v3.26.1
INCOME TAXES
 12 Months Ended
Mar. 31, 2026
INCOME TAXES [Abstract]  
INCOME TAXES
12.
INCOME TAXES
 
(Loss) income before tax expenses consisted of:

    For the years ended March 31,  
    2026
    2025     2024  
BVI
  
$
(3,954,937
)
  
$
(2,427,822
)
  
$
462,157
  
Hong Kong
    
(10,570,116
)
    
(9,211,648
)
    
2,474,331
  
Other jurisdictions
     (627,285 )     (174,607 )     —  
(Loss) Income before income tax expenses
  
$
(15,152,338
)
  
$
(11,814,077
)
  
$
2,936,488
  

The income tax provision consisted of the following components:

  For the years ended March 31,  
  2026   2025
   2024
  
Current income tax expense
  
$
—
    
$
—
    
$
—
  
Deferred income tax expense
    
—
      
(153,428
)
    
(439,934
)
Total income tax expense
  
$
—
    
$
(153,428
)
  
$
(439,934
)

The Company’s subsidiaries mainly operate in Hong Kong and British Virgin Islands that are subject to taxes in the jurisdictions in which they operate, as follows:


The United States

The Company’s subsidiary is subject to the Federal and state laws of United States of America. The U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law. The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits in its income tax provision. The Company has not accrued or paid or penalties which were not material to its results of operations for the period. Deferred tax asset is not provided for as the tax losses may not be carried forward as the Company has not generated operating income yet.


British Virgin Islands (“BVI”)

The Company incorporated in the BVI and is not subject to tax on income or capital gain. In addition, payments of dividend by the Company to its shareholders are not subject to withholding tax in the BVI.


Cayman Islands

Under the current laws of the Cayman Islands, the Group’s subsidiary is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.


Hong Kong

The Company’s principal subsidiaries are incorporated in Hong Kong and are subject to Hong Kong profits tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. Under the two-tiered profit tax rates regime, the first HK$2 million assessable is subject to Hong Kong profits tax at a rate of 8.25%, and the remaining profits are subject to a rate of 16.5%. The profits of Group entities not qualifying for the two-tiered profits tax rates regime will continue to be taxed at a flat rate of 16.5%. The tax impact of two-tiered tax bucket is deemed immaterial to the Group. The provision for Hong Kong Profits Tax is calculated by applying the estimated annual effective tax rate of 16.5%. Additionally, dividend payments by the subsidiaries incorporated in Hong Kong to the Company are not subject to any Hong Kong withholding tax.

Effective January 1, 2025, Hong Kong enacted the Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025 to implement Pillar Two of the Organization for Economic Cooperation and Development (“OECD”) Base Erosion and Profit Shifting (“BEPS”) 2.0. The legislation introduces a global minimum effective tax rate of 15% for multinational enterprise (“MNE”) groups with consolidated annual revenue of at least €750 million in at least two of the four fiscal years immediately preceding the tested fiscal year. The legislation includes the Income Inclusion Rule (“IIR”) and the Hong Kong Minimum Top-up Tax (“HKMTT”).

The Company evaluated the potential impact of the Hong Kong Pillar Two legislation. Although the Company operates through subsidiaries in multiple jurisdictions, mainly in Hong Kong, and therefore constitutes a multinational group, management concluded that the Group is not currently within the scope of the Pillar Two rules because the Group’s consolidated annual revenue does not meet the €750 million threshold required for application of the legislation. Accordingly, no current tax, deferred tax, or top-up tax liability related to Pillar Two has been recognized in the consolidated financial statements.

For the years ended March 31, 2026, 2025 and 2024, the Company’s principal operations were conducted in Hong Kong. The reconciliation of the Hong Kong income tax rate of 16.5% to the effective income tax rate based on loss before income tax expense for the year ended March 31, 2026, in accordance with the updated disclosure requirement of ASU 2023-09, is as follows:
    For the year ended March 31, 2026  
Hong Kong statutory income tax rate
   $ (2,500,135 )     16.5 %
Foreign Tax Effects
                
British Virgin Islands (BVI)
                
Statutory tax rate difference between BVI and Hong Kong
     652,564       (4.3 )%
Other foreign jurisdictions
     103,502       (0.7 )%
Change in valuation allowance
     1,643,748       (10.9 )%
Nontaxable or nondeductible items
                
Depreciation
     95,451       (0.6 )%
Others
     4,870       (0.0
 )%
Changes in unrecognized tax benefits
     —
       — %
Other adjustments     -
       — %
Effective tax rate
   $ —       0.0 %

As previously disclosed for the years ended March 31, 2025 and 2024, prior to the adoption of ASU 2023-09, the reconciliation of the Hong Kong income tax rate of 16.5% to the effective income tax rate based on loss before income tax expense is as follows

   
For the years ended March 31,
 
   
2025
    
2024
  
Hong Kong statutory income tax rate
 
$
(1,949,323
)
  
$
484,521
  
Tax effect of different tax rates in other jurisdictions
    
429,401
      
(76,256
)
Tax effect on non-taxable income
    
(289
)
    
(404
)
Tax effect on under provision in respect of prior year, net
   
76,902
      
—
  
Tax effect on non-deductible expenses
    
114,159
      
32,073
  
Tax effect on change in valuation allowance     1,482,578       —  
Total income tax expense
  
$
153,428
    
$
439,934
  

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

      
As of March 31,
  
   
2026
    
2025
  
Net operating loss carried forward
  
$
2,023,656
    
$
614,768
  
Share-based compensation
   
899,010
      
848,574
  
Allowance for credit losses     327,299       —  
Others
    
(779
)
    
19,236
  
Subtotal
    
3,249,186
      
1,482,578
  
Less: valuation allowance
    
(3,249,186
)
    
(1,482,578
)
Total deferred tax assets
  
$
—
    
$
—
  

The movement of valuation allowance is as follows:

  For the years ended March 31,  
 
 2026
  
 2025
  
   2024
  
Balance as of beginning of the year
  
$
1,482,578
    
$
—
    
$
—
  
Additions
    
1,766,608
      
1,482,578
      
—
  
Balance as of end of the year
  
$
3,249,186
    
$
1,482,578
    
$
—
  

The realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future periods. The Group regularly assesses the ability to realize its deferred tax assets and establishes a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. The Group weighs all available positive and negative evidence, including its earnings history and results of recent operations, projected future taxable income, and tax planning strategies.

As of March 31, 2026 and 2025, the Group had accumulated net operating loss carryforwards of $12.26 million and $3.73 million, respectively. For entities incorporated in Hong Kong and United States, net loss can be carried forward indefinitely. The Company evaluates its valuation allowance requirements at the end of each reporting period by reviewing all available evidence, both positive and negative, and considering whether, based on the weight of that evidence, a valuation allowance is needed. When circumstances cause a change in management’s judgement about the realizability of deferred tax assets, the impact of the change on the valuation allowance is generally reflected in income from operations. The future realization of the tax benefit of an existing deductible temporary difference ultimately depends on the existence of sufficient taxable income of the appropriate character within the carryforward period available under applicable tax law. However, ASC 740-10-30-21 indicates that, notwithstanding projections of future taxable income an entity may have, forming a conclusion that a valuation allowance is not needed is difficult when there are cumulative losses in recent years. As a result, as of March 31, 2026, the Company accrued full valuation allowance against the deferred tax assets based on the evidence.

Uncertain tax positions

The Group evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. The Group continues to assess the uncertain tax positions in accordance with applicable income tax guidance and based on changes in facts and circumstances. As of March 31, 2026 and 2025, the Group did not have any unrecognized uncertain tax positions and the Group does not believe that its unrecognized tax benefits will change over the next twelve months.