail to withhold income tax in accordance with relevant laws and regulations, the PRC subsidiaries may face sanctions imposed by the tax authorities or other PRC governmental authorities.

**Regulations Relating to Tax**

***Dividend Withholding Tax***

Pursuant to the *PRC Enterprise Income Tax Law* and its implementation rules, if a non-resident enterprise has not set up an organization or establishment in China, or has set up an organization or establishment but the income derived has no actual connection with such organization or establishment, it will be subject to a withholding tax on its PRC-sourced income at a rate of 10%. Pursuant to the *Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income*, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise is reduced to 5% from a standard rate of 10% if the Hong Kong enterprise directly holds at least 25% of the PRC enterprise. Pursuant to the *Circular of the State Administration of Taxation on the Issues concerning the Application of the Dividend Clauses of Tax Agreements*, or *SAT Circular 81*, a Hong Kong resident enterprise must meet the following conditions, among others, in order to enjoy the reduced withholding tax: (i) it must directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (ii) it must have directly owned such percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends. Furthermore, the *Bulletin of the State Taxation Administration on Issuing the Administrative Measures for Entitlement to Treaty Benefits for Non-resident Taxpayers*, which became effective in January 2020, requires that where non-resident taxpayers judge by themselves that they meet the conditions for entitlement to treaty benefits, they may obtain such entitlement themselves at the time of making tax declarations, or at the time of making withholding declarations via withholding agents. At the same time, they shall collect, gather, and retain relevant materials for future reference in accordance with the provisions of these measures, and shall accept the follow-up administration of tax authorities. Accordingly, our direct subsidiary, Tea Essence Limited (Hong Kong), may be able to enjoy the 5% withholding tax rate for the dividends they receive from Xi'an CMIT or Xi'an Youpincui, if it satisfies the conditions prescribed under *SAT Circular 81* and other relevant tax rules and regulations. However, according to *SAT Circular 81*, if the relevant tax authorities consider the transactions or arrangements we have are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust the favorable withholding tax in the future. Additionally, the *Announcement of the State Administration of Taxation on Issues concerning "Beneficial Owners" in Tax Treaties*, promulgated by the SAT on February 3, 2018, and took effect on April 1, 2018, further clarified the analysis standard when determining one's qualification for beneficial owner status.

***Enterprise Income Tax***

The principal regulations governing enterprise income tax in China are the *PRC Enterprise Income Tax Law* and its implementing rules, which became effective on January 1, 2008, most recently amended in December 2018. Under the *PRC Enterprise Income Tax Law*, enterprises are classified as resident enterprises and non-resident enterprises. PRC resident enterprises typically pay an enterprise income tax at the rate of 25%. Uncertainties exist with respect to how the *PRC Enterprise Income Tax Law* applies to the tax residence status of Bon Natural Life Limited and our offshore subsidiaries.

Under the *PRC Enterprise Income Tax Law*, an enterprise established outside China with its "de facto management bodies" located within China is considered a "resident enterprise", meaning that it is treated in a manner similar to a PRC domestic enterprise for enterprise income tax purposes. The implementing rules of the *PRC Enterprise Income Tax Law* define the "de facto management body" as a managing body that in practice exercises "substantial and overall management and control over the production and operations, personnel, accounting, and properties" of the enterprise.

The SAT issued the Circular of the State Administration of Taxation on Issues Concerning the Identification of Chinese-controlled Overseas Registered Enterprises as Resident Enterprises in accordance with the Actual Standards of Organizational Management, or SAT Circular 82, in 2009, and most recently amended in December 2017. According to SAT Circular 82, a Chinese-controlled offshore incorporated enterprise will be regarded as a PRC tax resident by virtue of having a "de facto management body" in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following criteria are met: (a) the places where the senior management and senior management departments responsible for the daily production, operation and management of the enterprise perform their duties are mainly located within the territory of China; (b) decisions relating to the enterprise's financial matters (such as money borrowing, lending, financing and financial risk management) and human resource matters (such as appointment, dismissal and salary and wages) are made or are subject to approval by organizations or personnel in China; (c) the enterprise's primary assets, accounting books and records, company seals, and board and shareholders meeting minutes are located or maintained in China, and (d) 50% or more of voting board members or senior executives habitually reside in China. In addition, the SAT issued the Bulletin of the State Administration of Taxation on Printing and Distributing the Administrative Measures for Income Tax on Chinese-controlled Resident Enterprises Incorporated Overseas (Trial Implementation) in 2011, most recently amended in June 2018, providing more guidance on the implementation of SAT Circular 82. This bulletin clarifies matters including resident status determination, post determination administration, and competent tax authorities. In January 2014, the SAT issued the Bulletin of the State Administration of Taxation on Issues concerning the Determination of Resident Enterprises Based on the Standards of Actual Management Institutions, or SAT Bulletin 9. According to SAT Bulletin 9, a Chinese-controlled offshore incorporated enterprise that satisfies the conditions prescribed under the SAT Circular 82 for being recognized as a PRC tax resident must apply for being recognized as a PRC tax resident to the competent tax authority at the place of registration of its main investor within the territory of China.

We do not believe that we meet all of the conditions outlined in the immediately preceding paragraph. We believe that Bon Natural Life Limited and our offshore subsidiaries should not be treated as a "resident enterprise" for PRC tax purposes if the criteria for "de facto management body" as set forth in *SAT Circular 82* were deemed applicable to us. However, as the tax residency status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term "de facto management body" as applicable to our offshore entities, we may be treated as a resident enterprise for PRC tax purposes under the *PRC Enterprise Income Tax Law,* and we may, therefore, be subject to PRC income tax on our global income. We are actively monitoring the possibility of "resident enterprise" treatment for the applicable tax years and are evaluating appropriate organizational changes to avoid this treatment, to the extent possible.

In the event that Bon Natural Life Limited or any of our offshore subsidiaries is considered to be a PRC resident enterprise: Bon Natural Life Limited or our offshore subsidiaries, as the case may be, may be subject to the PRC enterprise income tax at the rate of 25% on our worldwide taxable income; dividend income that Bon Natural Life Limited or our offshore subsidiaries, as the case may be, received from our PRC subsidiaries may be exempt from the PRC withholding tax; and interest paid to our overseas shareholders or Shares holders who are non-PRC resident enterprises as well as gains realized by such shareholders or Shares holders from the transfer of our shares or Shares may be regarded as PRC-sourced income and as a result be subject to PRC withholding tax at a rate of up to 10%, subject to any reduction or exemption set forth in relevant tax treaties, and similarly, dividends paid to our overseas shareholders or Shares holders who are non-PRC resident individuals, as well as gains realized by such shareholders or Shares holders from the transfer of our shares or Shares, may be regarded as PRC-sourced income and as a result be subject to PRC withholding tax at a rate of 20%, subject to any reduction or exemption set forth in relevant tax treaties. "Risk Factor—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or Shares holders."

SAT issued Bulletin of the State Administration of Taxation on Several Issues concerning the Enterprise Income Tax on the Indirect Transfers of Properties by Non-Resident Enterprises, or SAT Bulletin 7, on February 3, 2015, which replaced or supplemented certain previous rules under the Circular of the State Administration of Taxation on Strengthening the Administration of Enterprise Income Tax on Incomes from Equity Transfers of Non-Resident Enterprises, or SAT Circular 698. Under SAT Bulletin 7, an "indirect transfer" of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises may be re-characterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax. According to SAT Bulletin 7, "PRC taxable assets" include assets attributed to an establishment in China, immovable properties in China, and equity investments in PRC resident enterprises. In respect of an indirect offshore transfer of assets of a PRC establishment, the relevant gain is to be regarded as effectively connected with the PRC establishment and therefore included in its enterprise income tax filing, and would consequently be subject to PRC enterprise income tax at a rate of 25%. Where the underlying transfer relates to the immovable properties in China or to equity investments in a PRC resident enterprise, which is not effectively connected to a PRC establishment of a non-resident enterprise, a PRC enterprise income tax at 10% would apply, subject to available preferential tax treatment under applicable tax treaties or similar arrangements, and the party who is obligated to make the transfer payments has the withholding obligation. There is uncertainty as to the implementation details of SAT Bulletin 7. If SAT Bulletin 7 was determined by the tax authorities to be applicable to some of our transactions involving PRC taxable assets, our offshore subsidiaries conducting the relevant transactions might be required to spend valuable resources to comply with SAT Bulletin 7 or to establish that the relevant transactions should not be taxed under SAT Bulletin 7.

On October 17, 2017, the SAT issued the Bulletin of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Bulletin 37, which came into effect on December 1, 2017. The SAT Bulletin 37 further clarifies the practice and procedure of the withholding of nonresident enterprise income tax.

Where the payers fail to withhold any or sufficient tax, the non-PRC residents, as the transferors, are required to declare and pay such taxes to the tax authorities on their own within the statutory time limit. Failure to comply with the tax payment obligations by the non-PRC residents will result in penalties, including full payment of taxes owed, fines ranging from fifty percent to five times the amount of unpaid or underpaid tax, and default interest on those taxes.

Enterprises that are recognized as high and new technology enterprises in accordance with the *Administrative Measures for the Determination of High and New Tech Enterprises* issued by the Ministry of Science, or the MOF, and the SAT are entitled to enjoy a preferential enterprise income tax rate of 15%. Under which the validity period of the high and new technology enterprise qualification shall be three years from the date of issuance of the certificate. An enterprise can re-apply for such recognition as a high and new technology enterprise before or after the previous certificate expires.

***PRC Value-Added Tax***

Pursuant to the *Interim Regulations on Value-Added Tax of the PRC*, which was promulgated by the State Council on December 13, 1993, most recently amended on December 19, 2017, and the *Implementation Rules for the Interim Regulations on Value-Added Tax of the PRC*, which was promulgated by the MOF, and SAT on December 25, 1993, and became effective on January 1, 2009, and as amended on October 28, 2011, any entity or individual conducting product sales is required to pay a value-added tax, or VAT, on the gross sales price of goods. VAT rates range up to 17%, depending on the type of products sold. On March 21, 2019, MOF, SAT and the General Administration of Customs jointly promulgated the *Announcement on Relevant Policies for Deepening Value-Added Tax Reform*, which became effective on April 1, 2019 and provides that (i) with respect to VAT taxable sales acts or import of goods originally subject to VAT rates of 16% and 10% respectively, such tax rates shall be adjusted to 13% and 9%, respectively; (ii) with respect to purchase of agricultural products originally subject to tax rate of 10%, such tax rate shall be adjusted to 9%; (iii) with respect to purchase of agricultural products for the purpose of production or consigned processing of goods subject to tax rate of 13%, such tax shall be calculated at the tax rate of 10%; (iv) with respect to export of goods and services originally subject to tax rate of 16% and export tax refund rate of 16%, the export tax refund rate shall be adjusted to 13%; and (v) with respect to export of goods and cross-border taxable acts originally subject to tax rate of 10% and export tax refund rate of 10%, the export tax refund rate shall be adjusted to 9%. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products.

***Regulations Relating to Overseas Listing and M&A***

On August 8, 2006, six PRC regulatory agencies, including the China Securities Regulatory Commission, or the CSRC, promulgated the *Rules on the Merger and Acquisition of Domestic Enterprises by Foreign Investors*, or the *M&A Rules*, which became effective on September 8, 2006, and were amended on June 22, 2009. The *M&A Rules*, among other things, require offshore special purpose vehicles formed for overseas listing purposes through acquisitions of PRC domestic companies and controlled by PRC domestic enterprises or individuals to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle's securities on an overseas stock exchange. In September 2006, the CSRC published on its official website procedures regarding its approval of overseas listings by special purpose vehicles. The CSRC approval procedures require the filing of a number of documents with the CSRC. Although the CSRC currently has not issued any definitive rule or interpretation concerning whether offerings like our recent IPO are subject to the *M&A Rules*, the interpretation, and application of the regulations remain unclear, and any future offerings may ultimately require approval from the CSRC. If CSRC approval is required, it is uncertain whether it would be possible for us to obtain the approval and any failure to obtain or delay in obtaining CSRC approval for a future securities offering would subject us to sanctions imposed by the CSRC and other PRC regulatory agencies.

The *M&A Rules* and other regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. For example, the *M&A Rules* require that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that impact or may impact national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand.

In addition, according to the *Notice on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors* issued by the General Office of the State Council on February 3, 2011, and which became effective on March 4, 2011, the *Rules on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors* issued by MOFCOM on August 25, 2011, and which became effective on September 1, 2011, the *Measures for the Security Review of Foreign Investments* issued by MOFCOM and NDRC on December 19, 2020, which became Effective on January 18, 2021, mergers and acquisitions by foreign investors that raise "national defense and security" concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise "national security" concerns are subject to strict review by MOFCOM, and the regulations prohibit any activities attempting to bypass such security review, including by structuring the transaction through a proxy or contractual control arrangement.

**C.** **Organizational Structure** 

We commenced our natural products and ingredients business through Xi'an App-Chem Bio(Tech) Co., Ltd. ("Xi'an App-Chem"), a corporation formed in the People's Republic of China in April of 2006. On April 23, 2006, Xi'an App-Chem received its Business License (Registration No.: 6101012116403) from the Xi'an Administration for Industry and Commerce.

On December 11, 2019, Bon Natural Life Limited was incorporated under the laws of the Cayman Islands as our offshore holding company to facilitate financing and offshore listing. Bon Natural Life Limited subsequently established a Wholly Foreign-Owned Enterprise ("WFOE") in PRC China, Tea Essence Health Tech (Hangzhou) Co., Ltd. ("Tea Essence (Hangzhou)"). Tea Essence (Hangzhou) is wholly owned by our direct subsidiary in Hong Kong, Tea Essence. Due to PRC legal restrictions on foreign ownership in companies that engage in online sales China, we originally carried out our business through Xi'an App-Chem, a domestic PRC company, through a variable interest entity structure. Effective November 1, 2021, however, we reorganized our corporate structure in the PRC and are now the indirect sole shareholder of Xi'an App-Chem. Xi'an App-Chem is wholly-owned by two WFOE's Xi'an CMIT and Xi'an Youpincui, each of which are in turn wholly-owned by the WFOE. Xi'an App-Chem's financial results are consolidated into our consolidated financial statements in accordance with U.S. GAAP because we have control over that entity by way of 100% equity ownership through Tea Essence, and in turn, Tea Essence (Hangzhou), Xi'an CMIT and Xi'an Youpincui.

The following diagram illustrates our corporate structure as of the date of this Annual Report:

![](form20-fchart_002.jpg)

**Xi'an App-Chem's Operating Subsidiaries**

The table below provides a summary of Xi'an App-Chem's operating subsidiaries ("Bon Operating Companies") and their primary business functions as of the date of this Annual Report:

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| | | | | |
|:---|:---|:---|:---|:---|
| Name of Entity | Date of Incorporation | Place of Incorporation | % of Ownership | Principal Activities |
| App-Chem Health | April 17, 2006 | Tongchuan City, PRC | 100% owned by Xi'an App-Chem | Registered owner of land with an area of 12,904.5 square meters, no other business activities |
| App-Chem Ag-tech | April 19, 2013 | Dali County, PRC | 100% owned by Xi'an App-Chem | Product manufacturing |
| App-Chem Guangzhou | April 27, 2018 | Guangzhou City, PRC | 100% owned by Xi'an App-Chem | Raw material purchase |
| Tongchuan DT | May 22, 2017 | Tongchuan City, PRC | 99% owned by Xi'an App-Chem,1% owned by App-Chem Health | Product manufacturing |
| Xi'an DT | April 24, 2015 | Xi'an City, PRC | 75% owned by Xi'an App-Chem | Research and development of product |
| Xi'an YH | September 15, 2009 | Xi'an City, PRC | 93.75% owned by Xi'an CMIT, 6.25% owned by Xi'an App-Chem | Research and development of product |
| Xianyang DT | April 16, 2025 | Xianyang City, PRC | 100% owned by Xi'an App-Chem | Technology development and sales of the products |
| Bozhou DT | March 9, 2023 | Bozhou City,<br> PRC | 100% owned by Xi'an App-Chem | Product manufacturing |

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**D.** **Property, Plants and Equipment** 

**Property, Plants, and Equipment**

Our current property and equipment consist of buildings, machinery, vehicles, and construction in progress with a total net book value of $18,158,289 and $15,005,686 as of September 30, 2025 and 2024, respectively. Xi'an App-Chem has two facilities in operation:

Weinan Raw Materials and Ingredients Production Site

This site, located in Xuzhuang Industrial Park, Dali County, Weinan, Shaanxi, occupies an area of 30 mu, or approximately 5 acres (1 mu=0.165 acre) and a building area of 11,000 m<sup>2</sup>, or 118,403 square feet. It is rented by the Company at RMB 12,500 or $1,920 per month. It is equipped with a plant extract workshop (which has 4 sets of extraction equipment consisting of 6 m<sup>3</sup> or 212 cubic feet multifunctional extraction tanks, 3 sets of concentration equipment, 14 sets of separation equipment and 23 sets of storage and transport equipment), a refining, drying, and packing workshop (2 sets of spray and drying towers, 6 sets of drying equipment, 2 sets of crushing equipment and over 20 other related equipment), a spices refinement workshop (70 sets of various production equipment with volume from 2000L to 5000L, 1 set of molecular distillation equipment, 1 set of water treatment equipment, 1 set of ash treatment equipment and 15 sets of refrigeration and pressure equipment). This facility mainly manufactures products in our clary sage series, apple polyphenols series, and stachyose products.

Tongchuan Functional Health Business Production Site

This site, located at the intersection of Datang Third Road and Changhong South Road, Southern Industrial Park, New Downtown District, Tongchuan, Shaanxi, covers an area of 24.8 mu or approximately 4.1 acres (1 mu=0.165 acre) and a construction area of 13,500 m<sup>2</sup> or approximately 145,313 square feet. The construction of Tongchuan Project was fully completed and put into production in December 2022 and it's equipped with 3 disinfection production lines, 2 production lines of powder drinks and pressed candies, 3 paste production lines, 2 production lines of special diets and 1 research and development center, quality inspection center, product exhibition center and a comprehensive office area. After completion, the value of this new plant's total output is expected to reach up $150 million per year. The Company has obtained a long-term land use certificate for this site. No additional expenditures or other conditions are required to maintain the sustainable land use right.

Yumen Plant

On May 10, 2021, we acquired a land use right of 8.2 acres at cost of $267,000, through a government organized auction bidding in Yumen City, Gansu Province of China. We have the right to use this land for 50 years until May 9, 2071. We have started construction on a new manufacturing facility for raw materials and ingredients on this land. Total budget for construction of this new manufacturing plant is around $5.6 million. The construction of Yumen Project was initially expected to be completed by October 2022. Due to resurgence of the COVID-19 pandemic, which resulted in the implementation of significant governmental measures, including lockdowns, closures, quarantines and travel bans, the construction work was not completed as of September 30, 2024, at which date our operating subsidiary Xi`an App-Chem Bio (Tech) Co., Ltd. ("App-Chem") and its wholly owned subsidiary, Gansu Baimeikang Biotechnology Co., Ltd. ("Baimeikang") entered into an Asset Selling Agreement (the "Agreement") with Xinjiang Baixiangquan Aromatic (Tech) Co., Ltd. ("Baixiangquan"). Under the Agreement, App-Chem has agreed to sell all the assets of Baimeikang to Baixiangquan by transferring 100% of the equity interests in Baimeikang to Baixiangquan, which include our Yumen project for RMB 43.3 million. The transfer of Gansu Beimeikang's equity interest to Baixiangquan had been closed on November 11, 2024.

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| **ITEM 4A.** | **UNRESOLVED STAFF COMMENTS** |

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Not applicable.

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|:---|:---|
| **ITEM 5.** | **OPERATING AND FINANCIAL REVIEW AND PROSPECTS** |

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**A.** **Operating Results** 

Key Financial Performance Indicators

In assessing our financial performance, we consider a variety of financial performance measures, including principal growth in net revenue and gross profit, our ability to control costs and operating expenses to improve our operating efficiency and net income. Our review of these indicators facilitates timely evaluation of the performance of our business and effective communication of results and key decisions, allowing our business to respond promptly to competitive market conditions and different demands and preferences from our customers. The key measures that we use to evaluate the performance of our business are set forth below and are discussed in greater details under "Results of Operations":

Net Revenue

Our net revenue is driven by changes in the number of customers, sales volume, selling price, and mix of products sold. Our products are sold with no right of return and we do not provide other credits or sales incentive to customers.

We sell our products to our customers in three broad product categories: fragrance compounds, health supplemental powder drinks and bioactive food ingredients, which accounted for 43.3%, 17.8% and 38.9% of our total revenue for the year ended September 30, 2025; 20.7%, 28.3% and 51.0% of our total revenue for the year ended September 30, 2024, 48.5%, 29.5% and 22.0% of our total revenue for the year ended September 30, 2023, respectively.

Sales volumes of our bioactive food ingredients increased by 55.7% for the year ended September 30, 2025 as compared to 2024 due to strong customer demand. Sales volumes of Fragrance compounds had increased by 218.8% during fiscal year ended September 30, 2025 as compared to same period of 2024. However, sales volumes of health supplemental powder drinks decreased by 49.2%, for the year ended September 30, 2025 as compared to the same period of 2024 as a result of our change in sales strategy in response to market change. The total number of customers were 107 and 123 customers for the years ended September 30, 2025 and 2024, respectively, represent a slightly decrease of 13.0% as a result of focusing on larger volume customers during the year. As a result of these change in product mix, change in sales volume, changes in average selling price and exchange rates, our total revenue decreased by 21.7% for the year ended September 30, 2025 as compared to the same period of 2024.

Sales volumes of our bioactive food ingredients increased by 12.7% for the year ended September 30, 2024 as compared to the same period of 2023 due to strong customer demand. However, sales volumes of all of our fragrance compounds and health supplemental powder drinks decreased by 73.8%, and 22.2%, respectively, for the year ended September 30, 2024 as compared to the same period of 2023 as a result of our change in sales strategy in response to market change. The total number of customers were 123 and 126 customers for the years ended September 30, 2024 and 2023, respectively, represent a slightly decrease of 1.6% as a result of focusing on larger volume customers during the year. As a result of these change in product mix, change in sales volume, changes in average selling price and exchange rates, our total revenue decreased by 19.2% for the year ended September 30, 2024 as compared to the same period of 2023.

Gross Profit

Gross profit is equal to net revenue minus cost of goods sold. Cost of goods sold primarily includes inventory costs (raw materials, labor, packaging cost, depreciation and amortization, third-party products purchase price, freight costs and overhead). Cost of goods sold generally changes as our production costs change, as these are affected by factors including the market price of raw materials, labor productivity, and in changes to the customer and product mix. Our cost of revenues accounted for 79.2%, 70.2%, 70.1% of our total revenue for the fiscal year 2025, 2024 and 2023, respectively.

The gross margin was 20.8% for the year ended September 30, 2025, representing a 9% decrease as compared to gross margin of 29.8% for the previous year. The decline in gross margin was resulted from the changing of product mix, downward adjusting of selling prices in response to the increasingly difficult market condition.

Our gross margin was 29.8% for the year ended September 30, 2024, a decrease by 0.1% from gross margin of 29.9% for the year ended September 30, 2023 due to changes in product mix and strategy in response to market changes to focus on bioactive food ingredients segment.

Operating Expenses

Our operating expenses consist of selling expenses, general and administrative expenses and research and development expenses.

Our selling expenses primarily include salary and welfare benefit expenses paid to our sales personnel, advertising expenses to increase the awareness of our brand, shipping ad delivery expenses, expenses incurred for our business travel, meals and other sales promotion and marketing activities related expenses. Our selling expenses accounted for 2.3%, 1.1% and 1.0% of our total revenue for the years ended September 30, 2025, 2024 and 2023, respectively. We expect our selling expenses, including, but not limited to, salaries and advertising expenses, to continue to increase in the foreseeable future, as we plan to put more marketing effort to acquire new client and promote our sales.

Our general and administrative expenses primarily consist of employee salaries, welfare and insurance expenses, depreciation, bad debt reserve expenses, inspection and maintenance expenses, office supply and utility expenses, business travel and meals expenses, land and property taxes and professional service expenses. General and administrative expenses were 23.1%, 14.0% and 7.8% of our revenues for the years ended September 30, 2025, 2024 and 2023, respectively. We expect our general and administrative expenses, including, but not limited to, salaries and business consulting expenses, to continue to increase in the foreseeable future, as we plan to hire additional personnel and incur additional expenses in connection with the expansion of our business operations. We expect our professional fees for legal, audit, and advisory services to increase as we become a public company since July 2021.

Our research and development expenses primarily consist of salaries, welfare and insurance expenses paid to our employees involved in the research and development activities, materials and supplies used in the development and testing of our new products, depreciation, and other miscellaneous expenses. Research and development expenses were 4.0%, 6.8% and 1.0% of our revenues for the years ended September 30, 2025, 2024 and 2023, respectively. We expect our research and development expenses, including, but not limited to, salaries and material expenses, to continue to increase in the foreseeable future, as we plan to develop new products and improving our production process.

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

The following table summarizes the results of our operations during the fiscal years ended September 30, 2025 and 2024, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such periods.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | For the Years Ended September 30, | For the Years Ended September 30, | For the Years Ended September 30, | For the Years Ended September 30, | For the Years Ended September 30, | For the Years Ended September 30, |
|  | **2025** | **2025** | 2024 | 2024 | Variance | Variance |
|  | **Amount** | **% of revenue** | Amount | % of revenue | Amount | % |
| **REVENUE** | $**18670684** | **100.0%** | $23844556 | 100.0% | $(5173872) | -21.7% |
| **COST OF REVENUE** | **(14791863)** | **79.2%** | (16734547) | 70.2% | 1942684 | -11.6% |
| **GROSS PROFIT** | **3878821** | **20.8%** | 7110009 | 29.8% | (3231188) | -45.4% |
| **OPERATIONG EXPENSES** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Selling expenses | **(436933)** | **2.3%** | (270579) | 1.1% | 166354 | 61.5% |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | **(4310910)** | **23.1%** | (3345240) | 14.0% | 965670 | 28.9% |
| &nbsp;&nbsp;&nbsp;Research and development expenses | **(754193)** | **4.0%** | (1620656) | 6.8% | (866463) | -53.5% |
| **Total operating expenses** | **(5502036)** | **29.5%** | (5236475) | 22.0% | 265561 | 5.1% |
| **LOSS (INCOME) FROM OPERATIONS** | **(1623215)** | **8.7%** | 1873534 | 7.9% | (3496749) | -186.6% |
| **OTHER INCOME (EXPENSE)** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest expenses, net | **(365313)** | **2.0%** | (302862) | 1.3% | 62451 | 20.6% |
| &nbsp;&nbsp;&nbsp;Other income (expenses), net | **278511** | **1.5%** | (854733) | 3.6% | (1133244) | -132.6% |
| **Total other expenses, net** | **(86802)** | **0.5%** | (1157595) | 4.9% | (1070793) | -92.5% |
| **(LOSS) INCOME BEFORE INCOME TAX PROVISION** | **(1710017)** | **9.2%** | 715939 | 3.0% | (2425956) | -338.8% |
| **PROVISION FOR INCOME TAXES** | **339414** | **1.8%** | 351179 | 1.5% | (11765) | -3.4% |
| **NET (LOSS) INCOME FROM CONTINUING OPERATIONS** | **(2049431)** | **11.0%** | 364760 | 1.5% | (2414191) | -661.9% |
| **NET LOSS FROM HELD FOR SALE** | **-** | **0.0%** | (19512) | 0.1% | 19512 | 100.0% |
| **NET (LOSS) INCOME** | $**(2049431)** | **11.0%** | $345248 | 1.4% | $(2394679) | -693.6% |

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*Revenues*

We currently produce our products for our customers in three broad product categories: fragrance compounds, health supplemental (powder drinks) and bioactive food ingredients.

Total revenues were $18,670,684 in fiscal year 2025, a decrease of $5,173,872, or approximately 21.7% as compared to $23,844,556 in fiscal year 2024. Specifically, the decrease in revenues was primarily attributable to (i) a decrease in sales volume of health supplemental powder drinks, which decreased by 49.2% from fiscal year 2024 to fiscal year 2025. The decrease in sales volume for health supplements products was largely due to reduced market demand and a strategic shift in our sales focus on fragrance compounds and bioactive food ingredients; (ii) We sold our products to 107 and 123 customers in fiscal year 2025 and 2024, respectively, representing a decrease in the number of customers of 13.0%.

The following table summarizes the breakdown of revenues by categories for the periods indicated.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | For the Years Ended September 30, | For the Years Ended September 30, | For the Years Ended September 30, | For the Years Ended September 30, | For the Years Ended September 30, | For the Years Ended September 30, |
|  | 2025 | 2025 | 2024 | 2024 | Change | Change |
|  | **Amount** | % | Amount | % | Amount | % |
| Fragrance compounds | $**8081897** | 43.3% | $4944475 | 20.7% | $3137422 | 63.5% |
| Health supplements (powder drinks) | **3326864** | 17.8% | 6740630 | 28.3% | (3413766) | -50.6% |
| Bioactive food ingredients | **7261923** | 38.9% | 12159451 | 51.0% | (4897528) | -40.3% |
| Total revenue | $**18670684** | 100.0% | $23844556 | 100.0% | $(5173872) | -21.7% |

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*Revenues from sales of our fragrance compound products*

Our fragrance compound products primarily include natural compounds extracted from plants for cosmetic applications, such as sclareolide and ambroxide, a sustainable replacement to ambergris, a secretion by sperm whales.

Revenues from sales of our fragrance compound products increased by 63.5% or $3,137,422 to $8,081,897 in fiscal year 2025 from $4,944,475 in 2024. During fiscal year ended September 30, 2025, in reaction to the fast changing market landscape, the Company had adjusted the selling price of fragrance compound products from $343 in 2024 to $176 in 2025, representing a downward adjust of 48.7%; consequently, the sales volume of fragrance compound products had increased 218.8% from 14,420 kg in 2024 to 45,966 kg in 2025.

 

*Revenues from sales of our health supplement (powder drinks) products*

Our health supplement (powder drinks) products primarily include Prebiotics series with benefits such as intestine rejuvenation and probiotic proliferation acceleration.

Revenues from sales of health supplement (powder drinks) products decreased by 50.6% or $3,413,766 to $3,326,864 in fiscal year 2025 from $6,740,630 in the same period of 2024. This decrease was mainly attributable to a 49.2% decrease in sales volume from 291,866 cases sold in fiscal year 2024 to 148,235 cases sold in the same period of 2025. The drop in sales volume reflects a decline in customer demand, likely influenced by shifting consumer preferences and changing market conditions. The decrease in revenue was also affected by our strategic decision to reallocate sales efforts and resources to focus on fragrance compounds and bioactive food ingredient segments.

*Revenues from sales of our bioactive food ingredient products*

Our bioactive food ingredient products primarily include fruit juice concentrates and extracts for a variety of health benefits that can't be sufficiently sourced from daily dietary intakes, such as fruit concentrates, apple polyphenol, rich in anti-oxidant and derived from apple, milk thistle extracts with benefits to protect liver and lower blood sugar, and phloretin, an anti-oxidant with skin discoloration effect extracted from leaves and roots of apple, pear and other fruits.

Revenues from sales of our bioactive food ingredient products decreased by 40.3% or $4,897,528 to $7,261,923 in fiscal year 2025 from $12,159,451 in the same period of 2024. During fiscal year ended September 30, 2025, in response to the increasingly fierce market competition, the Company downward adjusted 61.7% the selling price of bioactive food ingredients products from $35 in 2024 to $13 in 2025; as a result, the sale volume of bioactive food ingredients increased 55.7% from 351, 3000 kg in 2024 to 547,126 kg in 2025. This significant decrease in pricing was largely a result of our strategic shift to gain market share at the price of lower selling price.

*Cost of Revenues*

Our cost of revenues primarily consists of inventory costs (raw materials, labor, packaging cost, depreciation and amortization, freight costs and overhead) and business tax. Cost of revenues generally changes as our production costs change, which are affected by factors including the market price of raw materials, or labor productivity, and as the customer and product mix changes.

Our cost of revenues decreased by $1,942,684, or 11.6%, from $16,734,547 in fiscal year 2024 to $14,791,863 in the same period of 2025. The decrease in our cost of revenues was mainly attributable to the following: (i) a decrease of 60.1% and 21.5% in the cost of revenue of our health supplement products and bioactive food ingredients, respectively; (ii) which was partially offset by the increase in cost of revenue of our fragrance compound products, which increased by 80.4% in fiscal year 2025 as compared to fiscal year 2024.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | For the Years Ended September 30, | For the Years Ended September 30, | Change | Change |
|  | **2025** | 2024 | Amount | % |
| Cost of revenue - Fragrance compound products | $**6084306** | $3373097 | $2711209 | 80.4% |
| Cost of revenue - Health supplement (powder drinks) | **1838961** | 4609950 | (2770989) | -60.1% |
| Cost of revenue - Bioactive food ingredients | **6868596** | 8751500 | (1882904) | -21.5% |
| Total cost of revenue | $**14791863** | $16734547 | $(1942684) | -11.6% |

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*Cost of Revenues from sales of our fragrance compound products*

The 80.4% increase in cost of revenues for our fragrance compound products from $3,373,097 in fiscal year 2024 to $6,084,306 in the same period of 2025, mainly attributable to the following: (i) an increase in sales order by 218.8% from 45,966 kg sold in fiscal year 2025 to 14,420 kg sold in the same period of 2024, as a result of marketing compaign to boost customer demand; (ii) the decrease of unit cost from $234 in fiscal year 2024 to $132 in fiscal year 2025.

 

*Cost of Revenues from sales of our health supplement (powder drinks) products*

The 60.1% decrease in cost of revenues for our health supplement (powder drinks) products from $4,609,950 in fiscal year 2024 to $1,838,961 in the same period of 2025, mainly attributable to the following: (i) a decrease of 49.2% in sales volume from 291,866 cases sold in fiscal year 2024 to 148,235 cases sold in the same period of 2025 due to the changing consumer preferences and market dynamics that impacted overall sales. (ii) the weighted average unit cost for this product category also had a decrease of 25%, primarily due to lower overhead costs being allocated to these products as sales volume decreased.

*Cost of Revenues from sales of our bioactive food ingredient products*

The 21.5% decrease in cost of revenues for our bioactive food ingredient products from $8,751,500 in fiscal year 2024 to $6,868,596 in the same period of 2025, which was mainly attributable to the following: (i) a 55.7% increase sales volume, which increased by from 351,300 kg sold in fiscal year 2024 to 547,126 kg sold in the same period of 2025. The volume growth reflects strong market demand for our bioactive food ingredients, particularly in sectors emphasizing health and wellness (ii) the decrease in weighted average selling unit, which decreased by 60.1% in fiscal year 2025 as compared to fiscal year 2024, mainly attributable to our strategic shift toward a more cost-effect product mix in this product line.

*Gross Profit*

 

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| | | | | |
|:---|:---|:---|:---|:---|
|  | For the Years Ended September 30, | For the Years Ended September 30, | Change | Change |
|  | **2025** | 2024 | Amount | % |
| Gross profit - Fragrance compound products | $**1997591** | $1571378 | $426213 | 27.1% |
| Gross profit - Health supplement (powder drinks) | **1487903** | 2130680 | (642777) | -30.2% |
| Gross profit - Bioactive food ingredients | **393327** | 3407951 | (3014624) | -88.5% |
| Total gross profit | $**3878821** | $7110009 | $(3231188) | -45.4% |
| Gross profit margin | **20.8%** | 29.8% |  | -9.0% |

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Our gross profit in fiscal year 2025 decreased by $3,231,188, or 45.4% to $3,878,821, from $7,110,009 in the same period of 2024. Our gross margin decreased by 9.0% from 29.8% in fiscal year 2024 to 20.8% in the same period of 2025. The decrease in gross profit was due to (i) a decrease of 88.5% or $3,014,624 of gross profit realized from bioactive food ingredients product line, which was coupled with (ii) a 30.2% or $642,777 decrease in gross profit generated from health supplement product line; and was partially offset by (iii) an increase of 27.1% or $426,213 in gross profit created from fragrance compound products.

*Gross profit from sales of our fragrance compound products*

Gross profit of our fragrance compound products increased by $426,213 or 21.7% from $1,571,378 in fiscal year 2024 to $1,997,591 in the same period of 2025. The increase was primarily attributable to (i) an increase of 218.8% in sales volume from 14,420 kg sold in fiscal year 2024 to 45,966 kg sold in the same period of 2025 (ii) the increase was partially offset by the 48.7% decrease in average selling price. As a result of the above, gross margin for our fragrance compound products decreased by 7.1% from 31.8% in the fiscal year 2024 to 24.7% for the same period of 2025.

*Gross profit from sales of our health supplement (powder drinks) products*

Gross profit of our health supplement (powder drinks) products decreased by $642,777 or 30.2% from $2,130,680 in fiscal year 2024, to $1,487,903 in the same period of 2025. The decrease was primarily attributable to (i) a decrease of 49.2% in sales volume from 291,866 cases sold in fiscal year 2024 to 148,235 cases sold in the same period of 2025 (ii) the weighted average unit cost decrease by 21.4% from fiscal year 2024 to fiscal year 2025. As a result of the above, gross margin for our health supplement (powder drinks) products increased by 13.1% from 31.6% in the fiscal year ended September 30, 2024 to 44.7% for the same period of 2025.

 

*Gross profit from sales of our bioactive food ingredient products*

Gross profit of our bioactive food ingredient products decreased by $3,014,624 or 88.5%, from $3,407,951 in fiscal year 2024, to $393,327 in fiscal year 2025. This significant decrease was primarily due to (i) downward adjustment of selling price from $34.6 to $13.3; which was coupled with decrease in unit cost from $24.9 in fiscal 2024 to $12.6 in current fiscal year; and (ii) even through the sale volume of bioactive food ingredient had increased from 351,300 kg in twelve months ended September 30, 2024 to 547,126 kg in same period of 2025.

*Selling expenses*

 

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| | | | | |
|:---|:---|:---|:---|:---|
|  | For the Years Ended September 30, | For the Years Ended September 30, | Change | Change |
|  | **2025** | 2024 | Amount | % |
| (in US dollars, except percentage) |  |  |  |  |
| Selling expenses | $**436933** | $270579 | $166354 | 61.5% |
| as a percentage of revenue | **2.3%** | 1.1% |  | 1.2% |

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Selling expenses increased by $166,354, or 61.5%, from $270,579 in the twelve months ended September 30, 2024 to $436,933 for the same period of 2025, mainly attributable to (i) during fiscal year 2025 the Company issued 599,025 Class A ordinary shares as payment to an marketing consulting firm, with fair value of $1,340,000. The Company realized such selling expenses on a straight-line basis over the corresponding service period. During fiscal 2025, the Company incurred $304,352 share-based selling expenses; there was no transaction of similar nature during the same period of 2024.

*General and administrative expenses*

 

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| | | | | |
|:---|:---|:---|:---|:---|
|  | For the Years Ended September 30, | For the Years Ended September 30, | Change | Change |
|  | **2025** | 2024 | Amount | % |
| (in US dollars, except percentage) |  |  |  |  |
| General and administrative expenses | $**4310910** | $3345240 | $965670 | 28.9% |
| as a percentage of revenue | **23.1%** | 14.0% |  | 9.1% |

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General and administrative expenses increased by $965,670 or 28.9% from $3,345,240 in fiscal year 2024 to $4,310,910 in the same period of 2025, mainly attributable to (i) during twelve months ended September 30, 2025, the Company issued 468,885 Class A ordinary shares to professional service providers such as company attorney and other consultants, with fair value of $1,476,000. The Company realized such general and administrative expenses on a straight-line basis over the corresponding service period. During fiscal 2025, the Company incurred $606,247 share-based general and administrative expenses; (ii) an increase of business and travelling expenses, etc.

*Research and development ("R&D") expenses*

 

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| | | | | |
|:---|:---|:---|:---|:---|
|  | For the Years Ended September 30, | For the Years Ended September 30, | Change | Change |
|  | **2025** | 2024 | Amount | % |
| (in US dollars, except percentage) |  |  |  |  |
| Research and development expenses | $**754193** | $1620656 | $(866463) | -53.5% |
| as a percentage of revenue | **4.0%** | 6.8% |  | -2.8% |

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Research and development expenses decreased by $866,463, or 53.5%, from $1,620,656 in fiscal year 2024 to $754,193 in the twelve months ended September 30, 2025. During fiscal 2025, the Company outsourced a third-party consultant to develop two ongoing technology development projects, and issued 864,605 Class A ordinary shares with fair value of $2,400,000. The Company realized such research and development expenses on a straight-line basis over the corresponding service period. During fiscal 2025, the Company incurred $434,976 share-based research and development expenses; during the same period of 2024, there was no transaction of similar nature.

 

*Other income (expenses)*

Other income (expenses) primarily includes interest income generated from our bank deposits, interest expenses incurred on our borrowings from various banks and financial institutions, government subsidy income, rental income, allowance of acquisition deposit, income from technology transfer, unrealized foreign currency exchange gain due to our export sales, and investment income of short-term investment.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | For the Years Ended<br> September 30, | For the Years Ended<br> September 30, | Change | Change |
|  | **2025** | 2024 | Amount | % |
| (in US dollars, except percentage) |  |  |  |  |
| Interest expense, net | $**(365313)** | $(302862) | $62451 | 20.6% |
| Other income |  |  |  |  |
| Government subsidiaries | $**37256** | $63450 | $(26194) | -41.3% |
| Gain (loss) on disposal of subsidiaries | $**160927** | $- | $160927 | 100.0% |
| Other income (expenses) | $**80328** | $(918183) | $998511 | -108.7% |

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Interest expense, net, increased by $62,451, or approximately 20.6% in fiscal year 2025 as compared to twelve months ended September 30, 2024, mainly attributable to increased average loan balances we carried during fiscal year 2025 compared to the same period of 2024.

Government subsidy income primarily relate to local government's cash award to HNTEs based on their financial performance to promote entrepreneurship and stimulate local economies. In fiscal year 2024, we received $63,450 grants from the local government, compared to $37,256 that had received in fiscal year 2025.

During twelve months ended September 30 2025, the Company realized gain of $160,927 through disposal of subsidiaries, there was no income in the same nature during the same period of 2024. The Company also realized other income of $80,328 during fiscal year 2025, as compared to other expenses of $918,183 for the same period of 2024, mainly attributed to a $1 million provision for an acquisition deposit recorded during fiscal year 2024, due to the uncertainties surrounding the recovery of the deposit.

The overall changes in our other income (expenses) reflected the above major factors.

*Provision for Income Taxes*

Our provision for income taxes was $339,414 during fiscal year 2025, a decrease of $11,765, or 3.4% from $351,179 in the same period of 2024 due to our decreased taxable income. Under the EIT Law, domestic enterprises and FIEs are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on a case-by-case basis. EIT grants preferential tax treatment to "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.

*Net (loss) income attributable to Bon Natural Life Limited*

As a result of the foregoing, we realized net loss of $1,994,768 in fiscal 2025 as compared with our net income of $398,172 during the same period of 2024.

 ****

***Comparison of Results of Operations for the Years Ended September 30, 2024 and 2023***

The following table summarizes the results of our operations during the fiscal years ended September 30, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such periods.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** |
|  | **2024** | **2024** | **2023** | **2023** | **Variance** | **Variance** |
|  | **Amount** | **% of revenue** | **Amount** | **% of revenue** | **Amount** | **%** |
| REVENUE | $23844556 | 100.0% | $29522353 | 100.0% | (5677797) | (19.2)% |
| COST OF REVENUE | (16734547) | 70.2% | (20682326) | 70.1% | (3947779) | (19.1)% |
| GROSS PROFIT | 7110009 | 29.8% | 8840027 | 29.9% | (1730018) | (19.6)% |
| OPERATING EXPENSES |  |  |  |  |  |  |
| Selling expenses | 270579 | 1.1% | 293719 | 1.0% | (23140) | (7.9)% |
| General and administrative expenses | 3345240 | 14.0% | 2311378 | 7.8% | 1033862 | 44.7% |
| Research and development expenses | 1620656 | 6.8% | 298469 | 1.0% | 1322187 | 443.0% |
| Total operating expenses | 5236475 | 21.9% | 2903566 | 9.8% | 2332909 | 80.3% |
| INCOME FROM OPERATIONS | 1873534 | 7.9% | 5936461 | 20.1% | (4062927) | (68.4)% |
| OTHER INCOME (EXPENSE) |  |  |  |  |  |  |
| Interest expense, net | (302862) | (1.3)% | (228754) | (0.8)% | 74108 | 32.4% |
| Other expenses, net | (854733) | (3.6)% | (134840) | (0.5)% | 719893 | 533.9% |
| Total other income (expenses), net | (1157595) | (4.9)% | (363594) | (1.2)% | 794001 | 218.4% |
| INCOME BEFORE INCOME TAX PROVISION | 715939 | 3.0% | 5572867 | 18.9% | (4856928) | (87.2)% |
| PROVISION FOR INCOME TAXES | 351179 | 1.5% | 1002298 | 3.4% | (651119) | (65.0)% |
| NET INCOME FROM CONTINUING OPERATIONS | 364760 | 1.5% | 4570569 | 15.5% | (4205809) | (92.0)% |
| NET LOSS FROM HELD FOR SALE | (19512) | (0.1)% | (17887) | (0.1)% | 1625 | 9.1% |
| NET INCOME | $345248 | 1.4% | $4552682 | 15.4% | (4207434) | (92.4)% |

---

*Revenues*

We currently produce our products for our customers in three broad product categories: fragrance compounds, health supplemental (powder drinks) and bioactive food ingredients.

Total revenues were $23,844,556 in fiscal year 2024, a decrease of $5,677,797, or approximately 19.2% as compared to $29,522,353 in fiscal year 2023. Specifically, the decrease in revenues was primarily attributable to (i) a decrease in sales volume of fragrance compound and health supplemental powder drinks, which decreased by 73.8% and 22.2%, respectively from fiscal year 2023 to fiscal year 2024. The decrease in sales volume for these products was largely due to reduced market demand and a strategic shift in our sales focus on bioactive food ingredients, which we prioritized the promotion and sales and recorded an 8.0% increase in sales volume during the same period; (ii) We sold our products to 123 and 126 customers in fiscal year 2024 and 2023, respectively, representing a decrease of 17.3%. In terms of purchase order size, average purchase order by our customers decreased by 17.3% from approximately $193,858 per customer in fiscal year 2024 to approximately $234,304 per customer in fiscal year 2023.

The following table summarizes the breakdown of revenues by categories for the periods indicated.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Revenues** | **Revenues** | **Revenues** | **Revenues** | **Revenues** | **Revenues** |
|  | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** |
|  | **2024** | **2024** | **2023** | **2023** | **Change** | **Change** |
|  | **Amount** | **%** | **Amount** | **%** | **Amount** | **%** |
| Fragrance compounds | $4944475 | 20.7% | $14315810 | 48.5% | (9371335) | (65.5)% |
| Health supplements (powder drinks) | 6740630 | 28.3% | 8704468 | 29.5% | (1963838) | (22.6)% |
| Bioactive food ingredients | 12159451 | 51.0% | 6502075 | 22.0% | 5657376 | 87.0% |
| Total Revenue | $23844556 | 100.0% | $29522353 | 100.0% | (5677797) | (19.2)% |

---

*Revenues from sales of our fragrance compound products*

Our fragrance compound products primarily include natural compounds extracted from plants for cosmetic applications, such as sclareolide and ambroxide, a sustainable replacement to ambergris, a secretion by sperm whales.

Revenues from sales of our fragrance compound products decreased by 65.5% or $9,371,335 to $4,944,475 in fiscal year 2024 from $14,315,810 in the same period of 2023. This decrease was mainly attributable to the significant decrease in sales volume, which decreased to 14,420 kg in fiscal year 2024 from 55,038 kg in fiscal year 2023, a decrease of 40,618 kg, or 73.8%. The drop in market demand for fragrance compound products was the primary factor contributing to this decline, reflecting changes in customers preferences, economic conditions, or competitive pressures within the industry. Despite the volume decline, the average selling price of our fragrance compound products increased by 31.8% in fiscal year 2024 compared to fiscal year 2023. This increase was largely attributable to a shift in customer purchasing behavior, as customers gravitated toward higher-priced products. This trend in pricing partially mitigated the impact of reduced sales volume on overall revenue.

*Revenues from sales of our health supplement (powder drinks) products*

Our health supplement (powder drinks) products primarily include Prebiotics series with benefits such as intestine rejuvenation and probiotic proliferation acceleration.

Revenues from sales of health supplement (powder drinks) products decreased by 22.6 % or $1,963,838 to $6,740,630 in fiscal year 2024 from $8,704,468 in the same period of 2023. This decrease was mainly attributable to a 22.2% decrease in sales volume from 375,035 cases sold in fiscal year 2023 to 291,866 cases sold in the same period of 2023. The drop in sales volume reflects a decline in customer demand, likely influenced by shifting consumer preferences and changing market conditions. The decrease in revenue was also affected by our strategic decision to reallocate sales efforts and resources to focus on bioactive food ingredient segments.

*Revenues from sales of our bioactive food ingredient products*

Our bioactive food ingredient products primarily include fruit juice concentrates and extracts for a variety of health benefits that can't be sufficiently sourced from daily dietary intakes, such as fruit concentrates, apple polyphenol, rich in anti-oxidant and derived from apple, milk thistle extracts with benefits to protect liver and lower blood sugar, and phloretin, an anti-oxidant with skin discoloration effect extracted from leaves and roots of apple, pear and other fruits.

Revenues from sales of our bioactive food ingredient products increased by 87.0% or $5,657,376 to $12,159,451 in fiscal year 2024 from $6,502,075 in the same period of 2023. The increase was mainly attributable to an increase in sales volume from 325,384 kg in fiscal year 2023 to 351,300 kg in fiscal year 2024, representing a 8% or 25,916 kg increase. The sales volume growth reflects strong market demand for our bioactive food ingredients, particularly in products emphasizing health and wellness. Additionally, the average selling price for these products increased by 73.2% from fiscal year 2023 to fiscal year 2024. This significant rise in pricing was largely a result of our strategic shift toward a premium product mix, focusing on high-value offerings such as apple polyphenol.

 

*Cost of Revenues*

Our cost of revenues primarily consists of inventory costs (raw materials, labor, packaging cost, depreciation and amortization, freight costs and overhead) and business tax. Cost of revenues generally changes as our production costs change, which are affected by factors including the market price of raw materials, or labor productivity, and as the customer and product mix changes.

Our cost of revenues decreased by $3,947,779, or 19.1 %, from $16,734,547 in fiscal year 2024 to $20,682,326 in the same period of 2023. The decrease in our cost of revenues was mainly attributable to the following: (i) a decrease of 73.8.%, and 22.2% in the sales volume of our fragrance compound products and health supplement products, respectively (ii) partially offset by the increase of unit cost in our fragrance compound products and bioactive food ingredients products, which increased by 27.6% and 85.5%, respectively in fiscal year 2024 as compared to fiscal year 2023.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Years Ended <br> September 30,** | **For the Years Ended <br> September 30,** | **For the Years Ended <br> September 30,** | **For the Years Ended <br> September 30,** |
|  | **2024** | **2023** | **Change** | **Change** |
|  | **Amount** | **Amount** | **Amount** | **%** |
| Cost of revenues – Fragrance compound products | $3373097 | $10087289 | (6714192) | (66.6)% |
| Cost of revenues – Health supplement (powder drinks) | 4609950 | 6223508 | (1613558) | (25.9)% |
| Cost of revenues – Bioactive food ingredients | 8751550 | 4371529 | 4379971 | 100.2% |
| Total cost of revenues | $16734547 | $20682326 | (3947779) | (19.1)% |

---

*Cost of Revenues from sales of our fragrance compound products*

The 66.6% decrease in cost of revenues for our fragrance compound products from $10,087,289 in fiscal year 2023 to $3,373,097 in the same period of 2024, mainly attributable to the following: (i) a decrease in sales order by 73.8% from 55,038 kg sold in fiscal year 2022 to 14,420 kg sold in the same period of 2024, as a result of a reduced market demand and shifting of customer preferences ; (ii) the decrease was partially offset by the increase in average selling price, which increased by 31.8% in fiscal year 2024 as compared to fiscal year 2023, as a shift in customer preferences in higher-value products.

*Cost of Revenues from sales of our health supplement (powder drinks) products*

The 25.9% decrease in cost of revenues for our health supplement (powder drinks) products from $6,223,508 in fiscal year 2023 to $4,609,950 in the same period of 2024, mainly attributable to the following: (i) a decrease of 22.2% in sales volume from 375,035 cases sold in fiscal year 2023 to 291,866 cases sold in the same period of 2024 due to the changing consumer preferences and market dynamics that impacted overall sales. (ii) the weighted average unit cost for this product category also had a slightly decrease of 4.8%, primarily due to lower overhead costs being allocated to these products as sales volume decreased.

*Cost of Revenues from sales of our bioactive food ingredient products*

The 100.2% increase in cost of revenues for our bioactive food ingredient products from $4,371,529 in fiscal year 2023 to $8,751,500 in the same period of 2024, which was mainly attributable to the following: (i) a 8.0% increase sales volume, which increased by from 325,384 kg sold in fiscal year 2023 to 351,300 kg sold in the same period of 2024. The volume growth reflects strong market demand for our bioactive food ingredients, particularly in sectors emphasizing health and wellness (ii) the increase in weighted average selling price, which increase by 73.2% in fiscal year 2024 as compared to fiscal year 2023, mainly attributable to our strategic shift toward a premium product mix, focusing on high-value offerings such as apple polyphenol (iii) during fiscal year 2024, we strategically pivoted our sales focus towards high-value bioactive food ingredient products as a response to declining markets for fragrance compound products and health supplement (powder drinks) products.

 

*Gross Profit*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Years Ended <br> September 30,** | **For the Years Ended <br> September 30,** | **For the Years Ended <br> September 30,** | **For the Years Ended <br> September 30,** |
|  | **2024** | **2023** | **Change** | **Change** |
|  | **Amount** | **Amount** | **Amount** | **%** |
| Gross Profit – Fragrance compound products | $1571378 | $4230768 | $(2659390) | (62.9)% |
| Gross Profit – Health supplement (powder drinks) | 2130679 | 2480960 | (350281) | (14.1)% |
| Gross Profit – Bioactive food ingredients | 3407951 | 2130546 | 1277405 | 60.0% |
| Total Gross Profit | $7110008 | $8842274 | $(1732266) | (19.6)% |
| Gross Profit Margin | 29.8% | 29.9% |  | (0.1)% |

---

Our gross profit in fiscal year 2024 decreased by $1,732,266, or 19.6%, to $7,110,008, from $8,842,274 in the same period of 2023. Our gross margin decreased slightly by 0.1% from 29.9% in fiscal year 2023 to 29.8% in the same period of 2024. The decrease in gross profit was due to (i) an decrease of 73.8% in sales volume of fragrance compound products and 22.2% in sales volume of health supplement (powder drinks) products as discussed above; (ii) gross profit margin of our bioactive food ingredient, which decreased by 4.7% due to the increase in acost of revenue as discussed above.

*Gross profit from sales of our fragrance compound products*

Gross profit of our fragrance compound products decreased by $2,659,390 or 62.9% from $4,230,768 in fiscal year 2023 to $1,571,378 in the same period of 2024. The decrease was primarily attributable to (i) an decrease of 22.2% in sales volume from 375,035 cases sold in fiscal year 2023 to 291,866 cases sold in the same period of 2024 (ii) the decrease was partially offset by the increase in average selling price, which increased by 31.8% in fiscal year 2024 as compared to fiscal year 2023. As a result of the above, gross margin for our fragrance compound products increased slightly by 2.2% from 29.5% in fiscal year 2023, to 31.8% in the same period of 2024.

*Gross profit from sales of our health supplement (powder drinks) products*

Gross profit of our health supplement (powder drinks) products decreased by $350,281 or 14.1% from $2,480,960 in fiscal year 2023, to $2,130,679 in the same period of 2024. The decrease was primarily attributable to (i) a decrease of 22.2% in sales volume from 375,035 cases sold in fiscal year 2023 to 291,866 cases sold in the same period of 2024 (ii) the weighted average unit cost decrease by 4.8% from fiscal year 2023 to fiscal year 2024. As a result of the above, gross margin for our health supplement (powder drinks) products increased by 3.1% from 28.5% in fiscal year 2023, to31.6% in the same period of 2024.

*Gross profit from sales of our bioactive food ingredient products*

Gross profit of our bioactive food ingredient products increased by $1,277,405 or 60.0%, from $2,130,546 in fiscal year 2023, to $3,407,951 in fiscal year 2024. This increase was primarily due to (i) a 8.0% increase sales volume, which increased by from 325,384 kg sold in fiscal year 2023 to 351,300 kg sold in the same period of 2024 (ii) the increase in weighted average selling price, which increase by 73.2% in fiscal year 2024 as compared to fiscal year 2023, mainly attributable to our strategic shift toward a premium product mix, focusing on high-value offerings such as apple polyphenol. As a result of the above, gross margin for our bioactive food ingredient products decreased by 4.7% from32.8% in fiscal year 2023, to28.0% in the same period of 2024.

 

*Selling expenses*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the Years Ended <br> September 30,** | **For the Years Ended <br> September 30,** | **Change** | **Change** |
| <br>(in US dollars, except percentage) | **2024** | **2023** | **Amount** | **%** |
| Selling Expenses | $270579 | $293719 | (23140) | (7.9)% |
| as a percentage of revenues | 1.1% | 1.0% |  | 0.1% |

---

Selling expenses decreased by $23,140, or 7.9%, from $293,719 in fiscal year 2023, to $270,579 in the same period of 2024, mainly attributable to (i) a decrease of $10,658 in delivery expense as we reduced shipments of samples and marketing materials during fiscal year 2024 (ii) a decrease of $12,341 in salaries and social benefits as overall compensation decreased for the sales staff (iii) a decrease of $7,716 in insurance expenses driven by the decision to discontinue providing shipping insurance for customers. (iv) the decrease was offset by the increase of $7,076 in business travelling expenses, due to the increase efforts to support sales activities and customer engagement.

*General and administrative expenses*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the Years Ended <br> September 30,** | **For the Years Ended <br> September 30,** | **Change** | **Change** |
| <br>(in US dollars, except percentage) | **2024** | **2023** | **Amount** | **%** |
| General and Administrative Expenses | $3345240 | $2311378 | 1033862 | 44.7% |
| as a percentage of revenues | 14.0% | 7.8% |  | 6.2% |

---

General and administrative expenses increased by $1,033,862, or 44.7%, from $2,311,378 in fiscal year 2023, to $3,345,240 in the same period of 2024, mainly attributable to (i) an increase of $441,179 professional service fees such as legal consulting expense, financial consultant and etc., due to the engagement of more third-party consultants to support business operations and strategic initiatives during fiscal year 2024. (ii) an increase of $80,561 in business and travelling expenses, due to the increase effort to develop business (iii) the increase was offset by the decrease of $22,927 in salaries and social benefits as the overall compensation decreased.

*Research and development ("R&D") expenses*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the Years Ended <br> September 30,** | **For the Years Ended <br> September 30,** | **Change** | **Change** |
| <br>(in US dollars, except percentage) | **2024** | **2023** | **Amount** | **%** |
| Research and Development Expenses | $1620656 | 298469 | 1322187 | 443.0% |
| as a percentage of revenues | 6.8% | 1.0% |  | 5.8% |

---

Research and development expenses increased by $1,322,187, or approximately 443.0%, from $298,469 in fiscal year 2023, to $1,620,656 in the same period of 2024. The increase was mainly due to (i) the increase of $1,322,677 in outsourced R&D expenses, which was primarily attributable to investments in two ongoing technology development projects as we focus on leveraging external expertise to accelerate innovation (ii) an increase of $30,994 in salaries and social benefits as overall compensation increased iii) the increase is offset by a decrease of $55,230 in material used for R&D activities, indicating our shift toward outsource R&D projects that requiring less material input.

*Other income (expenses)*

Other income (expenses) primarily includes interest income generated from our bank deposits, interest expenses incurred on our borrowings from various banks and financial institutions, government subsidy income, rental income, allowance of acqusition deposit, income from technology transfer, unrealized foreign currency exchange gain due to our export sales, and investment income of short-term investment.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the Years Ended <br> September 30,** | **For the Years Ended <br> September 30,** | **Change** | **Change** |
| <br>(in US dollars, except percentage) | **2024** | **2023** | **Amount** | **%** |
| Interest expense, net | (302863) | $(228755) | 74108 | 32.4% |
| Other income, net |  |  |  |  |
| &nbsp;&nbsp;&nbsp;-Government grants | 63450 | 25415 | (38035) | 149.7% |
| &nbsp;&nbsp;&nbsp;-Others expenses | (918183) | (160255) | 757928 | 473.0% |

---

Interest expense, net, increased by $74,108, or approximately 32.4% in fiscal year 2024 as compared to 2023, mainly attributable to increased average loan balances we carried during fiscal year 2024 compared to the same period of 2023.

Government subsidy income primarily relate to local government's cash award to HNTEs based on their financial performance to promote entrepreneurship and stimulate local economies. In fiscal year 2024, we received $63,450 grants from the local government, compared to $25,415 that received in fiscal year 2023.

Other expenses were $918,183 for the fiscal year ended 2024, compared to $160,255 for the fiscal year ended 2023, representing an increase of $757,928, or 473.0%. The significant increase was primarily attributed to a $1 million provision for an acquisition deposit recorded during fiscal year 2024, due to the uncertainties surrounding the recovery of the deposit.

The overall changes in our other income (expenses) reflected the above major factors.

*Provision for Income Taxes*

Our provision for income taxes was $351,179 during fiscal year 2024, a decrease of $651,119, or 65.0% from $1,002,298 in the same period of 2023 due to our decreased taxable income. Under the EIT Law, domestic enterprises and FIEs are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on a case-by-case basis. EIT grants preferential tax treatment to "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 impact of the tax holidays noted above decreased foreign taxes by $234,101 and $667,258 for the years ended September 30, 2024 and 20223, respectively. The benefit of the tax holidays on net income per share (basic and diluted) $0.10 and $1.5 for the years ended September 30, 2024 and 2023, respectively.

*Net income*

As a result of the foregoing, our net income decreased to $345,248 in fiscal year 2024 from $4,552,682 in fiscal year 2023.

**B.** **Liquidity and Capital Resources** 

In assessing our liquidity, management monitors and analyzes our cash on-hand, our ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments. In May 2024, we closed a private offering of ordinary shares and received subscription proceeds of $5.6 million. In March 2025, we closed a public offering of Class A ordinary shares and received subscription proceeds of $10.7 million.

As of September 30, 2025, we had cash and restricted cash of $6.3 million and working capital of $19.5 million. For the year ended September 30, 2025, the Company realized approximately $2.0 million net loss.

As of September 30, 2025, we had outstanding bank loans of approximately $12.2 million from several PRC banks (including short-term bank loans of $10.2 million, current portion of long-term bank loans of approximately $1.1 million and long-term loan of $0.9 million). Management expects that it would be able to renew all of its existing bank loans upon their maturity based on past experience and our good credit history.

Based on the current operating plan, management believes that the above-mentioned measures, including cash and restricted cash of $6.3 million, collectively will provide sufficient liquidity for us to settle the tax liabilities with local government, to meet our future liquidity for at least 12 months from the date our consolidated financial statements for the year ended September 30, 2025 are issued.

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

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| | | | |
|:---|:---|:---|:---|
|  | For the Years Ended <br> September 30, | For the Years Ended <br> September 30, | For the Years Ended <br> September 30, |
|  | 2025 | 2024 | 2023 |
| Net cash provided by (used in) operating activities | 141115 | $(7723704) | $(616904) |
| Net cash used in investing activities | (9995938) | (15727) | (1185665) |
| Net cash provided by financing activities | 15454803 | 8755113 | 1155247 |
| Effect of exchange rate change on cash | 7388 | (469823) | (80788) |
| Net increase (decrease) in cash | 5607368 | 545859 | (728110) |
| Cash and restricted cash, beginning of year | 658610 | 112751 | 840861 |
| Cash and restricted cash, end of year | 6265978 | $658610 | $112751 |

---

*Cash flows from operating activities*

Net cash provided by operating activities during the year ended September 30, 2025 was $141,115, primarily attributable to net loss of $2,049,431 for the fiscal year ended September 30, 2025, an allowance of doubtful accounts of $693,822 due to the credit risk associated with the recovery of our accounts receivable, a share-based compensation of $1,393,573, primarily due to the increase of consulting services provided to the Company and settled through issuing Class A ordinary shares during the fiscal year 2025, an increase of $108,814 in accounts receivable due to increased customers payment period during the fiscal year 2025, an increased of $11,736,318 in prepaid expenses and other current assets.

Net cash used in operating activities during the year ended September 30, 2024 was $7,723,704, primarily attributable to net income of $345,248 for the year ended September 30, 2024, an allowance of doubtful accounts of $1,000,000 primarily due to the credit risk associated with the recovery of our acquisition deposit, a share-based compensation of $1,319,840 primarily due to the increase consultants that were engaged during the fiscal year 2024, an increase of $6,814,746 account receivable due to increased customers payment period during the fiscal year 2024, an increased of $5,586,209 in advance to suppliers primarily due to increased payment to secure raw material in the fiscal year 2024, and increase in prepaid expenses and other current assets of $7,400,216.

Net cash used in operating activities during the year ended September 30, 2023 was $616,904, primarily attributable to net income of $4,552,682 for the year ended September 30, 2023, our taxes payable increased by $1,561,946 primarily due to increased sales in the year ended September 30, 2023, an decrease of $2,081,376 account receivable due to increased account receivable settlement during the year ended September 30, 2023, and increase in advance to suppliers of $4,563,347 due to the advance payment to our suppliers and contractors.

*Cash flows from investing activities*

Net cash used in investing activities during the year ended September 30, 2025 was $9,995,938 which was primarily attributable to the capital expenditure on construction-in-progress of $4,364,757 and purchase of intangible assets of $5,624,354 during the fiscal year 2025.

Net cash used in investing activities during the year ended September 30, 2024 was $15,727 which was primarily attributable to the purchase of property and equipment of $7,047 in the continuing operations during the fiscal year 2024. Net cash used in investing activities from discontinued operations was $8,745 during fiscal year 2024.

Net cash used in investing activities during the year ended September 30, 2023 was $1,185,665 which was primarily attributable to the purchase of intangible assets during the year ended September 30, 2023 of $669,190 in continuing operations and net cash used in investing activities from discontinued operations of $460,125.

*Cash flows from financing activities*

Net cash provided by financing activities for the year ended September 30, 2025 was $15,454,803, primarily include proceeds from short-term loans of $12,020,797, which was partially offset by repayment of short-term loans of $7,290,399; proceeds from long-term loans of $970,537, which was partially offset by repayment of long-term loans of $340,102. As well as net proceeds from issuance of Class A ordinary shares in a public offering of $10,672,912.

Net cash provided by financing activities for the year ended September 30, 2024 was $8,755,113, primarily include net proceeds from issuance of our ordinary shares from private placement of $5,600,000, proceeds from short-term loans of $4,308,260, proceeds from long-term loans of $694,030, offset by repayment of long-term loans of $451,269, and repayment of short-term loans of $1,510,029.

Net cash provided by financing activities for the year ended September 30, 2023 was $1,155,247, primarily include net proceeds from issuance of our ordinary shares of $2,027,544, proceeds from short-term loans of $2,879,809, proceeds from long-term loans of $1,132,803, offset by repayment of long-term loans of $2,143,046, and repayment of short-term loans of $2,728,836.

**C.** **Research and Development, Patents and Licenses, Etc.** 

Please see Item 4.A. "Information on the Company—Business Overview—Intellectual Property," above.

**D.** **Trend Information** 

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended September 30, 2025 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

**E.** **Off-Balance Sheet Arrangements** 

As of September 30, 2025 and 2024, there were no off-balance sheet arrangements.

**F.** **Tabular Disclosure of Contractual Obligations** 

As of September 30, 2025, we had the following contractual obligations:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | Payment Due by Period | Payment Due by Period | Payment Due by Period | Payment Due by Period |
| Contractual obligations | Amount | Less than 1<br> year | 1 - 3<br> years | 3 - 5<br> years | More than 5<br> years |
| &nbsp;&nbsp;&nbsp;(1) Debt obligations | $12172653 | $11329838 | $842815 | $&nbsp;&nbsp;&nbsp;&nbsp; - | $&nbsp;&nbsp;&nbsp;&nbsp; - |
| &nbsp;&nbsp;&nbsp;(2) Lease obligations | $113398 | $76797 | $36601 | $- | $- |
| Total | $12286051 | $11406635 | $879416 | $- | $- |

---

(1) As of September 30, 2025, we had total $12.2 short-term and long-term borrowings from several PRC banks and financing institutions (including short-term loans of $10.2 million, current portion of long-term loans of $1.1 million and long-term loans of $0.9 million) (see Footnote 11 – Debt, for details).

(2) The operating lease include our factory space in Dali and office space in Xi'an.

**Legal proceedings**

We are currently not a party to any material legal or administrative proceedings. We may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business. Litigation or any other legal or administrative proceeding, regardless of the outcome, may result in substantial cost and diversion of our resources, including our management's time and attention.

**<u>Recent Accounting Pronouncements</u>**

The Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued.

In September 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The FASB is issuing the amendments to enhance the transparency and decision usefulness of income tax disclosures. Investors currently rely on the rate reconciliation table and other disclosures, including total income taxes paid, to evaluate income tax risks and opportunities. While investors find these disclosures helpful, they suggested possible enhancements to better (1) understand an entity's exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities, (2) assess income tax information that affects cash flow forecasts and capital allocation decisions, and (3) identify potential opportunities to increase future cash flows. The FASB decided that the amendments should be effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted. The adoption of this guidance did not have a material impact on its financial position, results of operations and cash flows.

In July 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in ASU 2023-07 improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in ASU 2023-07 improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The adoption of this guidance did not have a material impact on its financial position, results of operations and cash flows.

In March 2024, the FASB issued ASU 2024-01, "Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards" ("ASU 2024-01"), which intends to improve clarity and operability without changing the existing guidance. ASU 2024-01 provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718. Entities can apply the guidance either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the potential impact of adopting this guidance on its financial statements.

In November 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures" (Subtopic 220-40) ("ASU 2024-03"). The objective of ASU 2024-03 is to improve disclosures about a public entity's expenses, primarily through additional disaggregation of income statement expenses. In January 2025, the FASB further clarified the effective date of ASU 2024-03 with the issuance of Accounting Standards Update 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2025-01"). ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted and may be applied either on a prospective or retrospective basis. The Company is currently evaluating the impact ASU 2024-03 will have on its financial statement disclosures.

We do not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.

**G.** **Safe Harbor** 

See "Introductory Notes—Forward-Looking Information."

---

| | |
|:---|:---|
| **ITEM 6.** | **DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES** |

---

**A.** **Directors and Senior Management** 

The following table sets forth certain information regarding our directors and senior management, as well as employees upon whose work we are dependent, as of the date of this Annual Report.

Although the Board of Directors and management team for Bon Natural Life Limited has been recently constituted, each of our executive officers has been serving in an equivalent position with Xi'an App-Chem for some time as indicated in the footnotes to the table below. Our executive officers and directors and their ages as of the date of this Annual Report are as follows:

---

| | | | |
|:---|:---|:---|:---|
| Name | Age | Date Joined Bon Natural Life | Position(s) and Office(s) Held |
| Yongwei Hu | 54 | June, 2020<sup>(1)</sup> | Chief Executive Officer, Director, and Chairman |
| Xin Ma | 48 | November, 2025 | Chief Financial Officer |
| Yingchun Xue | 52 | June, 2020<sup>(2)</sup> | Chief Operating Officer |
| Wenjuan Chen | 46 | June, 2020<sup>(3)</sup> | Chief Marketing Officer |
| Jianli Liu | 66 | June, 2020<sup>(4)</sup> | Chief Technology Officer and Chief Scientist |
| Jianjun Gao | 54 | August, 2023 | Director |
| Jing Chen | 59 | October, 2023 | Director |
| Zhixiang Gao | 55 | October, 2023 | Director |
| Jing Liu | 47 | October 2024 | Director |

---

<sup>(1)</sup> Mr. Hu has led Xi'an App-Chem as President and Chairman of its board since April of 2006.

<sup>(2)</sup> Ms. Xue has served as Vice President of Xi'an App-Chem since 2011.

<sup>(3)</sup> Ms. Chen has served as Vice General Manager of Xi'an App-Chem since 2006.

<sup>(4)</sup> Mr. Liu has served as CTO and Chief Scientist of Xi'an App-Chem since 2006.

Set forth below is a brief description of the background and business experience of our executive officers and directors:

**Yongwei Hu** is our Chief Executive Officer and Chairman of our Board of Directors. From June 2000 to March 2006, Mr. Hu served as the department manager and Deputy Executive President of Shaanxi Iko Ostriches Co., Ltd. and Xi'an England Bioscience Co., Ltd. From January 1999 to May 2000, Mr. Hu served as the trainer-in-charge of Xi'an Synchrobit Co., Ltd. From July 1997 to December 1998, Mr. Hu served as trainer-in-charge of Ping An Insurance Group Xi'an Branch Office. From July 1993 to June 1997, Mr. Hu served as staff and department manager of Shaanxi Agriculture, Industry and Trade Co., Ltd. Mr. Hu obtained a bachelor's degree in Biology upon his graduation from Northwest University in 1993.

Mr. Hu has over twenty years of experience in natural products industry, an abundant industry network, and deep familiarity with the global natural health market, with extensive experience in the Big Health markets in Europe and the United States. In addition, he maintains sound business relations with well-known large enterprises in the health and pharmaceutical industry. We believe Mr. Hu's depth of experience and extensive industry knowledge make him well-positioned to continue leading the company forward.

**Xin Ma** is our Chief Financial Officer. Prior to joining the Company, Mr. Ma served as the Vice President of Finance at Zhejiang United Hydrogen Energy Technology Co., Ltd. (since March 2025). Mr. Ma has served in a variety of key leadership roles with companies including Easy Home Trading Co., Ltd. (March 2016 - March 2025 as Vice President), SkyPeople Juice Group Co., Ltd (Nasdaq: SPU) (January 2012 - November 2015 as Chief Financial Officer), Nanyang Universal Solar Technology Co., Ltd. (Nasdaq: UNSS) (January 2011- December 2011 as Chief Financial Officer), and Kangtan Biologic Technology (Shandong) Co., Ltd. (Nasdaq: KWBT) (February 2006 - December 2010 as Chief Financial Officer). He received his MSc. Finance and MSc. Management from the University of Leicester, UK and is a Certified Public Accountant in the state of Washington. Mr. Ma is also a Financial Risk Manager, certified by the Global Association of Risk Professionals as well as a member of Association of Chartered Certified Accountants.

**Yingchun Xue** is our Chief Operating Officer. Ms. Xue has worked for Xi'an App-Chem Bio (Tech) Co,. Ltd. since 2011 and is currently the Vice President in charge of research and development of plant extracts, quality control and procurement of trade products. A senior phytochemical engineer, Ms. Xue obtained a bachelor's degree in Applied Chemistry upon graduation from Nanjing University in 1994.

**Wenjuan Chen** is our Chief Marketing Officer. She has served as the Vice President of Xi'an App-Chem Bio (Tech) Co., Ltd. since 2006. Ms. Chen obtained a bachelor's degree after her study at Xi'an International Studies University from 2000 to 2004, and a master's degree of Business Administration after her study at Shaanxi Master of Business Administration Institute from 2016 to 2018.

**Jianli Liu** is our Chief Technology Officer and Chief Scientist. In this position, Mr. Liu is responsible for proposing new technical ideas and concepts for Xi'an App-Chem and guiding and supervising their execution. He is a professor and the Dean of the Traditional Chinese Medicine Department at Northwest University. He holds a Ph.D. from the University of Manchester. He is a member of the Royal Society of Chemistry, and a member of Chinese Patent Medicine Chapter of the China Association of Chinese Medicine. He has published over sixty academic papers, among which six have been included in SCI (Science Citation Index) journals and three have been included in EI (Engineering Index) journals.

His scientific achievements include the following:

● Mr.
 Liu was the first in the world to complete the biomimetic synthesis of anti-cancer drug 10-Hydroxycamptothecin, a research initiated
 in the early 1970s with no prior success in over two decades since its start.

● Mr.
 Liu proposed "A new subject, i.e., the state of trace elements - study of trace elements in traditional Chinese medicine",
 and for the first time used experiments to prove that most of the trace elements in traditional Chinese medicine exist in a bond
 state, and that the amount of free state existence is very minor. This finding was awarded the third prize of the Outstanding Paper
 of Natural Science in Shaanxi Province in 1993.

● The
 successful membrane introduction mass spectrometry and its application in detecting and measuring volatile organic matters in water
 bodies. This finding was awarded the second prize of Outstanding Scientific Research Achievements of Shaanxi Universities in 1989.

● The
 successful research of simple biomimetic synthesis of rutecarpine, an active ingredient in Chinese medicine fructus evodiae.

● The
 successful research of simple biomimetic synthesis of tryptanthrin, an active ingredient in Chinese medicine folium isatidis.

● The
 development and research of new drugs using tryptanthrin and rutecarpine.

● The
 successful in-depth study of biosynthesis of tryptanthrin in isatis indigotica fortune and its verification by extra addition of
 precursors.

**Jianjun Gao** has served as the member of our Board of Directors and Chairman of the Compensation Committee of the Board of Directors since August 2, 2023. Mr. Gao has served as a Bioinformatics Scientist at Progenesis Inc. since October of 2022. Prior to that, from September of 2020 to October of 2022, Mr. Gao served as Senior Bioinformatician, and director of the epigenetics team at The Lundquist Institute, Harbor-UCLA Medical Center. From September 2020 to July 2021, he was a Bioinformatics data scientist on contract with Genentech. From August 2019 to July 2020, Mr. Gao was a Biostatistics Scientist at Denovo Biopharma LLC. From September 2018 to August 2019, he was a scientist in computational biology at Takeda Pharmaceutical in San Diego. From January 2016 to August 2018, Mr. Gao was a Sr. Bioinformatician/ Data analyst, at the School of Medicine at the University of California San Diego. From August of 2014 to December of 2016, he was Bioinformatician in the Department of Human Genetics at the University of Chicago. Mr. Gao was also a data analyst at the Department of Public Health Sciences at the University of Chicago from September 2012 to August 2014. Mr. Gao was a Postdoctoral Fellow at the Epidemiology Branch, National Institutes of Environmental Health Sciences, National Institutes of Health from February of 2008 through September of 2012.

Mr. Gao holds a Ph.D in Neurobiology and Population Genetics from the Institute for Nutritional Sciences, Chinese Academy of Science, China, an M.S. in Genetics and Population Heath from the Institute of Population & Health, Northwest University, China, and a B.S. from the College of Life Science, Lanzhou University, China. Mr. Gao is an expert in genetic, genomic, epigenetic, and epidemiologic data analysis, and in data visualization and interpretation via bioinformatics pipelines. Bionformatics is an interdisciplinary field that develops methods and software tools for understanding biological data. Based on Mr. Gao's deep technical background, rich experience and industry resources in the field of biotechnology, he can help the company in the following aspects, 1). Assisting the company to keep up with the development of cutting-edge biotechnology; 2). Introducing and assisting the company to acquire high level technology and technical experts; 3). Assisting the company to obtain investment from professional investment institutions based on his rich resources of biotechnology investment institutions.

**Jing Chen** has served as the member of our Board of Directors and Chairman of the Audit Committee of the Board of Directors since October 2, 2023. Most recently, Ms. Chen served as the Vice President of Future FinTech Group Inc. (NASDAQ: FTFT) from November 2020 to April 2023. Previously, she served as the Chief Financial Officer of Future FinTech Group Inc. from May 2019 to November 2020. Ms. Chen served as the CFO of AnZhiXinCheng (Beijing) Technology Co., Ltd. from August 2018 to May 2019. Ms. Chen has also served as an independent director of Hello iPayNow (Beijing) Company Ltd. since April 2019. From August 2017 to July 2018, Ms. Chen served as the CFO of Beijing Logis Technology Development Co., Ltd., a company listed on The National Equities Exchange and Quotations Co., Ltd. of China which is a Chinese over-the-counter stock trading system. From June 2016 to July 2017, Ms. Chen served as the Group Chief Financial Officer of Beijing AnWuYou Food Co., Ltd. Ms. Chen served as the Chief Financial Officer of Beijing DKI Investment Management Co., Ltd. from August 2012 to May 2016. Ms. Chen's other professional experience includes service as the Chief Financial Officer of Yayi International Inc. (U.S. OTCBB: YYIN) from February 2010 to April 2012, the Chief Financial Officer of China Natural Gas, Inc. (NASDAQ GM: CHNG) from May 2009 to January 2010, and Chief Financial Officer of Origin Agritech Inc. (NASDAQ: SEED) from December 2007 to September 2008. She has also served as the Senior Director of Finance of iKang Healthcare Group Inc. (NASDAQ: KANG listed on April 9, 2014) from December 2006 to November 2007 and as the Director of Finance of Elong Inc. (NASDAQ: LONG) from August 2001 to November 2006.

Ms. Chen received a degree of Doctor of Business Administration from Victoria University, Neuchatel, Switzerland in March 2008 and an MBA degree from City University of Seattle, Washington, U.S. in April 2000. She graduated from Shanghai Institute of Tourism with a major in Accounting in July 1985 and completed her studies of Supervisory Skills in Hong Kong Polytechnic Institute in September 1993. She holds a Fellow Membership of CPA Australia (FCPA) and a Fellow Membership of the Association of International Accountants U.K. (FAIA). She is also a Member of the Chartered Institute of Management Accountants (CIMA), a Senior Member of the International Financial Management (SIFM) accredited by the Ministry of Human Resources and Social Security of PRC, and a Certified Internal Control Professional, as granted by Internal Control Institute (ICI).

**Zhixiang Gao** has served as the member of our Board of Directors and Chairman of the Nominating Committee of the Board of Directors since October 2, 2023. Mr. Gao has served as the Deputy General Manager of Xi'an Shiyuan Logistics Service Company Ltd. since February 2022. Mr. Gao served as the General Manager of Qixia (Xi'an) Technology Company Ltd. from January 2019 to February 2022. Mr. Gao served as the Associate Dean of Information Engineering at the Technology Research Institute of Shaanxi Normal University from January 2019 to February 2022. From July 2017 to December 2018, Mr. Gao worked for Eurasia University in Xi'an to take charge of the preparation work of the audit department and the improvement of the internal control system. From February 2009 to July 2017, Mr. Gao served as the General Manager of Logistics Group of Eurasia University in Xi'an. From May 2006 to July 2017, Mr. Gao served as the Director of the Procurement Department of Eurasia University in Xi'an. Mr. Gao served as the Chief of Finance of Sichuan Tianyi College from May 2004 to May 2005 and as the Finance Supervisor of Xi'an Oriental Hotel from July 1994 to July 2003.

Mr. Gao received a Master of Business Administration degree from Northwestern Polytechnical University, Xi'an, China in December 2015. He received a Bachelor of Economics and Management degree from Army and Communication College of Xi'an, China in September 2007. Mr. Gao graduated from Shaanxi Tourism Institute, a technical secondary school, with a major in Foreign-related Financial Administration in September 1994.

**Jing Liu** has served as the member of our Board of Directors since October 28, 2024. Since July 2004, Ms. Liu has been serving as a lecturer and engaging in teaching and scientific research in chemical engineering at Xi'an University of Science and Technology, Shaanxi, China. Ms. Liu has authored three academic papers and secured three patents.

Ms. Liu received a Bachelor's degree in Chemical Technology in July 2001, a Master's degree in Mineral Processing Engineering in July 2004, and a Doctoral degree in Mining Engineering in July 2017, all from Xi'an Science and Technology Institute, Shaanxi, China.

**B.** **Compensation** 

Set forth below is the compensation paid during the fiscal year ended September 30, 2025 for each of our executive officers and directors. The figures below represent the compensation paid by Xi'an App-Chem:

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| | | |
|:---|:---|:---|
| Name |  | 2025<br> Compensation |
| Yongwei Hu | US$ | 26620 |
| Wallace Lee (former Chief Financial Officer) | US$ | 46200 |
| Xin Ma | US$ |  |
| Yingchun Xue | US$ | 16638 |
| Wenjuan Chen | US$ | 16638 |
| Jianli Liu | US$ |  |
| Jianjun Gao | US$ | 12000 |
| Jing Chen | US$ | 18000 |
| Zhixiang Gao | US$ | 8319 |
| Jing Liu | US$ |  |

---

**C.** **Board Practices** 

Term of Office

Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our Articles.

Directors Service Contracts

Yongwei Hu serves under a Labor Contract with Xi'an App-Chem dated November 3, 2014. The term of his contract is open-ended. Mr. Hu is bound by a non-competition agreement for the three years following the end of his employment.

Jianjun Gao serves under a Director Service Agreement dated August 3, 2025 (the "Agreement"). Under the Agreement Mr. Gao receives a stipend of $1,000 per month for each month and a stock options of $12,000 per year for each year of service as director. The term of this Agreement is one year. Upon expiration of this Agreement, Agreement renewal should be based on negotiations between the Company and director.

Jing Chen serves under a Director Service Agreement dated October 3, 2025 (the "Agreement"). Under the Agreement, Ms. Chen receives a stipend of $1,500 per month for each month and stock options having a value of $12,000, to be determined by reference to the closing price of Company's stock on October 3, 2025. The term of this Agreement is one year. Upon expiration of this Agreement, Agreement renewal should be based on negotiations between the Company and director.

Zhixiang Gao serves under a Director Service Agreement dated October 3, 2025 (the "Agreement"). Under the Agreement, Mr. Gao receives a stipend of $1,000 per month for each month and stock options having a value of $12,000, to be determined by reference to the closing price of Company's stock on October 3, 2025. The term of this Agreement is one year. Upon expiration of this Agreement, Agreement renewal should be based on negotiations between the Company and director.

Jing Liu serves under a Director Service Agreement dated October 28, 2025 (the "Agreement"). Under the Agreement, Ms. Liu receives stock options having a value of $12,000, to be determined by reference to the closing price of Company's stock on October 27, 2025. The term of this Agreement is one year. Upon expiration of this Agreement, Agreement renewal should be based on negotiations between the Company and director.

Committees of the Board

We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted a charter for each of the three committees. Each committee's members and functions are described below.

***Audit Committee.*** Our audit committee consists of Jing Chen, Jianjun Gao, and Zhixiang Gao. Jing Chen is the chairman of our audit committee. We have determined that Jing Chen, Jianjun Gao, and Zhixiang Gao each satisfy the "independence" requirements of Rule 4200(a)(15) of The NASDAQ Stock Market, Inc., and meets the independence standards under Rule 10A-3 under the Exchange Act. We have determined that Jing Chen qualifies as an "audit committee financial expert." The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:

● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors;

● reviewing with the independent auditors any audit problems or difficulties and management's response;

● discussing the annual audited financial statements with management and the independent auditors;

● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures;

● reviewing and approving all proposed related party transactions;

● meeting separately and periodically with management and the independent auditors; and

● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

***Compensation Committee.*** Our compensation committee consists of Jing Chen, Jianjun Gao, and Zhixiang Gao. Jianjun Gao is the chairman of our compensation committee. We have determined that Jing Chen, Jianjun Gao, and Zhixiang Gao each satisfy the "independence" requirements of Rule 4200(a)(15) of The NASDAQ Stock Market, Inc. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee is responsible for, among other things:

● reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers;

● reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors;

● reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and

● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person's independence from management.

 ****

***Nominating and Corporate Governance Committee.*** Our nominating and corporate governance committee consists of Jing Chen, Jianjun Gao, and Zhixiang Gao. Zhixiang Gao is the chairman of our nominating and corporate governance committee. We have determined that Jing Chen, Jianjun Gao, and Zhixiang Gao each satisfy the "independence" requirements of Rule 4200(a)(15) of The NASDAQ Stock Market, Inc. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee is responsible for, among other things:

● selecting and recommending to the board nominees for election by the shareholders or appointment by the board;

● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity;

● making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and

● advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken.

Duties of Directors

Under Cayman Islands law, our directors have a duty to act honestly, in good faith and with a view to our best interests. Our directors also have a duty to exercise the care, diligence and skills that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association and the class rights vested thereunder in the holders of the shares. A shareholder may in certain circumstances have rights to damages if a duty owed by the directors is breached.

Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functions and powers of our board of directors include, among others:

● convening shareholders' annual general meetings and reporting its work to shareholders at such meetings;

● declaring dividends and distributions;

● appointing officers and determining the term of office of the officers;

● exercising the borrowing powers of our company and mortgaging the property of our company; and

● approving the transfer of shares in our company, including the registration of such shares in our share register.

Terms of Directors and Officers

Our officers are elected by and serve at the discretion of the board of directors. Our directors hold officer for one-year terms with automatic annual renewals, and will continue to hold office until such time as they resign, or until such time as they are removed from office by ordinary resolution of the shareholders or by the board. A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; or (ii) is found by our company to be or becomes of unsound mind.

**D.** **Employees** 

As of September 30, 2025, we had a total of 96 full time employees, of which 50 are in production, 5 are in quality control, 15 are in R&D, 15 are in sales and marketing, 6 are in finance and accounting, and 5 are in office and administration. We do not have any part time employees.

**E.** **Share Ownership** 

The following table sets forth, as of the date of this Annual Report, the beneficial ownership of our ordinary shares by each executive officer and director, by each person known by us to beneficially own more than 5% of our ordinary shares and by the executive officers and directors as a group. Except as otherwise indicated, all shares are owned directly and the percentage shown is based on 6,086,971 Class A ordinary shares and 2,041,839 Class B ordinary shares issued and outstanding.

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| | | | | |
|:---|:---|:---|:---|:---|
| Current Executive Officers and Directors | Amount of beneficial ownership | Percentage of beneficial ownership of Class A<br> Ordinary<br> Shares | Amount of beneficial ownership of Class B<br> Ordinary<br> Shares | Percentage of beneficial ownership of Class B<br> Ordinary<br> Shares |
| Yongwei Hu |  |  | 2004427 | 98.17% |
| Xin Ma |  |  |  |  |
| Yingchun Xue<sup>(1)</sup> | 120 | \* |  |  |
| Wenjuan Chen<sup>(1)</sup> | 80 | \* |  |  |
| Jianli Liu<sup>(2)</sup> | 549 | \* |  |  |
| Jianjuan Gao |  |  |  |  |
| Jing Chen |  |  |  |  |
| Zhixing Gao |  |  |  |  |
| Jing Liu |  |  | 37412 | 1.83% |
| Total of all current officers and directors: | 749 | \* | 2041839 | 100% |
| ≥5% Beneficial owner |  |  |  |  |
| \* Less than 1% |  |  |  |  |

---

<sup>1)</sup> Represents proportional beneficial ownership of shares held in Lavender Oil Limited, a company in which Yingchun Xue, our COO, Wenjuan Chen, our CMO, and Zhenzhao Li, our former CFO, are shareholders and hold the shares through their proportional ownership of Lavender Oil Limited.

<sup>(2)</sup> Represents proportional beneficial ownership of shares held in Hawthorn Fruit Limited, a company in which Jianli Liu is a shareholder and holds the shares through his proportional ownership of Hawthorn Fruit Limited.

As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have "beneficial ownership" of any security that such person has the right to acquire within 60 days after such date.

The persons named above have full voting and investment power with respect to the shares indicated. Under the rules of the Securities and Exchange Commission, a person (or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our ordinary shares.

Major Shareholders

Other than as set forth above, there are no beneficial owners of 5% or more of our voting securities. The company is not directly or indirectly owned or controlled by another corporation(s) or by any foreign government. There are no arrangements, known to us, the operation of which may at a subsequent date result in a change in control of the company.

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| | |
|:---|:---|
| **ITEM 7.** | **MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS** |

---

**A.** **Major Shareholders** 

Please refer to Item 6 "Directors, Senior Management and Employees—E. Share Ownership."

**B.** **Related Party Transactions** 

Except as set forth below, during our preceding three financial years up to the date of this Annual Report, there have been no transactions or loans between the company and (a) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, the company; (b) associates; (c) individuals owning, directly or indirectly, an interest in the voting power of the company that gives them significant influence over the company, and close members of any such individual's family; (d) key management personnel, that is, those persons having authority and responsibility for planning, directing and controlling the activities of the company, including directors and senior management of companies and close members of such individuals' families; and (e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence:

**(a) Due to related parties**

---

| | | | |
|:---|:---|:---|:---|
|  | Related party relationship | September 30, 2025 | September 30, 2024 |
| Yongwei Hu | Chief Executive Officer and Controlling shareholder of the Company | 130983 | 81089 |
| Wenhu Guo | Senior Management of the Company |  | 11543 |
| Sheying Wang | Senior Management of the Company | 3090 | 145634 |
| Yuantao Wang | 49% shareholder of Tianjin YHX |  | 18105 |
| Shaanxi Meishengyuan Biotechnology Co., Ltd | Mr Hu, the Chief Executive Officer and Controlling shareholder of the Company, is also the majority shareholder and director of this company | - | 43 |
| Total due to related parties |  | $134073 | $256414 |

---

As of September 30, 2025 and 2024, the balance of due to related parties was comprised of the Company's borrowings from related parties and was used for working capital during the Company's normal course of business. Such advance was non-interest bearing and due on demand.

(b) Due from related parties

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| | | | |
|:---|:---|:---|:---|
|  | Related party relationship | September 30, 2025 | September 30, 2024 |
| Wenjuan Chen | Senior Management of the Company | $6304 | $4700 |
| Lu Jiang | Employee of the Company | 757 | 768 |
| Jing Liu | Wife of the controlling shareholder | 76132 | 7709 |
| Wenhu Guo | Senior Management of the Company | 15624 | 10544 |
| Shujie Mou | Senior Management of Tianiin YHX |  | 2953 |
| Shaanxi Kangdi Health Technology Co., LTD | 25% shareholder of Xi'an Shanfang | 428572 | 6554 |
| Total due from related parties |  | $527389 | $33228 |

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As of September 30, 2025 and 2024, the balance of due from related parties was mainly comprised of advance to the employees for business purposes, such as investment receivable from one related party, unreimbursed expenses and petty cash, etc.

**(c) Loan guarantee provided by related parties**

In connection with the Company's short-term and long-term loans borrowed from PRC banks and other financial institutions, the Company's controlling shareholder, Mr. Yongwei Hu pledged his personal bank savings as collateral to safeguard the Company's borrowings from the banks and financial institutions. Mr. Yongwei Hu and his wife Ms. Jing Liu also jointly pledged their personal residence property to guarantee the Company's certain loans (see Note 11 to financial statements).

All related party transactions are in the normal course of business.

**C.** **Interests of Experts and Counsel** 

Not applicable.

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| | |
|:---|:---|
| **ITEM 8.** | **FINANCIAL INFORMATION** |

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**A.** **Consolidated Statements and Other Financial Information** 

***Financial Statements***

We have appended consolidated financial statements filed as part of this Annual Report. See Item 18 "Financial Statements."

***Legal Proceedings***

We are currently not a party to any material legal or administrative proceedings. We may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business. Litigation or any other legal or administrative proceeding, regardless of the outcome, may result in substantial cost and diversion of our resources, including our management's time and attention.

 ****

***Dividend Policy***

To date, we have not paid any cash dividends on our shares. As a Cayman Islands company, we may only declare and pay dividends except when the corporation is insolvent or would thereby be made insolvent or when the declaration or payment would be contrary to any restrictions contained in our Articles of Association. Dividends may be declared and paid out of surplus only; but in case there is no surplus, dividends may be declared or paid out of the net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year. We currently anticipate that we will retain any available funds to finance the growth and operation of our business and we do not anticipate paying any cash dividends in the foreseeable future. Additionally, our cash held in foreign countries may be subject to certain control limitations or repatriation requirements, limiting our ability to use this cash to pay dividends.

**B.** **Significant Changes** 

No significant change has occurred since the date of our consolidated financial statements filed as part of this Annual Report.

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| | |
|:---|:---|
| **ITEM 9.** | **THE OFFER AND LISTING** |

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**A.** **Offer and Listing Details** 

Our common stock is listed on the Nasdaq Capital Market and trade under the symbol "BON."

**Approximate Number of Holders of Our Securities**

On September 30, 2025, there were 11 shareholders of record of our common stock, including 9 Class A ordinary shareholders and 2 Class B ordinary shareholders. Certain of our securities are held in nominee or street name so the actual number of beneficial owners of our securities is greater than the number of record holders set forth above.

**B.** **Plan of Distribution** 

Not applicable.

**C.** **Markets** 

See our disclosures above under "A. Offer and Listing Details."

**D.** **Selling Shareholders** 

Not applicable.

**E.** **Dilution** 

Not applicable.

**F.** **Expenses of the Issue** 

Not applicable.

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| | |
|:---|:---|
| **ITEM 10.** | **ADDITIONAL INFORMATION** |

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**A.** **Share Capital** 

The capital of the Company is US$25,100,000 divided into (a) 1,000,000,000 Class A ordinary shares of a par value of US$0.025 each, (b) 50,000,000 Class B ordinary shares of a par value of US$0.001 each and (c) 50,000,000 preference shares of a par value of US$0.001 each. As of the date of this Annual Report, 6,086,971 Class A ordinary shares and 2,041,839 Class B ordinary shares issued and outstanding. All of our issued and outstanding ordinary shares are fully paid.

**B.** **Memorandum and Articles of Association** 

The following are summaries of material provisions of our memorandum and articles of association and of the Companies Law, insofar as they relate to the material terms of our ordinary shares.

***Objects of Our Company.*** Under our memorandum and articles of association, the objects of our company are unrestricted and we have the full power and authority to carry out any object not prohibited by the law of the Cayman Islands.

***Ordinary Shares.*** Our ordinary shares are issued in registered form and are issued when registered in our register of members. Our shareholders who are nonresidents of the Cayman Islands may freely hold and vote their shares.

***Preference Shares.*** Our preference shares may be issued in the future, upon approval of the Board of Directors, in one or more classes or series, with rights and limitations of each class or series with regard to voting, dividends, convertability, and other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations and restrictions, as may be designated by the Board for each designated class.

***Dividends.*** The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors. In addition, our shareholders may by ordinary resolution declare a final dividend, but no dividend may exceed the amount recommended by our directors. Our articles of association provide that dividends may be declared and paid out of our profits, realized or unrealized, or from any reserve set aside from profits which our board of directors determine is no longer needed. Dividends may also be declared and paid out of share premium account or any other fund or account which can be authorized for this purpose subject to the restrictions of the Companies Law, provided that in no circumstances may we pay a dividend if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business.

***Voting Rights.*** On a show of hands each shareholder is entitled to one vote or, on a poll, each shareholder is entitled to one vote for each ordinary share, voting together as a single class, on all matters that require a shareholder's vote. Voting at any shareholders' meeting is by show of hands unless a poll is demanded. A poll may be demanded by the chairman of such meeting or one or more shareholders present in person or by proxy entitled to vote and who together hold not less than 10 percent of the paid-up voting share capital for the Company.

A quorum required for a meeting of shareholders consists of one or more shareholders present and holding at least a majority of the votes of the issued and outstanding voting shares in our company. Shareholders may be present in person or by proxy or, if the shareholder is a legal entity, by its duly authorized representative. Shareholders' meetings may be convened by our board of directors on its own initiative or upon a request to the directors by shareholders holding no less than 10 percent of our paid voting share capital. Advance notice of at least seven days is required for the convening of our annual general shareholders' meeting and any other general shareholders' meeting.

An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the ordinary shares cast at a meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching to the outstanding ordinary shares at a meeting. A special resolution will be required for important matters such as a change of name or making changes to our memorandum and articles of association. Holders of the ordinary shares may, among other things, divide or combine their shares by ordinary resolution.

***Transfer of Ordinary Shares.*** Any of our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.

Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share whether or not it is fully paid up without assigning any reason for doing so.

If our directors refuse to register a transfer they shall, within two months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.

The registration of transfers may be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 45 days in any year as our board may determine.

***Liquidation.*** On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of shares), assets available for distribution among the holders of ordinary shares shall be distributed among the holders of our shares on a pro rata basis. If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholders proportionately.

***Calls on Shares and Forfeiture of Shares.*** Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice served to such shareholders at least 14 days prior to the specified time and place of payment. The shares that have been called upon and remain unpaid are subject to forfeiture.

***Redemption of Shares.*** The Companies Law and our articles of association permit us to purchase, redeem or otherwise acquire our own shares. In accordance with our articles of association and provided the necessary shareholders or board approval have been obtained, we may issue shares on terms that are subject to redemption, at our option or at the option of the holders of these shares, on such terms and in such manner, including out of capital, as may be determined by our board of directors.

***Variations of Rights of Shares.*** The rights attached to any class or series of shares (unless otherwise provided by the terms of issue of the shares of that class or series), whether or not our company is being wound-up, may be varied with the consent in writing of the holders of two-thirds of the issued shares of that class or series or with the sanction of a special resolution passed at a separate meeting of the holders of the shares of the class or series. The rights conferred upon the holders of the shares of any class issued shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking *pari passu* with such existing class of shares.

***Issuance of Additional Shares.*** Our memorandum and articles of association authorizes our board of directors to issue additional ordinary shares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares.

***Inspection of Books and Records.*** Holders of our ordinary shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records. However, we will provide our shareholders with annual audited financial statements. See "Where You Can Find Additional Information."

***Anti-Takeover Provisions.*** Some provisions of our memorandum and articles of association may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable, including a provision that limits the ability of shareholders to requisition and convene general meetings of shareholders, such that shareholders requisitioning a meeting must hold not less than ten percent of the paid up voting share capital of the company

However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our memorandum and articles of association for a proper purpose and for what they believe in good faith to be in the best interests of our company.

 ****

***Exempted Company.*** We are an exempted company with limited liability under the Companies Law. The Companies Law distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company that does not hold a license to carry on business in the Cayman Islands:

● does not have to file an annual return of its shareholders with the Registrar of Companies;

● is not required to open its register of members for inspection;

● does not have to hold an annual general meeting;

● is prohibited from making any invitation to the public in the Cayman Islands to subscribe for any of its securities;

● may issue negotiable or bearer shares or shares with no par value;

● may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);

● may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

● may register as an exempted limited duration company; and

● may register as a segregated portfolio company.

"Limited liability" means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company.

**C.** **Material Contracts** 

We have not entered into any material contracts other than in the ordinary course of business and other than those described in Item 4 "Information on the Company," Item 5 "Operating and Financial Review and Prospects—F. Tabular Disclosure of Contractual Obligations," Item 7 "Major Shareholders and Related Party Transactions," or filed (or incorporated by reference) as exhibits to this Annual Report or otherwise described or referenced in this Annual Report.

**D.** **Exchange Controls** 

***PRC Exchange Controls***

Regulations on Foreign Currency Exchange

Under the PRC Foreign Currency Administration Rules promulgated on January 29, 1996 and last amended on August 5, 2008 and various regulations issued by SAFE and other relevant PRC government authorities, payment of current account items in foreign currencies, such as trade and service payments, payment of interest and dividends can be made without prior approval from SAFE by following the appropriate procedural requirements. By contrast, the conversion of RMB into foreign currencies and remittance of the converted foreign currency outside the PRC for the purpose of capital account items, such as direct equity investments, loans and repatriation of investment, requires prior approval from SAFE or its local office.

On February 13, 2015, SAFE promulgated the Circular on Simplifying and Improving the Foreign Currency Management Policy on Direct Investment, effective from June 1, 2015, which cancels the requirement for obtaining approvals of foreign exchange registration of foreign direct investment and overseas direct investment from SAFE. The application for the registration of foreign exchange for the purpose of foreign direct investment and overseas direct investment may be filed with qualified banks, which, under the supervision of SAFE, may review the application and process the registration.

The Circular of the SAFE on Reforming the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise, or SAFE Circular 19, was promulgated on March 30, 2015 and became effective on June 1, 2015. According to SAFE Circular 19, a foreign-invested enterprise may, according to its actual business needs, settle with a bank the portion of the foreign exchange capital in its capital account for which the relevant foreign exchange bureau has confirmed monetary contribution rights and interests (or for which the bank has registered the account-crediting of monetary contribution). For the time being, foreign-invested enterprises are allowed to settle 100% of their foreign exchange capitals on a discretionary basis; a foreign-invested enterprise shall truthfully use its capital for its own operational purposes within the scope of business; where an ordinary foreign-invested enterprise makes domestic equity investment with the amount of foreign exchanges settled, the invested enterprise shall first go through domestic re-investment registration and open a corresponding Account for Foreign Exchange Settlement Pending Payment with the foreign exchange bureau (bank) at the place of registration. The Circular of the SAFE on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or SAFE Circular 16, was promulgated and became effective on June 9, 2016. According to SAFE Circular 16, enterprises registered in PRC may also convert their foreign debts from foreign currency into Renminbi on self-discretionary basis. SAFE Circular 16 provides an integrated standard for conversion of foreign exchange under capital account items (including but not limited to foreign currency capital and foreign debts) on self—discretionary basis, which applies to all enterprises registered in the PRC. SAFE Circular 16 reiterates the principle that Renminbi converted from foreign currency-denominated capital of a company may not be directly or indirectly used for purposes beyond its business scope and may not be used for investments in securities or other investment with the exception of bank financial products that can guarantee the principal within the PRC unless otherwise specifically provided. Besides, the converted Renminbi shall not be used to make loans for related enterprises unless it is within the business scope or to build or to purchase any real estate that is not for the enterprise own use with the exception for the real estate enterprise.

On January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or SAFE Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profits from domestic entities to offshore entities, including (i) banks must check whether the transaction is genuine by reviewing board resolutions regarding profit distribution, original copies of tax filing records and audited financial statements, and (ii) domestic entities must retain income to account for previous years' losses before remitting any profits. Moreover, pursuant to SAFE Circular 3, domestic entities must explain in detail the sources of capital and how the capital will be used, and provide board resolutions, contracts and other proof as a part of the registration procedure for outbound investment.

Regulations on Foreign Exchange Registration of Overseas Investment by PRC Residents

SAFE issued the Circular on Relevant Issues Relating to Domestic Resident's Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, which became effective in July 2014, to replace the Circular of the State Administration of Foreign Exchange on Issues Concerning the Regulation of Foreign Exchange in Equity Finance and Roundtrip Investments by Domestic Residents through Offshore Special Purpose Vehicles, to regulate foreign exchange matters in relation to the use of special purpose vehicles, or SPVs, by PRC residents or entities to seek offshore investment and financing or conduct round trip investment in China. SAFE Circular 37 defines a SPV as an offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the purpose of seeking offshore financing or making offshore investment, using legitimate onshore or offshore assets or interests, while "round trip investment" is defined as direct investment in China by PRC residents or entities through SPVs, namely, establishing foreign-invested enterprises to obtain the ownership, control rights and management rights. SAFE Circular 37 stipulates that, prior to making contributions into an SPV, PRC residents or entities be required to complete foreign exchange registration with SAFE or its local branch. In addition, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment in February 2015, which amended SAFE Circular 37 and became effective on June 1, 2015, requiring PRC residents or entities to register with qualified banks rather than SAFE in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.

PRC residents or entities who had contributed legitimate onshore or offshore interests or assets to SPVs but had not obtained registration as required before the implementation of the SAFE Circular 37 must register their ownership interests or control in the SPVs with qualified banks. An amendment to the registration is required if there is a material change with respect to the SPV registered, such as any change of basic information (including change of the PRC residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, and mergers or divisions. Failure to comply with the registration procedures set forth in SAFE Circular 37 and the subsequent notice, or making misrepresentation on or failure to disclose controllers of the foreign-invested enterprise that is established through round-trip investment, may result in restrictions being imposed on the foreign exchange activities of the relevant foreign-invested enterprise, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant PRC residents or entities to penalties under PRC foreign exchange administration regulations. See "Risk Factors—PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into our PRC subsidiary, limit our PRC subsidiary's ability to increase its registered capital or distribute profits to us, or may otherwise adversely affect us."

Regulations on Dividend Distribution

Distribution of dividends of foreign investment enterprises are mainly governed by the Foreign Investment Enterprise Law, issued in 1986 and amended in 2000 and 2016 respectively, and the Implementation Rules under the Foreign Investment Enterprise Law, issued in 1990 and amended in 2001 and 2014 respectively. Under these regulations, foreign investment enterprises in the PRC may distribute dividends only out of their accumulative profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, no less than 10% of the accumulated profits of the foreign investment enterprises in the PRC are required to be allocated to fund certain reserve funds each year unless these reserves have reached 50% of the registered capital of the enterprises. A PRC company is not permitted to distribute any profits until any losses from previous fiscal years have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year. Under our current corporate structure, our BVI holding company may rely on dividend payments from our wholly foreign-owned enterprises incorporated in China to fund any cash and financing requirements we may have. Limitation on the ability of our operating subsidiaries to make remittance to our WOFEs and on the ability of our WOFEs to pay dividends to us could limit our ability to access cash generated by the operations of those entities.

**E.** **Taxation** 

The following summary of the material Cayman Islands, PRC and U.S. federal income tax consequences of an investment in our ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this Annual Report, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in our ordinary shares, such as the tax consequences under U.S. state and local tax laws or under the tax laws of jurisdictions other than the Cayman Islands, the People's Republic of China and the United States.

**Cayman Islands Taxation**

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of, the Cayman Islands. No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies except those which hold interests in land in the Cayman Islands. The Cayman Islands is a party to a double tax treaty entered with the United Kingdom in 2010 but is otherwise not party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.

**People's Republic of China Taxation**

Under the *PRC Enterprise Income Tax Law* and its implementation rules, an enterprise established outside of the PRC with "de facto management body" within the PRC is considered a resident enterprise. The implementation rules define the term "de facto management body" as the body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. In April 2009, the SAT issued the *SAT Circular 82*, which provides certain specific criteria for determining whether the "de facto management body" of a PRC-controlled enterprise that is incorporated offshore is located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT's general position on how the "de facto management body" text should be applied in determining the tax resident status of all offshore enterprises. According to *SAT Circular 82*, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its "de facto management body" in China only if all of the following conditions are met: (i) the places where the senior management and senior management departments responsible for the daily production, operation and management of the enterprise perform their duties are mainly located within the territory of the PRC; (ii) decisions relating to the enterprise's financial matters (such as money borrowing, lending, financing and financial risk management) and human resource matters (such as appointment, dismissal and salary and wages) are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise's primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC. In addition, the SAT issued the *Bulletin of the State Administration of Taxation on Printing and Distributing the Administrative Measures for Income Tax on Chinese-controlled Resident Enterprises Incorporated Overseas (Trial Implementation)* in 2011, providing more guidance on the implementation of *SAT Circular 82*. This bulletin clarifies matters including resident status determination, post determination administration, and competent tax authorities. In January 2014, the SAT issued the *SAT Bulletin 9*. According to *SAT Bulletin 9*, a Chinese-controlled offshore incorporated enterprise that satisfies the conditions prescribed under the *SAT Circular 82* for being recognized as a PRC tax resident must apply for being recognized as a PRC tax resident to the competent tax authority at the place of registration of its main investor within the territory of China.

We believe that Bon Natural Life Limited is not a PRC resident enterprise for PRC tax purposes. Bon Natural Life Limited is not controlled by a PRC enterprise or PRC enterprise group and we do not believe that Bon Natural Life Limited meets all of the conditions above. Bon Natural Life Limited is a company incorporated outside the PRC. As a holding company, its key assets are its ownership interests in its subsidiaries, and its key assets are located, and its records (including the resolutions of its board of directors and the resolutions of its shareholders) are maintained, outside the PRC. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term "de facto management body."

If the PRC tax authorities determine that Bon Natural Life Limited is a PRC resident enterprise for enterprise income tax purposes, we would be subject to 25% enterprise income tax on its worldwide income. Furthermore, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders of our Shares. In addition, non-resident enterprise shareholders may be subject to a 10% PRC tax on gains realized on the sale or other disposition of ordinary shares, if such income is treated as sourced from within the PRC. Furthermore, if we are deemed a PRC resident enterprise, dividends payable to our non- resident individual shareholders and any gain realized on the transfer of ordinary shares by such shareholders may be subject to PRC tax at a rate of 20% unless a reduced rate is available under an applicable tax treaty. It is also unclear whether non- resident shareholders of Bon Natural Life Limited would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that Bon Natural Life Limited is treated as a PRC resident enterprise.

On February 3, 2015, the SAT issued the *SAT Bulletin 7*, which came into effect on February 3, 2015, but will also apply to cases where their PRC tax treatments are not yet concluded. Pursuant to *SAT Bulletin 7*, an ''indirect transfer'' of PRC assets, including a transfer of equity interests in an unlisted non-PRC holding company of a PRC resident enterprise, by non-PRC resident enterprises may be re-characterized and treated as a direct transfer of the underlying PRC assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise.

On October 17, 2017, the SAT issued the *SAT Bulletin 37*, which came into effect on December 1, 2017. The *SAT Bulletin 37* further clarifies the practice and procedure of the withholding of non-resident enterprise income tax.

Where a non-resident enterprise transfers taxable assets in China indirectly by disposing of the equity interests of an overseas holding company, which is an Indirect Transfer, the non-resident enterprise as either transferor or transferee, or the PRC entity whose equity is transferred, may report such Indirect Transfer to the relevant tax authority. Using a "substance over form" principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to penalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes. Our company may be subject to filing obligations or taxed if our company is transferor in such transactions, and we may be subject to withholding obligations if our company is transferee in such transactions, under *SAT Bulletin 7* and *SAT Bulletin 37*. For transfer of shares in our company by investors who are non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in the filing under *SAT Bulletin 7* and *SAT Bulletin 37*. As a result, we may be required to expend valuable resources to comply with *SAT Bulletin 7* and *SAT Bulletin 37* or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.

**United States Federal Income Tax Considerations**

The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of our ordinary shares by a U.S. Holder (as defined below) that acquires and holds our Shares as "capital assets" (generally, property held for investment) under the U.S. Internal Revenue Code of 1986, as amended, or the Code. This discussion is based upon existing U.S. federal tax law, which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service, the IRS, with respect to any U.S. federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary position. This discussion, moreover, does not address the U.S. federal estate, gift, Medicare, and alternative minimum tax considerations, or any state, local and non-U.S. tax considerations, relating to the ownership or disposition of our ordinary shares. The following summary does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or to persons in special tax situations such as:

● banks and other financial institutions;

● insurance companies;

● pension plans;

● cooperatives;

● regulated investment companies;

● real estate investment trusts;

● broker-dealers;

● traders in securities that elect to use a mark-to-market method of accounting;

● certain former U.S. citizens or long-term residents;

● tax-exempt entities (including private foundations);

● persons liable for alternative minimum tax;

● holders who acquire their ordinary shares pursuant to any employee share option or otherwise as compensation;

● investors that will hold their ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes;

● investors that have a functional currency other than the U.S. dollar;

● persons that actually or constructively own 10% or more of the total combined voting power of all classes of our voting stock; or

● partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding ordinary shares through such entities.

all of whom may be subject to tax rules that differ significantly from those discussed below.

Each U.S. Holder is urged to consult its tax advisor regarding the application of U.S. federal tax law to its particular circumstances, and the state, local, non-U.S. and other tax considerations of the ownership and disposition of our ordinary shares.

**General**

For purposes of this discussion, a "U.S. Holder" is a beneficial owner of our ordinary shares that is, for U.S. federal income tax purposes:

● an individual who is a citizen or resident of the United States;

● a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in, or organized under the law of the United States or any state thereof or the District of Columbia;

● an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or

● a trust (A) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a U.S. person under the Code.

If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding our ordinary shares and their partners are urged to consult their tax advisors regarding an investment in our ordinary shares.

**Passive Foreign Investment Company Considerations**

A non-U.S. corporation, such as our company, will be classified as a PFIC, for U.S. federal income tax purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of "passive" income or (ii) 50% or more of the value of its assets (determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income. For this purpose, cash and assets readily convertible into cash are categorized as a passive asset and the company's goodwill and other unbooked intangibles are taken into account. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, more than 25% (by value) of the stock.

Although the law in this regard is not entirely clear, we treat our consolidated subsidiary as being owned by us for U.S. federal income tax purposes because we control its management decisions and are entitled to substantially all of the economic benefits associated with this entity. As a result, we consolidate its results of operations in our consolidated U.S. GAAP financial statements. If it were determined, however, that we are not the owner of the consolidated subsidiary for U.S. federal income tax purposes, we would likely be treated as a PFIC for the current taxable year and any subsequent taxable year.

Assuming that we are the owner of the subsidiary for U.S. federal income tax purposes, and based upon our current and projected income and assets, and projections as to the value of our assets, based in part on the market value of our Shares, we do not expect to be a PFIC for the current taxable year or the foreseeable future. While we do not anticipate being or becoming a PFIC in the current or foreseeable taxable years, no assurance can be given in this regard because the determination of whether we will be or become a PFIC is a factual determination made annually that will depend, in part, upon the composition of our income and assets. Fluctuations in the market price of our Shares may cause us to be classified as a PFIC for the current or future taxable years because the value of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined by reference to the market price of our Shares from time to time (which may be volatile). In estimating the value of our goodwill and other unbooked intangibles, we have taken into account the cash proceeds and our market capitalization following our initial public offering. If our market capitalization subsequently declines, we may be or become classified as a PFIC for the current taxable year or future taxable years. Under circumstances where our revenue from activities that produce passive income significantly increase relative to our revenue from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming classified as a PFIC may substantially increase.

If we are classified as a PFIC for any year during which a U.S. Holder holds our ordinary shares, the PFIC rules discussed below under "Passive Foreign Investment Company Rules" generally will apply to such U.S. Holder for such taxable year, and unless the U.S. Holder makes certain elections, will apply in future years even if we cease to be a PFIC.

The discussion below under "Dividends" and "Sale or Other Disposition" is written on the basis that we will not be or become classified as a PFIC for U.S. federal income tax purposes. The U.S. federal income tax rules that apply generally if we are treated as a PFIC are discussed below under "Passive Foreign Investment Company Rules."

**Dividends**

Subject to the discussion below under "Passive Foreign Investment Company Rules," any cash distributions (including the amount of any PRC tax withheld) paid on our ordinary shares out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend income on the day actually or constructively received by the U.S. Holder. Because we do not intend to determine our earnings and profits on the basis of U.S. federal income tax principles, any distribution we pay will generally be treated as a "dividend" for U.S. federal income tax purposes. Dividends received on our ordinary shares will not be eligible for the dividends received deduction allowed to corporations. A non-corporate U.S. Holder will be subject to tax at the lower capital gain tax rate applicable to "qualified dividend income," provided that certain conditions are satisfied, including that (1) our Shares are readily tradeable on an established securities market in the United States, or, in the event that we are deemed to be a PRC resident enterprise under the PRC tax law, we are eligible for the benefit of the United States-PRC income tax treaty, (2) we are neither a PFIC nor treated as such with respect to a U.S. Holder (as discussed below) for the taxable year in which the dividend was paid and the preceding taxable year, and (3) certain holding period requirements are met. We expect our Shares will be readily tradeable on an established securities market in the United States. There can be no assurance, however, that our Shares will be considered readily tradeable on an established securities market in later years.

In the event that we are deemed to be a PRC resident enterprise under the PRC Enterprise Income Tax Law, a U.S. Holder may be subject to PRC withholding taxes on dividends paid on our ordinary shares. We may, however, be eligible for the benefits of the United States-PRC income tax treaty. If we are eligible for such benefits, dividends we pay on our ordinary shares would be eligible for the reduced rates of taxation described in the preceding paragraph.

Dividends will generally be treated as income from foreign sources for U.S. foreign tax credit purposes and will generally constitute passive category income. Depending on the U.S. Holder's individual facts and circumstances, a U.S. Holder may be eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any foreign withholding taxes imposed on dividends received on our ordinary shares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction, for U.S. federal income tax purposes, in respect of such withholding, but only for a year in which such holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex and their outcome depends in large part on the U.S. Holder's individual facts and circumstances. Accordingly, U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

**Sale or Other Disposition**

Subject to the discussion below under "Passive Foreign Investment Company Rules," a U.S. Holder will generally recognize capital gain or loss upon the sale or other disposition of ordinary shares in an amount equal to the difference between the amount realized upon the disposition and the holder's adjusted tax basis in such ordinary shares. Any capital gain or loss will be long-term if the ordinary shares have been held for more than one year and will generally be U.S.-source gain or loss for U.S. foreign tax credit purposes. In the event that gain from the disposition of the ordinary shares is subject to tax in the PRC, such gain may be treated as PRC source gain under the United States-PRC income tax treaty. The deductibility of a capital loss may be subject to limitations. U.S. Holders are urged to consult their tax advisors regarding the tax consequences if a foreign tax is imposed on a disposition of our ordinary shares, including the availability of the foreign tax credit under their particular circumstances.

**Passive Foreign Investment Company Rules**

If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our ordinary shares, and unless the U.S. Holder makes a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules on (i) any excess distribution that we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than 125 percent of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder's holding period for the ordinary shares), and (ii) any gain realized on the sale or other disposition of ordinary shares. Under the PFIC rules:

● the excess distribution or gain will be allocated ratably over the U.S. Holder's holding period for the ordinary shares;

● the amount allocated to the current taxable year and any taxable years in the U.S. Holder's holding period prior to the first taxable year in which we are classified as a PFIC (each, a "pre-PFIC year"), will be taxable as ordinary income;

● the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year; and

● the interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year.

If we are a PFIC for any taxable year during which a U.S. Holder holds our ordinary shares and any of our subsidiaries is also a PFIC, such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. U.S. Holders are urged to consult their tax advisors regarding the application of the PFIC rules to any of our subsidiaries.

As an alternative to the foregoing rules, a U.S. Holder of "marketable stock" in a PFIC may make a mark-to-market election with respect to such stock, provided that such stock is regularly traded. For those purposes, our ordinary shares are treated as marketable stock due to their listing on the Nasdaq Capital Market. We anticipate that our Shares should qualify as being regularly traded, but no assurances may be given in this regard. If a U.S. Holder makes this election, the holder will generally (i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of Shares held at the end of the taxable year over the adjusted tax basis of such Shares and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the Shares over the fair market value of such Shares held at the end of the taxable year, but such deduction will only be allowed to the extent of the amount previously included in income as a result of the mark-to-market election. The U.S. Holder's adjusted tax basis in the Shares would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes a mark-to-market election in respect of a corporation classified as a PFIC and such corporation ceases to be classified as a PFIC, the holder will not be required to take into account the gain or loss described above during any period that such corporation is not classified as a PFIC. If a U.S. Holder makes a mark-to-market election, any gain such U.S. Holder recognizes upon the sale or other disposition of our Shares in a year when we are a PFIC will be treated as ordinary income and any loss will be treated as ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously included in income as a result of the mark-to-market election.

Because a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the PFIC rules with respect to such U.S. Holder's indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes.

We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs described above.

If a U.S. Holder owns our ordinary shares during any taxable year that we are a PFIC, the holder must generally file an annual IRS Form 8621. You should consult your tax advisors regarding the U.S. federal income tax consequences of owning and disposing of our ordinary shares if we are or become a PFIC.

**Information Reporting**

Certain U.S. Holders may be required to report information to the IRS with respect to the beneficial ownership of our ordinary shares. These rules also impose penalties if a U.S. Holder is required to submit such information to the IRS and fails to do so.

In addition, U.S. Holders may be subject to information reporting to the IRS with respect to dividends on and proceeds from the sale or other disposition of our ordinary shares. Each U.S. Holder is advised to consult with its tax advisor regarding the application of the U.S. information reporting rules to their particular circumstances.

**F.** **Dividends and Paying Agents** 

Not applicable.

**G.** **Statement by Experts** 

Not applicable.

**H.** **Documents on Display** 

We have filed this Annual Report on Form 20-F with the SEC under the Exchange Act. Statements made in this Annual Report as to the contents of any document referred to are not necessarily complete. With respect to each such document filed as an exhibit to this Annual Report, reference is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed qualified in its entirety by such reference.

We are subject to the informational requirements of the Exchange Act as a foreign private issuer and file reports and other information with the SEC. Reports and other information filed by us with the SEC including this Annual Report, may be inspected and copied at the public reference room of the SEC at 100 F Street, N.E., Washington D.C. 20549. You can also obtain copies of this Annual Report by mail from the Public Reference Section of the SEC, 100 F. Street, N.E., Washington D.C. 20549, at prescribed rates. Additionally, copies of this material may be obtained from the SEC's Internet site at http://www.sec.gov. The SEC's telephone number is 1-800-SEC-0330. In accordance with NASDAQ Stock Market Rule 5250(d).

As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

**I.** **Subsidiary Information** 

Please see Item 4.a, Information on the Company – History and Development of the Company, above.

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|:---|:---|
| **ITEM 11.** | **QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK** |

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**Foreign Exchange Risk**

Foreign currency risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. Substantially all of our revenue-generating transactions, and a majority of our expense-related transactions, are denominated in Renminbi, which is the functional currency of our operations. We do not hedge against currency risk.

The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions. To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would reduce the Renminbi amount we receive from the conversion. Conversely, if we decide to convert Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares, servicing outstanding debts, or for other business purposes, appreciation of the U.S. dollar against the Renminbi would reduce the U.S. dollar amounts available to us.

Our functional currency is the RMB, and our financial statements are presented in U.S. dollars. The RMB depreciated by 3.8% for the year ended September 30, 2024 and depreciated 0.8% for the year ended September 30, 2025. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. The change in the value of the RMB relative to the U.S. dollar may affect our financial results reported in the U.S. dollar terms without giving effect to any underlying changes in our business or results of operations. Currently, our assets, liabilities, revenues and costs are denominated in RMB.

**Interest Rate Risk**

We are not currently exposed to interest rate risk. We do not own any interest-bearing instruments and our interest-bearing debt carries a fixed rate.

**Market Price Risk**

We are not currently exposed to commodity price risk or market price risk.

**Inflation**

Inflation does not materially affect our business or the results of our operations.

**Seasonality**

Seasonality does not materially affect our business or the results of our operations.

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|:---|:---|
| **ITEM 12.** | **DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES** |

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**A.** **Debt Securities** 

Not applicable.

**B.** **Warrants and Rights** 

As of the date of this Annual Report, we had the following warrants and options outstanding:

● Options issued to our directors as follows:

○ Options to purchase Class A ordinary shares of the Company, par value $0.025 per share, at an exercise price of $0.25 per share. The stock options issued to the Director shall have a value of $12,000, to be determined by reference to the closing price of Company's stock on August 3, 2023.

○ Options to purchase Class A ordinary shares of the Company, par value $0.025 per share, at an exercise price of $0.25 per share. The stock options issued to the Director shall have a value of $12,000, to be determined by reference to the closing price of Company's stock on August 1, 2025.

○ Options to purchase Class A ordinary shares of the Company, par value $0.025 per share, at an exercise price of $0.025 per share. The stock options issued to the Director shall have a value of $12,000, to be determined by reference to the closing price of Company's stock on October 3, 2025.

○ Options to purchase Class A ordinary shares of the Company, par value $0.025 per share, at an exercise price of $0.025 per share. The stock options issued to the Director shall have a value of $12,000, to be determined by reference to the closing price of Company's stock on October 3, 2025.

○ Options to purchase Class A ordinary shares of the Company, par value $0.025 per share, at an exercise price of $0.25 per share. The stock options issued to the Director shall have a value of $12,000, to be determined by reference to the closing price of Company's stock on October 28, 2025.

● Warrants issued to investors as follows:

○ Warrants to purchase a total of 333,333 Class A ordinary shares of the Company, par value $0.025 per share, at an exercise price of $36 per share.

**C.** **Other Securities** 

Not applicable.

**D.** **American Depositary Shares** 

We do not have any American Depositary Shares.

**PART II**

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| **ITEM 13.** | **DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES** |

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None.

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| **ITEM 14.** | **MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS** |

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None.

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|:---|:---|
| **ITEM 15.** | **CONTROLS AND PROCEDURES** |

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**A.** **Disclosure Controls and Procedures** 

Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of the Company's disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act, as of September 30, 2025.

The term "disclosure controls and procedures" as defined in Rules 13a-15(e) and 15d-15(e) means controls and other procedures of the Company that are designed to ensure that information required to be disclosed by a company in reports, such as this Annual Report, that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of September 30, 2025, due to material weaknesses in our internal control over financial reporting related to a lack of accounting staff and resources with appropriate knowledge of generally accepted accounting principles in the United States ("U.S. GAAP") and SEC reporting and compliance requirements

Following the identification of the material weaknesses and control deficiencies, we have taken remedial measures including (i) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework; (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel; and (iii) setting up an internal audit function as well as engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal control.

As of the date of this Annual Report, we have not fully addressed the above-referenced weaknesses. However, we have made progress in implementing remedial measures, specifically:

● We have hired two additional mid-level financial staff in late 2020, one of whom has been staffed in financial reporting unit and the other in internal control department. In addition, we appointed Mr. Xin Ma as our CFO on November 12, 2025, who has extensive financial and tax experience in public companies in the U.S. with U.S. Certified Public Accountant qualifications.

● Since September 30, 2020, the management team, including our chief executive officer, Mr. Yongwei Hu and other management team members of our PRC subsidiary and its subsidiaries in the PRC have held internal meetings, discussions, trainings, and seminars on a monthly basis to review our financial statements and operational performance and to identify areas to improve our internal control procedures.

● We have appointed directors and established an audit committee;

Management, under the oversight of the Board and Audit Committee, continues to evaluate contingency plans in response to potential changes in regulatory and audit inspection environments.

**B.** **Management's Annual Report on Internal Control Over Financial Reporting** 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of our consolidated financial statements in accordance with GAAP. Our accounting policies and internal controls over financial reporting, established and maintained by management, are under the general oversight of the Board's audit committee.

Our internal control over financial reporting includes those policies and procedures that:

● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

Management assessed our internal control over financial reporting as of September 30, 2025. The standard measures adopted by management in making its evaluation are the measures in the Internal-Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on management's assessment using the COSO criteria, our CEO and CFO concluded that our internal control over financial reporting as of September 30, 2025 was not effective. We have taken, and are taking, certain actions to remediate the material weaknesses.

**C.** **Attestation Report of the Registered Public Accounting Firm** 

Because the Company is a non-accelerated filer, this Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC where domestic and foreign registrants that are non-accelerated filers, which we are, and "emerging growth companies," which we also are, are not required to provide the auditor attestation report.

**D.** **Changes in Internal Controls over Financial Reporting** 

Other than as described above, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the year ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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| **ITEM 16A.** | **AUDIT COMMITTEE FINANCIAL EXPERT** |

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The audit committee of our board of directors currently consists of three members, Jing Chen, Jianjun Gao, and Zhixiang Gao. Our board of directors has determined that all of our audit committee members are "independent" under the Exchange Act and have the requisite financial knowledge and experience to serve as members of our audit committee. In addition, our board of directors has determined that Jing Chen is an "audit committee financial expert" as defined in Item 16A of the Instructions to Form 20-F and meets Nasdaq's financial sophistication requirements due to his current and past experience in various companies in which he was responsible for, amongst others, the financial oversight responsibilities.

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| **ITEM 16B.** | **CODE OF ETHICS** |

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We have adopted a Code of Business Conduct and Ethics (the "Code of Ethics") that applies to all of the directors, officers and employees of the Company and its subsidiaries, including our principal executive officer, principal financial officer and principal accounting officer. The Code of Ethics addresses, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the federal securities laws, confidentiality, trading on inside information, and reporting of violations of the code. A copy of the Code of Ethics is filed as Exhibit 14.1 to our amended registration statement on Form F-1 filed on May 14, 2021. During the fiscal year ended September 30, 2025, there were no waivers of our Code of Ethics.

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|:---|:---|
| **ITEM 16C.** | **PRINCIPAL ACCOUNTANT FEES AND SERVICES** |

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The following table sets forth the aggregate fees by categories specified below in connection with services rendered by our principal external auditors for the periods indicated.

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|:---|:---|:---|
|  | Fiscal Year Ended <br> September 30, | Fiscal Year Ended <br> September 30, |
|  | 2025 | 2024 |
| Audit Fees\* | $263000 | $200000 |

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\* "Audit Fees" consisted of the aggregate fees billed for professional services rendered for the audit of our annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.

Our Audit Committee pre-approves all auditing services and permitted non-audit services to be performed for us by our independent auditor, including the fees and terms thereof (subject to the de minimums exceptions for non-audit services described in Section 10A(i)(l)(B) of the Exchange Act that are approved by our Audit Committee prior to the completion of the audit).

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|:---|:---|
| **ITEM 16D.** | **EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES** |

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Not applicable

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|:---|:---|
| **ITEM 16E.** | **PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS** |

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There were no purchases of equity securities made by or on behalf of us or any "affiliated purchaser" as defined in Rule 10b-18 of the Exchange Act during the period covered by this Annual Report.

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| **ITEM 16F.** | **CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT** |

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None.

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|:---|:---|
| **ITEM 16G.** | **CORPORATE GOVERNANCE** |

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We were incorporated in the Cayman Islands and our corporate governance practices are governed by applicable Cayman Islands law and our Memorandum and Articles. In addition, because our common stock is listed on Nasdaq, we are subject to Nasdaq's corporate governance requirements.

As permitted by Nasdaq Listing Rule 5615(a)(3), we have elected to follow the corporate governance laws of the Cayman Islands in lieu of the following Nasdaq Listing Rules:

● <u>Nasdaq Listing rule 5620(a) – Annual Shareholder Meetings</u>. Nasdaq Listing Rule 5620(a) requires that each company with shares listed on Nasdaq hold an annual meeting of shareholders no later than one year after the end of each of the company's fiscal years. In lieu of following this Listing Rule, we have elected to follow the corporate governance requirements of the Cayman Islands. Under Cayman Islands law and our Memorandum and Articles of Association, there is no requirement for us to hold an annual meeting of shareholders.

● Nasdaq Listing Rule 5635 – Shareholder Approval of Certain Securities Issuances. Nasdaq Listing Rule 5635 requires shareholder approval prior to an issuance of securities in connection with: (i) certain acquisition of stock or assets of another company; (ii) an issuance of shares that will result in a change of control of the company; (iii) the establishment or amendment of certain equity-based compensation plans and arrangements; and (iv) certain transactions (other than a public offering) involving issuances of a 20% or more interest or voting power in the company at a price that is less than the minimum price defined therein. In lieu of following this Listing Rule, we have elected to follow the corporate governance requirements of the Cayman Islands. Under Cayman Islands law and our Memorandum and Articles of Association, it is not necessary to obtain shareholder approval for issuances of securities as are described in Listing Rule 5635.

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| **ITEM 16H.** | **MINE SAFETY DISCLOSURE** |

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Not applicable.

**ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.**

Not applicable.

**ITEM 16J. INSIDER TRADING POLICIES**

We have not currently adopted an insider trading policy.

**ITEM 16K. CYBERSECURITY.**

**Cybersecurity Risk Management and Strategy**

We recognize the importance of safeguarding the security of our computer systems, software, networks, and other technology assets. We have implemented cybersecurity measures and protocols for assessing, identifying, and managing material risks from cybersecurity threats, which are integrated into our overall risk management framework. This framework includes steps for assessing the severity of a cybersecurity threat, identifying the source of a cybersecurity threat, implementing cybersecurity countermeasures and mitigation strategies and informing our board of directors of material cybersecurity threats and incidents. Our management team is responsible for assessing our cybersecurity risk management program and we are reliant on third parties to service parts of our IT infrastructure. We identify potential risks from third-party service providers through threat intelligence. Once any risks impacting our IT assets are identified, our management team will implement appropriate risk mitigation measures.

We conduct cybersecurity risk assessments in response to changes in our business needs, which encompass risks to our objectives as well as those arising from potential compromises of data security. These assessments inform the development of operational procedures, including emergency response plans for cybersecurity incidents, data classification standards, and protocols for data asset identification and classification management within our business operations.

In the year ended September 30, 2025, we did not detect any cybersecurity incidents that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.

**Governance**

Significant developments regarding cybersecurity threats, incidents and related responses are addressed at a board level. Management holds primary responsibility for addressing cybersecurity matters, with the information technology personnel conducting day-to-day assessment, management and monitoring of cybersecurity risks. When cybersecurity issues occur, our information technology personnel will collect the relevant information, prepare solutions to mitigate the issues, and report the incidents to our management.

**PART III**

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|:---|:---|
| **ITEM 17.** | **FINANCIAL STATEMENTS** |

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We have elected to provide financial statements pursuant to Item 18.

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|:---|:---|
| **ITEM 18.** | **FINANCIAL STATEMENTS** |

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The financial statements are filed as part of this Annual Report beginning on page F-1.

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|:---|:---|
| **ITEM 19.** | **EXHIBITS** |

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|:---|:---|
| Exhibit No. | Description |
| 3.1 | [Amended and Restated Memorandum and Articles of Association of the Registrant, as currently in effect<sup>(4)</sup>](https://www.sec.gov/Archives/edgar/data/1816815/000149315222030926/ex3-1.htm) |
| 4.1 | [Registrant's Specimen Certificate for Ordinary Shares<sup>(2)</sup>](https://www.sec.gov/Archives/edgar/data/1816815/000149315221011470/ex4-1.htm) |
| 4.2 | [2024 Equity Incentive Plan<sup>(4)</sup>](https://www.sec.gov/Archives/edgar/data/1816815/000149315224007679/ex4-1.htm) |
| 10.1 | [Labor Contract between Xi'an App-Chem and Yongwei Hu<sup>(1)</sup>](https://www.sec.gov/Archives/edgar/data/1816815/000149315220023056/ex10-7.htm) |
| 10.2 | [Loan Agreement<sup>(1)</sup>](https://www.sec.gov/Archives/edgar/data/1816815/000149315220023056/ex10-11.htm) |
| 10.3 | [Director Service Agreement with Yingchun Xue<sup>(7)</sup>](https://www.sec.gov/Archives/edgar/data/1816815/000149315223026800/ex10-2.htm) |
| 10.4 | [Director Service Agreement with Jianjun Gao<sup>(7)</sup>](https://www.sec.gov/Archives/edgar/data/1816815/000149315223026800/ex10-1.htm) |
| 10.5 | [Director Service Agreement with Jing Chen<sup>(8)</sup>](https://www.sec.gov/Archives/edgar/data/1816815/000149315223036352/ex10-1.htm) |
| 10.6 | [Director Service Agreement with Zhixiang Gao<sup>(8)</sup>](https://www.sec.gov/Archives/edgar/data/1816815/000149315223036352/ex10-2.htm) |
| 10.7 | [English translation of Property Lease Agreement for Weinan Raw Materials and Ingredients Production Site<sup>(1)</sup>](https://www.sec.gov/Archives/edgar/data/1816815/000149315220023056/ex10-14.htm) |
| 10.8 | [Form of Subscription Agreement for private offering closed January 17, 2023<sup>(6)</sup>](https://www.sec.gov/Archives/edgar/data/1816815/000149315223002057/ex10-1.htm) |
| 10.9 | [Form of Warrant issued in private offering closed January 17, 2023<sup>(6)</sup>](https://www.sec.gov/Archives/edgar/data/1816815/000149315223002057/ex10-2.htm) |
| 10.10 | [English Translation of Employment Agreement between Ma Xin and Bon Natural Life Limited<sup>(10)</sup>](https://www.sec.gov/Archives/edgar/data/1816815/000149315225022626/ex10-1.htm) |
| 14.1 | [Code of Business Conduct and Ethics<sup>(1)</sup>](https://www.sec.gov/Archives/edgar/data/1816815/000149315220023056/ex14-1.htm) |
| 21.1 | [Significant subsidiaries of the Registrant<sup>(5)</sup>](https://www.sec.gov/Archives/edgar/data/1816815/000149315222002688/ex21-1.htm) |
| 31.1 | [Certifications of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-1(a)<sup>(11)</sup>](ex31-1.htm) |
| 31.2 | [Certifications of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-1(a) <sup>(11)</sup>](ex31-2.htm) |
| 32.1 | [Certifications of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002<sup>(11)</sup>](ex32-1.htm) |
| 32.2 | [Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002<sup>(11)</sup>](ex32-2.htm) |
| 99.1 | [Clawback Policy<sup>(9)</sup>](https://www.sec.gov/Archives/edgar/data/1816815/000149315223042853/ex99-1.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 (embedded within the Inline XBRL document) |

---

(1) Incorporated by reference to Registration Statement on Form F-1 filed December 7, 2020

(2) Incorporated by reference to Registration Statement on Form F-1/A filed May 14, 2021

(3) Incorporated by reference to Report of Foreign Private Issuer on Form 6-K filed June 30, 2022

(4) Incorporated by reference to Report of Foreign Private Issuer on Form 6-K filed November 8, 2022

(5) Incorporated by reference to Annual Report on Form 20-F filed January 31, 2022

(6) Incorporated by reference to Report of Foreign Private Issuer on Form 6-K filed January 20, 2023

(7) Incorporated by reference to Report of Foreign Private Issuer on Form 6-K filed August 4, 2023

(8) Incorporated by reference to Report of Foreign Private Issuer on Form 6-K filed October 5, 2023

(9) Incorporated by reference to Report of Foreign Private Issuer on Form 6-K filed November 28, 2023

(10) Incorporated by reference to Report of Foreign Private Issuer on Form 6-K filed November 14, 2025

(11) Filed herewith

**SIGNATURE**

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

---

| | |
|:---|:---|
| Date: January 22, 2026 | Bon Natural Life Limited |
|  | */s/ Yongwei Hu* |
|  | Yongwei Hu |
|  | Chief Executive Officer |

---

**INDEX TO CONSOLDIATED FINANCIAL STATEMENTS**

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| Consolidated Financial Statements |  |
| [Report of Independent Registered Public Accounting Firm](#DA_001) | F-2 |
| [Consolidated Balance Sheets as of September 30, 2025 and 2024](#DA_002) | F-3 |
| [Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the Years Ended September 30, 2025, 2024 and 2023](#DA_003) | F-4 |
| [Consolidated Statements of Changes in Shareholders' Equity for the Years Ended September 30, 2025, 2024 and 2023](#DA_004) | F-5 |
| [Consolidated Statements of Cash Flows for the Years Ended September 30, 2025, 2024 and 2023](#DA_005) | F-6 |
| [Notes to Consolidated Financial Statements](#DA_006) | F-7 – F-36 |

---

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and

Shareholders of Bon Natural Life Limited

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheets of Bon Natural Life Limited and its subsidiaries (collectively, the "Company") as of September 30, 2025 and 2024, and the related consolidated statements of operations and comprehensive (loss) income, changes in shareholders' equity, and cash flows for the years ended September 30, 2025, 2024 and 2023, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2025 and 2024, and the results of its operations and its cash flows for years ended September 30, 2025, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audits provide a reasonable basis for our opinion.

/s/ *YCM CPA INC.*

We have served as the Company's auditor since 2022.

PCAOB ID 6781

Irvine, California

January 22, 2026

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **As of September 30,** | **As of September 30,** |
|  | **2025** | **2024** |
| **ASSETS** |  |  |
| **CURRENT ASSETS** |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $3765978 | $80466 |
| &nbsp;&nbsp;&nbsp;Restricted cash | 2500000 | 576739 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 11012741 | 11781103 |
| &nbsp;&nbsp;&nbsp;Inventories, net | 3305438 | 1572224 |
| &nbsp;&nbsp;&nbsp;Advances to suppliers, net | 15938109 | 14469299 |
| &nbsp;&nbsp;&nbsp;Due from related parties | 527389 | 33228 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 8710796 | 4296949 |
| &nbsp;&nbsp;&nbsp;Current assets held for sale associated with the sale of the Gansu subsidiary | - | 6983849 |
| **TOTAL CURRENT ASSETS** | $45760451 | $39793857 |
| **NON-CURRENT ASSETS** |  |  |
| &nbsp;&nbsp;&nbsp;Property, plant and equipment, net | $18158289 | $15005686 |
| &nbsp;&nbsp;&nbsp;Intangible assets, net | 6424893 | 776995 |
| &nbsp;&nbsp;&nbsp;Right-of-use lease assets, net | 113250 | 141895 |
| &nbsp;&nbsp;&nbsp;Non-current other receivables | 14728732 |  |
| &nbsp;&nbsp;&nbsp;Deferred tax assets, net |  | 1388 |
| &nbsp;&nbsp;&nbsp;Non-current assets held for sale associated with the sale of the Gansu subsidiary | - | 6045611 |
| **TOTAL NON-CURRENT ASSETS** | $39425164 | $21971575 |
| **TOTAL ASSETS** | $85185615 | 61765432 |
|  |  | $— |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| **CURRENT LIABILITIES** |  |  |
| &nbsp;&nbsp;&nbsp;Short-term loans | $10248225 | $5719493 |
| &nbsp;&nbsp;&nbsp;Current portion of long-term loans | 1081613 | 461765 |
| &nbsp;&nbsp;&nbsp;Accounts payable | 7641274 | 3428102 |
| &nbsp;&nbsp;&nbsp;Due to related parties | 134073 | 244871 |
| &nbsp;&nbsp;&nbsp;Taxes payable | 4881898 | 3681166 |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 219678 | 506769 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | 2024902 | 2243219 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities, current | 76797 | 148904 |
| &nbsp;&nbsp;&nbsp;Current liabilities held for sale associated with the sale of the Gansu subsidiary | - | 11543 |
| **TOTAL CURRENT LIABILITIES** | $26308460 | $16445832 |
| **NON-CURRENT LIABILITIES** |  |  |
| &nbsp;&nbsp;&nbsp;Long-term loans | $842815 | $970061 |
| &nbsp;&nbsp;&nbsp;Operating lease liability, non-current | 36601 | - |
| **TOTAL NON-CURRENT LIABILITIES** | $879416 | $970061 |
| **TOTAL LIABILITIES** | $27187876 | $17415893 |
| **SHAREHOLDERS' EQUITY** |  |  |
| &nbsp;&nbsp;&nbsp;Class A Ordinary shares ($0.025 par value, 1,000,000,000 shares authorized, 6,086,971 and 77,149 shares issued and outstanding as of September 30, 2025 and 2024, respectively) | 152174 | 1928 |
| &nbsp;&nbsp;&nbsp;Class B Ordinary shares ($0.001 par value, 50,000,000 shares authorized, 2,041,839 shares issued and outstanding as of September 30, 2025 and 2024) | 2042 | 2042 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 40791764 | 25005100 |
| &nbsp;&nbsp;&nbsp;Statutory reserve | 2849440 | 2733354 |
| &nbsp;&nbsp;&nbsp;Retained earnings | 16630831 | 18741685 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive (loss) | (2875571**)** | (2577418) |
| **TOTAL BON NATURAL LIFE LIMITED SHAREHOLDERS' EQUITY** | $57550680 | $43906691 |
| **NON-CONTROLLING INTEREST** | $447059 | $442848 |
| **TOTAL SHAREHOLDERS' EQUITY** | $57997739 | $44349539 |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | $85185615 | $61765432 |

---

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

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** |
|  | **2025** | **2024** | **2023** |
| **REVENUE** | $18670684 | $23844556 | $29522353 |
| **COST OF REVENUE** | (14791863) | (16734547) | (20682326) |
| **GROSS PROFIT** | 3878821 | 7110009 | 8840027 |
| **OPERATING EXPENSES** |  |  |  |
| &nbsp;&nbsp;&nbsp;Selling expenses | (436933) | (270579) | (293719) |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | (4310910) | (3345240) | (2311378) |
| &nbsp;&nbsp;&nbsp;Research and development expenses | (754193) | (1620656) | (298469) |
| **TOTAL OPERATING EXPENSES** | (5502036) | (5236475) | (2903566) |
| **(LOSS) INCOME FROM OPERATIONS** | (1623215) | 1873534 | 5936461 |
| **OTHER INCOME (EXPENSES)** |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest income | 867 | 393 | 9414 |
| &nbsp;&nbsp;&nbsp;Interest expense | (366180) | (303255) | (238168) |
| &nbsp;&nbsp;&nbsp;Government subsidiaries | 37256 | 63450 | 25415 |
| &nbsp;&nbsp;&nbsp;Gain (loss) on disposal of subsidiaries | 160927 |  |  |
| &nbsp;&nbsp;&nbsp;Other income (expenses) | 80328 | (918183) | (160255) |
| **TOTL OTHER EXPENSES, NET** | (86802) | (1157595) | (363594) |
| **INCOME BEFORE INCOME TAX PROVISION** | (1710017) | 715939 | 5572867 |
| **INCOME TAX PROVISION** | 339414 | 351179 | 1002298 |
| **NET (LOSS) INCOME FROM CONTINUING OPERATIONS** | (2049431) | 364760 | 4570569 |
| &nbsp;&nbsp;&nbsp;Net loss from the sale of the Gansu subsidiary | - | (19512) | (17887) |
| **NET (LOSS) INCOME** | (2049431) | 345248 | 4552682 |
| &nbsp;&nbsp;&nbsp;Less: net loss attributable to non-controlling interest | (54663) | (52924) | (43300) |
| **NET (LOSS) INCOME ATTRIBUTABLE TO BON NATURAL LIFE LIMITED** | $(1994768) | $398172 | $4595982 |
| **OTHER COMPREHENSIVE (LOSS) INCOME** |  |  |  |
| &nbsp;&nbsp;&nbsp;Total foreign currency translation adjustment | (298871) | 1102618 | (1040285) |
| **TOTAL COMPREHENSIVE (LOSS) INCOME** | (2348302) | 1447866 | 3512397 |
| &nbsp;&nbsp;&nbsp;Less: comprehensive loss attributable to non-controlling interest | (55381) | (54333) | (33311) |
| **COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO BON NATURAL LIFE LIMITED** | $(2292921) | $1502199 | $3545708 |
| **(LOSS) EARNINGS PER SHARE** |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic | $(0.72) | $4.17 | $125.72 |
| &nbsp;&nbsp;&nbsp;Diluted | $(0.72) | $4.14 | $124.92 |
| **WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING** |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic | 2755232 | 95513 | 36558 |
| &nbsp;&nbsp;&nbsp;Diluted | 2755232 | 96114 | 36792 |

---

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

**BON NATURAL LIMITED AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY**

**FOR THE YEARS ENDED SEPTEMBER 30, 2025, 2024 AND 2023**

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Class A Ordinary Shares** | **Class A Ordinary Shares** | **Class B Ordinary Shares** | **Class B Ordinary Shares** | | | | | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Additional paid-in**<br>**capital** | **Statutory**<br>**reserve** | **Retained**<br>**earnings** | **Accumulated other comprehensive**<br>**income (loss)** | **Total shareholders'**<br>**equity** | **Non- <br> controlling**<br>**interest** | **Total**<br>**equity** |
| **Balance as of September 30, 2022** | **25673** | $**642** | **197789** | $**198** | $**15711450** | $**1804116** | $**14676769** | $**(2631171)** | $**29562004** | $**530492** | $**30092496** |
| &nbsp;&nbsp;&nbsp;Issuance of ordinary shares and warrants in a private placement, net | 11000 | 275 |  |  | 2027269 |  |  |  | 2027544 |  | 2027544 |
| &nbsp;&nbsp;&nbsp;Issuance of ordinary shares for services | 2280 | 57 |  |  | 218247 |  |  |  | 218304 |  | 218304 |
| &nbsp;&nbsp;&nbsp;Exercise of stock options | 90 | 2 |  |  | (2) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Share-based compensation |  |  |  |  | 131092 |  |  |  | 131092 |  | 131092 |
| &nbsp;&nbsp;&nbsp;Appropriation to statutory reserve |  |  |  |  |  | 568755 | (568755) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net income |  |  |  |  |  |  | 4595982 |  | 4595982 | (43300) | 4552682 |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | - | - | - | - | - | - | - | (1050274) | (1050274) | 9989 | (1040285) |
| **Balance as of September 30, 2023** | **39043** | $**976** | **197789** | $**198** | $**18088056** | $**2372871** | $**18703996** | $**(3681445)** | $**35484652** | $**497181** | $**35981833** |
| &nbsp;&nbsp;&nbsp;Issuance of ordinary shares and warrants in a private placement, net | 24055 | 601 | 1844050 | 1844 | 5597555 |  |  |  | 5600000 |  | 5600000 |
| &nbsp;&nbsp;&nbsp;Share-based compensation | 11600 | 290 |  |  | 1319550 |  |  |  | 1319840 |  | 1319840 |
| &nbsp;&nbsp;&nbsp;Issuance of ordinary shares for the round-up of the share consolidation | 2451 | 61 |  |  | (61) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Appropriation to statutory reserve |  |  |  |  |  | 360483 | (360483) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net income |  |  |  |  |  |  | 398172 |  | 398172 | (52924) | 345248 |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | - | - | - | - | - | - | - | 1104027 | 1104027 | (1409) | 1102618 |
| **Balance as of September 30, 2024** | **77149** | $**1928** | **2041839** | $**2042** | $**25005100** | $**2733354** | $**18741685** | $**(2577418)** | $**43906691** | $**442848** | $**44349539** |
| &nbsp;&nbsp;&nbsp;Issuance of Class A Ordinary shares and warrants for a public offering, net | 28000 | 700 |  |  | 10672212 |  |  |  | 10672912 |  | 10672912 |
| &nbsp;&nbsp;&nbsp;Exercise of pre-funded warrants | 305333 | 7633 |  |  | (7633) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Cashless exercise of series B warrants | 3716706 | 92918 |  |  | (92918) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Issuance of Class A ordinary shares for the round-up of the share consolidation | 19268 | 482 |  |  | (482) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Share-based compensation | 1940515 | 48513 |  |  | 5215485 |  |  |  | 5263998 |  | 5263998 |
| &nbsp;&nbsp;&nbsp;Appropriation to statutory reserve |  |  |  |  |  | 116086 | (116086) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Elimination of NCI at disposal of subsidiary |  |  |  |  |  |  |  |  |  | 59592 | 59592 |
| &nbsp;&nbsp;&nbsp;Net loss |  |  |  |  |  |  | (1994768) |  | (1994768) | (54663) | (2049431) |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | - | - | - | - | - | - | - | (298153) | (298153) | (718) | (298871) |
| **Balance as of September 30, 2025** | **6086971** | $**152174** | **2041839** | $**2042** | $**40791764** | $**2849440** | $**16630831** | $**(2875571)** | $**57550680** | $**447059** | $**57997739** |

---

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

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** |
|  | **2025** | **2024** | **2023** |
| Cash flows from operating activities |  |  |  |
| &nbsp;&nbsp;&nbsp;Net (loss) income | $(2049431) | $345248 | $4552682 |
| &nbsp;&nbsp;&nbsp;Less: net loss from discontinued operations | - | (19512) | (17887) |
| &nbsp;&nbsp;&nbsp;Net income from continuing operations | (2049431) | 364760 | 4570569 |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net (loss) income to cash provided (used in) operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allowance for doubutful accounts | 693822 | 1000000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 1087635 | 1107360 | 949550 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory reserve (recovery) | 432765 | (990) | (5812) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax |  |  | 1411 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of operating lease right-of-use assets | 198378 | 170172 | 228552 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation | 1393573 | 1319840 | 349396 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Gain) loss on disposal of subsidiaries | (160927) |  |  |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (108814) | (6814746) | 2081376 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | (2165615) | (530637) | 721371 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advance to supplies, net | (1668615) | (5586209) | (4563346) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (11736318) | (7400216) | (2170541) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 6107669 | 1917735 | 833547 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | (32952) |  | (232147) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes payable | 1268173 | 832476 | 1561946 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | (276248) | 385769 | (80176) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | 7158020 | 5525631 | 2097424 |
| Net cash provided by (used in) operating activities from continuing operations | 141115 | (7709055) | 6343120 |
| Net cash used in operating activities from discontinued operations | - | (14649) | (6960024) |
| Net cash provided by (used in) operating activities | $141115 | $(7723704) | $(616904) |
| Cash flows from investing activities |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of short-term investments | $- | $- | $(67) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds upon redemption of short-term investments |  | 65 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of property and equipment | (6827) | (7047) | (61906) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sales of property and equipment |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital expenditure on construction-in-progress | (4364757) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of intangible assets | (5624354) |  | (669190) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds of borrowings to related parties | - | - | 5623 |
| Net cash used in investing activities from continuing operations | (9995938) | (6982) | (725540) |
| Net cash used in investing activities from discontinued operations | - | (8745) | (460125) |
| Net cash used in investing activities | $(9995938) | $(15727) | $(1185665) |
| Cash flows from financing activities |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net proceeds from issuance of ordinary shares | $10672912 | $5600000 | $2027544 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from short-term loans | 12020797 | 4308260 | 2879809 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from long-term loans | 970537 | 694030 | 1132803 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayment of short-term loans | (7290399) | (1510029) | (2728836) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayment of long-term loans | (340102) | (451269) | (2143046) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from (repayment of) borrowings from related parties | (578942) | 205190 | 10419 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from (repayment of) third party loans |  | (96066) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from (repayment of) finance lease | - | - | (26509) |
| Net cash provided by financing activities from continuing operations | 15454803 | 8750116 | 1152184 |
| Net cash provided by financing activities from discontinued operations | - | 4997 | 3063 |
| Net cash provided by financing activities | $15454803 | $8755113 | $1155247 |
| Effect of changes of foreign exchange rates on cash | 7388 | (469823) | (80788) |
| Net increase (decrease) in cash and restricted cash | 5607368 | 545859 | (728110) |
| Cash and restricted cash, beginning of year | 658610 | 112751 | 840861 |
| Cash and restricted cash, end of year | 6265978 | 658610 | 112751 |
| Less: cash of discontinued operations, end of year | - | 1405 | 1517 |
| Cash and restricted cash of the continued operations at the end of the year | $6265978 | $657205 | $111235 |
| Supplemental disclosure of cash flow information |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest expenses | $324026 | $303325 | $238224 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for income taxes | $- | $- | $478683 |
| Supplemental disclosure of non-cash investing and financing activities |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exercise of options | $- | $- | $2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Right-of-use assets obtained in exchange for operating lease obligations | $- | $- | $- |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unpaid purchase of property and equipment | $- | $- | $403318 |

---

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

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 – ORGANIZATION AND BUSINESS DESCRIPTION**

***Business***

Bon Natural Life Limited ("Bon Natural" or the "Company"), through its wholly-owned subsidiaries (together as the "Company"), is engaged in the research and development, manufacturing and sales of functional active ingredients extracted from natural herb plants which are widely used by manufacturer customers in the functional food, personal care, cosmetic and pharmaceutical industries. The Company sells its products to customers located in both Chinese and international markets.

***Organizations***

Bon Natural Life Limited was incorporated as an exempted company with limited liability under the laws of the Cayman Islands on December 11, 2019.

Bon Natural owns 100% equity interest of Bon Natural Life U.S.A. Limited ("Bon Natural Life U.S.A."), an entity incorporated on February 7, 2023 in accordance with the laws and regulations in the State of Nevada.

Bon Natural owns 100% equity interest of Tea Essence Limited ("Tea Essence"), an entity incorporated on January 9, 2020 in accordance with the laws and regulations in Hong Kong.

Tea Essence owns 100% equity interest of Tea Essence Health Tech (Hangzhou) Co., Ltd. ("Tea Essence (Hangzhou)"), an Wholly Foreign-Owned Enterprise ("WFOE") incorporated in Hangzhou City on March 9, 2023 in accordance with PRC laws.

Xi'an Cell and Molecule Information Technology Limited. ("Xi'an CMIT") was formed on April 9, 2020, in the People's Republic of China ("PRC").

Bon Natural, Tea Essence, and Tea Essence (Hangzhou) are currently not engaging in any active business operations and merely acting as holding companies.

Prior to the reorganization described below, Mr. Yongwei Hu, the chairman of the board of directors and the chief executive officer of the Company, was the controlling shareholder of Xi'an App-Chem Bio(Tech) Co., Ltd. ("Xi'an App-Chem"), an entity incorporated on April 23, 2006 in accordance with PRC laws. Xi'an App-Chem owns 100% of the equity interests of the following subsidiaries: (1) Shaanxi App-Chem Health Industry Co., Ltd. ("App-Chem Health") was incorporated on April 17, 2006 in Tongchuan City in accordance with PRC laws; (2), Shaanxi App-Chem Ag-tech Co., Ltd ("App-Chem Ag-tech") was incorporated on April 19, 2013 in Dali County, Shaanxi Province in accordance with PRC laws; (3) Xi'an Yanhuang TCM Medical Research & Development Co., Ltd ("Xi'an YH") was incorporated on September 15, 2009 in Xi'an City in accordance with PRC laws; (4) App-Chem Bio (Tech) (Guangzhou) Co., Ltd. ("App-Chem Guangzhou") was incorporated on April 27, 2018 in Guangzhou City in accordance with PRC laws and (5) Tongchuan Dietary Therapy Health Technology Co., Ltd. ("Tongchuan DT") was incorporated on May 22, 2017 in Tongchuan City in accordance with PRC laws.

In addition, Xi'an App-Chem also owns majority of the equity interest in the following two entities: Xi'an Dietary Therapy Medical Technology Co., Ltd ("Xi'an DT") was incorporated on April 24, 2015 in accordance with PRC laws, with 75% equity ownership interest owned by Xi'an App-Chem; Tianjin Yonghexiang Bio(Tech) Co., Ltd. ("Tianjin YHX") was incorporated on September 26, 2019 in accordance with PRC laws, with 51% equity ownership interest owned by Xi'an App-Chem. On June 26, 2025, App-Chem sold 51% equity ownership of Tianjin YHX for the consideration of RMB 1. The disposal does not represent a strategic shift of the Company and had no major effect on the Company's operations and financial results.

On March 9, 2023, Xi'an App-Chem established a new 100% controlled subsidiary, Bozhou Dietary Therapy Health Technology Co., Ltd. ("Bozhou DT").

On September 27, 2021, the Company disposed Balikun to a third party for RMB 1.00. As Balikun had no operating activity and no material assets, the disposal of Balikun did not constitute discontinued operation.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

Xi'an App-Chem, together with its subsidiaries are collectively referred to as the "Bon Operating Companies" below.

***Terminating the VIE agreements for corporate restructuring***

Due to PRC legal restrictions on foreign ownership in companies that engage in online sales China, the Company originally carried out its business through Xi'an App-Chem, a domestic PRC company holding a value-added telecommunications license, through a variable interest entity structure, because foreign investment in the value-added telecommunication services industry in China is extensively regulated and subject to numerous restrictions. However, the Company's online sales have historically generated minimal revenues. On September 28, 2021, the Company's Board of Directors approved a restructuring of the Company's corporate structure to terminate the original VIE contractual agreements, to convert Xi'an App-Chem from a PRC domestic company into a Sino-foreign joint venture, and to transfer 100% of the ownership interests in Xi'an App-Chem from its original shareholders to Xi'an CMIT and Xi'an Youpincui. Effective November 1, 2021, the Company completed the reorganization of its corporate structure in the PRC and are the indirect sole shareholder of Xi'an App-Chem. Xi'an App-Chem is wholly-owned by two WOFEs Xi'an CMIT and Xi'an Youpincui. Each of the WOFEs are in turn wholly-owned by Tea Essence, the Company's direct wholly-owned subsidiary in Hong Kong. The termination of the VIE agreements as described above does not adversely affect the Company's business, financial condition, and results of operations because the Company, together with its wholly owned subsidiaries, are effectively controlled by the same shareholders before and after the restructuring. The restructuring is therefore considered to be a recapitalization of entities under common control. Following the corporate restructuring, the value-added telecommunication license held by Xi'an App-Chem has been revoked.

Details of the subsidiaries of the Company as of September 30, 2025 were set out below:

---

| | | | | |
|:---|:---|:---|:---|:---|
| Name of Entity | Date of Incorporation | Place of Incorporation | % of Ownership | Principal Activities |
| Bon Natural Life | December 11, 2019 | Cayman Islands | Parent, 100% | Investment holding |
| Bon Natural Life U.S.A. | February 7, 2023 | U.S.A. | 100% | Investment holding |
| Tea Essence | January 9, 2020 | Hong Kong | 100% | Investment holding |
| Xi'an CMIT | April 9, 2020 | Xi.an City, PRC | 100% | WFOE, Investment holding |
| Xi'an Youpincui | September 8, 2021 | Xi.an City, PRC | 100% | WFOE, Investment holding |
| PRC Subsidiaries: |  |  |  |  |
| Tea Essence Tech (HangZhou) Co, Ltd. | October 24, 2024 | Hangzhou City, PRC | 100% | WFOE, Investment holding |
| Xi'an App- Chem Bio (Tech) | April 23, 2006 | Xi'an City, PRC | 100% owned by WFOEs | General administration and sales of the Company's products to customers |
| Xi'an YH | September 15, 2009 | Xi'an City, PRC | 91% owned by Xi'an CMIT, 9% owned by Xi'an App-Chem | Research and development of product |
| Bon Operating Companies (owned by Xi'an App-Chem) | Bon Operating Companies (owned by Xi'an App-Chem) |  |  |  |
| App-Chem Health | April 17, 2006 | Tongchuan City, PRC | 100% owned by Xi'an App-Chem | Registered owner of land with an area of 12,904.5 square meters, no other business activities |
| App-Chem Ag-tech | April 19, 2013 | Dali County, PRC | 100% owned by Xi'an App-Chem | Product manufacturing |
| App-Chem Guangzhou | April 27, 2018 | Guangzhou City, PRC | 100% owned by Xi'an App-Chem | Raw material purchase |
| Tongchuan DT | May 22, 2017 | Tongchuan City, PRC | 99% owned by Xi'an App-Chem,1% owned by App-Chem Health | Product manufacturing |
| Xi'an DT | April 24, 2015 | Xi'an City, PRC | 75% owned by Xi'an App-Chem | Research and development of product |
| Bozhou DT | March 9, 2023 | Bozhou City, PRC | 100% owned by Xi'an App-Chem | Product manufacturing |
| Xianyang DT | April 16, 2025 | Xianyang City, PRC | 100% owned by Xi'an App-Chem | Technology developement and sales of the products |

---

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

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

***<u>Basis of Presentation and Principles of Consolidation</u>***

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The accompanying consolidated financial statements include the financial statements of the Company, and its wholly owned subsidiaries. All inter-company balances and transactions are eliminated upon consolidation.

***<u>Non-controlling interests</u>***

Non-controlling interest represent minority shareholders' 25% ownership interest in Xi'an DT as of September 30, 2025.

Non-controlling interests represent minority shareholders' 25% ownership interest in Xi'an DT and a minority shareholder's 49% ownership interest in Tianjin YHX as of September 30, 2024.

The non-controlling interests are presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interests in the results of the Company are presented on the face of the consolidated statements of income and comprehensive income as an allocation of the total income or loss for the years ended September 30, 2025, 2024 and 2023.

***<u>Uses of estimates</u>***

In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("US GAAP"), 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 estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the allowance for estimated uncollectible receivables, realizability of advance to suppliers, inventory valuations, useful lives of property, plant and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, fair value of stock-based compensation, revenue recognition realization of deferred tax assets and fair value less costs to sell of assets classified as held for sale.

***<u>Risks and Uncertainties</u>***

The main operation of the Company is 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 PRC economy. 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, this may not be indicative of future results.

The development and commercialization of natural and healthy extracts and compounds products is highly competitive, and the industry currently is characterized by rapidly changing technologies, significant competition and a strong emphasis on intellectual property. The Company may face competition with respect to its current and future pharmaceutical product candidates from major pharmaceutical companies in China.

***<u>Cash and restricted cash</u>***

Cash includes currency on hand and deposits held by banks that can be added or withdrawn without limitation. The Company maintains most of its bank accounts in the PRC. Cash balances in bank accounts in PRC are insured by the PRC regulation for a maximum amount of RMB 500,000 and are not insured by the Federal Deposit Insurance Corporation (see Note 17).

Restricted cash consist of cash deposited with banks in conjunction with borrowings from banks. Restriction on the use of such cash is imposed by the banks and remains effective throughout the terms of the bank borrowings. Restricted cash is classified as current asset on the Company's consolidated balance sheets, as all the balance is expected to be released to cash within the next 12 months from September 30, 2025.

***<u>Accounts receivable, net</u>***

The Company determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trend. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management's best estimate of specific losses on individual exposures, as well as a provision on historical trends of collections. Actual amounts received may differ from management's estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the collection is not probable, $693,822, $nil and $99,528 uncollectible account receivable was written-off during the years ended September 30, 2025, 2024 and 2023, respectively. Allowance for uncollectible balances amounted to $707,149 and $13,520 as of September 30, 2025 and 2024, respectively.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***<u>Advances to Suppliers, net</u>***

Advances to suppliers consist of balances paid to suppliers for inventory raw materials and construction materials associated with the Company's construction-in-progress projects that have not been provided or received. Advances to suppliers are reviewed periodically to determine whether their carrying value has become impaired. The Company considers the assets to be impaired if the collectability of the advance becomes doubtful. The Company uses the aging method to estimate the allowance for unrealizable balances. In addition, at each reporting date, the Company generally determines the adequacy of allowance for doubtful accounts by evaluating all available information, and then records specific allowances for those advances based on the specific facts and circumstances. As of September 30, 2025 and 2024, no allowance for doubtful account was recorded.

***<u>Inventories, net</u>***

Inventories are stated at net realizable value using weighted average method. Costs include the cost of raw materials, freight, direct labor and related production overhead. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. The Company evaluates inventories on a quarterly basis for its net realizable value adjustments, 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, expiration dates, as applicable, taking into consideration historical and expected future product sales. The Company recorded inventory reserve of $438,553 and $106 as of September 30, 2025 and 2024, respectively.

***<u>Fair value of financial instruments</u>***

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 cash, short-term investment, accounts receivable, inventories, advance to suppliers, prepaid expenses and other current assets, accounts payable, short-term bank loans, accrued expenses and other current liabilities, taxes payable and due to related parties, approximate the fair value of the respective assets and liabilities as of September 30, 2025 and 2024 based upon the short-term nature of the assets and liabilities.

The Company believes that the carrying amount of long-term loans approximates fair value at September 30, 2025 and 2024 based on the terms of the borrowings and current market rates as the rates of the borrowings are reflective of the current market rates.

***<u>Property, plant and equipment, net</u>***

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

---

| | |
|:---|:---|
|  | Useful life |
| Buildings | 20 years |
| Machinery and equipment | 5–10 years |
| Automobiles | 8 years |
| Office and electric equipment | 3–5 years |

---

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

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 consolidated statements of income and comprehensive income in other income or expenses.

***<u>Construction-in-Progress ("CIP")</u>***

Construction-in-progress represents property and buildings under construction and consists of construction expenditures, equipment procurement, and other direct costs attributable to the construction. Construction-in-progress is not depreciated. Upon completion and ready for intended use, construction-in-progress is reclassified to the appropriate category within property, plant and equipment.

***<u>Discontinued operations</u>***

Disposal groups comprising assets and liabilities, are classified as held for sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use. Such assets, or disposal groups, are measured at the lower of their carrying amount and fair value less costs to sell. The comparative consolidated balance sheet is re-presented to classify assets as held for sale in the period that the respective assets are classified as held for sale.

On September 30, 2024, the Company discontinued Gansu BMK by transferring 100% of the equity interests in Gansu BMK. A component of a reporting entity or a group of components of a reporting entity that are disposed or meet the criteria to be classified as held for sale, such as the management having the authority to approve the action, commits to a plan to sell the disposal group, should be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results. Discontinued operations are reported when a component of an entity comprising operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity is classified as held for disposal or has been disposed of, if the component either (1) represents a strategic shift or (2) have a major impact on an entity's financial results and operations. In the consolidated statements of operations and comprehensive loss, result from discontinued operations is reported separately from the income and expenses from continuing operations and prior periods are presented on a comparative basis. In order to present the financial effects of the continuing operations and discontinued operations, revenues and expenses arising from intra-group transactions are eliminated except for those revenues and expenses that are considered to continue after the disposal of the discontinued operations (see Note 4).

On June 26, 2025, App-Chem sold 51% equity ownership of Tianjin YHX for the consideration of RMB 1. The disposal does not represent a strategic shift of the Company and had no major effect on the Company's operations and financial results.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***<u>Intangible assets, net</u>***

The Company's intangible assets primarily include two land use rights. A land use right in the PRC represents an exclusive right to occupy, use and develop a piece of land during the contractual term of the land use right. The cost of a land use right is usually paid in one lump sum at the date the right is granted. The prepayment usually covers the entire period of the land use right. The lump sum advance payment is capitalized and recorded as land use right and then charged to expense on a straight-line basis over the period of the right, which is normally 50 years.

***<u>Impairment of long-lived Assets</u>***

Long-lived assets, such as property, plant and equipment, land use rights and long-term investment, are reviewed for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Recoverability of a long-lived asset or asset group to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying value of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount that the carrying value exceeds the estimated fair value of the asset or asset group. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. Assets to be disposed are reported at the lower of carrying amount or fair value less costs to sell, and are no longer depreciated. No impairment of long-lived assets was recognized as of September 30, 2025 and 2024.

***<u>Leases</u>***

ASC 842 requires that lessees recognize ROU assets and lease liabilities calculated based on the present value of lease payments for all lease agreements with terms that are greater than twelve months. ASC 842 distinguishes leases as either a finance lease or an operating lease that affects how the leases are measured and presented in the statement of operations and statement of cash flows.

For operating leases, the Company calculated ROU assets and lease liabilities based on the present value of the remaining lease payments as of the date of adoption. There were no changes in the Company's capital lease portfolio, which are now titled "finance leases" under ASC 842.

***<u>Foreign Currency Translation</u>***

The functional currency for Bon Natural is the U.S Dollar ("US$"). Tea Essence uses Hong Kong dollar as its functional currency. However, Bon Natural, and Tea Essence currently only serve as the holding companies and did not have active operations as of September 30, 2025. The Company operates its business through its subsidiaries in the PRC as of September 30, 2025. The functional currency of the Company's subsidiaries is the Chinese Yuan ("RMB"). The Company's consolidated financial statements have been translated into US$.

Assets and liabilities accounts are translated using the exchange rate at each reporting period end date. Equity accounts are 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. 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 consolidated financial statements:

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| | | | |
|:---|:---|:---|:---|
|  | **September 30,**<br> **2025** | **September 30,**<br> **2024** | **September 30,**<br> **2023** |
| Period-end spot rate | US$1=RMB7.1190 | US$1=RMB7.0176 | US$1=RMB7.2960 |
| Average rate | US$1=RMB7.2125 | US$1=RMB7.2043 | US$1=RMB7.0533 |

---

***<u>Revenue recognition</u>***

To determine revenue recognition for contracts with customers, the Company performs the following five steps : (i) identify the contract(s) 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 obligations.

In accordance to ASC 606, the Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. When the company sells goods to customers within the PRC, the Company realizes revenue when customers' signed delivery receipt has been obtained; when the company sells goods to customers outside the PRC, the Company realizes revenue

when the customs declaration form and bill of lading has been obtained. The Company accounts for the revenue generated from sales of its products to its customers, in which the Company is acting as a principal in these transactions, is subject to inventory risk, has latitude in establishing prices, and is responsible for fulfilling the promise to provide customers the specified goods. All of the Company's contracts have single performance obligation as the promise is to transfer the individual goods to customers, and there are no other separately identifiable promises in the contracts.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

The Company's revenue streams are recognized at a point in time when title and risk of loss passes and the customer accepts the goods, which generally occurs at delivery. The Company's products are sold with no right of return and the Company does not provide other credits or sales incentive to customers. The Company's sales are net of value added tax ("VAT") and business tax and surcharges collected on behalf of tax authorities in respect of product sales. As of September 30, 2025, the Company had unfinished contracts with various customers for total value over RMB 70 million (approximately $9.8 million). It is expected that these contracts will be finished in the four to six months after the date of this annual report is released.

***<u>Contract Assets and Liabilities</u>***

Payment terms are established on the Company's pre-established credit requirements based upon an evaluation of customers' credit. The Company did not have contract assets as of September 30, 2025 and 2024.

The Company's contract liability primarily relates to unsatisfied performance obligations when payment has been received from customers before the Company's products are delivered, and are recorded as deferred revenue on the consolidated balance sheets. Costs of fulfilling customers' purchase orders, such as shipping, handling and delivery, which occur prior to the transfer of control, are recognized in selling, general and administrative expense when incurred. Deferred revenue amounted to $219,678 and $506,769 as of September 30, 2025 and 2024, respectively.

***<u>Disaggregation of Revenues</u>***

The Company disaggregates its revenue from contracts by product types, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. The Company's disaggregation of revenues for the years ended September 30, 2025, 2024 and 2023 are disclosed in Note 19 of the consolidated financial statements.

***<u>Research and development expenses</u>***

The Company expenses all internal research and development costs as incurred, which primarily comprise employee costs, internal and external costs related to execution of studies, including manufacturing costs, facility costs of the research center, and amortization and depreciation to intangible assets and property, plant and equipment used in the research and development activities. For the years ended September 30, 2025, 2024 and 2023, research and development expense were approximately $754,193, $1,620,656 and $298,469, respectively.

***<u>Selling, General and Administrative Expenses</u>***

Selling expenses represents primarily costs of payroll, benefits, commissions for sales representatives and advertising expenses. General and administrative expenses represent primarily payroll and benefits costs for administrative employees, rent and operating costs of office premises, depreciation and amortization of office facilities, professional fees and other administrative expenses.

***<u>Advertising expense</u>***

Advertising expenses primarily relate to promotion of the Company's brand name and products through outdoor billboards and social media such as Weibo and WeChat. Advertising expenses are included in selling expenses in the consolidated statements of income and comprehensive income. Advertising expenses amounted to $836, $13,135, $11,344 for the years ended September 30, 2025, 2024 and 2023, respectively.

***<u>Government subsidies</u>***

Government subsidies primarily relate to local government's cash award to High and New Technology Enterprises ("HNTEs") to encourage entrepreneurship and stimulate local economy. Such awards are granted on a case-by-case basis by local government. The Company's subsidiary, Xi'an App-chem was approved as a HNTE and received government subsidy in the form of export sales refund and cash awards based on annual financial performance.

The Company recognizes government subsidies as other operating income when they are received because they are not subject to any past or future conditions, there are no performance conditions or conditions of use, and they are not subject to future refunds. Government subsidies received and recognized as other operating income totaled $37,256, $63,450 and $25,415 for the years ended September 30, 2025, 2024 and 2023, respectively.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***<u>Income taxes</u>***

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 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.

The Company's subsidiaries in China are subject to the income tax laws of the PRC. No significant income was generated outside the PRC for the years ended September 30, 2025, 2024 and 2023. As of September 30, 2025 and 2024, all of the Company's tax returns of its PRC subsidiaries remain open for statutory examination by PRC tax authorities.

***<u>Value added tax ("VAT")</u>***

Sales revenue represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price and VAT rates range up to 17% (starting from May 1, 2018, VAT rate was lowered to 16%, and starting from April 1, 2019, VAT rate was further lowered to 13%), depending on the type of products sold. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. The Company recorded a VAT payable or recoverable net of VAT payments in the accompanying consolidated financial statements.

For export sales, VAT is not imposed on gross sales price, and the VAT related to purchasing raw materials is refunded after the export is completed.

***<u>Employee Defined Contribution Plan</u>***

The Company's subsidiaries in the PRC participate in a government-mandated multi-employer defined contribution 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 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 consolidated statements of income and comprehensive income amounted to $102,650, $66,735, $93,190 and for the years ended September 30, 2025, 2024 and 2023, respectively.

***<u>Share Based Compensation</u>***

The Company recognize stock-based compensation expense on a straight-line basis over the applicable requisite service period, based on the grand date fair value of the award.

The fair value of shares issued for services is ealculated by multiplying the number of shares issued with the average price of three prior trading days' closing prices as stipulated in the service agreements the Company entered into with various service providers.

The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management's best estimates and involve inherent uncertainties and the application of management's judgment.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***<u>(Loss) earnings per Share</u>***

The Company computes earnings 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 income 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. For the years ended September 30, 2025, no shares of options were considered in the diluted EPS calculation using treasure stock method. For the years ended September 30, 2024, 601 shares of options were considered in the diluted EPS calculation using treasury stock method. For the years ended September 30, 2023, 234 shares of options were considered in the diluted EPS calculation using treasury stock method.

The following table sets forth the computation of basic and diluted (loss) earnings per share for the years ended September 30, 2025, 2024 and 2023:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years ended September 30,** | **For the Years ended September 30,** | **For the Years ended September 30,** |
|  | **2025** | **2024** | **2023** |
| Numerator: |  |  |  |
| Net (loss) income attributable to ordinary shareholders | $(1994768) | $398172 | $4595982 |
| Denominator: |  |  |  |
| Weighted-average number of ordinary shares outstanding – basic | 2755232 | 95513 | 36558 |
| Outstanding options |  | 601 | 234 |
| Outstanding warrants | - | - | - |
| Potentially dilutive shares from outstanding options and warrants | - | 601 | 234 |
| Weighted-average number of ordinary shares outstanding – diluted | 2755232 | 96114 | 36792 |
| (Loss) earnings per share – basic | $(0.72) | $4.17 | $125.72 |
| (Loss) earnings per share – diluted | $(0.72) | $4.14 | $124.92 |

---

***<u>Comprehensive income</u>***

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

***<u>Statement of Cash Flows</u>***

In accordance with ASC 230, "Statement of Cash Flows", cash flows from the Company's operations are formulated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

***<u>Recent Accounting Pronouncements</u>***

The Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued.

In September 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The FASB is issuing the amendments to enhance the transparency and decision usefulness of income tax disclosures. Investors currently rely on the rate reconciliation table and other disclosures, including total income taxes paid, to evaluate income tax risks and opportunities. While investors find these disclosures helpful, they suggested possible enhancements to better (1) understand an entity's exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities, (2) assess income tax information that affects cash flow forecasts and capital allocation decisions, and (3) identify potential opportunities to increase future cash flows. The FASB decided that the amendments should be effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted. The adoption of this guidance did not have a material impact on its financial position, results of operations and cash flows.

In July 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in ASU 2023-07 improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in ASU 2023-07 improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The adoption of this guidance did not have a material impact on its financial position, results of operations and cash flows.

In March 2024, the FASB issued ASU 2024-01, "Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards" ("ASU 2024-01"), which intends to improve clarity and operability without changing the existing guidance. ASU 2024-01 provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718. Entities can apply the guidance either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the potential impact of adopting this guidance on its financial statements.

In November 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures" (Subtopic 220-40) ("ASU 2024-03"). The objective of ASU 2024-03 is to improve disclosures about a public entity's expenses, primarily through additional disaggregation of income statement expenses. In January 2025, the FASB further clarified the effective date of ASU 2024-03 with the issuance of Accounting Standards Update 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2025-01"). ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted and may be applied either on a prospective or retrospective basis. The Company is currently evaluating the impact ASU 2024-03 will have on its financial statement disclosures.

We do not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.

**NOTE 3— LIQUIDITY**

In assessing its liquidity, management monitors and analyzes the Company's cash on-hand, its ability to generate sufficient revenue sources in the future, and its operating and capital expenditure commitments. In May 2024, the Company closed a private offering of ordinary shares and received subscription proceeds of $5.6 million.(see Note 15). In March 2025, the Company closed a public offering and received net proceeds of $10.7 million. (see Note 15)

As of September 30, 2025, the Company had cash and restricted cash of approximately $6.3 million and working capital of $19.5 million. For the year ended September 30, 2025, the Company had approximately $2.0 million net loss. As of September 30, 2025, the Company had outstanding bank loans of approximately $12.2 million from several PRC banks (including short-term bank loans of $10.2 million, current portion of long-term bank loans of approximately $1.1 million and long-term loan of $0.9 million). Management expects that it would be able to renew all of its existing bank loans upon their maturity based on past experience and the Company's good credit history.

Based on the current operating plan, management believes that the above-mentioned measures, including cash and restricted cash of $6.3 million and $10.7 million proceeds from our public offering of Class A ordinary shares in March 2025, collectively will provide sufficient liquidity for the Company to settle the tax liabilities, to meet its future liquidity for at least 12 months from the date the Company's consolidated financial statements are issued.

**NOTE 4 — DISCOUNTINUED OPERATIONS**

On September 30, 2024, the Company's operating subsidiary Xi`an App-Chem and its wholly owned subsidiary, Gansu BMK entered into an Asset Selling Agreement (the "Agreement") with Xinjiang Baixiangquan Aromatic (Tech) Co., Ltd. ("Baixiangquan"). Under the Agreement, Xi`an App-Chem has agreed to sell all the assets of Gansu BMK to Baixiangquan by transferring 100% of the equity interests in Gansu BMK to Baixiangquan for a consideration of RMB 43.3 million ($6.2 million).

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

As of September 30, 2024, the Company classified the assets and liabilities in Gansu BMK as held for sale and completed the the equity transfer registration in November 2024. The following table summarizes the major classes of assets and liabilities of the discontinued Gansu BMK that have been classified as held-for-sale in the consolidated balance sheets:

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **September 30,<br> 2024** |
| Carrying amounts of the major classes of assets included in discontinued operations: | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; | $— |
| Cash |  | 1405 |
| Advance to suppliers |  | 6982444 |
| Property and equipment, net |  | 5812646 |
| Intangible assets, net | - | 232965 |
| Total assets classified as held for sale | $- | $13029460 |
| Carrying amounts of the major classes of liabilities included in discontinued operations: |  |  |
| Due to related parties | - | 11543 |
| Total liabilities classified as held for sale | $- | $11543 |

---

A summary of the Company's major classes of line items constituting net loss from discontinued operations for the years ended September 30, 2025, 2024 and 2023 is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** |
|  | **2025** | **2024** | **2023** |
| Revenue | $- | $- | $- |
| Cost of revenue | - | - | - |
| Gross profit | - | - | - |
| Income (Expenses): |  |  |  |
| General and administrative expenses |  | (19445) | (17819) |
| Interest income |  | 3 | 5 |
| Interest expense |  | (70) | (56) |
| Other expenses | - | -) | (17 |
| Net loss from discontinued operation before income taxes |  | (19512) | (17887) |
| Income tax expenses | - | - | - |
| Net loss from discontinued operation | $- | $(19512) | $(17887) |

---

A summary of the Company's cash flows from discontinued operations for the years ended September 30, 2025, 2024 and 2023 is as follows:

****

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** |
|  | **2025** | **2024** | **2023** |
|  | $ | $ | $ |
| Net cash (used in) provided by operating activities from discontinued operations | -) |  |  |
| Net cash used in investing activities from discontinued operations | -) |  |  |
| Net cash provided by financing activities from discontinued operations |  |  |  |

---

On June 26, 2025, App-Chem sold 51% equity ownership of Tianjin YHX for the consideration of RMB 1. The disposal does not represent a strategic shift of the Company and had no major effect on the Company's operations and financial results.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 5 — ACCOUNTS RECEIVABLE, NET**

Accounts receivable, net, consists of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **September 30,<br> 2024** |
| Accounts receivable | $11719890 | $11794623 |
| Less: allowance for doubtful accounts | (707149) | (13520) |
| Accounts receivable, net | $11012741 | $11781103 |

---

The Company's accounts receivable primarily includes balance due from customers when the Company's products are sold and delivered to customers. Approximately $2.9 million or 26% of the net accounts receivable balance as of September 30, 2025 has been collected as of the date of the Company's consolidated financial statements are released.

The following table summarizes the Company's accounts receivable and subsequent collection by aging bucket:

---

| | | | |
|:---|:---|:---|:---|
| Accounts Receivable by aging bucket | Balance as of September 30, 2025 | Subsequent collection | % of subsequent collection |
| Less than 3 months | 4353164 | 568036 | 13% |
| From 4 to 6 months | 2569282 | 425.057 | 17% |
| From 7 to 9 months | 3358650 | 1081613 | 32% |
| From 10 to 12 months | 3488 |  | 0% |
| Over 1 year | 1435306 | 842815 | 59% |
| Total gross accounts receivable | 11719890 | 2917521 | 25% |
| Allowance for doubtful accounts | (707149) |  |  |
| Accounts Receivable, net | 11012741 | 2917521 | 26% |

---

Allowance for doubtful accounts movement is as follows:

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **September 30,<br> 2024** |
| Beginning balance | $13520 | $13004 |
| Additions | 693822 |  |
| Write-off uncollectible balance |  |  |
| Foreign currency translation adjustments | (193) | (516) |
| Ending balance | $707149 | $13520 |

---

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 6 – INVENTORIES, NET**

Inventories, net, consist of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **September 30,<br> 2024** |
| Raw materials | $20814 | $862324 |
| Finished goods | 3723177 | 710006 |
| Inventory valuation allowance | (438553) | (106) |
| Total inventory, net | $3305438 | $1572224 |

---

**NOTE 7 –ADVANCES TO SUPPLIERS, NET**

Advances to suppliers, net, consist of the following:

---

| | | |
|:---|:---|:---|
| **Schedule of Advances to suppliers:** | **September 30,<br> 2025** | **September 30,<br> 2024** |
| Raw materials purchase | $12563186 | $9480638 |
| Machinery and equipment | 2071920 | 4973210 |
| Others | 1303003 | 15451 |
| Less: allowance for doubtful accounts | - | - |
| Advances to suppliers, net | $15938109 | $14469299 |

---

**NOTE 8— ACQUISITION DEPOSIT**

On July 6, 2021, the Company entered into a consulting agreement with a New York based consulting firm ("the consulting firm"), pursuant to which, the consulting firm will help the Company to (i) identify appropriate business partner candidates in New York or California in order to jointly establish a research and development center in the United States for future new product development; (ii) find opportunities to establish business relationship with U.S based companies with OEM demand and utilize the Company's manufacturing strength and capability to manufacture healthcare ingredient products for U.S companies under the OEM arrangement and (iii) help the Company to purchase or lease appropriate commercial facilities in the U.S., etc. The consulting firm will be compensated with $30,000 in exchange for performing these designated consulting services. Given the fact that the Company lacks credit history in the U.S, the Company is required to make a deposit of $1.5 million to the consulting firm. The Company has made a deposit of $1.0 million to the consulting firm and recorded it as acquisition deposit on the balance sheets as of September 30, 2024 and 2023.

During the year ended September 30, 2023, the consulting firm presented a potential acquisition target to the Company, which was a small R&D firm specializing in developing anti-aging formulas. The consulting firm also began assisting the Company with due diligence for this potential acquisition. However, negotiations surrounding the acquisition stalled, leading the Company to initiate discussions with the consulting firm to secure a full refund of the deposit.

Despite ongoing efforts to recover the deposit, there remains significant uncertainty regarding the full recovery of the amount. As a result, the Company recorded a full provision for doubtful accounts of $1.0 million for the year ended September 30, 2024, reflecting the risk of not receiving the full deposit amount.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

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

Property, plant and equipment, net, consists of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **September 30,<br> 2024** |
| Buildings | $11910615 | $12082715 |
| Machinery, equipment and furniture | 6355260 | 6441179 |
| Motor Vehicles | 211000 | 218541 |
| Construction in progress | 4422082 | - |
| Subtotal | 22898957 | 18742435 |
| Less: accumulated depreciation | (4740668) | (3736749) |
| Property, plant and equipment, net | $18158289 | $15005686 |

---

Depreciation expense was $1,048,886, $1,083,251 and $945,507 for the years ended September 30, 2025, 2024 and 2023, respectively.

**NOTE 10 – INTANGIBLE ASSETS, NET**

Intangible assets, net mainly consist of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **September 30,<br> 2024** |
| Land use rights | $867507 | $859864 |
| Less: accumulated amortization | (93965) | (82869) |
| Land use rights, net | $773542 | $776995 |

---

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **September 30,<br> 2024** |
| Patent | $5674954 | $&nbsp;&nbsp;&nbsp;&nbsp; - |
| Less: accumulated amortization | (23604) | - |
| Land use rights, net | $5651351 | $- |

---

Amortization expenses were $38,749, $24,108 and $9,010 for the years ended September 30, 2025, 2024 and 2023, respectively. Estimated future amortization expense for intangible assets is as follows:

SCHEDULE OF AMORTIZATION EXPENSES

---

| | |
|:---|:---|
| Fiscal years ending | Amortization expenses |
| 2026 | $377160 |
| 2027 | $377160 |
| 2028 | $377160 |
| 2029 | $377160 |
| 2030 | $377160 |
| Thereafter | $4539094 |
| Total | $6424894 |

---

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 11— DEBT**

The Company borrowed from PRC banks, other financial institutions and third-parties as working capital funds. As of September 30, 2025 and 2024, the Company's debt consisted of the following:

(a) Short-term loans:

SCHEDULE OF SHORT-TERM LOANS

---

| | | | |
|:---|:---|:---|:---|
|  |  | **September 30,<br> 2025** | **September 30,<br> 2024** |
| China Construction Bank ("CCB') | (1) | $36117 | $36639 |
| Shanghai Pudong Development Bank ("SPD Bank") | (2) | 3610058 | 1424989 |
| Beijing Bank | (3) | 842815 | 854993 |
| Industrial and Commercial Bank of China ("ICBC") | (4) | 702346 | 142499 |
| Agricultural Bank of China | (5) | 1123753 | 1139991 |
| Bohai Bank | (6) | 561877 | 569995 |
| Bank of China | (7) | 421408 | 569995 |
| Postal Savings Bank of China | (8) | 280938 | 439181 |
| Qinnong Bank | (9) | 983284 | 498746 |
| Bank of Communication | (10) |  | 42465 |
| Zheshang Bank | (11) | 842815 |  |
| Chang'an Bank | (12) | 842815 | - |
| Total short-term loans |  | $10248225 | $5719493 |

---

(1) On December 14, 2023, Tongchuan DT entered into another loan agreement with CCB to borrow RMB 257,117 (equivalent to US$36,639) as working capital for one year, with maturity date on December 14, 2024 and interest rate of 3.95% per annum. On November 19, 2024, the Company borrowed RMB 257,117 (approximately $36,000) from CCB with interest rate of 3.85% per annum for one year.

(2) On February 7, 2024, Xi'an App-Chem, obtained an approval of line of credit from SPD Bank for a maximum of RMB 10.0 million (approximately $1.4 million) loans as working capital for one year and borrow RMB 10.0 million (equivalent to US$1.4 million) short-term loan out of this line of credit as working capital for one year subsequently, with interest rate of 4.1% per annum. As September 30, 2025, full amount of this loan had been repaid.

On February 21, 2025, the Company has borrowed RMB 9.5 million (approximately $1.3 million) from SPD Bank for one year with interest rate of 3.37% per annum. On July 31, 2025, the Company has borrowed RMB 2 million (approximately $0.28 million) from SPD Bank for one year with interest rate of 3.30% per annum. On August 18, 2025, the Company has borrowed RMB 7.7 million (approximately $1.1 million) from SPD Bank for one year with interest rate of 3.30% per anuum. On September 24, 2025, the Company has borrowed RMB 6.5 million (approximately $0.9 million) from SPD Bank for one year with interest rate of 2.84% per annum. As of September 30, 2025, total amount due to SPD Bank was RMB 25.7 million (approximately $3.6 million).

(3) On July 17, 2024, Xi'an App-Chem, entered into a loan agreement with Beijing Bank to borrow RMB 6.0 million (approximately US$0.8 million) short-term loan as working capital for one year, with interest rate of 4.30% per annum and maturity date on July 16, 2025. This loan had been extended for one year on July 14, 2025 with new interest rate of 3.75% and the mature date is July 9, 2026. The Company's controlling shareholder, Mr. Yongwei Hu and his wife Ms. Jing Liu provided guarantee to this loan. In addition, the Company pledged its 100% ownership interest in App-Chem Ag-tech and certain patent owned by the Company as collateral to guarantee this loan.

(4) On March 18, 2025, Xi'an App-Chem entered into a loan agreement with ICBC to borrow RMB 5.0 million (equivalent to US$702,346) as working capital for one year, with maturity date on March 14, 2026 and interest rate of 3.25% per annum.

On March 19, 2024, Xi'an App-Chem's subsidiary, Tianjin YHX, entered into a loan agreement with ICBC to borrow RMB 1.0 million (equivalent to US$137,061) as working capital for one year, with maturity date on March 18, 2025 and interest rate of 3.35% per annum. As September 30, 2025, full amount of this loan had been repaid.

(5) On March 23, 2024, Xi'an App-Chem, entered into a loan agreement with Agricultural Bank of China to borrow RMB 8.0 million (approximately US$1.1 million) short-term loan as working capital for one year, with interest rate of 3.7% per annum and maturity date on March 22, 2025. The loan had been extended for one year on March 28, 2025 with new interest rate of 3.10% per annum and the maturity date is March 27, 2026. The Company's controlling shareholder, Mr. Yongwei Hu and his wife Ms. Jing Liu provided guarantee to this loan.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

(6) On January 23, 2024, Xi'an App-Chem, entered into a loan agreement with China Bohai Bank to borrow RMB 4.0 million (equivalent to US$0.5 million) as working capital for one year, with interest rate of 3.90% per annum and maturity date on January 21, 2025. This loan had been extended for one year on January 24, 2025 with new interest rate of 3.50% per annum. The maturity date is January 23, 2026. The Company's controlling shareholder, Mr. Yongwei Hu and his wife Ms. Jing Liu, provided guarantee to this loan.

(7) On August 2, 2024, Xi'an App-Chem, entered into a loan agreement with Bank of China to borrow RMB 4.0 million (equivalent to US$0.5 million) as working capital for one year, with interest rate of 4.10% per annum and maturity date on August 1, 2025. After this loan had been repaid, the Company borrowed RMB 3.0 million (approximately 0.4 million) with interest rate of 3.00% per annum from Bank of China. The maturity date is September 30, 2026. The Company's controlling shareholder, Mr. Yongwei Hu and his wife Ms. Jing Liu, provided guarantee to this loan.

(8) On February 1, 2024, Xi'an App-Chem, entered into a loan agreement with Postal Savings Bank of China to borrow RMB 3.1 million (equivalent to US$0.4 million) as working capital for one year, with interest rate of 4.10% per annum and maturity date on January 31, 2025. On February 27, 2025, the Company borrowed RMB 1.8 million (approximately $253,000) from Postal Savings Bank with interest rate of 3.90% per annum for one year. On February 28, 2025, the Company borrowed RMB 200,000 (approximately $28,000) from Postal Savings Bank with interest rate of 4.50% per annum for one year. The Company's controlling shareholder, Mr. Yongwei Hu and his wife Ms. Jing Liu, provided guarantee to this loan. As September 30, 2025, outstanding balance was RMB 2 million ($280,938).

(9) On August 12, 2024, Xi'an App-Chem, entered into a loan agreement with Qinnong Bank to borrow RMB 3.5 million (equivalent to US$0.5 million) as working capital for one year, with interest rate of 4.00% per annum and maturity date on July 11, 2025. On January 26, 2025 the Company borrowed RMB 3.5 million (approximately $0.5 million) from Qinnong Bank with interest rate of 4.00% for one year. On August 15, 2025 the Company borrowed RMB 3.5 million (approximately $0.5 million) from Qinnong Bank with interest rate of 4.00% for one year. The Company's controlling shareholder, Mr. Yongwei Hu and his wife Ms. Jing Liu, provided guarantee to this loan. As September 30, 2025, outstanding balance was RMB 7 million ($983,284).

(10) On March 15, 2024, Xi'an App-Chem's subsidiary, Tianjin YHX, entered into a loan agreement with Bank of Communication to borrow RMB 0.3 million (equivalent to US$42,465) as working capital for one year, with maturity date on March 15, 2025 and interest rate of 3.65% per annum. On March 14, 2025, principal amount of RMB298,000 ($41,860) was renewed to February 9, 2026, with interest rate 3.65% per annum. After App-Chem sold 51% equity ownership of Tianjin YHX on June 26, 2025 for the consideration of RMB 1, the Company is no longer liable to such loan.

(11) On May 26, 2025, the Company borrowed RMB 6 million (approximately $0.84 million) from Zhengshang Bank with interest rate of 3.60% per annum for one year. The Company's controlling shareholder, Mr. Yongwei Hu and his wife Ms. Jing Liu, provided guarantee to this loan.

(12) On January 24, 2025, the Company borrowed RMB 6 million (approximately $0.84 million) from Chang'an Bank with interest rate of 3.40% per annum for one year. The Company's controlling shareholder, Mr. Yongwei Hu and his wife Ms. Jing Liu, provided guarantee to this loan.

(b) Long-term loans:

---

| | | | |
|:---|:---|:---|:---|
|  |  | **September 30,<br> 2025** | **September 30,<br> 2024** |
| Xi'an High-Tech Emerging Industry Investment Fund Partnership | (13) | $- | $46523 |
| Webank Co., Ltd. | (14) |  | 174062 |
| Huaxia Bank | (15) | 800674 | 926243 |
| Qishang Bank | (16) | 140470 | 284998 |
| Ningxia Bank | (17) | 983284 |  |
| Total |  | 1924428 | 1431826 |
| Less: current portion of long-term loans |  | (1081613) | (461765) |
| Total long-term loans |  | $842815 | $970061 |

---

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

(13) On June 26, 2017, the Company's subsidiary, Xi'an App-Chem, entered into a loan agreement with third-party Xi'an High-tech Emerging Industries Investment Fund Partnership (the "Lender") to borrow RMB 8.0 million (approximately $1.2 million) as working capital for three years, with maturity date on June 25, 2020 and an interest rate of 3.8% per annum. The Company's controlling shareholder, Mr. Yongwei Hu, pledged his proportionate ownership interest in Xi'an App-chem as collateral to safeguard this loan.

The loan matured on June 25, 2020 and not repaid on time due to COVID-19 impact. The Company has negotiated with the Lender to extend the loan repayment date to December 25, 2022 in accordance with a COVID-19 relief notice issued by local government, with adjusted interest rate of 4.75% per annum during the period from June 26, 2020 to June 25, 2021, and 5.225% per annum during the period from June 26, 2021 to December 31, 2023. The Company renew the loan agreement on January 1, 2024 for one more year with an interst rate of 5.23% and a maturity date of January 31, 2025

(14) On February 10, 2022, Xi'an App-Chem, entered into two loan agreements with Shenzhen Qianhai WeBank Co., Ltd, to borrow an aggregate of RMB 1.51 million (equivalent to US$212,808) loans as working capital for two years, with maturity date on February 12, 2024 and interest rate of 8.1% per annum. The loan was fully repaid on its maturity.

On June 20, 2021, Xi'an App-Chem's subsidiary, Tianjin YHX, entered into a loan agreement with Shenzhen Qianhai WeBank Co., Ltd, to borrow RMB 620,000 (equivalent to US$96,005) as working capital for 24 months, with maturity date on June 20, 2023 and interest rate of 14.4% per annum. The loan was fully repaid during the year ended September 30, 2023.

On March 14, 2022, Tianjin YHX, entered into another loan agreement with Shenzhen Qianhai WeBank Co., Ltd, to borrow RMB 90,000 (equivalent to US$12,652) as working capital for 24 months, with maturity date on March 20, 2024 and interest rate of 15.39% per annum. The loan was fully repaid on its maturity date.

On January 12, 2023, Tianjin YHX, entered into another loan agreement with Shenzhen Qianhai WeBank Co., Ltd, to borrow RMB 150,000 (equivalent to US$20,559) as working capital for 24 months, with maturity date on January 20, 2025 and interest rate of 13.77% per annum. After App-Chem sold 51% equity ownership of Tianjin YHX on June 26, 2025 for the consideration of RMB 1, the Company is no longer liable to such loan.

On August 23, 2023, Tianjin YHX, entered into another loan agreement with Shenzhen Qianhai WeBank Co., Ltd, to borrow RMB 500,000 (equivalent to US$68,531) as working capital for 24 months, with maturity date on August 20, 2025 and interest rate of 14.76% per annum. After App-Chem sold 51% equity ownership of Tianjin YHX on June 26, 2025 for the consideration of RMB 1, the Company is no longer liable to such loan.

On September 15, 2023, Tianjin YHX, entered into another loan agreement with Shenzhen Qianhai WeBank Co., Ltd, to borrow RMB 27,000 (equivalent to US$3,701) as working capital for 24 months, with maturity date on September 20, 2025 and interest rate of 14.76% per annum. After App-Chem sold 51% equity ownership of Tianjin YHX on June 26, 2025 for the consideration of RMB 1, the Company is no longer liable to such loan.

On December 18, 2023, Tianjin YHX, entered into another loan agreement with Shenzhen Qianhai WeBank Co., Ltd, to borrow RMB 860,000 ($120,803) as working capital for 24 months, with maturity date on December 20, 2025 and interest rate of 16.02% per annum. After App-Chem sold 51% equity ownership of Tianjin YHX on June 26, 2025 for the consideration of RMB 1, the Company is no longer liable to such loan.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

(15) On May 30, 2023, Xi'an App-Chem, obtained a RMB 2 million ($274,123) working capital loans from Huaxia Bank with fixed interest rate of 5% per annum for three years with a maturity date on May 30, 2026. As of September 30, 2025, oustanding balance of this loan was RMB 1.6 million ($224,751).

On March 1, 2024, Xi'an App-Chem, obtained a RMB 5.0 million ($712,494) working capital loans from Huaxia Bank with fixed interest rate of 4.5% per annum for two years with a maturity date on March 1, 2026. As of September 30, 2025, oustanding balance of this loan was RMB 4.1 million ($575,924).

(16) On August 22, 2023, the Company's subsidiary, Xi'an App-Chem, obtained a working capital loan of RMB3.0 million ($411,184) from Qishang Bank with a floating interest rate of 5.10% per annum (adjusted on August 22, 2025) for three years, with a maturity date of August 8, 2026.

(17) On June 13, 2025, the Company borrowed RMB 7 million (approximately $0.98 million) from Ningxia Bank with interest rate of 4.00% per annum for two years. The maturity date is June 11, 2027. The Company's controlling shareholder, Mr. Yongwei Hu and his wife Ms. Jing Liu, provided guarantee to this loan.

For the above-mentioned short-term and long-term loans from PRC banks and financial institutions, interest expense amounted to $366,180, $303,325 and $238,224 for the years ended September 30, 2025, 2024 and 2023, respectively.

**NOTE 12 — RELATED PARTY TRANSACTIONS**

(a) Due to related parties

---

| | | | |
|:---|:---|:---|:---|
|  | Related party relationship | **September 30,<br> 2025** | **September 30,<br> 2024** |
| Yongwei Hu | Chief Executive Officer and Controlling shareholder of the Company | $130983 | $81089 |
| Wenhu Guo | Senior Management of the Company |  | 11543 |
| Sheying Wang | Senior Management of the Company | 3090 | 145634 |
| Yuantao Wang | 49% shareholder of Tianjin YHX |  | 18105 |
| Shaanxi Meishengyuan Biotechnology Co., Ltd | Mr Hu, the Chief Executive Officer and Controlling shareholder of the Company, is also the majority shareholder and director of this company | - | 43 |
| Total due to related parties |  | $134073 | $256414 |

---

As of September 30, 2025 and 2024, the balance of due to related parties was comprised of the Company's borrowings from related parties and was used for working capital during the Company's normal course of business. Such advance was non-interest bearing and due on demand.

(b) Due from related parties

---

| | | | |
|:---|:---|:---|:---|
|  | Related party relationship | **September 30,<br> 2025** | **September 30,<br> 2024** |
| Wenjuan Chen | Senior Management of the Company | $6304 | $4700 |
| Lu Jiang | Employee of the Company | 757 | 768 |
| Jing Liu | Wife of the controlling shareholder | 76132 | 7709 |
| Wenhu Guo | Senior Management of the Company | 15624 | 10544 |
| Shujie Mou | Senior Management of Tianjin YHX |  | 2953 |
| Shaanxi Kangdi Health Technology Co., LTD | 25% shareholder of Xi'an Shanfang | 428572 | 6554 |
| Total due from related parties |  | $527389 | $33228 |

---

As of September 30, 2025 and 2024, the balance of due from related parties was mainly comprised of advance to the employees for business purposes, such as investment receivable from one related party, unreimbursed expenses and petty cash, etc.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

(c) Loan guarantee provided by related parties

In connection with the Company's short-term and long-term loans borrowed from PRC banks and other financial institutions, the Company's controlling shareholder, Mr. Yongwei Hu pledged his proportionate ownership interest in Xi'an App-chem, and his personal bank savings as collateral to safeguard the Company's borrowings from the banks and financial institutions. Mr. Yongwei Hu and his wife Ms. Jing Liu also jointly pledged their personal residence property to guarantee the Company's certain loans (see Note 11).

**NOTE 13 — TAXES**

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

Cayman Islands

Under the current tax laws of the Cayman Islands, Bon Natural Life Limited ("Bon Natural Life") 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.

Hong Kong

Tea Essence is incorporated in Hong Kong and is subject to profit taxes in Hong Kong at a rate of 16.5%. However, Tea Essence did not generate any assessable profits derived from Hong Kong sources in the years ended September 30, 2025, 2024 and 2023, and accordingly no provision for Hong Kong profits tax has been made in these periods.

PRC

Under PRC CIT Law, domestic enterprises and Foreign Investment Enterprises ("FIEs") are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on a case-by-case basis by local government as 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 Company's subsidiary, Xi'an App-Chem was approved as a HNTE and is entitled to a reduced income tax rate of 15% beginning October 18, 2017, which is valid for three years. In December 2020, Xi'an App-Chem successfully renewed its HNTE Certificate with local government and will continue to enjoy the reduced income tax rate of 15% for another three years by December 1, 2023.

CIT is typically governed by the local tax authority in PRC. Each local tax authority at times may grant tax holidays to local enterprises as a way to encourage entrepreneurship and stimulate local economy. The corporate income taxes for the years ended September 30, 2025, 2024 and 2023 were reported at a blended reduced rate as a result of Xi'an App-chem being approved as a HNTE and enjoying a 15% reduced income tax rate, but subsidiaries of Xi'an App-chem are subject to a 25% income tax rate. The impact of the tax holidays noted above decreased foreign taxes by $1,311,877, $234,101 and $667,258 for the years ended September 30, 2025, 2024 and 2023, respectively. The benefit of the tax holidays on net income per share (basic and diluted) $0.48, $0.25, $37.5 for the years ended September 30, 2025, 2024 and 2023, respectively.

---

| | | | |
|:---|:---|:---|:---|
|  | For the years ended September 30, | For the years ended September 30, | For the years ended September 30, |
|  | 2025 | 2024 | 2023 |
| PRC statutory income tax rate | 25.0% | 25.0% | 25.0% |
| Effect of income tax holiday | -20.3% | -32.7% | -12.0% |
| Permanent difference | -0.6% | 1.2% | 0.6% |
| Research and development deduction | 18.7% | -226.4% | -5.4% |
| Change in valuation allowance | -42.6% | 281.9% | 9.8% |
| Effective tax rate | -19.8% | 49.1% | 18.0% |

---

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

The components of the income tax provision (benefit) are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** |
|  | **2025** | **2024** | **2023** |
| Current tax provision: |  |  |  |
| Cayman Islands | $- | $- | $- |
| Hong Kong |  |  |  |
| China | 339414 | 351179 | 1000887 |
| &nbsp;&nbsp;&nbsp;Sub-total | 339414 | 351179 | 1000887 |
| Deferred tax provision (benefit): |  |  |  |
| Cayman Islands |  |  |  |
| Hong Kong |  |  |  |
| China | - | - | 1411 |
| &nbsp;&nbsp;&nbsp;Sub-total | - | - | 1411 |
| Income tax provision | $339414 | $351179 | $1002298 |

---

Deferred tax assets

The Company's deferred tax assets are comprised of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **September 30,<br> 2024** |
| Deferred tax assets derived from allowance for doubtful accounts and net operating losses ("NOL") | $864916 | $429351 |
| Less: valuation allowance | (864916) | (427963) |
| Deferred tax assets | $- | $1388 |

---

The Company follows ASC 740, "Income Taxes", which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income.

A valuation allowance is provided against deferred tax assets when the Company determines that it is more likely than not that the deferred tax assets will not be utilized in the future. The Company has subsidiaries in the PRC, among which 7 entities, including Xi'an CMIT, App-Chem Ag-tech, App-Chem Guangzhou, Tongchuan DT, Xi'an DT, Tianjin YHX and Gansu BMK, reported recurring operating losses since their inception and the chances for these subsidiaries that suffered recurring losses in prior period to become profitable in the foreseeable near future and to utilize their net operating loss carry forwards were remote. Accordingly, the Company provided valuation allowance of $864,916 and $427,963 for the deferred tax assets of these subsidiaries as of September 30, 2025 and 2024, respectively.

As of September 30, 2025, all of the Company's tax returns of its PRC subsidiaries remain open for statutory examination by PRC tax authorities.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 14 - OPERATING LEASE**

On July 1, 2025, the Company entered into a lease agreement with Xi'an High-Tech Zone Innovation Park Development Center Co., Ltd., for the lease of Room 601, Block C, Gazelle Valley, No.69, Jinye Road, High-Tech Zone, Xi'an, Shaanxi, where the current Company headquarter locates.

Balance sheet information related to the operating lease is as follows:

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **September 30,<br> 2024** |
| Operating lease assets: |  |  |
| Operating lease right of use assets | $113250 | $141895 |
| Total operating lease assets | 113250 | 141895 |
| Operating lease obligations: |  |  |
| Current operating lease liabilities | 76797 | 148904 |
| Non-current operating lease liabilities | 36601 | - |
| Total operating lease obligations | $113398 | $148904 |

---

The weighted-average remaining lease term and the weighted-average discount rate of leases are as follows:

---

| | |
|:---|:---|
|  | September 30,<br> 2025 |
| Weighted-average remaining lease term | 1.7 |
| Weighted-average discount rate | 3.76% |

---

The following table summarizes the maturity of operating lease liabilities as of September 30, 2025:

---

| | |
|:---|:---|
| 12 months ending September 30, | US$ |
| 2026 | $79023 |
| 2027 | 20740 |
| 2028 | 16969 |
| Total lease payments | 116732 |
| &nbsp;&nbsp;&nbsp;Less: imputed interest | (3334) |
| Total lease liabilities | $113398 |

---

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 15— SHAREHOLDERS' EQUITY**

Class A Ordinary Shares

Bon Natural Life Limited ("Bon Natural Life", or the "Company") was incorporated under the laws of Cayman Islands on December 11, 2019. The initial authorized number of ordinary shares was 45,000,000 shares with par value of US$0.001 each. On March 9, 2024, the Company adopted an amendment of Memorandum of Association to amend the capital of the Company into 270,000,000 ordinary shares of a par value of US$0.001 each. On April 15, 2025, the Company adopted an amendment of Memorandum of Association to amend the capital of the Company into 1,000,000,000 Class A ordinary shares of a par value of US$0.025 each. Each Class A ordinary share is entitiled to one vote on all matters subject to the vote at general meetings of the Company. On April 11, 2024 and May 19, 2025, the Company effected 1-for-10 and 1-for-25 reverse stock split, respectively. All share numbers and per share amounts have been retroactively adjusted in the accompanying consolidated financial statements.

Class B Ordinary Shares

On April 15, 2025, the Company adopted an amendment of Memorandum of Association to amend the capital of the Company into 50,000,000 Class B ordinary shares of a par value of US$0.001 each. Each Class B ordinary share is entitled to one hundred votes on all matters subject to the vote at general meetings of the Company. Class B ordinary shares are convertible to Class A ordinary shares at a rate of twenty-five Class B ordinary shares to one Class A ordinary share.

On January 17, 2023, the Company closed a private offering of ordinary shares and warrants to purchase ordinary shares. A total of 11,000 Class A ordinary shares were issued to a total of five investors (the "Investors") at a subscription price of $200 per share, for total subscription proceeds of $2,200,000. In addition, for each share subscribed for by the Investors, the Company issued one warrant to purchase one ordinary share at an exercise price of $220 per share, exercisable for a period of 24 month for a total of 11,000 shares. A commission of $168,532 were paid related to this private offering.

On May 16, 2024, the Company closed a private offering of ordinary shares and warrants to purchase ordinary shares. In connection with the offering, the Company issued (i)24,055 Class A ordinary shares and 72,165 warrants at a price of $57.25 per share, and (ii) 1,844,050 Class B ordinary shares and 221,286 warrants at a price of $2.29 per share, for total gross proceeds of approximately $5.6 million. The warrants had an exercise price of $63.00 per share to purchase Class A ordinary shares and an expiration period of four months. All warrants expired oon September 15, 2024.

On March 16, 2025, the Company priced a public offering for the sale of units as described below for aggregate gross proceeds to the Company of $12 million, before deducting placement agent fees and other estimated expenses payable by the Company. The Company offered 333,333 units, consisting of 28,000 ordinary units ("Ordinary Units") and 305,333 pre-funded units ("Pre-Funded Units"). Each Ordinary Unit consists of one Class A ordinary share of the Company, par value $0.025 per share ("Class A Ordinary Share"), one Series A warrant ("Series A Warrant") to purchase one Class A Ordinary Share at an exercise price of $36 per share and one Series B warrant ("Series B Warrant") to purchase one Class A Ordinary Share at an initial exercise price of $54 per share. Each Pre-Funded Unit consists of one pre-funded warrant ("Pre-Funded Warrant") to purchase one Class A Ordinary Share, one Series A Warrant and one Series B Warrant. The purchase price of each Ordinary Unit was $36, and the purchase price of each Pre-Funded Unit was equal to such price minus $0.025.

The Pre-Funded Warrants was exercisable immediately upon issuance and will expire when exercised in full. The Series A Warrants and Series B Warrants was immediately exercisable upon issuance and will expire on the three year anniversary of their initial issuance date.

The exercise price of the Series A Warrants was reset immediately following the thirtieth (30th) trading day (the "Reset Date") following the issuance date of the Series A Warrants to a price equal to 105% of the arithmetic average of the sum of the three lowest per share volume-weighted average prices ("VWAPs") of the Class A Ordinary Shares on the Nasdaq Capital Market ("Nasdaq") for the twenty (20) trading days immediately prior to the Reset Date, provided that such price shall not be lower than $7.2 (the "Floor Price"). As of the September 30, 2025, the exercise price of Series A Warrants was not set.

As of September 30, 2025, the Pre-Funded Warrants had been fully exercised; none of the Series A Warrants had been exercised; and Series B Warrants had been fully exercised in a cashless manner.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

Warrants

In connection with the Company's private placements in fiscal year 2024 and public offerings in fiscal year 2025, the Company issued warrants to investors to purchase the the ordinary shares at various price. A summary of warrants activity for the years ended September 30, 2025, 2024 and 2023 was as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of Warrants** | **Weighted Average Exercise Price** | **Weighted Average Remaining Term** |
| Outstanding, September 30, 2023 | 11000 | $220.00 | 0.3 |
| Granted | 293450 | $63.00 | 0.3 |
| Expired | (293450) | $63.00 | (0.3) |
| Outstanding, September 30, 2024 | 11000 | $220.00 | 0.3 |
| Granted | 972000 | $30.87 | 2.0 |
| Expired | (11000) | $220.00 | (0.3) |
| Exercised | (638667) | $28.20 | - |
| Outstanding, September 30, 2025 | 333333 | $36.00 | 2.5 |
| Exercisable, September 30, 2025 | 333333 | $36.00 | 2.5 |

---

Non-controlling interest

As of September 30, 2025, the Company's subsidiary, Xi'an App-Chem, owns the 75% of the equity interest in Xi'an DT. As of September 30, 2024, the Company's subsidiary, Xi'an App-chem, owns majority of the equity interest in the following two entities: Xi'an Dietary Therapy Medical Technology Co., Ltd ("Xi'an DT") and Tianjin Yonghexiang Bio(Tech) Co., Ltd. ("Tianjin YHX"). The following table reconciles the non-controlling interest as of September 30, 2025 and 2024:

---

| | | | |
|:---|:---|:---|:---|
|  | Xi'an DT | Tianjin YHX | Total |
| As of September 30, 2024 | $463006 | $(20158) | $442848 |
| Elimination of NCI at disposal of subsidiary |  | 59592 | 59592 |
| Net loss attributable to non-controlling interest | (6382) | (48281) | (54663) |
| Foreign currency translation adjustment | (9565) | 8847 | (718) |
| As of September 30, 2025 | $447059 | $- | $447059 |

---

On June 26, 2025, App-Chem sold 51% equity ownership of Tianjin YHX for the consideration of RMB1. The disposal does not represent a strategic shift of the Company and had no major effect on the Company's operations and financial results.

Statutory reserve and restricted net assets

Relevant PRC laws and regulations restrict the Company's PRC subsidiaries 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.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

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.

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 consolidated financial statements prepared in accordance with U.S GAAP differ from those in the statutory financial statements of the WFOE and its subsidiaries. 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, the Company's WFOE Xi'an CMIT and subsidiaries are restricted in their ability to transfer their net assets to the Company. Foreign exchange and other regulations in the PRC may further restrict the WFOE and its subsidiaries from transferring funds to the Company in the form of dividends, loans and advances.

**NOTE 16 - SHARE-BASED COMPENSATION**

The Company applied ASC 718 and related interpretations in accounting for measuring the cost of share-based compensation over the period during which the consultants are required to provide services in exchange for the issued shares. Share-based compensation awards are measured at the grant date fair value of the awards and recognized as expenses using the straight-line method over the service period.

***Shares issued for services***

On May 31, 2023, the Company entered into consulting agreements with a third-party consultant, which provide financial and acquisition consulting services. The Company issued 2,000 of its Class A ordinary shares to the consultant in lieu of cash payments for such services. The 2,000 Class A ordinary shares were valued at $174,904 and are fully expensed for the year ended September 30, 2023.

On August 2, 2023, the Company issued 280 of its Class A ordinary shares to a third-party consultant, which provide legal advice services. The 280 Class A ordinary shares were valued at $43,400 and were expensed for the year ended September 30, 2023.

On October 2, 2023, the Company granted and issued 8,800 Class A ordinary shares with a fair value of $886,820 based on the closing share price of $100.75 to several employees and consultants through the 2024 Equity Incentive plan. All issued shares were vested immediately.

On February 22, 2024, the Company granted and issued 800 shares of Class A ordinary shares with a fair value of $99,020 based on the closing price of $123.75 to a consultant that offered legal consulting services. All issued shares were vested immediately.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

On October 22, 2024, the Company issued 8,000 shares of its Class A ordinary shares to a third-party consultant, which provide legal advice services. The 8,000 shares were valued at $296,000 and were expensed for the year ended September 30, 2025.

On April 7, 2025, the Company issued 368,422 shares of its Class A ordinary shares to a third-party consultant, which provide research and development advice services. The 368,422 shares were valued at $1,750,000. During fiscal year 2025, the Company charged $301,779 into research and development expenses.

On April 7, 2025, the Company issued 200,000 shares of its Class A ordinary shares to a third-party consultant, which provide marketing consulting services. The 200,000 shares were valued at $800,000. During twelve months ended September 30, 2025, the Company charged $237,037 into selling expenses.

On April 7, 2025, the Company issued 242,858 shares of its Class A ordinary shares to a third-party consultant, which provide consulting advice services. The 242,858 shares were valued at $850,000. During fiscal year ended September 30, 2025, the Company charged $273,630 into general and administrative expenses.

On August 14, 2025, the Company issued 496,183 shares of its Class A ordinary shares to a third-party consultant, which provide research and development advice services. The 496,183 shares were valued at $650,000. During twelve months ended September 30, 2025, the Company charged $133,197 into research and development expenses.

On August 14, 2025, the Company issued 399,025 shares of its Class A ordinary shares to a third-party consultant, which provide marketing consulting services. The 399,025 shares were valued at $540,000. During fiscal year 2025, the Company charged $67,315 into selling expenses.

On August 14, 2025, the Company issued 226,027 shares of its Class A ordinary shares to a third-party consultant, which provide consulting advice services. The 226,027 shares were valued at $330,000. During twelve months ended September 30, 2025, the Company charged $36,616 into general and administrative expenses.

***Options***

The Company provides stock-based compensation to employees, directors and consultants under the 2024 Equity Incentive Plan. The fair value of the stock option was estimated on the date of grant using Black-Scholes option pricing model. The following was used in determing the fair value of the stock options granted during the fiscal years ended September 30, 2025 and 2024.

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended September 30,** | **For the Years Ended September 30,** |
|  | **2025** | **2024** |
| Exercise price | $2.5 | $2.5 |
| Expected term (years) | 5.2 | 5.2 |
| Expected stock price volatility | 150.0% | 150.0% |
| Risk-free rate of interest | 4.55% | 5.58% |
| Expected dividend rate | 0% | 0% |

---

Expected Term - The expected term of options represents the period that the Company's stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.

Expected Volatility - The Company computes stock price volatility over expected terms based on its historical common stock trading prices.

Risk-Free Interest Rate - The Company bases the risk-free interest rate on the benchmark interest rate for loans from financial institutions provided by the People's Bank of China with an equivalent remaining term.

Expected Dividend - The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

For the years ended September 30, 2025, 2024 and 2023, stock-based compensation associated with amortization of stock option expense was $47,998, $44,000 and $131,092, respectively. All stock-based compensation was recorded as a component of general and administrative expense.

The following table summarizes the Company's stock option activities:

---

| | | | |
|:---|:---|:---|:---|
|  | Number of<br> options | Weighted<br> Average <br> Exercise Price | Weighted<br> Average<br> Remaining<br> Contractual Term |
| Outstanding, September 30, 2023 | 356 | $2.5 | 9.0 |
| Granted | 469 | 2.5 | 10.0 |
| Forfeited |  |  |  |
| Exercised | - | - | - |
| Outstanding, September 30, 2024 | 825 | $2.5 | 8.4 |
| Granted | 10067 | 2.5 | 10.0 |
| Forfeited |  |  |  |
| Exercised | - | - | - |
| Exercisable, September 30, 2025 | 10892 | 2.5 | 9.6 |

---

**NOTE 17 - CONCENTRATION**

A majority of the Company's revenue and expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries' 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. For the years ended September 30, 2025, 2024 and 2023, the Company's substantial assets were located in the PRC and the Company's substantial revenues were derived from its subsidiaries located in the PRC.

As of September 30, 2025 and 2024, $6,265,978 and $657,205 of the Company's cash was on deposit at financial institutions in the PRC. Per PRC regulations, the maximum insured bank deposit amount is RMB500,000 (approximately $70,235) for each financial institution. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness. The Company has not experienced any losses in such accounts. As of 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 located in the PRC.

The Company sells its products primarily through direct distributors in the People's Republic of China (the "PRC") and to some extent, the overseas customers in European countries, North America and Middle East. For the year ended September, 2025, two customers accounted for 24.3% and 15.7% of the Company's total revenue, respectively. For the year ended September 30, 2024, three customers accounted for 38.6%, 28.0% and 15.9% of the Company's total revenue, respectively. For the year ended September 30, 2023, three customers accounted for 41.8%, 29.5% and 11.1% of the Company's total revenue, respectively.

As of September 30, 2025, four customers accounted for approximately 36.5%, 26.1%, 20.3% and 13.9% of the total accounts receivable balance, respectively. As of September 30, 2024, three customers accounted for approximately 51.4%, 19.0% and 28.8% of the total accounts receivable balance, respectively.

For the year ended September 30, 2025, four suppliers accounted for approximately 22.5%, 16.9%, 14.2% and 10.8% of the total purchases, respectively. For the year ended September 30, 2024, two suppliers accounted for approximately 50.8% and 21.4% of the total purchases, respectively. For the years ended September 30, 2023 three suppliers accounted for approximately 41.8%, 29.5% and 11.1% of the total purchases, respectively.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 18 - COMMITMENTS AND CONTINGENCIES**

From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. For the years ended September 30, 2025, 2024 and 2023, the Company did not have any material legal claims or litigation that, individually or in aggregate, could have a material adverse impact on the Company's consolidated financial position, results of operations and cash flows.

**NOTE 19— DISAGGREGATION OF REVENUES**

**<u>Revenue by product categories</u>**

The summary of our total revenues by product categories for the years ended September 30, 2025, 2024 and 2023 was as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For Years ended September 30,** | **For Years ended September 30,** | **For Years ended September 30,** |
|  | **2025** | **2024** | **2023** |
| Fragrance compounds | $8081897 | $4944475 | $14315810 |
| Health supplements (solid drinks) | 3326864 | 6740630 | 8704468 |
| Bioactive food ingredients | 7261923 | 12159451 | 6502075 |
| Total revenue | $18670684 | $23844556 | $29522353 |

---

**NOTE 20 - SUBSEQUENT EVENTS**

The Company has evaluated subsequent events through January 22, 2026, the date which the financial statements were available to be issued, and has concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements.

**NOTE 21— FINANCIAL INFORMATION OF THE PARENT COMPANY**

Rule 12-04(a), 5-04(c) and 4-08(e)(3) of Regulation S-X require the financial information of the parent company to be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. The Company performed a test on the restricted net assets of consolidated subsidiaries in accordance with such requirement and concluded that it was applicable to the Company as the restricted net assets of the Company's PRC subsidiaries exceeded 25% of the consolidated net assets of the Company, therefore, the financial statements for the parent company are included herein.

For purposes of the above test, restricted net assets of consolidated subsidiaries shall mean that amount of the Company's proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries in the form of loans, advances or cash dividends without the consent of a third party.

The financial information of the parent company has been prepared using the same accounting policies as set out in the Company's consolidated financial statements except that the parent company used the equity method to account for investment in its subsidiaries. Such investment is presented on the balance sheets as "Investment in subsidiaries" and the respective profit or loss as "Equity in earnings of subsidiaries" on the statements of comprehensive income.

The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the consolidated financial statements of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S GAAP have been or omitted.

The Company did not pay any dividend for the periods presented. As of September 30, 2025 and 2024, there were no material contingencies, significant provisions for long-term obligations, or guarantees of the Company, except for those which have been separately disclosed in the consolidated financial statements, if any.

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**PARENT COMPANY BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **As of September 30,** | **As of September 30,** |
|  | **2025** | 2024 |
| **ASSETS** |  |  |
| **CURRENT ASSETS** |  |  |
| Cash | $**45665** | $414 |
| Acquisition deposit |  |  |
| Due from subsidiaries | **23402786** | 10625991 |
| Prepaid expenses and other current assets | **2374808** | 5474580 |
| **TOTAL CURRENT ASSETS** | **25823259** | 16100985 |
| **NON-CURRENT ASSETS** |  |  |
| Investment in subsidiaries | **31727421** | 27805706 |
| **TOTAL NON-CURRENT ASSETS** | **31727421** | 27805706 |
| **TOTAL ASSETS** | $**57550680** | $43906691 |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| **LIABILITIES** | $**-** | $- |
| **COMMENTS AND CONTINGENCIES** |  |  |
| **SHAREHOLDERS' EQUITY** |  |  |
| Class A Ordinary shares ($0.025 par value, 1,000,000,000 shares authorized, 6,086,971 and 77,149 shares issued and outstanding as of September 30, 2025 and 2024, respectively) | **152174** | 1928 |
| Class B Ordinary shares ($0.001 par value, 50,000,000 shares authorized, 2,041,839shares issued and outstanding as of September 30, 2025 and 2024) | **2042** | 2042 |
| Additional paid-in capital | **40791764** | 25005100 |
| Retailed earnings | **19480271** | 21475039 |
| Accumulated other comprehensive loss | **(2875571)** | (2577418) |
| **TOTAL BON NATURAL LIFE LIMITED SHAREHOLDERS' EQUITY** | $**57550680** | $43906691 |
| **TOTAL LIABILITIES AND BON NATURAL LIFE LIMITED SHAREHOLDERS' EQUITY** | $**57550680** | $43906691 |

---

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** |
|  | **2025** | 2024 | 2023 |
| Selling expenses | $**(304352)** | $- | $- |
| General and administrative expenses | **(1554078)** | (1672772) | (846930) |
| Research and development expenses | **(434976)** | - | - |
| Total operating expenses | **(2293406)** | (1672772) | (846930) |
| Interest (expense) income | **(1001)** |  | 2 |
| Equity in (losses) earnings of subsidiaries and VIEs | **299639** | 2070944 | 5442910 |
| **Net (loss) income attributable to Bon Natural Life Limited** | **(1994768)** | 398172 | 4595982 |
| Foreign currency translation adjustment | **(298153)** | 1104027 | (1050274) |
| **Comprehensive income attributable to Bon Natural Life Limited** | $**(2292921)** | $1502199 | $3545708 |

---

**BON NATURAL LIFE LIMITED AND SUBSIDIARIES**

**PARENT COMPANY STATEMENTS OF CASH FLOWS**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** |
|  | **2025** | 2024 | 2023 |
| **CASH FLOWS FROM OPERATING ACTIVITIES:** |  |  |  |
| Net income | $**(1994768)** | $398172 | $4595982 |
| Adjustments to reconcile net cash flows from operating activities: |  |  |  |
| Equity in earnings of subsidiaries and VIEs | **(299639)** | (2070944) | (5442910) |
| Amortization of stock-based compensation | **-** | 848445 | 131092 |
| Issuance of ordinary and warrants shares for services | **1393573** | 471395 | 218304 |
| Allowance for doubt accounts | **-** | 1000000 |  |
| Changes in operating assets and liabilities: |  |  |  |
| Payables due to subsidiaries | **(12826599)** | (750021) | (1596032) |
| Prepaid expenses and other current assets | **3099772** | (5497500) | 65669 |
| **Net cash used in operating activities** | **(10627661)** | (5600453) | (2027895) |
| **CASH FLOWS FROM INVESTING ACTIVITIES:** |  |  |  |
| Payment of acquisition deposit | **-** | - | - |
| Net cash used in investing activities | **-** | - | - |
| **CASH FLOWS FROM FINANCING ACTIVITIES:** |  |  |  |
| Net proceeds from issuance of ordinary shares | **10672912** | 5600000 | 2027544 |
| Proceeds from exercise of stock options | **-** |  |  |
| Cash let to subsidiaries and VIEs | **-** | - | - |
| **Net cash provided by financing activities** | **10672912** | 5600000 | 2027544 |
| **Changes in cash** | **45251** | (453) | (354) |
| **Cash at the beginning of the year** | **414** | 867 | 1221 |
| **Cash at the end of the year** | $**45665** | $414 | $867 |

---

## Exhibit 31.1

**Exhibit 31.1**

**BON NATURAL LIFE LIMITED**

**CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-1(a)**

I, Yongwei Hu, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Annual
 Report on Form 20-F of Bon Natural Life Limited (the "Registrant") for the fiscal year ended September 30, 2025;

2. Based on my knowledge,
 this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
 statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered
 by this Annual Report;

3. Based on my knowledge,
 the consolidated financial statements, and other financial information included in this Annual Report, fairly present in all material
 respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in
 this Annual Report;

4. The Registrant's
 other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
 Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act
 Rules 13a–15(f) and 15d–15(f)) for the Registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) designed such disclosure
 controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
 information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
 particularly during the period in which this Annual Report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) designed such internal
 control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements
 for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) evaluated the effectiveness
 of the Registrant's disclosure controls and procedures and presented in this Annual Report our conclusions about the effectiveness
 of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) disclosed in this Annual
 Report any change in the Registrant's internal control over financial reporting that occurred during the period covered by
 the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control
 over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The Registrant's
 other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
 to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the
 equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) all significant deficiencies
 and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
 affect the Registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) any fraud, whether or not
 material, that involves management or other employees who have a significant role in the Registrant's internal control over
 financial reporting.

---

| | |
|:---|:---|
| By: | */s/Yongwei Hu* |
|  | Yongwei Hu |
|  | Chief Executive Officer (Principal Executive Officer) |

---

Date: January 22, 2026

## Exhibit 31.2

**Exhibit 31.2**

**BON NATURAL LIFE LIMITED**

**CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-1(a)**

I, Xin Ma, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I
 have reviewed this Annual Report on Form 20-F of Bon Natural Life Limited (the "Registrant") for the fiscal year ended
 September 30, 2025;

&nbsp;&nbsp;&nbsp;&nbsp;2. Based
 on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary
 to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
 the period covered by Annual Report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based
 on my knowledge, the consolidated financial statements, and other financial information included in this Annual Report, fairly present
 in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods
 presented in this Annual Report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The
 Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
 (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined
 in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the Registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) designed
 such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
 to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others
 within those entities, particularly during the period in which this Annual Report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) designed
 such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
 supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated
 financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) evaluated
 the effectiveness of the Registrant's disclosure controls and procedures and presented in this Annual Report our conclusions
 about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Annual Report based
 on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) disclosed
 in this Annual Report any change in the Registrant's internal control over financial reporting that occurred during the period
 covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal
 control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The
 Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
 reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing
 the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) all
 significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
 reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information;
 and

(b) any
 fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's
 internal control over financial reporting.

---

| | |
|:---|:---|
| By: | */s/ Xin Ma* |
|  | Xin Ma |
|  | Chief Financial Officer (Principal Financial and Accounting Officer) |

---

Date: January 22, 2026

## Exhibit 32.1

**Exhibit 32.1**

**BON NATURAL LIFE LIMITED**

**CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report on Form 20-F of Bon Natural Life Limited (the "Company") for the fiscal year ended September 30, 2025, as filed with the U.S. Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Annual Report fully
 complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained
 in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| By: | */s/ Yongwei Hu* |
|  | Yongwei Hu |
|  | Chief Executive Officer (Principal Executive Officer) |

---

Date: January 22, 2026

## Exhibit 32.2

**Exhibit 32.2**

**BON NATURAL LIFE LIMITED**

**CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report on Form 20-F of Bon Natural Life Limited (the "Company") for the fiscal year ended September 30, 2025, as filed with the U.S. Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Annual Report fully
 complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained
 in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| By: | */s/ Xin Ma* |
|  | Xin Ma |
|  | Chief Financial Officer (Principal Financial and Accounting Officer) |

---

Date: January 22, 2026