YSX Tech Co., Ltd

YSX Tech Co., Ltd. operates in the Chinese auto insurance aftermarket services, scenario-based customized services, and software development and information technology services industries. The company's business is concentrated in two principal markets: Guangdong Province and Xinjiang. For fiscal year 2026, 98.7% ¹ of total revenue was generated from customers in Guangdong Province and Xinjiang, with 98.0% ² of total revenue generated in Guangdong Province alone. For fiscal year 2025, 99.9% ³ of total revenue was generated in Guangdong Province and Xinjiang, with 98.8% ⁴ generated in Guangdong Province. For fiscal year 2024, 98.0% ⁵ of revenue was generated in Guangdong Province and Xinjiang, with 92.9% ⁶ generated in Guangdong Province. The insurance service industry in China is highly competitive, and the company expects competition to persist and intensify across brand recognition, value for money, user experience, customer services, reputation, and talents.

The company operates in a highly competitive insurance service industry in China. For the fiscal year ended March 31, 2026, there were three customers that accounted for more than 10% of total revenue, at 28.9% ⁷, 27.5% ⁸ and 26.0% ⁹. For the fiscal year ended March 31, 2025, there were four customers that accounted for more than 10% of total revenue, at 27.8% ¹⁰, 23.5% ¹¹, 21.6% ¹² and 16.0% ¹³. For the fiscal year ended March 31, 2024, there were four customers that accounted for more than 10% of total revenue, at 20.4% ¹⁴, 18.4% ¹⁵, 17.1% ¹⁶ and 13.0% ¹⁷. The company's competitive advantages are not explicitly enumerated in the filing, but the business relies on relationships with enterprise customers secured through bidding or centralized procurement processes, with contracts generally having a term of one or two years. The company's business is concentrated in Guangdong Province and Xinjiang, with 98.7% ¹⁸ of total revenue generated from customers in those two provinces in fiscal year 2026.

YSX Tech Co., Ltd. generates revenue through three operating segments: Auto Insurance Aftermarket Value-Added Services, Scenario-Based Customized Services, and Software Development and Information Technology Services. The Auto Insurance Aftermarket Value-Added Services segment involves securing service contracts with enterprise customers, primarily insurance companies and brokerages, through a bidding or centralized procurement process, with contracts generally having a term of one or two years. The Scenario-Based Customized Services and Software Development and Information Technology Services segments involve entering into service contracts with clients on a per-project basis, with service terms from one to two years. The company relies on third-party collaborating vendors to deliver a variety of automobile-related services to insurance policy holders for the auto insurance aftermarket services business, and may outsource certain tasks to third-party vendors for the other segments. The company's revenue is generated through three operating segments: Auto Insurance Aftermarket Value-Added Services, Scenario-Based Customized Services, and Software Development and Information Technology Services.

For the Auto Insurance Aftermarket Value-Added Services segment, the YSX Operating Companies secure service contracts with a substantial number of enterprise customers through a bidding or centralized procurement process, with contracts generally having a term of one or two years. The company relies on third-party collaborating vendors to deliver a variety of automobile-related services to insurance policy holders. For the Scenario-Based Customized Services and Software Development and Information Technology Services segments, the company enters into service contracts with clients on a per-project basis, with service terms from one to two years. The company may outsource certain tasks of certain projects to third-party vendors based on available resources and service requirements. For the fiscal year ended March 31, 2026, the company had three collaborating vendors accounting for more than 10% of procurement costs, totaling 77.2% ¹⁹ (with each vendor accounting for 31.0% ²⁰, 27.9% ²¹ and 18.3% ²² of total purchases). For fiscal year 2025, the company had four collaborating vendors accounting for more than 10% of procurement costs, totaling 69.7% ²³ (with each vendor accounting for 23.4% ²⁴, 23.3% ²⁵, 13.0% ²⁶ and 10.0% ²⁷ of total purchases). For fiscal year 2024, the company had four collaborating vendors accounting for more than 10% of procurement costs, totaling 61.2% ²⁸ (with each vendor accounting for 22.6% ²⁹, 17.7% ³⁰, 10.8% ³¹ and 10.1% ³² of total purchases).

The company's service mix shifted materially toward vehicle driving risk screening services, which experienced revenue growth of approximately 115% ³³ for the fiscal year ended March 31, 2026. The company's net accounts receivable balance was US$43,254,197 ³⁴ as of March 31, 2026, including an accounts receivable balance of $24,579,776 ³⁵ from third-party customers and an accounts receivable balance of $18,674,421 ³⁶ from related party customers. As of March 31, 2025, net accounts receivable was US$22,987,814 ³⁷, including $17,606,279 ³⁸ from third-party customers and $5,381,535 ³⁹ from related party customers. As of March 31, 2024, net accounts receivable was US$12,035,624 ⁴⁰, including $9,163,752 ⁴¹ from third-party customers and $2,871,872 ⁴² from related party customers. The allowance for credit losses was $780,608 ⁴³, $653,470 ⁴⁴, and $382,731 ⁴⁵ as of March 31, 2026, 2025, and 2024, respectively. Total credit loss expense for the fiscal year ended March 31, 2026 was $72,956 ⁴⁶, a decrease of approximately 74% ⁴⁷ year-over-year. Revenue grew from approximately $58.5 million ⁴⁸ for the fiscal year ended March 31, 2024 to approximately $83.5 million ⁴⁹ for the fiscal year ended March 31, 2026, representing a compound annual growth rate of approximately 19.4% ⁵⁰. The allowance for credit losses as a percentage of gross accounts receivable was 3.08% ⁵¹ as of March 31, 2026, compared to 4.01% ⁵² as of March 31, 2024. Of the total receivables outstanding as of March 31, 2026, approximately 87.8% ⁵³ were outstanding for six months or less and only approximately 3% ⁵⁴ were aged beyond one year. As of March 31, 2026, the company had cash of approximately $5.9 million ⁵⁵, total current assets of approximately $54.3 million ⁵⁶ and total current liabilities of approximately $19.5 million ⁵⁷. As of March 31, 2025, the company had cash of approximately $7.1 million ⁵⁸, total current assets of approximately $40.6 million ⁵⁹ and total current liabilities of approximately $12.1 million ⁶⁰. As of March 31, 2024, the company had cash of approximately $4.3 million ⁶¹, total current assets of approximately $27.5 million ⁶² and total current liabilities of approximately $7.2 million ⁶³. The company recorded tax liabilities of $4.5 million ⁶⁴ as of March 31, 2026.

On December 19, 2024, the company completed its initial public offering of Class A ordinary shares. On September 30, 2025, the company granted restricted shares to an employee under a share-based payment arrangement. On July 31, 2025, the company granted restricted shares to a non-employee under a share-based payment arrangement. On September 28, 2025, Xinjiang Agilent Information Technology Co., Ltd., a wholly owned subsidiary of Xinjiang YSX, was deregistered. On May 8, 2026, subsequent to the fiscal year end, the company issued Class B ordinary shares to Summitway Holding Limited and Altiverse Capital Limited. The company has established internal control procedures and rules for using chops and seals, including an office automation system for application and approval. The company has identified material weaknesses in internal control over financial reporting, including insufficient qualified accounting personnel and resources possessing the requisite knowledge of U.S. GAAP for daily accounting operations, complex equity transactions, and financial reporting. The company plans to take remedial measures including hiring more qualified accounting personnel, implementing regular U.S. GAAP training programs, engaging an external consulting firm to assist with assessment of Sarbanes-Oxley compliance requirements, and establishing an internal audit team.

Total revenues for the fiscal year ended March 31, 2026 were $83,530,000 ⁶⁵, compared to $72,995,000 ⁶⁶ for the fiscal year ended March 31, 2025 and $58,500,000 ⁶⁷ for the fiscal year ended March 31, 2024. Net income for the fiscal year ended March 31, 2026 was $10,000,000 ⁶⁸, compared to $8,000,000 ⁶⁹ for the fiscal year ended March 31, 2025 and $6,000,000 ⁷⁰ for the fiscal year ended March 31, 2024. The company's net accounts receivable balance was US$43,254,197 ⁷¹ as of March 31, 2026, compared to US$22,987,814 ⁷² as of March 31, 2025 and US$12,035,624 ⁷³ as of March 31, 2024. The allowance for credit losses was $780,608 ⁷⁴, $653,470 ⁷⁵, and $382,731 ⁷⁶ as of March 31, 2026, 2025, and 2024, respectively. Total credit loss expense for the fiscal year ended March 31, 2026 was $72,956 ⁷⁷, a decrease of approximately 74% ⁷⁸ year-over-year. The company recorded tax liabilities of $4.5 million ⁷⁹ as of March 31, 2026. Revenue grew from approximately $58.5 million ⁸⁰ for the fiscal year ended March 31, 2024 to approximately $83.5 million ⁸¹ for the fiscal year ended March 31, 2026, representing a compound annual growth rate of approximately 19.4% ⁸².

The company's service mix shifted materially toward vehicle driving risk screening services, which experienced revenue growth of approximately 115% ⁸³ for the fiscal year ended March 31, 2026. The company expects future growth in the scale of its business and operations, and anticipates further expansion in certain areas and geographies. The company endeavors to establish presence in new geographical markets, introduce new types of services, and work with a variety of additional business partners, including insurance companies and brokerages, external referral sources and after-sales service providers, to address the evolving needs of end consumers. The company plans to continue to invest heavily in branding, sales and marketing to acquire and retain customers.

The company expects that labor costs of the PRC operating entities, including wages and employee benefits, will continue to increase. The company expects future growth in the scale of its business and operations, and anticipates further expansion in certain areas and geographies, which increases the complexity of operations and may cause strain on managerial, operational and financial resources. The company must continue to hire, train and effectively manage new employees. The company plans to continue to invest heavily in branding, sales and marketing to acquire and retain customers.

The company plans to continue to invest heavily in branding, sales and marketing to acquire and retain customers. The company plans to continue to take remedial measures regarding internal control over financial reporting, including hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience, implementing regular U.S. GAAP accounting and financial reporting training programs, engaging an external consulting firm to assist with assessment of Sarbanes-Oxley compliance requirements, and establishing an internal audit team. The company does not intend to pay dividends for the foreseeable future, and currently intends to retain any future earnings to finance the operation and expansion of its business.

The company faces structural headwinds including intense competition in the insurance service industry in China, which may result in pricing pressures and reduced profitability. The company's business is subject to concentration risks arising from dependence on two principal markets, Guangdong Province and Xinjiang, with 98.7% ⁸⁴ of total revenue generated from customers in those provinces in fiscal year 2026. The company also faces concentration risks from dependence on a few large customers, with three customers accounting for 28.9% ⁸⁵, 27.5% ⁸⁶ and 26.0% ⁸⁷ of total revenue in fiscal year 2026. The company faces concentration risks from dependence on a few large vendors, with three collaborating vendors accounting for 77.2% ⁸⁸ of procurement costs in fiscal year 2026. The company faces credit risks from customers, with net accounts receivable of US$43,254,197 ⁸⁹ as of March 31, 2026. The company faces risks related to health epidemics, severe weather conditions, and other catastrophes, which could materially and adversely affect its business. The company faces risks related to disruption to its technology systems, including cybersecurity breaches or attacks. The company faces risks related to the inability to manage growth or execute strategies effectively. The company faces risks related to the VIE structure, including the possibility that the PRC government may find the VIE Agreements do not comply with PRC regulations, which could result in severe penalties and cause the value of Class A Ordinary Shares to decline or become worthless.

The company faces material risks from customer concentration, with three customers accounting for 28.9% ⁹⁰, 27.5% ⁹¹ and 26.0% ⁹² of total revenue in fiscal year 2026, and the loss of any of these customers could materially and adversely affect results. Vendor concentration is also significant, with three collaborating vendors accounting for 77.2% ⁹³ of procurement costs in fiscal year 2026. Geographic concentration is acute, with 98.7% ⁹⁴ of total revenue generated from customers in Guangdong Province and Xinjiang in fiscal year 2026. The company's VIE structure presents substantial legal risk, as the VIE Agreements have not been tested in a PRC court and, if found to violate PRC regulations, could result in severe penalties including revocation of business licenses, restriction of operations, or restructuring requirements that could cause the value of Class A Ordinary Shares to decline or become worthless. The company has identified material weaknesses in internal control over financial reporting, including insufficient qualified accounting personnel and resources possessing the requisite knowledge of U.S. GAAP for daily accounting operations, complex equity transactions, and financial reporting. The company faces credit risk from customers, with net accounts receivable of US$43,254,197 ⁹⁵ as of March 31, 2026, and an allowance for credit losses of $780,608 ⁹⁶ as of the same date.

The overall tone of management's message is not explicitly captured in a single letter to shareholders within the filing. However, the filing states that the company plans to continue to take remedial measures regarding internal control over financial reporting, including hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience, implementing regular U.S. GAAP accounting and financial reporting training programs, engaging an external consulting firm to assist with assessment of Sarbanes-Oxley compliance requirements, and establishing an internal audit team. The company's strategic priorities include managing growth effectively, expanding into new geographical markets, introducing new types of services, and working with additional business partners. The company also emphasizes the importance of maintaining relationships with customers and third-party collaborating vendors, and the need to continue investing in branding, sales and marketing to acquire and retain customers.