NOTE 1 — DESCRIPTION OF BUSINESS AND ORGANIZATION

Lianhe Sowell International Group Ltd (the “Company” or “Sowell”) is a holding company incorporated on July 26, 2023 under the laws of the Cayman Islands. The Company has no substantial operations other than holding all of the outstanding share capital of Lianhe Sowell International Holding Group Limited (“Sowell BVI”), which was incorporated in British Virgin Islands on July 18, 2023. Sowell BVI has no substantial operations other than holding all of the outstanding share capital of Lianhe Sowell International Group Limited (“Sowell HK”) which was incorporated in Hong Kong on August 11, 2023. Sowell HK is also a holding company that is holding all of the equity interest of Lianhe Sowell International Holdings (Hangzhou) Co., Ltd (previously known as Lianhe Sowell Enterprise Management (Shanwei) Co., Ltd) (“Sowell Hangzhou”), a wholly foreign owned enterprise incorporated in the People’s Republic of China (“PRC” or “China”) on October 26, 2023, and Lianhe Sowell International Holding (Shenzhen) Co., Ltd (“Sowell International”), a wholly foreign owned enterprise incorporated in the PRC on August 6, 2024, respectively.

The Company, through its PRC subsidiaries, Sowell Hangzhou and Sowell International, holds the PRC operating entities, including Shenzhen Sowell Technology Development Company Limited, which are primarily engaged in trading of electronic products and software development.

On December 1, 2023, the Company completed its reorganization of entities under the common control of the same group of shareholders, who collectively owned a majority of the equity interests of the Company prior to the reorganization. Sowell Hangzhou wholly owned Shenzhen Sowell and other PRC operating entities, and all of these entities included in the Company are under common control, which results in the consolidation of PRC operating entities. This transaction has been accounted for as a reorganization of entities under common control. These audited consolidated financial statements have been prepared as if the reorganization had become effective at the beginning of the earliest period presented.

Disposal of a Subsidiary

On January 20, 2025, the Company transferred 100% of the equity interest it held in Wuxi Sowell Information Technology Company Limited (“Wuxi Sowell”) a former wholly-owned subsidiary of the Company to an unrelated individual person, Mr. Qigang Guo, and an unrelated company, Wuxi Qiwei Intelligence Equipment Co., Ltd. with the consideration of RMB2. The net liabilities of Wuxi Sowell were $60,622 (RMB437,466) as of January 20, 2025 and the Company generated disposal gain of a subsidiary of $60,622 (RMB437,468) for the year ended March 31, 2025.

As of the issuance date of the consolidated financial statements, the details of the Company’s subsidiaries are as follows: