v3.26.1
Income Taxes
 6 Months Ended
Mar. 31, 2026
Income Taxes [Abstract]  
INCOME TAXES

14. INCOME TAXES

 

Cayman Islands

 

Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.

 

Hong Kong

 

According to Tax (Amendment) (No. 3) Ordinance 2018 published by Hong Kong government, from April 1, 2018, under the two-tiered profits tax rates regime, the profits tax rate for the first HKD2 million of assessable profits will be lowered to 8.25% (half of the rate specified in Schedule 8 to the Inland Revenue Ordinance (IRO)) for qualified corporations, and assessable profits above HK$2,000,000 will be taxed at 16.5%. The assessable profits of corporations which is not qualifying for the two-tiered profits tax rates regime, will continue to be taxed at a flat rate of 16.5%.

 

PRC

 

Under the Enterprise Income Tax Laws of the PRC, or the EIT Laws, domestic enterprises and Foreign Investment Enterprises, or the FIEs, are usually subject to a unified 25% enterprise income tax rate, while preferential tax rates, tax holidays and tax exemption may be granted on case-by-case basis.

 

Japan

 

Japan has a progressive tax system, of which its corporate income tax is calculated on the estimated assessable profits for the six months ended March 31, 2026 and 2025 times applicable tax rates. EXTEND is subject to national corporate income tax, inhabitant tax, and enterprise tax in Japan, which in the aggregate, resulted in the statutory income tax rate of approximately 36.8% and 36.8% for the six months ended March 31, 2026 and 2025, respectively.

 

The effective income tax rate was approximately 0% and -12.39% for the six months ended March 31, 2026 and 2025, respectively.

 

The income tax expenses consist of the following components:

 

   For the six months ended
March 31,		 
   2026   2025 
Current income tax expenses  $
—
    340,441 
Deferred income tax benefit   
—
    
—
 
Total income tax expenses  $
—
   $340,441 

A reconciliation between the Group’s actual provision for income taxes and the provision at Japan statutory rate is as follows:

 

   For the six months ended
March 31,		 
   2026   2025 
Loss before income tax expenses  $(1,670,078)  $(2,746,918)
Computed income tax benefit with statutory tax rate   (615,034)   (1,011,597)
Effect of preferential tax rate   19    (21,205)
Impact of different tax rates in other jurisdictions   214,875    821,728 
Non-deductible expenses   16,601    2,988 
Utilized tax gain   
—
    
—
 
Changes in valuation allowance   383,539    548,527 
Income tax expenses  $
—
   $340,441 

 

(1) Since the company’s main place of business is in Japan, the Japanese tax rate has been chosen as the statutory tax rate.

 

As of March 31, 2026 and September 30, 2025, the significant components of the deferred tax assets are summarized below:

 

   As of
March 31,
2026		   As of
September 30,
2025		 
Deferred tax assets:        
Net operating loss carried forward  $2,880,266   $2,479,634 
Unrealized foreign exchange loss   (43,244)   (30,668 )
Total deferred tax assets   2,837,022    2,448,966 
Valuation allowance   (2,837,022)   (2,448,966)
Deferred tax assets, net of valuation allowance  $
—
   $
—
 

 

The Group operates through subsidiaries and valuation allowance is considered for each of the entities on an individual basis. The Group recorded valuation allowance against deferred tax assets of those entities that are in a cumulative financial loss position and are not forecasting profits in the near future as of March 31, 2026 and September 30, 2025. In making such determination, the Group also evaluates a variety of factors including the Group’s operating history, accumulated deficit, existence of taxable temporary differences and reversal periods. The Group has recognized a valuation allowance of $2,837,022 and $2,448,966 as of March 31, 2026 and September 30, 2025, respectively.

 

Changes in valuation allowance are as follows:

 

   As of March 31, 2026   As of September 30, 2025 
Valuation allowance:        
Balance at beginning of the year  $2,448,966   $1,310,463 
Additions   382,859    1,157,678 
Loss utilized   
—
    
—
 
Exchange difference   5,197    (19,175)
Balance at end of the year  $2,837,022   $2,448,966 

As of March 31, 2026 net operating loss carryforwards will expire, if unused, in the following amounts:

 

2026  $146,286 
2027   514,331 
2028   1,592,564 
2029   1,689,118 
2030   7,480,918 
2031   1,374,204 
Total  $12,797,421