8. INTANGIBLE ASSETS

The intangible assets are including (a) land use right and (b) others and details are as follows: -

8(a) Land Use Right

The Company had land use rights over six plots (2024: Six plots) of state-owned land in The People’s Republic of China (“PRC”) where the Company’s manufacturing and storage facilities are located. The land use rights are not transferable and have remaining tenures of 22 years to 34 years (2024: 23 years to 35 years)

As of March 31, 2025, the land use rights of the Company with net carrying amount of US$3,090,000 (March 31, 2024: US$3,254,000) were pledged as security for the facilities of short-term bank loans (Note 9).

For the years ended March 31, 2023, 2024, and 2025, amortization expenses included in cost of sales, administrative expenses, and selling expenses were approximately US$0, US$132,000, and US$0; US$0, US$127,000, and US$0; and US$0, US$127,000, and US$0, respectively.

8 (b) Other intangible assets

Customer base and operating license arose from business combinations in 2011. Except for software, all other intangible assets had been fully amortized or impaired as of March 31, 2022.

Software

The new software is a MES system, which was launched in March 2024. It is an integrated computerized system (encompassing both hardware and software) that offers a range of tools and methodologies for executing workshop production tasks. Its aim is to boost production efficiency, optimize resource allocation, and ultimately augment the financial performance of enterprises. The software’s amortization period is 5 years, with a remaining amortization period from 2025 to 2029.

Patent

This represents the patent right bought from the patent holder for the production of new Super Durable Zipper; hence it has been identified as an intangible asset from these acquisitions.

Customer base

The vast majority of the products by Fulong Zipper and Jianxin Weaving are transacted with existing customers whom the subsidiaries have long-term relationship with and repeated orders from these customers, hence it has been identified as an intangible asset arising from these acquisitions.

Operating license

The electroplating industry is regulated tightly in PRC due to its pollutive nature and there will be limited granting of such licenses to new entrants based on current legislation, hence it has been identified as an intangible asset arising from these acquisitions.

Amortization expense

The amortization of software, patent, customer base and operating license is included in the “Administrative expense” line items in profit or loss respectively.

Impairment loss recognized previously

In 2013, full impairment was recognized on the carrying amount of patent, customer base and operating license. Since then, the subsidiaries became and remained dormant.