GRAN 20-F
Grande Group Ltd/HK (GRAN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
OR
For the fiscal year ended
OR
OR
For the transition period from to
Commission file number:
(Exact name of Registrant as specified in its charter)
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The (Nasdaq Capital Market) |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each
of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐ Yes ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
☐ Yes ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |||
| Emerging growth company |
If an emerging growth company that prepares its
financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange
Act.
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| International Financial Reporting Standards as issued | Other ☐ | |||
| by the International Accounting Standards Board ☐ |
| * | If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. |
☐ Item 17 ☐ Item 18
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).
☐ Yes
Table of Contents
i
INTRODUCTION
Except where the context otherwise requires and for purposes of this annual report only the term:
| ● | “Amended and Restated Memorandum and Articles of Association” are to the amended and restated memorandum and articles of association of the Company adopted on November 11, 2024 and filed with the Registry of Corporate Affairs of the British Virgin Islands on November 18, 2024; |
| ● | “BCA” are to the BVI Business Companies Act (Revised) of the BVI, as amended, supplemented or otherwise modified from time to time; |
| ● | “BVI” are to the British Virgin Islands; |
| ● | “CAGR” are to compounded annual growth rate, the year-on-year growth rate over a specific period of time; |
| ● | “China” or the “PRC” are to the People’s Republic of China, including Hong Kong and the Macau Special Administrative Regions of the People’s Republic of China for the purposes of this annual report only; |
| ● | “Class A Ordinary Shares” are to the class A ordinary shares of Grande (as defined below), par value US$0.00001 per share; |
| ● | “Class B Ordinary Shares” are to the class B ordinary shares of Grande (as defined below), par value US$0.00001 per share; |
| ● | “Code of Conduct” are to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission of Hong Kong; |
| ● | “Controlling Shareholder” are to Grande Holding Limited, a company incorporated under the laws of the Cayman Islands; |
| ● | “ECM” are to equity capital market; |
| ● | “Exchange Act” are to the Securities Exchange Act of 1934; |
| ● | “FRR” are to the Securities and Futures (Financial Resources) Rules (Chapter 571N of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time; |
| ● | “Grande Capital” are to Grande Capital Limited, a company with limited liability incorporated under the laws of Hong Kong, and a direct wholly-owned subsidiary of Grande. |
| ● | “HKD,” “HK Dollar,” or “HK$” are to the legal currency of Hong Kong; |
| ● | “HK Listing Rules” are to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong and the Rules Governing the Listing of Securities on GEM of The Stock Exchange of Hong Kong (as applicable), as amended, supplemented or otherwise modified from time to time; |
ii
| ● | “HKSE” are to The Stock Exchange of Hong Kong Limited; |
| ● | “HKSFC” are to the Securities and Futures Commission of Hong Kong; |
| ● | “HK Takeovers Codes” are to the Codes on Takeovers and Mergers and Share Buybacks issued by the HKSFC, as amended, supplemented or otherwise modified from time to time; |
| ● | “IPO(s)” are to initial public offering(s), the listing of a company’s shares on a stock exchange; |
| ● | “Licensed Representative(s)” are to an individual who is granted a license under section 120(1) or 121(1) of the SFO to carry on one or more than one regulated activities; |
| ● | “Mainland China” are to the mainland of the People’s Republic of China; excluding Taiwan, Hong Kong and the Macau Special Administrative Regions of the People’s Republic of China for the purposes of this annual report only; |
| ● | “Operating Subsidiaries” are to Grande Capital, Wicens International, and Shenzhen Zhenjing; |
| ● | “Ordinary Shares” are to Class A and Class B Ordinary Shares; |
| ● | “Responsible Officer(s)” or “RO” are to a Licensed Representative who is also approved as a responsible officer under section 126 of the SFO to supervise one or more than one regulated activity of the licensed corporation to which he/she is accredited; |
| ● | “RMB” and “Renminbi” refer to the legal currency of the PRC. |
| ● | “SEC” are to the U.S. Securities and Exchange Commission; |
| ● | “SFO” are to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time; |
| ● | “Shenzhen Zhenjing” refers to Shenzhen Zhenjing Investment Consulting Co., Ltd., a company incorporated under the laws of Mainland China, and wholly-owned by Grande through Grande Consulting Limited and Proplus Company Limited. |
| ● | “Sponsor Guidelines” are to the Additional Fit and Proper Guidelines for Corporations and Authorized Financial Institutions Applying or Continuing to Act as Sponsors and Compliance Advisers published by the HKSFC; |
iii
| ● | “Sponsor Coupling” refers to the arrangement required by HKSE as stipulated by Main Board Listing Rules Rule 3A.02 and Rule 3A.43 that, effective from 5 August 2022, as in the case of Main Board listing on the HKSE, a sponsor for IPOs in HKSE must also be appointed as one of the overall coordinators, who is an underwriter who acts as the “head of syndicates” responsible for the overall management of the share offering, coordination of book building or placing activities, and exercise control over book building activities and market allocation recommendations to the issuer; |
| ● | “US$”, “$”, “dollars” or “U.S. dollars” are to the legal currency of the United States; |
| ● | “U.S. GAAP” are to generally accepted accounting principles in the United States; and |
| ● | “we,” “us,” “our,” “the Company” and “Grande” are to Grande Group Limited, a BVI business company, and does not include its subsidiaries. Where appropriate, we shall refer to the subsidiaries by their legal names, collectively as “our subsidiaries”, or “Operating Subsidiaries” when we refer to our operating entities, as the case may be, and clearly identify the entity in which investors are purchasing an interest. |
| ● | “Wicens International” refers to Wicens International Securities Limited, formerly known as “Grande Securities Limited”, which was incorporated under the laws of Hong Kong on March 5, 2021. Wicens International Securities Limited is a partially owned subsidiary by Grande, through China CreateAlliance Holdings Limited. |
Grande is a holding company that does not have any material operations of its own, with its operations conducted in Hong Kong and Mainland China through its Operating Subsidiaries in Hong Kong and Mainland China. The functional currency of the Grande and all the other subsidiaries is U.S. dollars, Hong Kong Dollar or Renminbi.
The consolidated financial statements of the Company are translated from the functional currency into U.S. dollars. Assets and liabilities denominated in Hong Kong Dollar or RMB are translated into U.S. dollars using the applicable exchange rates at the balance sheet date. Equity accounts other than earnings generated in current period are translated into U.S. dollars at the appropriate historical rates. Revenues, expenses, gains and losses are translated into U.S. dollars at the average rates of exchange for the year. The resulting foreign currency translation adjustments are recorded in accumulated other comprehensive loss as a component of shareholders’ equity. The year-end and year-average exchange rates are as follows:
| March 31, | ||||||||||||||||||||||||
| 2026 | 2025 | 2024 | ||||||||||||||||||||||
| Year-end | Year-average | Year-end | Year-average | Year-end | Year-average | |||||||||||||||||||
| U.S. dollars: Hong Kong Dollar | 7.8000 | 7.8000 | 7.8000 | 7.8000 | 7.8000 | 7.8000 | ||||||||||||||||||
| U.S. dollars: RMB | 7.1000 | 7.1000 | 7.1000 | 7.1000 | 7.1000 | 7.1000 | ||||||||||||||||||
Foreign currency transaction gains and losses are a result of the effect of exchange rate changes on transactions denominated in currencies other than the functional currency of the respective subsidiary. Foreign currency denominated financial assets and liabilities are re-measured at the balance sheet date exchange rate. Exchange gains and losses resulting from those foreign currency transactions denominated in a currency other than the functional currency are recorded in the consolidated statements of operations.
We have made rounding adjustments to some of the figures included in this annual report. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.
We obtained the industry and market data used in this annual report or any document incorporated by reference from industry publications, research, surveys and studies conducted by third parties and our own internal estimates based on our management’s knowledge and experience in the markets in which we operate. We did not, directly or indirectly, sponsor or participate in the publication of such materials, and these materials are not incorporated in this annual report other than to the extent specifically cited in this annual report. We have sought to provide current information in this annual report and believe that the statistics provided in this annual report remain up-to-date and reliable, and these materials are not incorporated in this annual report other than to the extent specifically cited in this annual report.
iv
FORWARD-LOOKING STATEMENTS
This annual report on Form 20-F contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts are forward-looking statements. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
You can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements include, but are not limited to, statements about:
| ● | future financial and operating results, including revenues, income, expenditures, cash balances and other financial items; |
| ● | our ability to execute our growth, expansion and acquisition strategies, including our ability to meet our goals; |
| ● | current and future economic and political conditions; |
| ● | our expectations regarding demand for and market acceptance of our subsidiaries’ services; |
| ● | our expectations regarding the expansion of our subsidiaries’ client base; |
| ● | our subsidiaries’ relationships with their business partners; |
| ● | competition in our industries; |
| ● | relevant government policies and regulations relating to our industries; |
| ● | our ability to obtain and maintain all necessary government certifications, approvals, and/or licenses to conduct our business; |
| ● | ability to managing our growth effectively; |
| ● | our capital requirements and our ability to raise any additional financing which we may require; |
v
| ● | our subsidiaries’ ability to protect their intellectual property rights and secure the right to use other intellectual property that they deem to be essential or desirable to the conduct of their business; |
| ● | the dependence on our senior management and key employees; and |
| ● | our ability to hire and retain qualified management personnel and key employees in order to develop our subsidiaries’ business; |
| ● | overall industry and market performance; |
| ● | impact of slow down in general economy in China on our business and financial conditions, impact it may have on our operations, the demand for our products and services, and economic activity in general; |
| ● | other assumptions described in this annual report underlying or relating to any forward-looking statements. |
You should read this annual report and the documents that we refer to in this annual report and have filed as exhibits to this annual report completely and with the understanding that our actual future results may be materially different from what we expect. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the heading “Risk Factors” and elsewhere in this annual report. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.
You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in this annual report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
We would like to caution you not to place undue reliance on these forward-looking statements and you should read these statements in conjunction with the risk factors disclosed in “Item 3. Key Information—3.D. Risk Factors.” Those risks are not exhaustive. We operate in an evolving environment. New risks emerge from time to time and it is impossible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in any forward-looking statement. We do not undertake any obligation to update or revise the forward-looking statements except as required under applicable law. You should read this annual report and the documents that we reference in this annual report completely and with the understanding that our actual future results may be materially different from what we expect.
vi
PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable for annual reports on Form 20-F.
Item 2. Offer Statistics and Expected Timetable
Not applicable for annual reports on Form 20-F.
Item 3. Key Information
3.A. [Reserved]
3.B. Capitalization and Indebtedness
Not applicable for annual reports on Form 20-F.
3.C. Reasons for the Offer and Use of Proceeds
Not applicable for annual reports on Form 20-F.
3.D. Risk Factors
You should carefully consider the following risk factors, together with all of the other information included in this Annual Report. Investment in our securities involves a high degree of risk. You should carefully consider the risks described below together with all of the other information included in this Annual Report before making an investment decision. The risks and uncertainties described below represent our known material risks to our business. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, you may lose all or part of your investment.
Risks Relating to our Operation in Hong Kong and Mainland China
The PRC government may exercise significant direct oversight and discretion over the conduct of the business of our subsidiaries and may intervene or influence their operations, which could result in a material change in the operations of our Operating Subsidiaries and/or the value of Grande’s Class A Ordinary Shares. Our subsidiaries may be subject to laws and regulations of the PRC, which may impair our ability to operate profitably and result in a material negative impact on our operations and/or the value of our Class A Ordinary Shares. Furthermore, the changes in the policies, regulations, rules, and the enforcement of laws of Mainland China may also occur quickly with little advance notice and our assertions and beliefs of the risk imposed by the Mainland China legal and regulatory system cannot be certain.
Grande is a holding company, and we conduct our operations through our Operating Subsidiaries in Hong Kong and Mainland China. Our Operating Subsidiaries, Grande Capital and Wicens International, are located and operate its business in Hong Kong, a special administrative region of the PRC, and Shenzhen Zhenjing located and operate its business in Mainland China. However, due to long-arm provisions under the current PRC laws and regulations, there remains regulatory and legal uncertainty with respect to the implementation of laws and regulations of Mainland China to Hong Kong. There is no guarantee that the PRC government may not choose to implement the laws of Mainland China to Hong Kong. The PRC government may choose to exercise significant oversight and discretion, and the regulations to which our Operating Subsidiaries are subject may change rapidly and with little notice to them or our shareholders.
1
The laws and regulations in Mainland China are evolving, and their enactment timetable, interpretation, enforcement, and implementation involve significant uncertainties and may change quickly with little advance notice, along with the risk that the PRC government may intervene or influence our Operating Subsidiary’s operations at any time could result in a material change in our operations and/or the value of our securities. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and inconsistently with our Operating Subsidiaries’ current policies and practices. The laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or interpreted in a manner different from our understanding of these laws and regulations. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.
The laws, regulations, and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:
| ● | delay or impede our development; |
| ● | result in negative publicity or increase our operating costs; |
| ● | require significant management time and attention; |
| ● | cause devaluation of our securities or delisting; and, |
| ● | subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business operations. |
We are aware that recently the PRC government initiated a series of regulatory actions and statements to regulate business operations in certain areas in Mainland China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over Mainland China-based companies listed overseas using a variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. Additionally, companies are required to undergo a cybersecurity review if they hold large amounts of data related to issues of national security, economic development or public interest before carrying out mergers, restructuring or splits that affect or may affect national security. These statements were recently issued, and their official guidance and interpretation remain unclear at this time.
Based on our understanding of the PRC laws and regulations currently in effect as of the date of this annual report, we are not currently required to obtain permission from the PRC government to list on a U.S. securities exchange. Furthermore, while we believe that our Operating Subsidiaries’ operations are not currently being affected, they may be subject to additional and stricter compliance requirements in the near term. Compliance with new regulatory requirements or any future implementation rules may present a range of new challenges which may create uncertainties and increase our Operating Subsidiaries’ cost of operations.
The PRC government may intervene or influence our Operating Subsidiaries’ operations at any time and may exert more control over offerings conducted overseas and foreign investment in China-based issuers, which may result in a material change in our Operating Subsidiaries’ operations and/or the value of our Ordinary Shares. Any legal or regulatory changes that restrict or otherwise unfavorably impact our Operating Subsidiaries’ ability to conduct their operations could decrease demand for their services, reduce revenues, increase costs, require them to obtain more licenses, permits, approvals or certificates or subject them to additional liabilities. To the extent that any new or more stringent measures are implemented, our business, financial condition and results of operations could be adversely affected, and our Ordinary Shares could decrease in value or become worthless.
2
There is no guarantee that this will continue to be the case in the future in relation to the continued listing of our securities on a securities exchange outside of the PRC, or even when such permission is obtained, it will not be subsequently denied or rescinded. The PRC government may intervene or influence our operations at any time or may exert control over offerings conducted overseas and foreign investment in Hong Kong-based issuers, which may result in a material change in our operations and/or the value of our Class A Ordinary Shares.
We may become subject to a variety of PRC laws and other regulations regarding cybersecurity, data privacy, data protection or any other PRC laws and regulations related thereto, and any failure to comply with applicable laws and regulations could have a material and adverse effect on our business, financial condition and results of operations and may hinder our ability to maintain our listing on a U.S. or other foreign exchange, access the capital markets or issue securities in the future, and cause our Class A Ordinary Shares to significantly decline in value or become worthless.
We may become subject to a variety of laws and regulations in the PRC regarding privacy, data security, cybersecurity, data protection and overseas offering. These laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly with respect to foreign laws. In particular, there are numerous laws and regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal information and other user data. Such laws and regulations often vary in scope, may be subject to differing interpretations, and may be inconsistent among different jurisdictions.
On June 10, 2021, the Standing Committee of the National People’s Congress enacted the PRC Data Security Law, which took effect on September 1, 2021. The law requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection system for data security.
On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws.
On August 20, 2021, the 30th meeting of the Standing Committee of the 13th National People’s Congress voted and passed the “Personal Information Protection Law of the People’s Republic of China”, or “PRC Personal Information Protection Law,” or the “PIPL,” which became effective on November 1, 2021. The PRC Personal Information Protection Law applies to the processing of personal information of natural persons within the territory of China that is carried out outside of China where (1) such processing is for the purpose of providing products or services for natural persons within China, (2) such processing is to analyze or evaluate the behavior of natural persons within China, or (3) there are any other circumstances stipulated by related laws and administrative regulations. Pursuant to the PIPL, personal data processors (“data processors”) shall meet one of the conditions in order to transmit personal information overseas for their business operations: (i) passing the security evaluation organized by the Cyberspace Administration of China (the “CAC”); (ii) acquiring personal information protection certification from the professional organizations regulated by the CAC; (iii) adopting the standard contract forms stipulated by the CAC when entering into contracts with overseas information receivers, setting forth the rights and obligations of the parties; and (iv) other conditions regulated by laws, regulations and the CAC. Prior to the cross-border provision of personal information of the natural persons, personal information processors shall obtain the approval of the corresponding natural persons and advise them of the overseas receiver’s name, contact information, processing purpose and methods, classification of personal information and information reception procedures, etc.
3
On December 28, 2021, the CAC, jointly with the relevant authorities, formally published Measures for Cybersecurity Review (2021) which took effect on February 15, 2022 and replace the former Measures for Cybersecurity Review (2020) issued on July 10, 2021. Measures for Cybersecurity Review (2021) stipulates that in addition to “operator of critical information infrastructure,” any “data processor” carrying out data processing activities that affect or may affect national security should also be subject to cybersecurity review, and further elaborated the factors to be considered when assessing the national security risks of the relevant activities, including, among others, (i) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or transferred outside the country; and (ii) the risk of critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, or maliciously used by foreign governments after listing abroad. CAC has said that under the proposed rules companies holding data on more than one million users must apply for cybersecurity approval when seeking listings in other nations because of the risk that such data and personal information could be “affected, controlled, and maliciously exploited by foreign governments.”
Our Operating Subsidiaries may in the future collect and store certain data (including certain personal information) from our customers, who may be PRC individuals, in connection with our business and operations and for “Know Your Customers” purposes (to combat money laundering). Given that: (i) two of our Operating Subsidiaries are incorporated and located in Hong Kong and the other Operating Subsidiary is incorporated and located in mainland China; and (ii) we have an Operating Subsidiary engaged in business operations in mainland China, we currently may expect the Measures for Cybersecurity Review (2021) and the PRC Personal Information Protection Law to apply to our Operating Subsidiaries.
It is highly uncertain what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any. It is also highly uncertain what the potential impact such modified or new laws and regulations will have on the daily business operations of our Operating Subsidiaries, their respective abilities to accept foreign investments and the listing of our Class A Ordinary Shares on a U.S. or other foreign exchange. Should new regulations be introduced, there remains significant uncertainty in the interpretation and enforcement of relevant PRC cybersecurity laws and regulations. If any of our Operating Subsidiaries is deemed to be an “Operator” required to file for cybersecurity review in connection with our continued listing or future securities offerings or if the Measures for Cybersecurity Review or the PIPL becomes applicable to our Operating Subsidiaries, the business operations of our Operating Subsidiaries and the continued listing of our Class A Ordinary Shares in the United States could be subject to the CAC’s cybersecurity review in the future. We may be required to complete the filing procedures with the CSRC pursuant to the Trial Administrative Measures. If our Operating Subsidiaries become subject to the CAC or CSRC review, we cannot assure you that our Operating Subsidiaries will be able to comply with the regulatory requirements in all respects. In the event of a failure to comply, our Operating Subsidiaries may become subject to fines and other penalties, which may have a material adverse effect on our business, operations and financial condition, may adversely affect our continued listing or capital-raising activities, and may cause our Ordinary Shares to significantly decline in value or become worthless.
If the Chinese government chooses to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in Hong Kong-based issuers, such action may significantly limit or completely hinder our ability to maintain our listing or access the capital markets and cause our Class A Ordinary Shares to significantly decline in value or become worthless. As of the date of this Annual Report, no effective laws or regulations in the PRC explicitly require us to seek approval from any other PRC governmental authorities in connection with our current overseas listing, nor has the Company or any of our Operating Subsidiaries received any inquiry, notice, warning or sanctions from the CSRC or any other PRC governmental authorities.
4
Compliance with Hong Kong’s Personal Data (Privacy) Ordinance and any such other existing or future data privacy related laws, regulations and governmental orders may entail significant expenses and could materially affect our business.
Although we and our subsidiaries are not subject to cybersecurity review by the CAC nor any other PRC authorities to obtain regulatory approval regarding the data privacy and personal information requirements from the CAC nor any other PRC authorities for ours and our Operating Subsidiaries operations in Hong Kong, we and our subsidiaries are subject to a variety of laws and other obligations regarding data privacy and protection in Hong Kong.
In particular, the Personal Data (Privacy) Ordinance (Chapter 486 of the laws of Hong Kong) (“PDPO”) imposes a duty on any data user who, either alone or jointly with other persons, controls the collection, holding, processing or use of any personal data which relates directly or indirectly to a living individual and can be used to identify that individual. Under the PDPO, data users shall take all practicable steps to protect the personal data they hold from any unauthorized or accidental access, processing, erasure, loss, or use. Once collected, such personal data should not be kept longer than necessary for the fulfilment of the purpose for which it is or is to be used and shall be erased if it is no longer required, unless erasure is prohibited by law or is not in the public interest. The PDPO also confers on the Privacy Commissioner for Personal Data (“Privacy Commissioner”) power to conduct investigations and institute prosecutions. The data protection principles (collectively, the “DPP”), which are contained in Schedule 1 to the PDPO, outline how data users should collect, handle, and use personal data, complemented by other provisions imposing further compliance requirements. The collective objective of DPPs is to ensure that personal data is collected on a fully informed basis and in a fair manner, with due consideration towards minimizing the amount of personal data collected. Once collected, the personal data should be processed in a secure manner and should only be kept for as long as necessary for the fulfilment of the purposes of using the data. Use of the data should be limited to or related to the original collection purpose. Data subjects are given certain rights, inter alia: (a) the right to be informed by a data user whether the data user holds personal data of which the individual is the data subject; (b) if the data user holds such data, to be supplied with a copy of such data; and (c) the right to request correction of any data they consider to be inaccurate. The Commissioner may carry out criminal investigations and institute prosecution for certain offenses. Depending on the severity of the cases, the Privacy Commissioner will decide whether to prosecute or refer cases involving suspected commission to the Department of Justice of Hong Kong. Victims may also seek compensation by civil action from data users for damage caused by a contravention of the PDPO. The Commissioner may provide legal assistance to the aggrieved data subjects if the Commissioner deems fit to do so.
We believe that we and our subsidiaries have been in compliance with the data privacy and personal information requirements of the PDPO. However, if we or our Operating Subsidiaries conducting business operations in Hong Kong have violated certain provisions of the PDPO, we could face significant civil penalties and/or criminal prosecution, which could adversely affect our business, financial condition, and results of operations.
Given the current PRC regulatory environment, it is uncertain whether the Company may be required to complete filings with the CSRC in the future in connection with overseas securities activities. We have been closely monitoring regulatory developments in the PRC regarding any necessary approvals from the CSRC or other PRC governmental authorities required for listings or securities activities. As of the date of this Annual Report, we have not received any inquiry, notice, warning, sanctions or regulatory objection from the CSRC or other PRC governmental authorities.
On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Administrative Measures”) and five supporting guidelines, which came into effect on March 31, 2023. The Trial Administrative Measures further clarified and emphasized that the comprehensive determination of the “indirect overseas offering and listing by PRC domestic companies” shall comply with the principle of “substance over form” and particularly, an issuer will be required to go through the filing procedures under the Trial Administrative Measures if the following criteria are met at the same time: (a) 50% or more of the issuer’s operating revenue, total profits, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year are accounted for by PRC domestic companies, and (b) the main parts of the issuer’s business activities are conducted in Mainland China, or its main places of business are located in Mainland China, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in Mainland China.
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On the same day, the CSRC held a press conference for the release of the Trial Administrative Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, provided the exemption from immediate filings for issuers that (a) have been listed or have been registered but not yet listed in foreign securities markets, including U.S. markets, prior to the effective date of the Trial Administrative Measures, (b) are not required to re-perform the regulatory procedures with the relevant overseas regulatory authority or the overseas stock exchange, and c) will complete the overseas securities offering and listing before September 30, 2023. Nonetheless, such issuers shall carry out the filing procedures as required if they subsequently conduct refinancing or are involved in other circumstances that require filings with the CSRC. Furthermore, the Trial Administrative Measures and its supporting guidelines provide a negative list of types of issuers banned from listing overseas, the issuers’ obligation to comply with national security measures and the personal data protection laws, and certain other matters such as the requirements that an issuer (i) file with the CSRC within three business days after it submits an application for initial public offering to the competent overseas regulator and (ii) file subsequent reports with the CSRC on material events, including change of control and voluntary or forced delisting, after its overseas offering and listing.
Based on laws and regulations currently in effect in the PRC as of the date of this annual report, we believe we are not required to obtain regulatory approval from the CSRC or go through the filing procedures under the Trial Administrative Measures before our Class A Ordinary Shares can be listed or offered in the United Sates. As of the date of this Annual Report, our Company and our PRC subsidiary, Shenzhen Zhenjing have not been involved in any investigations on cybersecurity review initiated by CSRC, CAC or any PRC regulatory authorities. We believe that our PRC subsidiary’ operations in China are in material compliance with all applicable legal and regulatory requirements.
Although we are currently not required to obtain any permission or approval from the CSRC, the CAC or any other PRC governmental authority to operate our business or to list our securities on a U.S. securities exchange or issue securities to foreign investors, we cannot assure you that PRC regulatory agencies, including the CAC, would take the same view as we do, and there is no assurance that we can fully or timely comply with such laws. If approvals from the CSRC, CAC or other PRC regulatory authorities are required in connection with our continued listing or future capital-raising activities, we may face sanctions by the CSRC, the CAC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in Mainland China, limit our ability to pay dividends outside of Mainland China, limit our operations in Mainland China, delay or restrict cross-border cash transfers, or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of our Class A Ordinary Shares. If PRC regulatory agencies promulgate new rules requiring additional approvals for overseas securities activities, and we are unable to obtain such approvals or exemptions, the market value of our securities could be materially and adversely affected.
However, the central or local governments of the jurisdictions in which our PRC subsidiary operates may impose new, stricter regulations or interpretations of existing regulations with little advance notice that would require additional expenditures and efforts to ensure our subsidiary’s compliance with such regulations or interpretations. Our PRC subsidiary may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. In the event that our PRC subsidiary is not able to substantially comply with any existing or newly adopted laws and regulations, our business operations may be materially adversely affected and the value of our Ordinary Shares may significantly decrease.
Our financial condition, results of operations, the value of our Class A Ordinary Shares and/or our ability to continue to offer securities to investors may be materially and adversely affected by existing or future PRC laws and regulations which may become applicable to us and our subsidiaries.
Our Company is a holding company, and we conduct our operations through our Operating Subsidiaries in Hong Kong and the PRC. The legal and operational risks associated with being based in and having operations in mainland China also apply to operations in Hong Kong. While entities and businesses in Hong Kong operate under different sets of laws from Mainland China, the legal risks associated with being based in and having operations in Mainland China could apply to a company’s operations in Hong Kong, if the laws applicable to mainland China become applicable to entities and business in Hong Kong in the future.
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The PRC laws and regulations are evolving, and their enactment timetable, interpretation and implementation may be revised from time to time. To the extent any PRC laws and regulations become applicable to us and our subsidiaries in Hong Kong, we and our subsidiaries in Hong Kong may be subject to the risks associated with the legal system in Mainland China, including with respect to the enforcement of laws and the possibility of changes of rules and regulations, which could materially and adversely affect our financial condition and results of operations.
It remains uncertain whether the PRC government will adopt additional requirements or extend the existing requirements to apply to our Operating Subsidiaries located in Hong Kong. It is also uncertain whether the Hong Kong government will be mandated by the PRC government, despite the constitutional constraints of the Basic Law, to control over offerings conducted overseas and/or foreign investment of entities in Hong Kong, including our Operating Subsidiaries. Any actions by the PRC government to exert more oversight and control over offerings (including of businesses whose primary operations are in Hong Kong) that are conducted overseas and/or foreign investments in Hong Kong-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. If there is significant change to current political arrangements between Mainland China and Hong Kong, or the applicable laws, regulations, or interpretations change, and, in such event, if we are required to obtain such approvals in the future and we do not receive or maintain the approvals or is denied permission from mainland China or Hong Kong authorities, we will not be able to continuously list our Class A Ordinary Shares on a U.S. exchange, or continue to offer securities to investors, which would materially affect the interests of the investors and cause significant the value of our Class A Ordinary Shares significantly decline or be worthless.
The enactment of the law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Hong Kong National Security Law”) could impact our Hong Kong subsidiaries, which represent substantially all of our business.
On June 30, 2020, the Standing Committee of the PRC National People’s Congress adopted the Hong Kong National Security Law. This law defines the duties and government bodies of the Hong Kong National Security Law for safeguarding national security and four categories of offenses — secession, subversion, terrorist activities, and collusion with a foreign country or external elements to endanger national security — and their corresponding penalties. On July 14, 2020, former U.S. President Donald Trump signed the Hong Kong Autonomy Act, or HKAA, into law, authorizing the U.S. administration to impose blocking sanctions against individuals and entities determined to have materially contributed to the erosion of Hong Kong’s autonomy. On August 7, 2020, the U.S. government imposed HKAA-authorized sanctions on eleven individuals, including former and current Chief Executives of HKSAR, Carrie Lam and John Lee, respectively. On October 14, 2020, the U.S. State Department submitted to relevant committees of Congress the report required under HKAA, identifying persons materially contributing to “the failure of the Government of China to meet its obligations under the Joint Declaration or the Basic Law.” The HKAA further authorizes secondary sanctions, including the imposition of blocking sanctions, against foreign financial institutions that knowingly conduct a significant transaction with foreign persons sanctioned under this authority. The imposition of sanctions may directly affect foreign financial institutions and any third parties or clients dealing with any foreign financial institution that is targeted. It is difficult to predict the full impact of the Hong Kong National Security Law and HKAA on Hong Kong and companies located in Hong Kong. If our Hong Kong subsidiaries, which represent substantially all of our business, are determined to be in violation of the Hong Kong National Security Law or the HKAA by competent authorities, our business operations, financial position and results of operations could be materially and adversely affected.
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The enforcement of laws and rules and regulations in PRC can change quickly with little advance notice. Additionally, the PRC laws and regulations and the enforcement of such that apply or are to be applied to Hong Kong can change quickly with little or no advance notice. As a result, the Hong Kong legal system embodies uncertainties which could limit the availability of legal protections, which could result in a material change in our Operating Subsidiaries’ operations and/or the value of the securities we offered.
We have operation in Mainland China and Hong Kong. As one of the conditions for the handover of the sovereignty of Hong Kong to the PRC, the PRC accepted conditions such as Hong Kong’s Basic Law. According to Article 18 of the Basic Law, national laws of the PRC shall not be applied in Hong Kong, except for those listed in Annex III to the Basic Law, such as the laws relating to the national flag, national anthem, and diplomatic privileges and immunities. The Basic Law guaranteed a high degree of autonomy for Hong Kong which ensured Hong Kong will retain its currency (the Hong Kong Dollar), legal system, parliamentary system, and people’s rights and freedom for fifty years from 1997. This agreement has given Hong Kong the freedom to function with a high degree of autonomy. The Special Administrative Region of Hong Kong is responsible for its domestic affairs, including, but not limited to, the judiciary and courts of last resort, immigration, and customs, public finance, currencies, and extradition. Hong Kong continues using the English common law system.
However, if there are any changes in relation to the political arrangements which allows Hong Kong to function autonomously, this could potentially impact Hong Kong’s common law legal system and may in turn bring about uncertainty in, for example, the enforcement of our contractual rights. This could, in turn, materially and adversely affect our Hong Kong Operating Subsidiaries’ business and operations. Accordingly, we cannot predict the effect of future developments in the Hong Kong legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the pre-emption of local regulations by national laws. These uncertainties could limit the legal protections available to us, including the ability to enforce agreements with our customers.
The PRC legal system is a civil law system based on written statutes. Unlike common law systems, decided legal cases have little precedence. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past several decades has significantly enhanced the protections afforded to various forms of foreign investment in China. Our Operating Subsidiary, Shenzhen Zhenjing, a Mainland China - based company, is subject to PRC laws and regulations. For the fact that a portion of clients of our Operating Subsidiaries in Hong Kong are Mainland China – based, our Operating Subsidiaries in Hong Kong may also be subject to PRC laws and regulations. These PRC laws and regulations change frequently, and the interpretation and enforcement thereof involve uncertainties. For instance, we may have to resort to administrative and court proceedings to enforce the legal protections to which we are entitled to by law or contract. However, since PRC administrative and court authorities have significant discretion in interpreting statutory and contractual terms, it may be difficult to evaluate the outcome of administrative court proceedings and the level of law enforcement that we would receive in more developed legal systems. Such uncertainties, including the inability of our Operating Subsidiaries to enforce their contracts, could affect our business and operation. In addition, confidentiality protections in China may not be as effective as in the United States or other countries. Accordingly, we cannot predict the effect of future developments in the PRC legal system, particularly with regard to our business, including the promulgation of new laws. This may include changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. These uncertainties could limit the availability of law enforcement.
There are political risks associated with conducting business in Hong Kong.
We are based in Hong Kong and substantial part of our business and operations are in Hong Kong. During the period covered by the financial information incorporated by reference into and included in this annual report, we derive 81.43% of our revenue from operations in Hong Kong. Accordingly, the business operations and financial conditions of our Operating Subsidiaries will be affected by the political and legal developments in Hong Kong. Any adverse economic, social and/or political conditions, material social unrest, strike, riot, civil disturbance or disobedience, as well as significant natural disasters, may affect the market and may adversely affect our operations. Given the relatively small geographical size of Hong Kong, any of such incidents may have a widespread effect on our business operations, which could in turn adversely and materially affect our business, results of operations and financial condition.
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Hong Kong is a special administrative region of the PRC and the basic policies of the PRC regarding Hong Kong are reflected in the Basic Law, namely, Hong Kong’s constitutional document, which provides Hong Kong with a high degree of autonomy and executive, legislative and independent judicial powers, including that of final adjudication under the principle of “one country, two systems”. However, there is no assurance that there will not be any changes in the political arrangement between PRC and Hong Kong and the economic, political and legal environment in Hong Kong in the future. Since the fact that we are based in Hong Kong and a substantial part of our operations are in Hong Kong, any change of such political arrangements may pose an adverse impact to the stability of the economy in Hong Kong, thereby directly and adversely affecting our results of operations and financial positions.
Based on certain recent development including the Hong Kong National Security Law that was passed in June 2020, the U.S. State Department has indicated that the United States no longer considers Hong Kong to have significant autonomy from China and President Trump issued an executive order and signed into law the HKAA, to remove Hong Kong’s preferential trade status and to authorize the U.S. administration to impose blocking sanctions against individuals and entities who are determined to have materially contributed to the erosion of Hong Kong’s autonomy. The United States may impose the same tariffs and other trade restrictions on exports from Hong Kong that it places on goods from Mainland China. These and other recent actions may represent an escalation in political and trade tensions involving the U.S, Mainland China, and Hong Kong, which could potentially harm our business. It is difficult to predict the full impact of the HKAA on Hong Kong and companies with operations in Hong Kong like us. Furthermore, legislative or administrative actions in respect of China-U.S. relations could cause investor uncertainty for affected issuers, including us, and the market price of our Class A Ordinary Shares could be adversely affected.
Although we are based in Hong Kong and conduct operations in Mainland China and Hong Kong, if we should become subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed China-based companies, we may have to expend significant resources to investigate and/or defend the allegations, which could harm our Operating Subsidiaries’ business operations and our reputation and could result in a loss of investment in our Ordinary Shares if such allegations cannot be addressed and resolved favorably.
During the last several years, U.S. listed public companies that have substantially all of their operations in China have been the subject of intense scrutiny by investors, financial commentators and regulatory agencies. Much of the scrutiny has centered on financial and accounting irregularities and mistakes, lack of effective internal controls over financial reporting and, in many cases, allegations of fraud. The Chinese government also may exercise significant oversight and discretion over the conduct of our business in China and Hong Kong and may intervene or influence our Operating Subsidiaries’ operations at any time, which could result in a material change in their operations and/or the value of our Ordinary Shares. Moreover, as a result of this scrutiny, the publicly traded stock of many U.S.-listed Chinese companies that have been the subject of such scrutiny has sharply decreased in value. Many of these companies are now subject to shareholder lawsuits and/or SEC enforcement actions that are conducting internal and/or external investigations into the allegations.
Although we are based in Hong Kong, if we should become the subject of any such scrutiny, whether any allegations are true or not, we may have to expend significant resources to investigate such allegations and/or defend the Company. Such investigations or allegations would be costly and time-consuming, likely would distract our management from our normal business and could result in our reputation being harmed. The price of our Ordinary Shares could decline because of such allegations, even if the allegations are false.
The Hong Kong regulatory requirement of prior approval for the transfer of shares in excess of a certain threshold may restrict future takeovers and other transactions.
Section 132 of the Securities and Futures Ordinance (Chapter 157 of the Laws of Hong Kong) (the “SFO”) requires prior approval from the HKSFC for any company or individual to become a substantial shareholder of a HKSFC-licensed corporation in Hong Kong. Under the SFO, a person will be a “substantial shareholder” of a licensed company if he, either alone or with associates, has an interest in, or is entitled to control the exercise of, the voting power of more than 10% of the total number of issued shares of the licensed corporation, or exercises control of 35% or more of the voting power of a company that controls more than 10% of the voting power of the licensed company. Further, all potential parties who will be the new substantial shareholder(s) of our HKSFC-licensed subsidiaries, Grande Capital and Wicens International, are required to seek prior approval from the HKSFC. This regulatory requirement may discourage, delay or prevent a change in control of the Company, which could deprive the holders of our Class A Ordinary Shares of the opportunity to receive a premium for their Class A Ordinary Shares as part of a future sale and may reduce the price of our Class A Ordinary Shares upon the consummation of a future proposed business combination.
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Because our business is conducted in Hong Kong dollars and the price of our Class A Ordinary Shares is quoted in United States dollars, changes in currency conversion rates may affect the value of your investments.
Our books and records are maintained in Hong Kong dollars, which is the currency of Hong Kong, and the financial statements that we file with the SEC and provide to our shareholders are presented in United States dollars. Changes in the exchange rate between the Hong Kong dollar and U.S. dollar affect the value of our assets and the results of our operations in United States dollars. The value of the Hong Kong dollar against the United States dollar and other currencies may fluctuate and is affected by, among other things, changes in the Hong Kong’s political and economic conditions and perceived changes in the economy of Hong Kong and the United States. Any significant revaluation of the Hong Kong dollar may materially and adversely affect our cash flows, revenue and financial condition. Further, our Class A Ordinary Shares offered in our initial public offering, were denominated in United States dollars, we need to convert the net proceeds we receive into Hong Kong dollar in order to use the funds for our business. Changes in the conversion rate between the United States dollar and the Hong Kong dollar will affect that amount of proceeds we will have available for our business.
Since 1983, Hong Kong dollars have been pegged to the U.S. dollars at the rate of approximately HK$7.80 to US$1.00. We cannot assure you that this policy will not be changed in the future. If the pegging system collapses and Hong Kong dollars suffer devaluation, the Hong Kong dollar cost of our expenditures denominated in foreign currency may increase. This would in turn adversely affect the operations and profitability of our business.
There are uncertainties with respect to indirect transfers of assets (including equity interests) of Shenzhen Zhenjing, our Operating Subsidiary in Mainland China.
The Announcement of the State Administration of Taxation on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises (“Announcement No. 37”) and the Announcement on Certain Issues Concerning Enterprise Income Tax for Indirect Transfer of Assets by Non-Resident Enterprises (“Circular 7”) issued by The State Administration of Taxation (“SAT”), provide comprehensive guidelines in relation to, and also heighten the PRC tax authorities scrutiny over, indirect transfers by a non-resident enterprise of assets (including equity interests) of a PRC resident enterprise (“PRC Taxable Assets”).
Announcement No. 37 and Circular 7 specify that the PRC tax authorities are entitled to reclassify the nature of an indirect transfer of PRC Taxable Assets when a non-resident enterprise transfers PRC Taxable Assets indirectly by disposing of equity interests in an overseas holding company directly or indirectly holding such PRC Taxable Assets by disregarding the existence of such overseas holding company and considering the transaction to be a direct transfer of PRC Taxable Assets if such transfer is deemed to have been conducted for the purposes of avoiding PRC enterprise income taxes and without any other reasonable commercial purposes. It is unclear whether any exemptions specified under Circular 7 will be applicable to the transfer of our Class A Ordinary Shares on a public market by our non-resident enterprise Shareholders or to any future acquisition by us outside of the PRC involving PRC Taxable Assets. Therefore, the PRC tax authorities may deem any transfer of our Class A Ordinary Shares by our shareholders that are non-resident enterprises, or any future acquisition by us outside of the PRC involving PRC Taxable Assets to be subject to the foregoing regulations, which may subject our shareholders or us to additional PRC tax reporting obligations or tax liabilities.
We may be classified as a PRC resident enterprise for PRC enterprise income tax purposes and be subject to PRC taxation on our worldwide income, which could result in unfavorable tax consequences to us and our shareholders.
Under the EIT Law, if an enterprise is established outside of the PRC with a “de facto management body” located within the PRC, such enterprise will be considered a PRC tax resident enterprise for tax purposes. Under the regulation on the Implementation of the EIT Rules, the term “de facto management body” is defined as a body that exercises full and substantial control over and overall management of the business, production, personnel, accounts, and properties of an enterprise, so we may be considered a PRC resident enterprise by the PRC tax authorities and will normally be subject to the enterprise income tax on our worldwide income at the rate of 25%.
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It is unclear how the PRC tax authorities will determine whether an offshore entity is a non-PRC resident enterprise. There is no assurance that PRC tax authorities will not consider us as a “resident enterprise.” If the PRC tax authorities subsequently determine that we or our offshore holding companies are deemed to be or should be classified as “resident enterprise(s),” such entity or entities may be subject to enterprise income tax on their worldwide income at a rate of 25%, which could have a material and adverse impact on our financial condition and results of operations.
Failure to make adequate contributions to various mandatory social security plans as required by PRC regulations may subject us to penalties.
Under the PRC Social Insurance Law and the Administrative Measures on Housing Fund, Shenzhen Zhengjing, our PRC subsidiary is required to participate in various government sponsored employee benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and to contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees up to a maximum amount specified by the local government from time to time at locations where they operate the businesses. The requirements of employee benefit plans have not been implemented consistently by the local governments in China given the different levels of economic development in different locations. If the local governments deem our subsidiaries’ contribution to be insufficient, our subsidiaries may be subject to late contribution fees or fines in relation to any underpaid employee benefits, and our financial condition and results of operations may be adversely affected.
In Hong Kong, employers are required to select and join a provident fund scheme (“MPF Scheme”) in accordance with the statutory requirements of the Mandatory Provident Fund Schemes Ordinance for all employees in Hong Kong and to make contributions to the MPF Scheme based on the minimum statutory contribution requirement of 5% of the eligible employees’ relevant aggregate income, subject to a capped amount. Any non-compliance with statutory requirements with respect to our employees located in Hong Kong may result in enforcement being taken by the relevant authorities, which could lead to financial penalties or imprisonment.
Risks relating to the Industry in which we Operate
Our business performance is highly influenced by the conditions of capital and financial market in Hong Kong. Unfavorable market and economic conditions and the material deterioration of the political and regulatory environment in Hong Kong, Mainland China, and elsewhere in the world could materially and adversely affect our business, financial condition, prospects, and results of operations.
We are based in Hong Kong and a substantial part of our business and operations were carried out in Hong Kong. As the financial service provider for the capital market sectors of Hong Kong, our results of operations and prospects are highly susceptible to any development of change in government policies, as well as economic, social, political and legal development in Hong Kong. Events with adverse impacts on investors’ confidence and risk appetites, such as riots or mass civil disobedience movements and general deterioration of the local economy, may lead to a reduction in investment or trading activities and in turn our business performance. Any change in the Hong Kong local economic, social and political environment, all of which are beyond our control, may lead to a prolonged period of sluggish market activities which would in turn have material adverse impact on our business.
The capital market and the economic conditions in general of Hong Kong are highly sensitive to conditions of the capital markets, political, social and economic conditions in Mainland China and globally. When there are unfavorable changes to the global or local market conditions, the capital market and the economy in Hong Kong may experience negative fluctuations in its performance. Any prolonged slowdown in the global or Chinese economy may affect potential clients’ confidence in the capital market as a whole and have a negative impact on our business as a whole, the demand for our services, our pricing strategies, the level of our business activities and consequently our revenue derived therefrom. This may materially and adversely affect our financial condition and the results of operations. Additionally, continued turbulence in the international financial markets may adversely affect our ability to access the capital markets to meet liquidity needs. Financial markets and economic conditions could be negatively impacted by many factors, both economically and politically, beyond our control, such as the inability to access capital markets, control of the foreign exchange, changes in exchange rates, rising interest rates or inflation, slowing or negative growth rate, government involvement in the allocation of resources, inability to meet financial commitments in a timely manner, terrorism, pandemics such as the Covid-19 pandemic, political uncertainty, Russo — Ukraine war, the outcome of the Sino — US trade dispute, civil unrest, fiscal or other economic policy of Hong Kong or other governments, and the timing and nature of any regulatory reform.
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The current heightened tensions in international economic relations, such as the one between the United States and China, may also give rise to uncertainties in global economic conditions and adversely affect the capital market of Hong Kong. Amid these tensions, the U.S. government has imposed and may impose additional measures on entities in China, including sanctions. The U.S. government has imposed and has continued to propose to impose additional, new, or higher tariffs on certain products imported from China to penalize China for what it characterizes as unfair trade practices. China has responded by imposing, and proposing to impose additional, new, or higher tariffs on certain products imported from the United States. Unfavorable financial market and economic conditions in Hong Kong, Mainland China, and elsewhere in the world, and the escalations of the tensions that affect trade relations may lead to slower growth in the global economy in general, could negatively affect our clients’ business and materially reduce demand for our services and increase price competition among financial services firms seeking such engagements, and thus could materially and adversely affect our business, financial condition, and results of operations. In addition, our profitability could be adversely affected due to our fixed costs and the possibility that we would be unable to reduce our variable costs without reducing revenues or within a timeframe sufficient to offset any decreases in revenues relating to changes in the market and economic conditions.
Given the close tie between Hong Kong and Mainland China, the stability of the Hong Kong economy and domestic market is susceptible to the general economic, political and regulatory environment in Mainland China. Historically, significant portion of our revenue is derived from our clients which are based and operate in Mainland China. As such, our continued profitability will depend to a material extent on the ability of our Mainland China clients to conduct fundraising activities, IPO, or securities offering in Hong Kong. Any material adverse changes in the economic performance, political situations and regulations in relation to the financial and securities market in Mainland China may adversely affect Mainland China-based companies’ desire to participate in the financial and securities market in Hong Kong. This may lower their demand for the services of our Operating Subsidiaries and in turn adversely affect our financial condition and results of operations. The economy of Mainland China differs from the economies of most developed countries in a number of aspects, such as the extent of government intervention, growth rate, and control of the foreign exchange. In particular, the PRC government exerts substantial control over the growth of the domestic economy by means of, among others, resource allocation as well as setting policy on foreign exchange. There is no assurance that the PRC government will not implement reforms or policies which may drastically (i) restrict Mainland China investors from investing abroad and in Hong Kong; and/or (ii) restrict Mainland China companies and businesses to participate in the capital market in Hong Kong. Such intervention or policies changes may potentially affect the attractiveness of Hong Kong as an alternative venue for Mainland China business to conduct fundraising activities and securities offering in Hong Kong, or reduce the willingness of Mainland China investors to trade securities, or otherwise diminish the securities and financial market of Hong Kong, given the substantial reliance of Hong Kong financial and securities on the business and companies based in Mainland China. If the Chinese government implements market-oriented reforms involving unprecedented or experimental revision of its economic reform measures, there is no guarantee that adjustments to its policies will not negatively affect our operations and business development.
Furthermore, the outbreak of conflicts in Iran and Middle East has already affected global economic markets, and the uncertain resolution of this conflict could result in protracted and/or severe damage to the global economy. The military actions in the Middle East and the resulting sanctions could adversely affect global energy and financial markets and thus could affect our client’s business and our business, even though we do not have any direct exposure to the Middle East or the adjoining geographic regions. The extent and duration of the military action, sanctions, and resulting market disruptions are impossible to predict but could be substantial. Any such disruptions caused by the conflicts in the middle east may magnify the impact of other risks described in this section. We are currently actively monitoring the situation in Iran, however, we cannot predict the progress or outcome of the situation in Iran, as the conflict and governmental reactions are rapidly developing and beyond their control. Prolonged unrest intensified military activities, or more extensive sanctions impacting the region could have a material adverse effect on the global economy, and such effect could in turn have a material adverse effect on the operations, results of operations, financial condition, liquidity and business outlook of our business.
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The corporate finance services industry in Hong Kong is fiercely competitive, and we may lose our competitiveness to our competitors.
The financial and securities services industry in Hong Kong is highly competitive due to the vast number of market players in providing corporate finance advisory services similar to our subsidiaries. The competitors may have longer operating history, better brand recognition and reputation, proven track record, operations in more geographic locations, stronger human and financial resources, wider range of services and stronger shareholders’ background than us. We expect that there will be more market players entering into the market and competition will be intensified. New participants may enter into the market insofar as they have engaged appropriate qualified professionals and obtained the requisite regulatory licenses and permits. Given the keen competition, we cannot assure that we will be able to maintain our competitive edge in response to the fast-changing business environment. In addition, competition creates an unfavorable pricing environment in the market in which we operate. Intensified competition may cause us to reduce our service fees in order to compete with other market players, which could place significant pressure on our ability to maintain gross margins and is particularly acute during market slowdowns, and will in turn materially and adversely affect our market share, financial condition and results of operations.
The operations of the Operating Subsidiaries in Hong Kong are subject to extensive and evolving regulatory requirements in Hong Kong, the non-compliance with which may result in penalties, limitations, and prohibitions on our future business activities or suspension or revocation of the licenses of the Operating Subsidiaries, and consequently may materially and adversely affect our business, financial condition, and results of operations. In addition, we and our Operating Subsidiaries in Hong Kong may, from time to time, be subject to regulatory inquiries, investigations, and even penalties by relevant regulatory authorities or government agencies in Hong Kong or other applicable jurisdictions, such as the PRC, where a portion of our clients are based.
The Hong Kong financial market and corporate finance services industry in which we operate are highly regulated. The business operations of our Operating Subsidiaries, in particular, Grande Capital and Wicens International, are subject to applicable laws, regulations, guidelines, circulars, and other regulatory guidance, and many aspects of our businesses depend on obtaining and maintaining approvals, licenses, permits, or qualifications from the relevant regulators. Serious non-compliance with regulatory requirements could result in investigations and regulatory actions, which may lead to penalties, including reprimands, fines, limitations, or prohibitions on our future business activities or, if significant, suspension or revocation of their licenses. Failure to comply with these regulatory requirements could limit the scope of businesses in which our Operating Subsidiaries in Hong Kong are permitted to engage.
Furthermore, additional regulatory approvals, licenses, permits, or qualifications may be required by relevant regulators in the future, and some of our current approvals, licenses, permits, or qualifications are subject to periodic renewal. Although our Operating Subsidiaries were not subject to any public disciplinary actions by the HKSFC for the last five years, any such public disciplinary actions may affect our ability to conduct business, harm our reputation and, consequently, materially and adversely affect our business, financial condition, results of operations, and prospects.
Our Operating Subsidiaries, Grande Capital and Wicens International are HKSFC-licensed corporations that are subject to various requirements, such as remaining fit and proper at all times, minimum liquid and paid-up capital requirements, notification requirements, submission of audited accounts, submission of financial resources returns and annual returns, continuous professional training, under the SFO of Hong Kong and its subsidiary legislation and the codes and the guidelines issued by the HKSFC from time to time. If Grande Capital and Wicens International fail to meet the regulatory capital requirements in Hong Kong, the local regulatory authorities may impose penalties on us or limit the scope of our business, which could, in turn, have a material adverse effect on our financial condition and the results of operations. Moreover, the relevant capital requirements may be changed over time or subject to different interpretations by relevant governmental authorities, all of which are out of our control. Any increase in the relevant capital requirements or stricter enforcement or interpretation of the same may adversely affect our business activities. Any non-compliance with applicable laws, regulations, guidance or codes or any negative findings made by the regulators may result in (i) fines, deterrent penalties, or disciplinary actions against us, our Responsible Officers, Licensed Representatives or any of our personnel; or (ii) suspension or revocation of some or all of (a) our registrations or licenses for carrying on our business activities; or (b) the approvals or licenses granted to our personnel enabling them to carry out their responsibilities in our group. For instance, conditions may be imposed on our licenses restricting us from carrying on our business, or our Responsible Officers or Licensed Representatives may be banned from the industry for a specific period of time. Accordingly, our business operation, reputation, financial condition, and results of operations might be materially and adversely affected.
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Furthermore, any material changes to the laws and regulations applicable to us and the Operating Subsidiaries could significantly affect our operations. We cannot assure you that the business model and operations we currently have in place would be in compliance with any changes or updates to the regulatory requirements. Costs of compliance could increase, and our fee structure may have to be adjusted. For instance, we may need to increase the headcounts of our subsidiaries if requirements over sponsor work become more stringent or obtain more licenses if the licensing requirements change. The sanctions imposed by the HKSFC against large sponsor firms for substandard due diligence in several recent widely-publicized cases demonstrate that the HKSFC expects high standards of sponsor’s conduct and we will need to continue to enhance our internal controls and systems in respect of our sponsor work in accordance with new regulatory requirements or guidance.
From time to time, Grande Capital and Wicens International may be subject to, or required to assist in, inquiries, investigations, or penalties by relevant regulatory authorities or government agencies in Hong Kong, the PRC, or other jurisdictions, including the HKSFC, relating to its own activities or activities of third parties such as its clients. The HKSFC conducts on-site reviews and off-site monitoring to ascertain and supervise our business conduct and compliance with relevant regulatory requirements and to assess and monitor, among other things, our financial soundness. We, our directors, or our employees, may be subject to such regulatory inquiries and investigations from time to time, regardless of whether we are the target of such regulatory inquiries and investigations. If any misconduct is identified as a result of inquiries, reviews or investigations, the HKSFC may take disciplinary actions that would lead to revocation or suspension of licenses, public or private reprimand or imposition of pecuniary penalties against us, the responsible officers of the Grande Capital and Wicens International, licensed representatives, directors, or other officers. Any such disciplinary actions taken against us, the responsible officers of the Grande Capital and Wicens International, licensed representatives, directors, or other officers may have a material and adverse impact on our business operations and financial results. In addition, we and our Operating Subsidiaries are subject to statutory secrecy obligations under the SFO of Hong Kong whereby we may not be permitted to disclose details on any HKSFC inquiries, reviews or investigations without the consent of the HKSFC.
Furthermore, Grande Capital, our Operating Subsidiary, is registered with the CSRC under Article 21 of Trial Administrative Measures as an overseas securities company and has provided the undertakings to the CSRC in relation to the PRC domestic companies clients that engaged Grande Capital as the listing sponsor for their overseas listings in Hong Kong. If the CSRC were to believe, in the process of execution of the projects sponsored by Grande Capital, that Grande Capital is in violation of its undertakings to the CSRC, or failed to exercise proper diligence, or has made misrepresentations to the CSRC or relevant PRC authority, not only the CSRC and PRC authorities may issue correction order and warnings, impose of pecuniary penalties, or prohibit us and Grande Capital from providing our services to the PRC domestic companies in Mainland China, the Trial Administrative Measure explicitly stipulated that the CSRC may refer the relevant information concerning the alleged misconduct or violation to CSRC’s regulatory counterparts in overseas jurisdiction, i.e., the HKSFC in Hong Kong, which governs and regulates the business operation of Grande Capital. As a result, we and our Operating Subsidiaries, including Grande Capital, could be subject to inquiries, reviews or investigations, disciplinary actions, revocation or suspension of licenses, public or private reprimand or imposition of pecuniary penalties by the HKSFC, concerning the alleged misconduct or violation arising from the Operating Subsidiaries activities in Mainland China.
Our business is also subject to regulation by various other governmental agencies in Hong Kong, in addition to the HKSFC, including agencies responsible for monitoring and enforcing compliance with various legal obligations, such as privacy and data protection-related laws and regulations, intellectual property laws, employment and labor laws, workplace safety, trade laws, anti-corruption and anti-bribery laws, and tax laws and regulations. Non-compliance with applicable regulations or requirements could subject us to investigations, enforcement actions, sanctions, disgorgement of profits, fines, civil and criminal penalties or injunctions, termination of contracts, and/or claims for damages by our clients or professional party partners. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations, and financial condition could be adversely affected.
In addition, responding to any action will likely result in a significant diversion of our management’s attention and resources and an increase in professional fees. Enforcement actions and sanctions could materially harm our business, results of operations, and financial condition.
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A portion of the clients of Grande Capital are “PRC domestic companies” based in Mainland China whose overseas listings are subject to CSRC review. As long as Grande Capital engages PRC domestic companies as clients or conducts regulated activities in Hong Kong that involve such companies, Grande Capital is subject to the regulatory oversights from the CSRC and various obligations imposed by the Trial Administrative Measures, the violation or the alleged violation of which may result in warning, penalties, or prohibitions on the future business activities of our operation in Mainland China, and consequently may materially and adversely affect our business, financial condition, and results of operations.
A portion of our existing clients and potential clients are companies located in Mainland China, who are listing applicant for IPO on the HKSE or public companies listed on the HKSE. As of the date of this annual report, the Mainland China companies who have engaged our Operating Subsidiary for listing sponsorship services for overseas listing in Hong Kong are “PRC domestic companies” under the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Administrative Measures”), which overseas listings in Hong Kong are subject to the China Securities Regulatory Commission (“CSRC”)’s review procedures and approval.
As stipulated and required by the Trial Administrative Measures, as a condition for the “overseas securities companies” outside of Mainland China, such as our Operating Subsidiary, to engage PRC domestic companies in Mainland China as clients to act as their listing sponsors (i.e. in our case, to conduct Type 6 (advising on corporate finance activities) and Type 1 (dealing in securities) activities) for their overseas listings outside of Mainland China, overseas securities companies, such as our Operating Subsidiary, are subject to the filing/reporting, verification and supervisory obligations to the CSRC regarding the overseas listing projects of the PRC domestic companies engaged, including: (1) filing and registering with CSRC as sponsors or underwriters who are being engaged by PRC domestic companies for their overseas listing, and submitting report to the CSRC annually on the relevant business activities of such overseas securities companies regarding overseas listings of PRC domestic companies; and (2) for each project of the overseas securities companies, submitting the undertakings to the CSRC that such offshore securities companies have verified and examined the documents submitted to CSRC by its clients in relation to their overseas listing, and that such documents are true, accurate and complete.
Currently, Grande Capital is registered with the CSRC under Article 21 of the Trial Administrative Measures as an overseas securities company and has provided the undertakings to the CSRC in relation to the PRC domestic companies clients that engaged Grande Capital as the listing sponsor for their overseas listings in Hong Kong. Therefore, although the offering of our securities in the United States and the operation of our Operating Subsidiaries in Hong Kong, including Grande Capital, do not require approvals, licenses, permits, or qualifications from the PRC authorities, such as the CSRC or the CAC, as long as Grande Capital conducts regulated activities in Hong Kong that involves PRC domestic companies, Grande Capital is subject to the regulatory oversights from the CSRC under the Trial Administrative Measures for its business of providing listing sponsorship of PRC domestic companies, and Grande Capital may be subject to the laws and regulations of Mainland China, the legal and operational risks associated in Mainland China may also apply to our operations in Hong Kong for having existing or potential clients who are companies based in Mainland China or have shareholders or directors that are Mainland China individuals.
As of the date of this annual report, neither we nor Grande Capital have been informed by any PRC governmental authority, including the CSRC, of the violation of the undertaking or any obligations to the CSRC. We believe that Grande Capital and we have complied with all applicable laws and regulations in connection with the engagement with PRC clients in Mainland China in all material respects.
However, as stipulated by the Trial Administrative Measures, if the CSRC were to believe, in the process of execution of the projects sponsored by Grande Capital, that Grande Capital is in violation of its undertakings to the CSRC, or failed to exercise proper diligence, or has made misrepresentations to the CSRC or relevant PRC authority, the CSRC and PRC authorities may issue correction order and warnings, impose pecuniary penalties against Grande Capital and its responsible staff, directors, or other officers, suspend or revoke Grande’s registration under Article 21 of the Trial Administrative Measures, or prohibit us and Grande Capital from conducting business activities or providing services to the clients based in Mainland China, causing Grande Capital to lose access to the Mainland China market, all of which could have a material adverse effect on our business operation, reputation, financial condition and the results of operations. Furthermore, the Trial Administrative Measure explicitly stipulated that the CSRC may refer the relevant information concerning the alleged misconduct or violation to CSRC’s regulatory counterparts in overseas jurisdiction, i.e., the HKSFC in Hong Kong, which governs and regulates the business operation of Grande Capital. As a result, we and Grande Capital could be subject to inquiries, reviews or investigations, disciplinary actions, revocation or suspension of licenses, public or private reprimand or imposition of pecuniary penalties by the HKSFC, concerning the alleged misconduct or violation arising from the Grande Capital’s activities in Mainland China.
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We are affected by the rules and regulations governing listed companies on the HKSE.
Grande Capital, one of our Operating Subsidiaries, provides corporate finance advisory services to clients who are listing applicants or listed companies or their shareholders or investors on the HKSE. These clients are required to comply with the HK Listing Rules, the HK Takeovers Codes and other rules and regulations where applicable. Any changes to such rules and regulations, particularly those affecting the appointment and the role of the sponsors in listing applications and the appointment and the role of financial adviser in specific transactions, may affect the demand for and the scope of the corporate finance advisory services which may in turn materially and adversely affect our results of operations.
Risks Relating to our Business and Operation
We and our Operating Subsidiaries have a relatively short operating history compared to some of our established competitors and face significant risks and challenges in a rapidly evolving market, which makes it difficult to effectively assess our future prospects.
Our Operating Subsidiaries have a relatively short operating history compared to some of our established competitors. Our Operating Subsidiary, Grande Capital started to provide corporate finance advisory services in 2018, Shenzhen Zhenjing started the operation in 2025 and Wicens International only started operation in late April, 2026. Our Operating Subsidiaries only has limited operating history with regard to such business upon which an evaluation of our prospects can be based. Our future revenues and cash flows may fluctuate significantly given our short operating history, rendering it difficult to predict our results of operations and prospects.
There is no assurance that we will sustain profitability or positive cash flow from the existing operations or from any expanded or new operations, nor that we will be able to expand operations beyond our current level. You should consider our business and prospects in light of the risks and challenges we encounter or may encounter given the rapidly evolving market in which we operate and our relatively short operating history. These risks and challenges include our ability to, among other things:
| ● | build a well-recognized Grande brand; |
| ● | maintain and expand our client base; |
| ● | maintain and enhance our relationships with partners; |
| ● | attract, retain, and motivate qualified employees; |
| ● | anticipate and adapt to changing market conditions and a competitive landscape; |
| ● | Respond effectively to technological changes and advancements in our industry; |
| ● | Mitigate potential cybersecurity threats and protect sensitive client and company data; |
| ● | manage our future growth; |
| ● | ensure that the performance of the services of our Operating Subsidiaries meets client expectations; |
| ● | maintain or improve the operational efficiency of our Operating Subsidiaries; |
| ● | navigate a complex and evolving regulatory environment; |
| ● | defend ourselves in any legal or regulatory actions against us and our Operating Subsidiaries; |
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If we fail to address any or all of these risks and challenges, our business may be materially and adversely affected. As our business develops and as we respond to competition, our Operating Subsidiary may continue to introduce new service offerings, make adjustments to our existing services, or make adjustments to our business operations in general. There is no assurance that we will sustain profitability or positive cash flow from our existing operations or from any expanded or new operations, nor that we will be able to expand operations beyond our current level. Any significant change to our business model that does not achieve expected results could have a material and adverse impact on our financial condition and results of operations. It is therefore difficult to effectively assess our future prospects.
Our Operating Subsidiaries, in particular, Grande Capital rely on a limited number of key clients for their business, therefore, we are subject to significant client and industry concentration risk.
For the years ended March 31, 2026, 2025, and 2024, our top five clients accounted for 72.2%, 57.2%, and 78.1% of our total revenues and our largest client accounted for 29.9%, 30.8%, and 28.2% of our total revenue, respectively. Our clients are fairly concentrated and we rely on a limited number of key clients to generate revenue. Our client concentration risk is exacerbated due to our reliance on different clients, for different services engaged in different periods, and the fact that the revenue from our corporate finance advisory business as provided by Grande Capital was generated on a project-by-project basis and is non-recurring in nature.
Our concentration risk may be amplified due to the limited number of listing sponsorship projects that Grande Capital may sponsor in a given year. For example, our largest client for the year ended March 31, 2024 engaged Grande Capital for listing sponsorship and compliance advisory services, and our largest client for the year ended March 31, 2026 engaged Grande Capital for referral services. Since the listing sponsorship services, financial and compliance advisory services and referral services are non-recurring in nature, there is no assurance that Grande Capital can continue to secure engagements comparable to the similar level as for the year ended March 31, 2026 in the future. If Grande Capital is unable to continuously secure new sizable mandates, or if the market conditions become unfavorable, our business and the results of operations may be materially and adversely affected. Since Grande Capital first obtained its licenses in 2018, the Operating Subsidiary has sponsored and completed 16 IPOs on the HKSE, amongst of which, 14 IPOs that we have sponsored and completed are clients from construction industry. We are subject to industry concentration risk as our IPO sponsorship clients are highly concentrated in the construction industry. If the market conditions and performance of construction industry become unfavorable, our business and the results of operations may be adversely affected.
Our goal is to diversify our client base, industries coverage, revenue source and position ourselves as a trusted financial services provider. However, we cannot assure you that we will be successful in diversifying our client base and reducing our client and industry concentration risk. Moreover, if we lose a key client or if a client decides to engage in a competitor, and if we are unable to secure new clients during a period of time in the future, our results of operations, financial conditions, cashflow positions may be adversely and materially impacted.
The business activities of Grande Capital and Wicens International, our Operating Subsidiaries, are required to comply with regulatory capital requirements and to maintain a high level of funds and liquidity. Failure to comply with these regulatory capital requirements could materially and negatively affect our business operation and overall performance.
As a corporation licensed with the HKSFC to carry on regulated activities, Grande Capital and Wicens International are required under the SFO and Securities and Futures (Financial Resources) Rules (Chapter 571N of the Laws of Hong Kong) (the “FRR”) to maintain a minimum amount of paid-up share capital and liquid capital. As of the date of this annual report, Grande Capital and Wicens International are in compliance with the respective regulatory capital requirements. However, there is no assurance that such failure will not happen in the future. Our liquid capital may be tightened when we commence our underwriting and placing services or carry out our proposed expansion plans. Failure to meet the above requirement may cause the HKSFC to suspend the licenses of these Operating Subsidiaries, impose conditions in relation to our regulated activities, or take other appropriate disciplinary actions against us, which may adversely affect our business operations and financial performance. Failure to meet the above requirement could also affect client confidence, our ability to grow, our costs of funds, our ability to pay dividends on Class A Ordinary Shares, our ability to make acquisitions, and in turn, our business, results of operations, and financial condition.
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The revenue and profitability of Grande Capital are highly unpredictable, since (1) the revenue from the IPO corporate finance advisory business was generated on a project-by-project basis and is non-recurring in nature; (2) progress-based payment arrangement; and (3) possible default or delay of payments from our clients.
The revenue generated from Grande Capital, one of our operating entities, are primarily and substantially derived from the corporate finance advisory service, which includes listing sponsorship services, securities related services, financial advisory services, independent financial advisory services, compliance advisory services. Revenue of the corporate finance activities is to a large extent derived from transactions for which Grande Capital is engaged on a project basis with relevant terms and conditions (including professional fees and payment schedules) being negotiated and determined on a project-by-project basis subject to, amongst other things, the complexity of the transaction, the estimated time commitment and the overall capacity of the project execution team of Grande Capital. Since the mandates and the professional fee of the mandates, including the sponsor fee and financial advisory fee, are negotiated on a project-by-project basis, revenue generated from the corporate finance advisory services may fluctuate from time to time and may not recur. There is also no assurance that the clients who have previously sought our services will continue to retain us for future business, and there is no assurance that we can continue to secure the engagements of our Operating Subsidiary in the future. Therefore, the revenue generated from each client or engagement differs and we cannot assure that our future engagement fee rates will be comparable to those accepted by our clients during the years ended March 31, 2026, 2025 and 2024.
The nature of the corporate finance activities also means the demand and scope for the services of Grande Capital are dependent on the conditions of the financial markets, which are in turn influenced by a variety of factors (such as investor sentiment or political/economic environments) beyond our control, resulting in uncertainties in relation to the sustainability of our financial performance. Any adverse market condition or market sentiment will affect clients’ decisions on the scale, timing, and stock market choices in respect of their fundraising needs, which may lead to lower demand for, delay to or termination of fundraising activities and our services and in turn affect the financial performance of our corporate finance advisory business. If we are unable to continuously secure new sizable mandates, or if the market conditions become unfavorable, our business and the results of operations may be materially and adversely affected.
In general, service fees we charged for the projects are recognized when the underlying services have been provided and/or relevant milestones have been completed in accordance with the terms of our mandates by instalments, which are not necessarily based on the time or costs we have incurred for the project. The grant of approvals of the projects undertaken by Grande Capital by the regulators in Hong Kong such as the HKSE and the HKSFC, or by the home jurisdictions of the clients, such as the CSRC for the PRC domestic companies, will usually affect the project timeline. Failure in obtaining the necessary approvals as stipulated or at all could result in the delay or abortion of the transactions. Due to aforesaid nature of our projects and factors beyond our control, in particular our listing sponsorship engagements, it may not be possible to successfully complete each project, and consequently we may not receive the mandated payments in full for services provided or after we have expended substantial effort and time as scheduled or at all. If a milestone is not achieved or if a transaction is terminated before completion, the clients may delay in settling our invoices which are presented to them when due, or not settle them at all. In the case of default payments, if we have already incurred a significant amount of costs and expenditures for the project and the initial retainer fee or any progress payments received do not cover our total costs incurred, our results of operations may be materially and adversely affected. Failures or delays in receiving payments from our clients may adversely affect our cash flow position and our ability to meet the working capital requirement.
In these circumstances, Grande Capital’s revenue and profitability may fluctuate from year to year and our financial performance is highly unpredictable.
Our businesses depend on our key management and professional staff, and our business may suffer if we are unable to recruit and retain them.
Our businesses depend on the skills, reputation, and professional experience of our key management executives, the network of resources and relationships they generate during the normal course of their activities, and the synergies among the diverse fields of expertise and knowledge held by our senior professionals. Therefore, the success of our business depends on the continued services of these individuals. If we lose their services, we may not be able to execute our existing business strategy effectively, and we may have to change our current business direction. These disruptions to our business may take up significant energy and resources of our company, and materially and adversely affect our future prospects.
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Moreover, our business operations depend on our professional staff, our most valuable asset. Their skills, reputation, professional experience, and client relationships are critical elements in providing quality services to clients, managing our compliance and risk, and obtaining and executing client engagements. We devote considerable resources and incentives to recruiting and retaining these personnel. However, the market for quality professional staff is increasingly competitive. Loss of our professional staff and failure to recruit replacement will materially and adversely affect our business operations. We expect to face significant competition in hiring such personnel. Additionally, as we mature, current compensation scheme to attract employees may not be as effective as in the past. The intense competition may require us to offer more competitive compensation and other incentives to our talent, which could materially and adversely affect our financial condition and the results of operations. As a result, we may find it difficult to retain and motivate these employees, and this could affect their decisions about whether or not they continue to work for us. If we do not succeed in attracting, hiring, and integrating quality professional staff, or retaining and motivating existing personnel, we may be unable to grow effectively.
Where one or more of the regulated activities of Grande Capital and Wicens International has less than two responsible officers, our Hong Kong Operating Subsidiaries will be in breach of the relevant licensing requirements which could adversely affect our licensing status which may jeopardize our business operation.
Under the licensing requirements of the SFO, our licensed corporations, Grande Capital and Wicens International must have at all times at least two responsible officers to directly supervise the business of each of our regulated activities. At the date of this annual report, Wicens International has two Responsible Officers for Type 1 (dealing in securities) regulated activities and Grande Capital has two Responsible Officers for Type 1 (dealing in securities) and/or Type 6 (advising on corporate finance) regulated activities under the SFO. In addition, to act as a sponsor and compliance adviser, Grande Capital must ensure that there are sufficient Principals engaged in a full time capacity to oversee and supervise our transaction teams with at least two Principals engaged in a transaction team at all times. Without an adequate number of Principals, we cannot accept new engagements and may not be permitted to carry on our current roles as sponsor and compliance adviser.
In the event such number of our Responsible Officers resign, become disqualified or otherwise ineligible to continue their role as Responsible Officer, and at the same time the void created as a result thereof is without immediate and adequate replacement, this may result in a situation where one or more of the two regulated activities of our Operating Subsidiaries have fewer than two Responsible Officers. In this case, we will be exposed to operational disruption, and thus may result in a breach of the relevant licensing requirement, which may subsequently result in the suspension of our HKSFC licenses and jeopardize our business operations and financial performance.
We may not be able to implement our business strategies and future plans successfully.
Our business strategies include to continue developing the corporate finance advisory business, to further develop the ECM services, to develop our asset management business, and to promote and enhance our brand locally and in the overseas. However, the successful implementation of these strategies and plans depends on a number of factors including but not limited to the following:
| ● | our ability to recruit and retain qualified and experienced professional staff; in particular, in the recruitment of qualified staff with relevant experience to support the expected commencement of the placing and underwriting services, asset management services, and international capital market services. | |
| ● | our ability to cope with increased exposure to financial risk, operational risk, market risk, and credit risk arising from our expanded scope of business; | |
| ● | our ability to comply with all regulatory requirements and maintain/obtain the qualifications on the range of financial and securities services we provide or intend to provide to our clients; | |
| ● | our ability to secure sufficient financial resources; | |
| ● | clients’ acceptance and demand for our services and our ability to compete with our competitors; and | |
| ● | our ability to adapt to the changes in the market and government policies. |
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Many of these factors are beyond our control and by nature, are subject to uncertainty. As such, there is no assurance that our business strategies and future plans can be implemented successfully or may be materialized in accordance with our expected timetable, or at all, despite our capital commitments and investments into the same. Any failure or delay in the implementation of any or all of these strategies and plans may have a material adverse effect on our profitability and prospects.
In addition, our future plans may place substantial demands on our managerial, operational, technological, financial, and other resources. To manage and support our growth, we may need to improve our existing operational and administrative systems, improve our financial and management controls, and enhance our ability to recruit, train and retain existing and/or additional qualified personnel and staff. All of these endeavors will require substantial attention and time from management and significant additional expenditures. We cannot assure you that we will be able to manage any future growth effectively and efficiently, and our ability to capitalize on new business opportunities may be materially and adversely affected if we fail to do so, which could in turn materially and adversely affect our business, results of operations, financial condition, and prospects.
We may undertake acquisitions, investments, joint ventures, or other strategic alliances, which could present unforeseen integration difficulties or costs and may not enhance our business as we expect.
Our strategy includes plans to grow both organically and through possible acquisitions, joint ventures, or other strategic alliances. Joint ventures and strategic alliances may expose us and our subsidiaries to new operational, regulatory, and market risks, as well as risks associated with additional capital requirements. We may not be able, however, to identify suitable future acquisition targets or alliance partners.
Even if we identify suitable targets or partners, the evaluation, negotiation, and monitoring of the transactions could require significant management attention and internal resources and we may be unable to complete an acquisition or alliance on terms commercially acceptable to us. The costs of completing an acquisition or alliance may be costly and we may not be able to access funding sources on terms commercially acceptable to us. Even when acquisitions are completed, we may encounter difficulties in integrating the acquired entities and businesses, such as difficulties in retention of clients and personnel, challenge of integration and effective deployment of operations or technologies, and assumption of unforeseen or hidden material liabilities or regulatory non-compliance issues.
Any of these events could disrupt our business plans and strategies, which in turn could have a material adverse effect on our financial condition and results of operations. Such risks could also result in our failure to derive the intended benefits of the acquisitions, strategic investments, joint ventures, or strategic alliances, and we may be unable to recover our investment in such initiatives. We cannot assure you that we could successfully mitigate or overcome these risks.
We may fail to successfully integrate the operations of Shenzhen Zhenjing, or realize the anticipated benefits of the acquisition, which could adversely affect our business, financial condition, and results of operations.
In October 2025, we completed the acquisition of Proplus. Proplus, through Shenzhen Zhenjing, is principally engaged in providing executive training and corporate finance consulting services. While we expect Shenzhen Zhenjing to diversify our revenue streams, build a more resilient services portfolio, and reduce our reliance on the highly volatile IPO sponsorship and general corporate finance advisory markets, the success of this acquisition depends heavily on our ability to integrate Shenzhen Zhenjing operations and personnel effectively.
Integrating Shenzhen Zhenjing executive training and consulting services into our existing corporate finance advisory structure may prove more difficult, costly, or time-consuming than anticipated. Differences in corporate culture, operating styles, and internal control systems may impede smooth integration. The process of integration requires significant dedication of capital and attention from our senior management. This diversion could distract them from our day-to-day operations and core corporate finance advisory business, potentially hurting our existing client relationships and financial performance.
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Shenzhen Zhenjing business model is highly dependent on the specialized knowledge, relationships, and reputations of its key executives, trainers, and consultants. If we fail to retain these key professionals, the value of the acquired business could be severely diminished. We may not be able to successfully cross-sell our financial advisory services to Shenzhen Zhenjing executive training clients, or vice versa. If these expected commercial synergies fail to materialize, we may not achieve the projected returns on our investment. If we are unable to overcome these integration and operational hurdles, we may fail to achieve the strategic benefits of the Proplus acquisition, and our business, operating results, and the market price of our Class A Ordinary Shares could be materially and adversely affected.
Changes in Mainland China’s regulatory policies governing executive education, enterprise consulting, or adult training services could restrict our operations and increase compliance costs.
The regulatory framework surrounding commercial education, executive training, and corporate consulting in Mainland China continues to evolve. While Shenzhen Zhenjing operates as an upstream content developer and non-regulated corporate advisory entity rather than a direct operator of academic tutoring or vocational schools, PRC regulatory authorities could introduce stricter oversight, content review requirements, or licensing mandates on adult corporate training providers and content suppliers. Any future regulatory changes that restrict corporate capital market education, impose content restrictions, or increase administrative compliance burdens could impede Shenzhen Zhenjing’s business operations and growth prospects.
The failure to protect Shenzhen Zhenjing’s proprietary course curriculum and content and corporate consulting frameworks against unauthorized copying or intellectual property infringement could erode our competitive edge.
The commercial success of Shenzhen Zhenjing depends on the proprietary nature of its capital market curriculum, course content, and corporate finance consulting frameworks. Any unauthorized use of our trademarks and other intellectual property rights could harm our competitive advantages and business. In Mainland China, enforcing intellectual property (“IP”) rights can involve complex and costly legal procedures. Historically, China has not protected intellectual property rights to the same extent as the United States, and infringement of intellectual property rights continues to pose a serious risk of doing business in China. Monitoring and preventing unauthorized use are difficult, and the unauthorized copying, piracy, redistribution, or modification of our materials by competing corporate training providers, former employees, or third parties could diminish the commercial value of our curriculum and erode our pricing power. Furthermore, the application of laws governing intellectual property rights in China and abroad is uncertain and evolving, and could involve substantial risks to us. If we are unable to adequately protect our IP rights or prevent unauthorized dissemination of our proprietary content, our brand reputation, market share, and licensing revenue could be severely harmed.
Third parties may seek to challenge, invalidate or circumvent our subsidiaries’ copyrights, trade secrets, and other rights or applications for any of the foregoing. In order to protect their intellectual property rights, our subsidiaries may be required to spend significant resources. Litigation brought to protect and enforce intellectual property rights could be costly, time-consuming and distracting to management. The failure to secure, protect and enforce our subsidiaries’ intellectual property rights could adversely affect the brand and impact the business.
Shenzhen Zhenjing relies heavily on an independent downstream course provider for content distribution, and any failure to maintain this relationship could severely disrupt our business model and revenue stream.
Shenzhen Zhenjing operates strictly under an upstream business-to-business model, supplying proprietary course material to an independent downstream course provider. We do not directly operate or control the end-user delivery platforms or student enrollment channels. Consequently, our financial performance depends significantly on third parties partners’ operational capabilities, market reputation, and financial stability. If this downstream provider fails to effectively market our courses, experiences operational disruptions, suffers damage to its brand reputation, or terminates its licensing relationship with us, our content licensing revenues from Shenzhen Zhenjing would be materially and adversely affected.
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Our strategic growth strategy relies on converting executive training and pre-IPO consulting leads into HKSFC-licensed corporate finance clients, which may fail to materialize as expected.
A central strategic rationale for acquiring Shenzhen Zhenjing is to establish an integrated “Course Material & Consulting — Lead Generation — Execution” ecosystem. Under this model, high-growth SME clients identified through Shenzhen Zhenjing are intended to be channeled into our Hong Kong-licensed entities (Grande Capital and Wicens International). However, converting early-stage consulting leads into paying corporate finance clients depends on factors beyond our control, including macroeconomic conditions, client listing eligibility, capital market volatility, and regulatory approvals from the HKEX, SEC, and CSRC. If a substantial portion of these leads fail to mature into offshore listing engagements, the anticipated cross-business synergies may not be realized.
We may not be able to obtain additional capital when desired, on favorable terms, or at all. If we fail to meet the capital requirement pursuant to the FRR, our business operations and performance will be adversely affected.
We may require additional funding for further growth and development of our business, including any investments or acquisitions we may decide to pursue. Due to the unpredictable nature of the capital markets and our industry, we cannot assure you that we will be able to raise additional capital on terms favorable to us, or at all, if and when required, especially if we experience disappointing operating results. If adequate capital is not available to us as required, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our infrastructure or respond to competitive pressures could be significantly limited, which would adversely affect our business, financial condition and results of operations. If our existing resources are insufficient to satisfy our requirements, we may seek to issue additional equity or debt securities or obtain new or expanded credit facilities.
Our ability to obtain external financing in the future is subject to a variety of uncertainties, including our future financial condition, results of operations, cash flows, share price performance, liquidity of international capital and lending markets, and the Hong Kong financial industry. If we do raise additional funds through the issuance of equity or convertible debt securities, the ownership interests of our shareholders could be significantly diluted. These newly issued securities may have rights, preferences or privileges senior to those of existing shareholders. In addition, our HKSFC-licensed Operating Subsidiaries are required under the FRR to maintain certain levels of liquid capital. If they fail to maintain the required levels of liquid capital, the HKSFC may take actions against us and our business will be adversely affected.
Our failure to appropriately identify and address conflicts of interest could materially and adversely affect our business.
As we expand the scope of our business and our client base, it is critical for us to be able to address actual, potential, or even perceived conflicts of interest, including situations where we may encounter conflicts of interest arising among: (i) our various services, (ii) our clients and us, (iii) our various clients, (iv) our employees and us or (v) our clients and our employees
In light of the complexity and difficulty in appropriately identifying and dealing with potential conflicts of interest, our internal control procedures that are designed to identify and address conflicts of interest may not be sufficient. Our failure to manage conflicts of interest could harm our reputation and erode client confidence in us. In addition, potential or perceived conflicts of interest may also give rise to litigation or regulatory actions. The occurrence of any of the foregoing events could materially and adversely affect our business, results of operations and reputation.
We may be subject to litigation, arbitration, regulatory proceedings, or other legal proceeding risks, in particular, we may be subject to various professional liabilities and claims.
In the ordinary course of our business, our Operating Subsidiaries provide professional advice for corporate finance advisory services and provide information in relation to securities transactions to our clients. If our clients rely on such advice or information and incur losses as a result, we could be subject to claims in legal and regulatory proceedings for compensation and/or other relief for negligence, provision of false or misleading information, breach of fiduciary duties or employee misconduct. Although we have adopted relevant internal control measures, we cannot assure that such measures currently in place or as updated from time to time can completely eliminate the aforesaid risks of liabilities and claims. Any claims or lawsuits against us or our subsidiaries arising from professional negligence and/or employee misconduct and claims from indemnified persons that result in substantial amounts of compensation may have a material and adverse impact on our business activities, reputation, results of operations, and financial conditions.
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We and our directors and officers may from time to time become subject to or involved in various claims, controversies, lawsuits, and regulatory/legal proceedings. Claims, lawsuits, and litigations are subject to inherent uncertainties, and we are uncertain whether the foregoing claim would develop into a lawsuit. Lawsuits and litigations may cause us to incur defense costs, utilize a significant portion of our resources and divert management’s attention from our day-to-day operations, any of which could harm our business. Any settlements or judgments against us could have a material adverse impact on our financial condition, results of operations and cash flows. In addition, negative publicity regarding claims or judgments made against us may damage our reputation and may result in a material adverse impact on us.
Illegal or improper activities, violation of professional standards, and the misconduct of our personnel or third parties could harm our reputation and businesses, and are difficult to detect or deter.
We and our subsidiaries are subject to the risk of fraud, illegal act or misconduct committed by our directors, licensed employees, agents, clients or other third parties. Misconduct includes entering into unauthorized transaction, improperly using or divulging inside information, recommending transactions not suitable for our clients, engaging in fraudulent activities, or engaging in improper or illegal activities. There is no assurance that our directors, employees, agents, clients or other third parties would not commit incidents of fraud or other misconduct in the future, and we cannot assure that our procedures and policies would fully prevent or detect illegal or improper activities in our business operations. Such incidents may result in investigation and regulatory sanction against us and cause us to suffer financial loss and reputational harm. We may also need to incur costs to commence and participate in any legal proceedings against them to recover our loss. The potential harm to our reputation and to our business caused by such fraud or misconduct is impossible to quantify.
Our Operating Subsidiaries in Hong Kong, Grande Capital and Wicens International, are also subject to a number of obligations and standards arising from its business. The violation of these obligations and standards by any of our directors, officers, employees, agents, clients, or other third parties could materially and adversely affect us and our investors. For example, we and Operating Subsidiaries are required to properly handle confidential information. If our directors, officers, employees, agents, clients, or other third parties were to improperly use or disclose confidential information, we could suffer serious harm to our reputation, financial position, and existing and future business relationships.
We and our subsidiaries may not be able to fully detect money laundering and other illegal or improper activities in our business operations on a timely basis or at all, which could subject us to liabilities and penalties.
We and subsidiaries are required to comply with applicable anti-money laundering and anti-terrorism laws and other regulations in the jurisdictions where we operate. Although our Operating Subsidiaries and us have adopted policies and internal control procedures aimed at detecting, and preventing being used for, money-laundering activities by criminals or terrorist-related organizations and individuals, or improper activities, and ensure compliance with licensing and regulatory requirements, in light of the complexity of money-laundering activities and other illegal or improper activities, such policies and procedures may not completely eliminate the possibility of third parties using our business platform to engage in money laundering and/or other illegal or improper activities. There is no assurance that the internal control system in place will prove at all times adequate and effective to deal with all the possible risks given the fast changing financial and regulatory environment in which our subsidiaries operate. Such deficiencies or inherent limitations may result in fines or disciplinary actions against us imposed by regulators, and may adversely affect our financial condition and results of operations.
Furthermore, our subsidiaries, in particular Grande Capital and Wicens International, primarily complies with applicable anti-money laundering laws and regulations in Hong Kong (for example, the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615 of the Laws of Hong Kong) and the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Corporations) issued by the HKSFC), and we may not fully detect violations of anti-money laundering regulations in other jurisdictions or be fully compliant with the anti-money laundering laws and regulations in other jurisdictions to which we are required. After we become a publicly listed company in the United States, we will also be subject to the U.S. Foreign Corrupt Practices Act of 1977 and other laws and regulations in the United States, including regulations administered by the U.S. Department of Treasury’s Office of Foreign Asset Control. To the extent that our policies and procedures currently in place fail to detect and prevent money-laundering activities, terrorist financing and other illegal or improper activities by our directors, employees, agents, clients or other third parties and/or if we and subsidiaries fail to fully comply with the applicable laws and regulations, the relevant government authorities may initiate investigation against us, and may impose fines and/or other penalties on us, any of which may significantly and adversely affect our reputation, business operations and financial results.
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We may incur losses or experience disruption of our operations as a result of unforeseen or catastrophic events, including pandemics, terrorist attacks, or natural disasters.
An outbreak and prevalence of pandemic such as COVID-19 would adversely impact economic activities and conditions worldwide and led to significant volatility and disruption to financial markets. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, which had spread throughout the world and had resulted in the implementation of stringent governmental measures, including lockdowns, closures, quarantines, and travel bans or restrictions, temporary closure of businesses, intended to control the spread of the virus by different countries.
Though the impact of outbreaks of pandemic such as COVID-19 is temporary and not permanent, the frequent outbreak of different kinds of epidemics and pandemics including the new or more severe strains of the virus and their variants are highly uncertain and unpredictable, and the resultant anti-pandemic measures would inevitably result in slowdown of economic activities and volatility of stock markets in both Hong Kong and worldwide which, in totality, may adversely affect or delay our potential customers’ plans to commence their IPO and/or other fund raising and corporate activities.
In addition, our business could also be materially and adversely affected by catastrophic events or other business continuity problems, such as natural or man-made disasters, fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, political unrest, terrorist attacks or similar events may give rise to server interruptions, breakdowns, system failures, technology platform failures or Internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to operate, including communicating with clients and the relevant listing authorities. Moreover, besides COVID-19, our business and ability to operate could also be adversely affected by Ebola virus disease, Zika virus disease, H1N1 flu, H5N1 flu, H7N9 flu, avian flu, Swine flu, SARS or other epidemics.
Our headquarters are located in Hong Kong, where our directors and management and the majority of our employees currently reside. Consequently, we and subsidiaries are highly susceptible to factors adversely affecting Hong Kong. A disaster or a disruption in the infrastructure that supports our businesses, a disruption involving electronic communications or other services used by us or third parties with whom we conduct business, or a disruption that directly affects our headquarters, could have a material adverse impact on our ability to continue to operate our business without interruption. The business of our subsidiaries could also be adversely affected if our employees are affected by pandemics. In addition, our results of operations could be adversely affected to the extent that any pandemic harms the Chinese or Hong Kong economy in general. The incidence and severity of disasters or other business continuity problems are unpredictable, and our inability to timely and successfully recover could materially disrupt our businesses and cause material financial loss, regulatory actions, reputational harm, or legal liability.
We are exposed to risks associated with retention and recruitment of licensed and/or qualified personnel.
We rely heavily on human resources for the provision of corporate finance advisory services and executive training services. Should the pace of business growth lag behind the pace of increase in headcount, there may be negative impact on our financial results and business performance. In addition, benefits to be generated from the enhancement of human resources may not be as significant as expected due to factors beyond our control, such as the general market conditions, labor market, competition for talents against other financial services providers, travel restrictions and border control due to COVID -19, and the economic and political environment in Hong Kong and overseas. Such factors may cause a delay in realizing our business growth and our expansion plan and hence, our financial results, in particular our profitability, may be adversely affected. There is also no assurance that we can employ sufficient number of suitable and competent staff to implement our growth strategies.
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Our management team lacks experience in managing a U.S. public company and complying with laws applicable to such company, the failure of which may adversely affect our business, financial condition and results of operations.
Our current management team lacks experience in managing a U.S. publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to U.S. public companies. As we recently closed our initial public offering on July 2, 2025, our company are now subject to significant regulatory oversight and reporting obligations under the federal securities laws and the scrutiny of securities analysts and investors, and our management has limited experience in complying with such laws, regulations and obligations. Our management team may not successfully or efficiently manage our transition to becoming a U.S. public company. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition and results of operations.
We may face intellectual property infringement claims, which could be time-consuming and costly to defend and may result in the loss of significant rights by us.
Although we and our subsidiaries have not been subject to any litigation, pending or threatened, alleging infringement of third parties’ intellectual property rights, we cannot assure you that such infringement claims will not be asserted against us in the future. Third parties may own copyrights, trademarks, trade secrets, ticker symbols, internet content, and other intellectual properties that are similar to ours in jurisdictions where we currently have no active operations. If we expand our business to or engage in other commercial activities in those jurisdictions using our own copyrights, trademarks, trade secrets, and internet content, we may not be able to use these intellectual properties or face potential lawsuits from those third parties and incur substantial losses if we fail to defend ourselves in those lawsuits. We have policies and procedures in place to reduce the likelihood that we or our employees may use, develop, or make available any content or applications without the proper licenses or necessary third-party consents. However, these policies and procedures may not be effective in completely preventing the unauthorized posting or use of copyrighted material or the infringement of other rights of third parties.
Intellectual property litigation is expensive and time-consuming and could divert resources and management attention from the operation of our business. If there is a successful claim of infringement, we may be required to alter our services, cease certain activities, pay substantial royalties and damages to, and obtain one or more licenses from third parties. We may not be able to obtain those licenses on commercially acceptable terms, or at all. Any of those consequences could cause us to lose revenues, impair our client relationships and harm our reputation.
Our business is subject to various cyber-security risks and other operational risks, such as the failure or malfunction of our information technology infrastructure and the failure to maintaining relationships with our vendors, which may cause disruptions to our business operation and tarnish our reputation.
We and our Operating Subsidiaries face various cyber-security and other operational risks relating to our businesses on a daily basis. Their operations depend upon the secured processing, storage and transmission of confidential and other information in their information technology infrastructure and they are vulnerable to unauthorized access such as cyber-attacks, distributed denial of service attacks and ransomware attacks, malicious code and computer viruses by activists, hackers, organized crime, foreign state actors and other third parties, or other events that could lead to a security breach. They may also be subject to cyber-attacks involving the leak and destruction of sensitive and confidential client information and our proprietary information, which could result from an employee’s or agent’s failure to follow data security procedures or as a result of actions by third parties, including actions by government authorities. As the breadth and complexity of our information technology infrastructure continue to grow, the potential risk of security breaches and cyber-attacks increases. Developing and enhancing new products and services, which is necessary for us to remain competitive, may involve the use or creation of new technologies, which further exposes us to cybersecurity and privacy risks that cannot be completely anticipated and increase the risk of security breaches and cyber-attacks.
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While we have adopted various means to safeguard the integrity of the computer system and information technology infrastructure of our Operating Subsidiaries, these systems and infrastructure may fail to operate properly or become disabled as a result of events which are beyond our control, events such as human error, natural disasters, power failures, client misuse, computer viruses, cyber-attacks, spam attacks, unauthorized access and data loss or leakage. All of which may cause shutdown or disruption of operations (including data loss or corruption, interruption to our data storage system, delay or cessation in the services provided through our securities dealing and brokerage system and our online trading platform), account takeovers and unauthorized gathering, monitoring, misuse, loss, total destruction and disclosure of data and confidential information of ours, our clients, our employees or other third parties, or otherwise materially disrupt our or our clients’ or other third parties’ network access or business operations. The occurrence of one or more of such events could jeopardize the confidentiality of information processed, stored and transmitted through our computer systems and networks or otherwise disrupt our operations, which could result in reputational damage, disputes with clients and relevant parties, and financial losses.
Our Operating Subsidiaries also depends on various third-party software and platforms as well as other information technology systems provided by our information technology vendor in our business operations. These systems, including third-party systems, may fail to operate properly or become disabled as a result of tampering or a breach of our network security systems or otherwise, including for reasons beyond our control. Any interruption or deterioration in the performance of these third parties or failures of their information systems and technology could impair our operations, affect our reputation, and adversely affect our businesses. There is no guarantee that we are able to maintain our existing relationship with the information technology vendor of our software system or information technology infrastructure. In the event that any vendor is unable or unwilling to continue to provide existing services to our Operating Subsidiary, our Operating Subsidiary may not be able to replace them with service providers of equivalent expertise in a timely manner and thus resulting in disruption to our business operations.
The occurrence of any disruption to the computer system and/or other information technology infrastructure of our subsidiaries may render us unable to meet client requirements in a timely and efficient manner, and/or lead to unauthorized disclosure of personal information or any other unexpected associated losses and damages. As a result, our reputation may be tarnished and we may also face complaints, disciplinary action by regulatory authorities, and legal proceedings being brought against us (which can be costly and time-consuming to defend and which may significantly divert the efforts and resources of our management personnel away from our usual business operations) and may potentially result in us having to pay damages. This could materially and adversely affect our financial condition, prospects, and results of operations.
Failure to comply with data privacy, data protection, or any other laws and regulations related to data privacy and security, or the failure to protect client data or prevent breaches of our information systems, could expose us and the Operating Subsidiaries to liability or reputational damage and materially and adversely affect our business, financial condition, and results of operations.
In providing our services to clients, we manage, utilize and store sensitive and confidential client data, including personal data. As a result, we may be subject to a variety of data privacy, data protection, cybersecurity, and other laws and regulations related to data, including those relating to the collection, use, sharing, retention, security, disclosure, and transfer of confidential and private information, such as personal information and other data. These laws and regulations may apply not only to third-party transactions, but also to transfers of information within our organization, which relates to our investors, employees, contractors and other counterparties. These laws and regulations may restrict our business activities and require us to incur increased costs and efforts to comply, and any breach or non-compliance may subject us to proceedings against us, damage our reputation, or result in penalties and other significant legal liabilities, and thus may materially and adversely affect our business, financial condition, and results of operations.
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If any person, including any of our employees, negligently disregards or intentionally breaches our established controls with respect to client data, or otherwise mismanages or misappropriates that data, we could be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution. Unauthorized disclosure of sensitive or confidential client data, whether through systems failure, employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose clients. In addition, vulnerabilities of our external service providers and other third parties could also pose security risks to client information and data. Although we have taken steps to reduce the risk of such threats, our risk and exposure to a cyber-attack or related breach remains heightened due to the evolving nature of these threats, our routine transmission of sensitive information to third parties, the current global economic and political environment, external extremist parties and other developing factors. Similarly, unauthorized access to or through our information systems, whether by our employees or third parties, including a cyber-attack by third parties who may deploy viruses, worms or other malicious software programs, could result in negative publicity, significant remediation costs, legal liability, regulatory fines, and damage to our reputation and could have adverse effects on our results of operations. Any actual or perceived breach of the security of our technology, or media reports of perceived security vulnerabilities of our systems or the systems of our third-party service providers, could damage our reputation, expose us to the risk of litigation and liability, disrupt our operations, increase our costs with respect to investigations and remediation, reduce our revenues as a result of the theft of intellectual property, and otherwise adversely affect our business. Further, any actual or perceived security breach or cyber-attack directed at other financial institutions or financial services companies, whether or not we are impacted, could lead to a general loss of client confidence in the use of technology to conduct financial transactions, which could negatively impact us. The occurrence of any of these events could have adverse effects on our business and results of operations.
Any lack of effective internal controls over financial reporting may affect our ability to accurately report our financial results which may affect the market for and price of the Class A Ordinary Shares.
Prior to the initial public offering, we were a private company with limited accounting personnel and other resources for addressing our internal control over financial reporting. Our management has not completed an assessment of the effectiveness of our internal control over financial reporting and our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in connection with the audits of our consolidated financial statements for the years ended March 31, 2026, 2025, and 2024, we identified material weaknesses in our internal control over financial reporting as well as other control deficiencies for the above-mentioned periods.
As defined in the standards established by the PCAOB, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
The material weaknesses identified related to: (1) our lack of sufficient financial reporting and accounting personnel with understanding of U.S. GAAP to address complex U.S. GAAP technical issues, related disclosures in accordance with U.S. GAAP; (2) there was a lack of policies and procedures to ensure timely account reconciliation and analysis, review and detection of errors or inaccuracies in the consolidated financial statements; and (3) IT deficiencies, including lack of formal IT policies and procedures, risk and vulnerability assessments, recovery management, change management and system security.
To remediate our identified material weaknesses, we have implemented several measures to improve our internal control over financial reporting, including including (i) engaging qualified financial and accounting advisory team, external consultants, and additional staff with working experience in U.S. GAAP and SEC reporting requirements to strengthen our financial reporting function, to further improve the efficiency and quality of our financial reporting, and to establish a comprehensive policy and procedure manual; (ii) implementing and refining the formal IT policies and procedures and enhancing our IT systems that support the Company’s revenue and related financial reporting processes; and (iii) developing an ongoing staff training plan on US GAAP and SEC reporting requirements and engage external subject matter experts to conduct practical training on all relevant accounting and reporting areas.
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We are a public company in the United States subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 and the rules and regulations of Nasdaq Capital Market. Section 404 of the Sarbanes-Oxley Act, or Section 404, require us to include a report from management on the effectiveness of our internal control over financial reporting in our annual report on Form 20-F. In addition, once we cease to be an “emerging growth company” as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified, if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated, or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational, and financial resources and systems for the foreseeable future. We may be unable to complete our evaluation testing and any required remediation in a timely manner.
Risks Related to our Corporate Structure
We rely on dividends and other distributions of equity paid by our subsidiaries to fund any cash and financing requirements we may have. In the future, funds may not be available to fund operations or for other uses outside of Hong Kong, due to interventions in, or the imposition of restrictions and limitations on, our ability or our subsidiaries by the PRC and Hong Kong government to transfer cash. Any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business and might materially decrease the value of our Class A Ordinary Shares or cause them to be worthless.
Grande is a holding company incorporated in the BVI, and we rely on dividends and other distributions on equity paid by our subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. We do not expect to pay cash dividends in the foreseeable future. If any of our subsidiaries incur debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.
The transfer of funds within our organization follows a specific path. Funds held by Grande may be transferred directly to our Hong Kong Operating Subsidiaries, Grande Capital and Wicens International. Grande Consulting may then transfer funds to our PRC subsidiary, Shenzhen Zhenjing, to support its operations. Conversely, if the Company intends to distribute dividends, funds may be transferred from Shenzhen Zhenjing to Grande Consulting in accordance with PRC laws. Grande Capital, Wicens International, and Grande Consulting may transfer funds directly to Grande in accordance with Hong Kong laws. The Company will then distribute dividends to all of its shareholders in proportion to the Class A Ordinary Shares they hold, in accordance with the laws and regulations of BVI.
Our ability to receive distributions is subject to various regulations. Under the Companies Ordinance of Hong Kong, dividends may only be paid out of distributable profits. Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by us. There are no restrictions under the laws of Hong Kong on the conversion of HK dollars into foreign currencies or the remittance of currencies out of Hong Kong. Under PRC laws, our PRC subsidiary, Shenzhen Zhenjing, is required to set aside at least 10% of its after-tax profits each year to fund certain statutory reserves until the aggregate amount of such fund reaches 50% of its registered capital.
Despite the current legal framework, there can be no assurance that the PRC or Hong Kong government will not intervene or impose restrictions on our ability to transfer or distribute cash within our organization or to foreign investors. Such actions could result in an inability or prohibition on making transfers or distributions outside of Mainland China or Hong Kong. The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case, that restrict or otherwise unfavorably impact the ability or way we conduct our business, could require us to change certain aspects of our business to ensure compliance, which could decrease demand for our services, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business, financial condition and results of operations could be adversely affected and such measured could materially decrease the value of our Class A Ordinary Shares, potentially rendering them worthless. Further, any limitation on the ability of our subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.
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Our corporate structure may involve unique risks and could be disallowed by Chinese regulatory authorities. Any PRC regulations pertaining to our corporate structure, loans to and investment in PRC entities by offshore holding companies may delay us from making loans or capital contributions to our Shenzhen Zhenjing, one of our Operating Subsidiaries, which could materially and adversely affect their liquidity and their ability to fund and expand their businesses, which could cause our Class A Ordinary Shares to significantly decline in value or become worthless.
With regards to our corporate structure, any funds we may transfer to our Shenzhen Zhenjing, our Operating Subsidiary in Mainland China, either as a loan or as an increase in registered capital, are subject to approval by or registration with relevant government authorities in Mainland China, regardless of the amount of the transfer.
According to the relevant PRC regulations, capital contributions to Shenzhen Zhenjing are subject to the submission of reports of changes through the enterprise registration system and registration with a local bank authorized by the State Administration of Foreign Exchange (“SAFE”). In addition, any foreign loan procured by Shenzhen Zhenjing is required to be registered with SAFE, and such loan also is required to be registered with the National Development and Reform Commission (“NDRC”). We may not be able to complete such registrations or obtain necessary approvals on a timely basis with respect to future capital contributions or foreign loans by us to Shenzhen Zhenjing. If we fail to complete such registration or other procedures, our ability to maintain our corporate structure while capitalizing Shenzhen Zhenjing’s operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.
The dual-class structure of our Ordinary Shares will have the effect of concentrating voting control with our Controlling Shareholder, Grande Holding, which holds in the aggregate 96.07% of the voting power of our voting shares, preventing you and other shareholders from influencing significant decisions, including the election of directors, amendments to our organizational documents and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring shareholder approval.
Our authorized and issued Ordinary Shares are divided into Class A Ordinary Shares and Class B Ordinary Shares. The Company is authorized by its Amended and Restated Memorandum and Articles of Association to allot a maximum of (i) 4,950,000,000 Class A Ordinary Shares, par value US$0.00001 per share and (ii) 50,000,000 Class B Ordinary Shares, par value US$0.00001 per share. Holders of Class A Ordinary Shares and Class B Ordinary Shares shall at all times vote together as one class on all matters submitted to a vote by the shareholders. Each Class A Ordinary Share has one (1) vote and each Class B Ordinary Share has twenty (20) votes. Class A Ordinary Shares and Class B Ordinary Shares are not convertible into each other.
The Class B Ordinary Shares outstanding are all ultimately and beneficially owned by Mr. Tak Kai Raymond, TAM and Ms. Tianhang, Zhao through Grande Holding Limited (our Controlling Shareholder), which are representing 83.40% of the aggregate voting power of our issued and outstanding Ordinary Shares. Because of the one-to-twenty voting ratio between our Class A and Class B Ordinary Shares, Mr. Tam and Ms. Zhao, through Grande Holding Limited, will continue to control a majority of the combined voting power of our Ordinary Shares and therefore be able to control all matters submitted to our shareholders for approval so long as the Class B Ordinary Shares held by Grande Holding represent at least 51% of the voting power of all outstanding Ordinary Shares.
This concentrated control will limit the ability of holders of Class A Ordinary Shares to influence corporate matters for the foreseeable future. Our Amended and Restated Memorandum and Articles of Association do not include the sunset provisions to limit the lifespan of the Class B Ordinary Shares (meaning the high-vote feature of our Class B Ordinary Shares may persist indefinitely). The death of the ultimate beneficial owner of our Class B Ordinary Shares or intra-family transfers of Class B Ordinary Shares would not require conversion of the Class B Ordinary Shares. Furthermore, should the Company decide to issue additional Ordinary Shares in the future, the one-to-twenty voting ratio between the two classes of our ordinary shares will result in further dilutive effect on the holders of Class A Ordinary Shares.
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As a result, for so long as Grande Holding Limited owns a controlling or significant voting interest in our Ordinary Shares, it generally will be able to control or significantly influence, directly or indirectly and subject to applicable law, all matters affecting us, including:
| ● | the election of directors; | |
| ● | determinations with respect to our business direction and policies, including the appointment and removal of directors; | |
| ● | determinations with respect to corporate transactions, such as mergers, business combinations, change in control transactions or the acquisition or the disposition of assets; | |
| ● | our financing and dividend policy; | |
| ● | determinations with respect to our tax returns; and | |
| ● | compensation and benefits programs and other human resources policy decisions. |
Even if Grande Holding Limited were to dispose of certain of its shares of our Ordinary Shares such that it would control less than a majority of the voting power of our outstanding Ordinary Shares, it may be able to influence the outcome of corporate actions so long as it retains Class B Ordinary Shares. During the period of Grande Holding Limited’s controlling or significant ownership of our Ordinary Shares, investors may not be able to affect the outcome of such corporate actions.
Our Controlling Shareholder, Grande Holding Limited, may have interests that differ from yours and may vote in a way with which you disagree, and which may be adverse to your interests. Corporate action might be taken even if other shareholders oppose them. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control or other liquidity event of our Company, could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale or other liquidity event and might ultimately affect the market price of our Class A Ordinary Shares.
Furthermore, we cannot predict whether our dual-class structure will result in a lower or more volatile market price of our Class A Ordinary Shares or in adverse publicity or other adverse consequences. For example, certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indices. In July 2017, FTSE Russell and S&P Dow Jones announced that they would cease to allow most newly public companies utilizing dual-class capital structures to be included in their indices. Affected indices include the Russell 2000 and the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together make up the S&P Composite 1500. Beginning in 2017, MSCI, a leading stock index provider, opened public consultations on their treatment of dual-class structures and temporarily barred new dual-class listings from certain of its indices; however, in October 2018, MSCI announced its decision to include equity securities “with unequal voting structures” in its indices and to launch a new index that specifically includes voting rights in its eligibility criteria. Under the announced policies, our dual-class capital structure makes us ineligible for inclusion in certain indices, and as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track those indices are not expected to invest in our Class A Ordinary Shares. These policies are still fairly new and it is as of yet unclear what effect, if any, they will have on the valuations of publicly traded companies excluded from the indices, but it is possible that they may depress these valuations compared to those of other similar companies that are included. Because of our multi-class structure, we will likely be excluded from certain of these indices and we cannot assure you that other stock indices will not take similar actions. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from stock indices would likely preclude investment by many of these funds and could make our Class A Ordinary Shares less attractive to other investors. As a result, the market price of our Class A Ordinary Shares could be adversely affected.
As a “controlled company” under the rules of the Nasdaq Stock Market LLC, we may choose to exempt our company from certain corporate governance requirements that could have an adverse effect on our public shareholders.
Mr. Tak Kai Raymond, TAM (our ultimate controlling shareholder and majority shareholder of Grande Holding Limited) and Ms. Tianhang, Zhao beneficially own the majority of the voting power of our outstanding Ordinary Shares. Under the Rule 4350(c) of the Nasdaq Stock Market LLC, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirement that a majority of our directors be independent, as defined in the rules of the Nasdaq Stock Market LLC, and the requirement that our compensation and nominating committees consist entirely of independent directors.
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Although we do not intend to rely on the “controlled company” exemption under the Nasdaq listing rules, we could elect to rely on this exemption in the future. If we elect to rely on the “controlled company” exemption, a majority of the members of our Board of Directors might not be independent directors and our nominating and compensation committees might not consist entirely of independent directors. Accordingly, during any time while we remain a controlled company relying on the exemption and during any transition period following a time when we are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to all of the Nasdaq Capital Market corporate governance requirements. Our status as a controlled company could cause our Class A Ordinary Shares to look less attractive to certain investors or otherwise harm our trading price.
You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated in the BVI.
We are incorporated under the laws of the BVI. We conduct our operations in Hong Kong, outside the United States and substantially all of our assets are located outside the United States. In addition, most of our directors, officers and senior management are located in Hong Kong, and all or a substantial portion of their assets are located outside of the United States. As a result, it may be difficult or impossible for investors to effect service of process within the United States upon us or such persons or to enforce judgments obtained in United States courts against them or against us, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Even if you are successful in bringing an action of this kind, the laws of the BVI or Hong Kong could render you unable to enforce a judgment against our assets or the assets of our directors and officers.
There are also uncertainties as to whether the courts of the BVI would:
| ● | recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and | |
| ● | entertain original actions brought in each respective jurisdiction against us or our Directors or officers predicated upon the securities laws of the United States or any state in the United States. |
The U.S. and the BVI do not have a treating providing for reciprocal recognition and enforcement of judgments of courts of the U.S. in civil and commercial matters and that a final judgment for the payment of money rendered by any general or state court in the U.S. based on civil liability, whether or not predicated solely upon the U.S. federal securities laws would not be enforceable in the BVI. A final and conclusive judgment obtained in U.S. federal or state courts under which a sum of money is payable as compensatory damages (i.e., not being a sum claimed by a revenue authority for taxes or other charges of a similar nature by a governmental authority, or in respect of a fine or penalty or multiple or punitive damages) may be the subject of an action on a debt in the court of the BVI under the common law doctrine of obligation. Furthermore, it is uncertain that BVI courts would: (i) recognize or enforce judgments of U.S. courts obtained in actions against us or our directors or officers predicated upon the civil liability provisions of the U.S. federal securities laws; or (ii) entertain original actions brought against us or other persons predicated upon the Securities Act.
There is also uncertainty as to whether the courts of Hong Kong would (i) recognize or enforce judgments of the U.S. courts obtained against us, our subsidiaries, or our directors or officers predicated upon the civil liability provisions of the securities laws of the U.S. or any state in the U.S. or (ii) entertain original actions brought in Hong Kong against us, our subsidiaries or our directors or officers predicated upon the securities laws of the U.S. or any state in the U.S.
A judgment of a court in the U.S. predicated upon U.S. federal or state securities laws may be enforced in Hong Kong at common law by bringing an action in a Hong Kong court on that judgment for the amount due thereunder, and then seeking summary judgment on the strength of the foreign judgment, provided that the foreign judgment, among other things, is (1) for a debt or a definite sum of money (not being taxes or similar charges to a foreign government taxing authority or a fine or other penalty) and (2) final and conclusive on the merits of the claim, but not otherwise. Such a judgment may not, in any event, be so enforced in Hong Kong if (a) it was obtained by fraud; (b) the proceedings in which the judgment was obtained were opposed to natural justice; (c) its enforcement or recognition would be contrary to the public policy of Hong Kong; (d) the court of the U.S. was not jurisdictionally competent; or (e) the judgment was in conflict with a prior Hong Kong judgment.
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Hong Kong has no arrangement for the reciprocal enforcement of judgments with the U.S. As a result, there is uncertainty as to the enforceability in Hong Kong, in original actions or in actions for enforcement, of judgments of the U.S. courts of civil liabilities predicated solely upon the federal securities laws of the U.S. or the securities laws of any State or territory within the U.S. You may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing actions in Hong Kong against our subsidiaries, or our management named in the annual report, as judgments entered in the U.S. can be enforced in Hong Kong only at common law.
The laws of BVI provide limited protections for minority shareholders, so minority shareholders will not have the same options as to recourse in comparison to the U.S if the shareholders are dissatisfied with the conduct of our affairs.
Under the laws of the BVI, there is limited statutory protection of minority shareholders other than the provisions of the BVI Act dealing with shareholder remedies. The principal protections under BVI statutory law are derivative actions, actions brought by one or more shareholders for relief from unfair prejudice, oppression and unfair discrimination and/or to enforce the BVI Act or the Amended and Restated Memorandum and Articles of Association. Shareholders are entitled to have the affairs of the company conducted in accordance with the BVI Act and the Amended and Restated Memorandum and Articles of Association, and are entitled to payment of the fair value of their respective shares upon dissenting from certain enumerated corporate transactions.
There are common law rights for the protection of shareholders that may be invoked, largely dependent on English company law, since the common law of the BVI is limited. Under the general rule pursuant to English company law known as the rule in Foss v. Harbottle, a court will generally refuse to interfere with the management of a company at the insistence of a minority of its shareholders who express dissatisfaction with the conduct of the company’s affairs by the majority or the board of directors. However, every shareholder is entitled to seek to have the affairs of the company conducted properly according to BVI law and the constitutional documents of the company. As such, if those who control the company have persistently disregarded the requirements of the BVI law and the constitutional documents of the company, then the courts may grant relief. Generally, the areas in which the courts will intervene are the following: (i) an act complained of which is outside the scope of the authorized business or is illegal or not capable of ratification by the majority; (ii) acts that constitute fraud on the minority where the wrongdoers control the company; (iii) acts that infringe or are about to infringe on the personal rights of the shareholders, such as the right to vote; or (iv) where the company has not complied with provisions requiring approval of a special or extraordinary majority of shareholders. This means that even if shareholders were to sue us successfully, they may not be able to recover anything to make up for the losses suffered.
Under the laws of the BVI, the rights of minority shareholders are protected by provisions of the BCA dealing with shareholder remedies and other remedies available under common law (in tort or contractual remedies). The principal protection under statutory law is that shareholders may bring an action to enforce the constitutional documents of the company (i.e. the Amended and Restated Memorandum and Articles of Association) as shareholders are entitled to have the affairs of the company conducted in accordance with the BCA and the Amended and Restated Memorandum and Articles of Association of the company. A shareholder may also bring an action under statute if he feels that the affairs of the company have been or will be carried out in a manner that is unfairly prejudicial or discriminating or oppressive to him. The BCA also provides for certain other protections for minority shareholders, including in respect of investigation of the company and inspection of the company books and records. There are also common law rights for the protection of shareholders that may be invoked, largely dependent on English common law, since the common law of the BVI for business companies is limited.
Certain corporate governance practices in the BVI, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the U.S. To the extent we choose to follow home country practice with respect to corporate governance matters, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.
As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.
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Risks Relating to Our Class A Ordinary Shares
Our Class A Ordinary Shares may be delisted or prohibited from being traded over-the-counter under the HFCAA if the PCAOB is unable to inspect or investigate completely the Company’s auditor for two consecutive years.
Our independent registered public accounting firm issued an audit opinion on the financial statements included in this annual report filed with the SEC. As an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, our auditor is required by the laws of the United States to undergo regular inspections by the PCAOB.
Our auditor, WWC, P.C., the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as a firm headquartered in California and registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess our auditor’s compliance with the applicable professional standards with the last inspection in December 2023. However, recent developments with respect to audits of Hong Kong based companies, such as us, create uncertainty about the ability of our auditor to fully cooperate with the PCAOB’s request for audit workpapers without the approval of the Chinese authorities. As a result, our investors may be deprived of the benefits of PCAOB’s oversight of our auditor through such inspections.
Inspections of certain other firms that the PCAOB has conducted outside of China have identified deficiencies in those firms’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The PCAOB is currently able to conduct inspections of audit firms located in Mainland China and Hong Kong and conduct inspections of U.S. audit firms where audit work papers are located in Mainland China.
In addition, as part of a continued regulatory focus in the United States on access to audit and other information currently protected by national law, in particular China’s, in June 2019, a bipartisan group of lawmakers introduced bills in both houses of Congress that would require the SEC to maintain a list of issuers for which the PCAOB is not able to inspect or investigate an auditor report issued by a foreign public accounting firm. The Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges (EQUITABLE) Act prescribes increased disclosure requirements for such issuers and, beginning in 2025, the delisting from national securities exchanges, such as Nasdaq, of issuers included for three consecutive years on the SEC’s list. On May 20, 2020, the U.S. Senate passed S. 945, the HFCAA. The HFCAA was approved by the U.S. House of Representatives on December 2, 2020. On December 18, 2020, the former U.S. president signed into law the HFCAA. In essence, the HFCAA requires the SEC to prohibit foreign companies from listing securities on U.S. securities exchanges if a company retains a foreign accounting firm that cannot be inspected by the PCAOB for three consecutive years, beginning in 2021. The enactment of the HFCAA and any additional rulemaking efforts to increase U.S. regulatory access to audit information could cause investor uncertainty for affected issuers, including us, and the market price of our securities could be adversely affected, and we could be delisted if it is unable to cure the situation to meet the PCAOB inspection requirement in time. On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. We will be required to comply with these rules if the SEC identifies it as having a “non-inspection” year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCAA, including the listing and trading prohibition requirements described above.
Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act and on December 29, 2022, the Consolidated Appropriations Act was signed into law by former President Biden, which contained, among other things, an identical provision to Accelerating Holding Foreign Companies Accountable Act and amended the HFCAA by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time before your securities may be prohibited from trading or delisted. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.
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On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in a foreign jurisdiction.
On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in Mainland China and in Hong Kong because of positions taken by Mainland China and Hong Kong authorities in those jurisdictions, and identifies the registered public accounting firms in Mainland China and Hong Kong that are subject to such determinations. The PCAOB has made such designations as mandated under the HFCAA. Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms and thus are at risk of such suspensions in the future. The auditor of the Company, WWC, P.C., is not among the auditor firms listed on the determination list issued by the PCAOB, which notes all of the auditor firms that the PCAOB is not able to inspect.
On August 26, 2022, the CSRC, the Ministry of Finance of the PRC, and the PCAOB signed a Statement of Protocol, or the Protocol, governing inspections and investigations of audit firms based in Mainland China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in Mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB will consider the need to issue a new determination.
Should the PCAOB be unable to fully conduct inspections of our auditor, it will make it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures and you may be deprived of the benefits of such inspection, which could result in limitation or restriction to our access to the U.S. capital markets, and our securities may be delisted or prohibited from trading if the PCAOB determines that it cannot inspect or investigate completely our auditor under the HFCAA. Investors may consequently lose confidence in our reported financial information and procedures and the quality of our financial statements, which would adversely affect us.
We may experience extreme stock price volatility unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Class A Ordinary Shares, and could result in substantial losses to you.
The trading prices of our Class A Ordinary Shares are likely to be highly volatile and could fluctuate widely due to factors beyond our control. This may happen due to broad market and industry factors, such as performance and fluctuation in the market prices or underperformance or deteriorating financial results of other listed companies based in Hong Kong and China. The securities of some of these companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in the trading prices of their securities. The trading performances of other Hong Kong and Chinese companies’ securities after their offerings may affect the attitudes of investors towards Hong Kong-based U.S.–listed companies, which consequently may affect the trading performance of our Class A Ordinary Shares, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or matters of other Hong Kong and Mainland Chinese companies may also negatively affect the attitudes of investors towards Hong Kong and Mainland Chinese companies in general, including us, regardless of whether we have conducted any inappropriate activities. Furthermore, securities markets may from time to time experience significant price and volume fluctuations that are not related to our operating performance, which may have a material and adverse effect on the trading price of our Class A Ordinary Shares.
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In addition to the above factors, the price and trading volume of our Class A Ordinary Shares may be highly volatile due to multiple factors, including the following:
| ● | regulatory developments affecting us or our industry; | |
| ● | variations in our revenues, profit, and cash flow; | |
| ● | the general market reactions and financial market fluctuation due to the continuous Russo-Ukraine conflicts; | |
| ● | changes in the economic performance or market valuations of other financial services firms; political, social and economic conditions in Mainland China and Hong Kong; | |
| ● | actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; | |
| ● | fluctuations of exchange rates among Hong Kong dollar, Renminbi, and the U.S. dollar; | |
| ● | changes in financial estimates by securities research analysts; | |
| ● | detrimental negative publicity about us, our services, our officers, directors, Controlling Shareholder, other beneficial owners, professional parties we partner with, or our industry; | |
| ● | announcements by us or our competitors of new service offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments; | |
| ● | additions to or departures of our senior management; | |
| ● | litigation or regulatory proceedings involving us, our officers, directors, or Controlling Shareholder; | |
| ● | release or expiry of lock-up or other transfer restrictions on our outstanding Ordinary Shares; and | |
| ● | sales or perceived potential sales of additional Ordinary Shares. |
Any of these factors may result in large and sudden changes in the volume and price at which our Class A Ordinary Shares will trade.
Recently, there have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with a number of public companies, especially among companies with relatively smaller public floats. As a relatively small-capitalization company with relatively small public float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. In particular, our Class A Ordinary Shares may be subject to rapid and substantial price volatility, low volumes of trades and large spreads in bid and ask prices. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Class A Ordinary Shares.
In addition, if the trading volumes of our Class A Ordinary Shares are low, persons buying or selling in relatively small quantities may easily influence prices of our Class A Ordinary Shares. This low volume of trades could also cause the price of our Class A Ordinary Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Class A Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Class A Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in our Class A Ordinary Shares. A decline in the market price of our Class A Ordinary Shares also could adversely affect our ability to issue additional shares of Ordinary Shares or other securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our Class A Ordinary Shares will develop or be sustained. If an active market does not develop, holders of our Class A Ordinary Shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all.
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Volatility in our Class A Ordinary Shares price may subject us to securities litigation.
The market for our Class A Ordinary Shares may have, when compared to seasoned issuers, significant price volatility and we expect that our share price may continue to be more volatile than that of a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.
If we fail to meet applicable listing requirements, Nasdaq may delist our Class A Ordinary Shares from trading, in which case the liquidity and market price of our Class A Ordinary Shares could decline.
We cannot assure you that we will be able to meet the continued listing standards of Nasdaq in the future. If we fail to comply with the applicable listing standards and Nasdaq delists our Class A Ordinary Shares, we and our shareholders could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for our Class A Ordinary Shares; | |
| ● | reduced liquidity for our Class A Ordinary Shares; | |
| ● | a determination that our Class A Ordinary Shares are “penny stock”, which would require brokers trading in our Class A Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Class A Ordinary Shares; | |
| ● | a limited amount of news about us and analyst coverage of us; and | |
| ● | a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future. |
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because our shares have been approved for listing on Nasdaq, such securities are covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. Further, if we were no longer listed on Nasdaq, our securities would not be covered securities and we would be subject to regulations in each state in which we offer our securities.
Nasdaq may apply additional and more stringent criteria for our continued listing because insiders will hold a large portion of the Company’s listed securities.
Nasdaq Listing Rule 5101 provides Nasdaq with broad discretionary authority over the continued listing of securities in Nasdaq and Nasdaq may use such discretion to apply additional or more stringent criteria for the continued listing of particular securities, or suspend or delist particular securities based on any event, condition, or circumstance that exists or occurs that makes continued listing of the securities on Nasdaq inadvisable or unwarranted in the opinion of Nasdaq, even though the securities meet all enumerated criteria for continued listing on Nasdaq. In addition, Nasdaq has used its discretion to deny continued listing or to apply additional and more stringent criteria in the instances, including, but not limited to: (i) where the company engaged an auditor that has not been subject to an inspection by the PCAOB, an auditor that PCAOB cannot inspect, or an auditor that has not demonstrated sufficient resources, geographic reach, or experience to adequately perform the company’s audit; (ii) where the company planned a small public offering, which would result in insiders holding a large portion of the company’s listed securities. Nasdaq was concerned that the offering size was insufficient to establish the company’s initial valuation, and there would not be sufficient liquidity to support a public market for the company; and (iii) where the company did not demonstrate sufficient nexus to the U.S. capital market, including having no U.S. shareholders, operations, or members of the board of directors or management. The insiders of our Company will hold a large portion of the Company’s listed securities. Nasdaq might apply the additional and more stringent criteria for our continued listing.
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Nasdaq has proposed new listing rules that, if adopted, could result in the suspension of trading and delisting of our securities if we fail to maintain a minimum market value of listed securities.
On January 13, 2026, Nasdaq submitted to the SEC proposed rule changes that would require companies listed on the Nasdaq Global Market and Nasdaq Capital Market to maintain a minimum market value of listed securities of at least $5 million for 30 consecutive trading days. On July 22, 2026, the SEC issued an order approving Nasdaq’s new rules.
The proposal would also permit the suspension of trading and immediate delisting of securities of companies that fail to meet this requirement, without providing a cure or compliance period, and would modify the procedures and discretion applicable to hearings before a Nasdaq Hearings Panel. If we are unable to maintain the required minimum market value of our listed securities, our securities could be suspended from trading and delisted from Nasdaq, which could adversely affect the liquidity and market price of our securities and our ability to raise capital.
Our Class A Ordinary Shares may be thinly traded and you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.
Our Class A Ordinary Shares may be “thinly-traded”, meaning that the number of persons interested in purchasing our Class A Ordinary Shares at or near bid prices at any given time may be relatively small or non-existent. This situation may be attributable to a number of factors, including the fact that we are relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and might be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we become more seasoned. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. Broad or active public trading market for our Class A Ordinary Shares may not develop or be sustained.
If securities or industry analysts do not publish research or reports about us or the business of our subsidiaries, or if they publish a negative report regarding our Class A Ordinary Shares, the price of our Class A Ordinary Shares and trading volume could decline.
The trading market for our Class A Ordinary Shares may depend in part on the research and reports that industry or securities analysts publish about us or the business of our subsidiaries. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade us, the price of our Class A Ordinary Shares would likely decline. If one or more of these analysts cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our Class A Ordinary Shares and the trading volume to decline.
Resales of our Class A Ordinary Shares in the public market by the White Lion Capital, LLC may cause the market price of our Class A Ordinary Shares to decline.
On July 16, 2026, the Company entered into a ordinary share purchase Agreement (the “SPA”) with White Lion Capital, LLC, a Nevada limited liability company (the “White Lion Capital”). Pursuant to the SPA, the Company may issue and sell to the investor, from time to time and within 36 months from the execution date of SPA, up to 40,000,000 in aggregate gross purchase price of newly issued Class A Ordinary Shares of the Company.
The Company shall have the right, but not the obligation, to require White Lion Capital, by its delivery to the Investor of a purchase notice, to purchase the Class A Ordinary Shares. The purchase price of the Class A Ordinary Shares is determined according to the mechanism under the SPA, making reference to, among others, the average of the four lowest traded prices of the Class A Ordinary Shares during the rapid valuation period; or 97% of the lowest daily volume-weighted average price of the Class A Ordinary Shares during the VWAP purchase valuation period.
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The Company also executed a registration rights agreement (the “RRA”) with the White Lion Capital on July 16, 2026. Pursuant to the RRA, the Company shall, no later than 30 calendar days following the date on which the Company files its Form 20-F for the fiscal year ended March 31, 2026, file with the SEC an initial registration statement registering the resale by White Lion Capital of the maximum number of registrable securities as permitted.
We cannot predict if and when the White Lion Capital may sell such Class A Ordinary Shares in the public market. Resales of Class A Ordinary Shares by White Lion Capital from time to time, after the registration statement registering the resale by White Lion Capital is effective, could compete with the resale of the Class A Ordinary Shares purchased from this offering and have the effect of depressing the market price for our Class A Ordinary Shares.
Future sales and issuances of our Class A Ordinary Shares or other securities might result in significant dilution to our existing shareholders and could cause the price of our Class A Ordinary Shares to decline.
To raise capital, we may sell our Class A Ordinary Shares, convertible securities or other equity securities in one or more transactions other than those contemplated by the SPA with White Lion Capital, at prices and in a manner we determine from time to time. We may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by White Lion Capital, and the White Lion Capital or investors purchasing shares or other securities in the future could have rights superior to existing shareholders. The price per share at which we sell additional Class A Ordinary Shares, or securities convertible or exchangeable into our Class A Ordinary Shares, in future transactions may be higher or lower than the price per share paid by White Lion Capital. Any sales of additional shares, including securities of notes convertible into Class A Ordinary Shares or warrants or other securities to purchase Class A Ordinary Shares, will dilute the interests of our existing shareholders.
Sales of a substantial number of Class A Ordinary Shares in the public market or the perception that these sales might occur could depress the market price of our Class A Ordinary Shares and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our Class A Ordinary Shares. In addition, the sale of substantial amounts of our Class A Ordinary Shares could adversely impact its price.
Future issuances of our Class B Ordinary Shares may be dilutive to the voting power of our Class A Ordinary Shareholders.
Future issuances of our Class B Ordinary Shares, which can be approved by our Board of Directors, could result in dilution to existing holders of our Class A Ordinary Shares. Such issuances, or the perception that such issuances may occur, could depress the market price of the Class A Ordinary Shares.
Because the amount, timing, and whether or not we distribute dividends at all is entirely at the discretion of our board of directors, you must rely on price appreciation of our Class A Ordinary Shares for return on your investment.
Our board of directors has complete discretion as to whether to distribute dividends. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. In either case, all dividends are subject to certain restrictions under the BVI law, namely the Company may only pay dividends if we are solvent immediately after the dividend payment in the sense that the value of our assets will exceed our liabilities and we will be able to pay our debts as they become due.
We currently intend to retain all remaining funds and future earnings, if any, for the operation and expansion of our business and do not anticipate declaring or paying any further dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and other factors the board of directors deems relevant, and will be subject to the restrictions contained in any future financing instruments.
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Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our Class A Ordinary Shares will likely depend entirely upon any future price appreciation of our Class A Ordinary Shares. We cannot assure you that our Class A Ordinary Shares will appreciate in value or even maintain the price at which you purchased the Class A Ordinary Shares. You may not realize a return on your investment in our Class A Ordinary Shares and you may even lose your entire investment in our Class A Ordinary Shares.
We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.
Because we qualified as a foreign private issuer under the federal securities laws, we were exempt from certain provisions of the Exchange Act that are applicable to U.S. public companies, including: (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (ii) certain insider reporting requirements and the short-swing profit recovery provisions of Section 16(b), and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. However, effective March 18, 2026, our directors and officers became subject to Section 16(a) beneficial ownership reporting obligations and must file applicable reports with the SEC. Any director or officer who becomes a more-than-5% beneficial owner also has reporting obligations under Section 13(d) of the Exchange Act and related rules. In addition, foreign private issuers are required to file their annual report on Form 20-F within four months after the end of each fiscal year, while U.S. domestic issuers that are non-accelerated filers are required to file their annual report on Form 10-K within 90 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, even though we are required to furnish interim financial statements on Form 6-K, and even though we are required to furnish reports on Form 6-K disclosing whatever information we have made or are required to make public pursuant to the laws of the Cayman Islands or distribute to our shareholders and that is material to our company, you may not have the same protections afforded to shareholders of companies that are U.S. domestic issuers.
As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with corporate governance listing standards.
As a foreign private issuer, we are permitted to take advantage of certain provisions in the Nasdaq rules that allow us to follow our home country law for certain governance matters. Certain corporate governance practices in our home country, the British Virgin Islands, may differ significantly from corporate governance listing standards. Currently, we have elected to rely on certain home country practices with respect to our corporate governance. Hence, our shareholders may be afforded less protection than they would otherwise enjoy under the Nasdaq rules applicable to U.S. domestic issuers.
We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
We are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter. We would lose our foreign private issuer status if, for example, more than 50% of our outstanding voting securities become directly or indirectly held by residents of the United States and we fail to meet additional requirements necessary to maintain our foreign private issuer status. If we lose our foreign private issuer status on this date, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements under the Nasdaq rules. As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer, and accounting, reporting and other expenses in order to maintain a listing on a U.S. securities exchange.
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If we are classified as a passive foreign investment company, U.S. taxpayers who own our Class A Ordinary Shares may have adverse U.S. federal income tax consequences.
A non-U.S. corporation such as ourselves will be classified as a passive foreign investment company, which is known as a PFIC, for any taxable year if, for such year, either:
| ● | at least 75% of our gross income for the year is passive income; or |
| ● | the average percentage of our assets (determined at the end of each quarter) during the taxable year which produce passive income or which are held for the production of passive income is at least 50%. |
Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets.
If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. taxpayer who holds our Ordinary Shares, the U.S. taxpayer may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements. With the amount of cash we raised in our past offerings, together with any other assets held for the production of passive income, it is possible that, for any subsequent year, more than 50% of our assets may be assets which produce passive income. It is believed we are not a PFIC for the taxable year ending March 31, 2025. We will continue to make this determination following the end of any particular tax year.
The classification of certain of our income as active or passive, and certain of our assets as producing active or passive income, and hence whether we are or will become a PFIC, depends on the interpretation of certain United States Treasury Regulations as well as certain IRS guidance relating to the classification of assets as producing active or passive income. Such regulations and guidance are potentially subject to different interpretations. If due to different interpretations of such regulations and guidance the percentage of our passive income or the percentage of our assets treated as producing passive income increases, we may be a PFIC in one of more taxable years.
For a more detailed discussion of the application of the PFIC rules to us and the consequences to U.S. taxpayers if we were determined to be a PFIC, see “Item 10. Additional Information — 10.E. Taxation — United States Federal Income Tax Considerations — Passive Foreign Investment Company Considerations.”
We are an “emerging growth company” within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make it more difficult to compare our performance with other public companies.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the Jumpstart Our Business Startups (“JOBS”) Act. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised, and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.
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As an “emerging growth company” under applicable law, we will be subject to lessened disclosure requirements. Such reduced disclosure may make our Class A Ordinary Shares less attractive to investors.
For as long as we remain an “emerging growth company,” as defined in the JOBS Act, we will elect to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Because of these lessened regulatory requirements, our shareholders would be left without information or rights available to shareholders of more mature companies. If some investors find our Ordinary Shares less attractive as a result, there may be a less active trading market for our Class A Ordinary Shares and our share price may be more volatile.
We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company.”
We will incur significant legal, accounting and other expenses as a public company that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC, Nasdaq, impose various requirements on the corporate governance practices of public companies.
Compliance with these rules and regulations increases our legal and financial compliance costs and makes some corporate activities more time-consuming and costly. After we are no longer an “emerging growth company,” or until five years following the completion of our initial public offering, whichever is earlier, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. For example, as a public company, we have been required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult or costly for us to find qualified persons to serve on our board of directors or as executive officers as a public company. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.
Item 4. Information on the Company
4.A. History and Development of the Company
Grande Group Limited is a holding company incorporated in the British Virgin Islands. As a holding company with no material operations, Grande Group Limited conducts all its operations through its operating entities, Grande Capital Limited, Shenzhen Zhenjing Investment Consulting Co., Ltd., and Wicens International Securities Limited (formerly known as “Grande Securities Limited”). Grande Capital Limited was incorporated under the laws of Hong Kong on April 6, 2017. Grande Capital Limited is a limited liability company licensed with the HKSFC to undertake Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities. Grande Capital Limited is our Operating Subsidiary and is wholly owned by Grande Group Limited. Wicens International Securities Limited was incorporated under the laws of Hong Kong on March 5, 2021. Wicens International Securities Limited is a limited liability company licensed with the HKSFC to undertake Type 1 (dealing in securities) regulated activities.
As a holding company, Grande Group Limited relies on dividends or payments to be paid by its Hong Kong subsidiaries (i.e. Grande Capital and Grande Securities), to fund its cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and U.S. investors, to service any debt we may incur and to pay our operating expenses. The subsidiaries’ ability to pay dividends to the Company may be restricted by the debt the subsidiaries incur on their own or laws and regulations applicable to them. See “Item 3. Key Information — 3.D. Risk Factors — Risks related to our Corporate Structure — We rely on dividends and other distributions on equity paid by our subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.”
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Corporate History
Grande Group Limited, formerly known as “Hero Intelligence Group Limited”, was incorporated as a limited liability company on August 6, 2020, under the law of the BVI. It is a holding company and is not actively engaging in any business. Under its Amended and Restated Memorandum and Article of Association, Grande Group Limited is authorized to issue a maximum of 5,000,000,000 Ordinary Shares, par value US$0.00001 per share, divided into (i) 4,950,000,000 Class A Ordinary Shares, par value US$0.00001 per share and (ii) 50,000,000 Class B Ordinary Shares, par value US$0.00001 per share, of which 19,906,250 Class A Ordinary Shares and 5,000,000 Class B Ordinary Shares are issued and outstanding as of the date of this annual report. The registered office of Grande Group Limited is at the office of Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.
On June 4, 2024, the then sole shareholder of the Company, Grande Holding Limited, approved a share subdivision of its issued and unissued shares at a ratio of 100,000 for one (1), pursuant to which each of the Company’s existing issued and unissued ordinary share, par value US$1.00 per share, has been subdivided into 100,000 ordinary shares, par value US$0.00001 per share, and all the subdivided shares be ranked pari passu in all respects with each other (the “Share Subdivision”). Prior to the Share Subdivision, the Company was authorized to issue a maximum of 50,000 ordinary shares, par value US$1.00 per share; and subsequent to the Share Subdivision, the Company was authorized to issue a maximum of US$50,000 divided into 5,000,000,000 ordinary shares, par value US$0.00001 per share, and after such Share Subdivision, the number of issued and outstanding shares in the Company was 10,000,000 ordinary shares, par value US$0.00001 per share, all of which were held by Grande Holding Limited.
On July 4, 2024, Grande Holding Limited entered into Sale and Purchase Agreements with each of Beyond Worth Limited, Charming Apex Limited and Merleos Technology Limited, respectively. Pursuant to the Sales and Purchase Agreements, Grande Holding Limited sold, and Beyond Worth Limited, Charming Apex Limited and Merleos Technology Limited acquired, 4.9%, 4.8% and 4.7% equity interests in Grande Group Limited at the consideration of US$27,480, US$26,919 and US$26,358, respectively. On the same date, Grande Holding Limited executed the instrument of transfers whereby Grande Holding Limited transferred 490,000, 480,000 and 470,000 ordinary shares, out of its 10,000,000 ordinary shares, to Beyond Worth Limited, Charming Apex Limited and Merleos Technology Limited, respectively. Subsequent to the transfers, Grande Group Limited is owned as to 8,560,000, 490,000, 480,000 and 470,000 ordinary shares by Grande Holding Limited, Beyond Worth Limited, Charming Apex Limited and Merleos Technology Limited.
On November 11, 2024, the Company passed board resolutions and shareholders resolutions approving that:
| (i) | the maximum number of shares the Company authorized to issue are re-classified and divided from 5,000,000,000 shares of one class, US$0.00001 par value, into (a) 4,950,000,000 Class A Ordinary Shares, US$0.00001 par value each; and (b) 50,000,000 Class B Ordinary Shares, US$0.00001 par value each; | |
| (ii) | amongst of which, the 4,940,000,000 authorized but unissued shares are re-designated into 4,940,000,000 Class A Ordinary Shares; and 50,000,000 authorized but unissued shares be re-designated into 50,000,000 Class B Ordinary Shares; and | |
| (iii) | the 10,000,000 authorized and issued shares, held as to 8,560,000, 490,000, 480,000 and 470,000 ordinary shares by Grande Holding Limited, Beyond Worth Limited, Charming Apex Limited and Merleos Technology Limited, respectively, are re-designated into 8,560,000, 490,000, 480,000 and 470,000 Class A Ordinary Shares held by each, respectively. |
(the above events are collectively referred as the “Share Redesignation”)
On November 11, 2024, the Company also adopted an Amended and Restated Memorandum and Articles of Association which became effective on November 18, 2024.
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On November 18, 2024, the Company further issued 6,634,000, 379,750, 372,000 and 364,250 Class A Ordinary Shares to Grande Holding Limited, Beyond Worth Limited, Charming Apex Limited and Merleos Technology Limited, respectively, and 5,000,000 Class B Ordinary Shares to Grande Holding Limited.
Subsequently, 17,750,000 Class A Ordinary Shares and 5,000,000 Class B Ordinary Shares were issued and outstanding before Company’s initial public offering, of which (i) 15,194,000, 869,750, 852,000 and 834,250 Class A Ordinary Shares are held by Grande Holding Limited, Beyond Worth Limited, Charming Apex Limited and Merleos Technology Limited, respectively; and (ii) 5,000,000 Class B Ordinary Shares are held by Grande Holding Limited.
Completion of the Initial Public Offering
On July 2, 2025, the Company closed its initial public offering of 1,875,000 Class A Ordinary Shares at a public offering price of US$5.00 per Ordinary Share on the Nasdaq. On July 10, 2025, the underwriters to the Company’s initial public offering had exercised the over-allotment option in full to purchase an additional 281,250 Class A Ordinary Shares. The gross proceeds received from the initial public offering totaled approximately US$10.78 million. Company’s Class A Ordinary Shares began trading on July 1, 2025 on the Nasdaq Capital Market under the ticker symbol “GRAN.”
As of the date of annual report, 19,906,250 Class A Ordinary Shares and 5,000,000 Class B Ordinary Shares were issued and outstanding.
Acquisition of Proplus Company Limited
On October 1, 2025, the Company has entered into a Sale and Purchase Agreement (the “SPA”) with United One Global Limited, a limited liability company established under the law of Samoa (the “United One”). Pursuant to the SPA, the Company agreed to acquire 100% of the equity interest in Proplus Company Limited (“Proplus”) from the United One, the then sole shareholder of the Proplus, for consideration consisting of a cash payment in the amount of HK$78,000,000 (approximately US$10,000,000) in cash, subject to certain terms. Through its wholly-owned subsidiary, Shenzhen Zhenjing Investment Consulting Co., Ltd., the Proplus principally engaged in the provision of executive training, executive training curriculum design, and corporate finance consulting services.
The acquisition of Proplus has been completed on October 9, 2025. The Company currently holds 100% of the equity interest of Shenzhen Zhenjing Investment Consulting Co., Ltd., which is wholly owned through Proplus and Grande Consulting Limited by the Company.
Reorganization
On August 21, 2025, the Company and the non-controlling shareholder of Wicens International (formerly known as “Grande Securities Limited”) incorporated China CreateAlliance Holdings Limited. On February 27, 2026, the Company and the non-controlling shareholder of Wicens International transferred their respective equity interests in Wicens International (51% and 49%, respectively) to China CreateAlliance Holdings Limited as part of an internal group reorganization. Following the transfer, Wicens International became a direct wholly-owned subsidiary of China CreateAlliance, while the Company’s effective controlling interest in Wicens Securities remained unchanged.
On December 29, 2025, the Company incorporated Sparkward Holding Limited in the BVI as a wholly-owned subsidiary. On January 7, 2026, Sparkward incorporated Grande Digital Ventures Limited in Hong Kong as its wholly-owned subsidiary.
Corporate Structure
The following chart illustrates our corporate structure, including our subsidiaries, as of the date of this Annual Report. The percentages shown on the following chart represent percentages of equity ownership:
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Subsidiaries and Business Functions
Grande Capital Limited was incorporated under the laws of Hong Kong on April 6, 2017. Grande Capital Limited is a limited liability corporation licensed with the HKSFC to undertake Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities. Grande Capital Limited is the main operating entity and is wholly owned by Grande Group Limited.
Wicens International Securities Limited (formerly known as “Grande Securities Limited”) was incorporated under the laws of Hong Kong on March 5, 2021. Wicens International Securities Limited is a partially owned subsidiary by Grande Group Limited, through China CreateAlliance Holdings Limited, an intermediate holding company. Wicens International Securities Limited is licensed with the HKSFC to undertake Type 1 (dealing in securities) and currently operational. Although Wicens International completed its operational setup and commenced business activities in late April 2026, as of the date of this annual report and during the fiscal year ended March 31, 2026, it did not generate any recognized revenue. We anticipate that Wicens International will contribute to our revenue stream in subsequent period.
China CreateAlliance Holdings Limited is an intermediate holding company incorporated under the laws of BVI on August 21, 2025, which holds 100% of the equity interest of Wicens International Securities Limited. China CreateAlliance Holdings Limited is 51% owned by the Company, 16% owned by Mr. Tin Duk Victor, Chang, 33% owned by other independent third parties.
Grande Digital Ventures Limited was incorporated under the laws of Hong Kong on January 7, 2026. Grande Digital Ventures Limited s not engaging in any business and is currently dormant.
Sparkward Holding Limited is an intermediate holding company incorporated under the laws of BVI on December 29, 2025, which holds 100% of the equity interest of Grande Digital Ventures Limited.
Proplus Company Limited is an intermediate holding company incorporated under the laws of BVI on August 30, 2021, which holds 100% of the equity interest of Shenzhen Zhenjing Investment Consulting Co., Ltd. through Grande Consulting Limited.
Grande Consulting Limited, formerly known as Harvest Group Limited, was incorporated under the laws of Hong Kong on September 13, 2024. Together with its wholly-owned subsidiary, Shenzhen Zhenjing Investment Consulting Co., Ltd., Grande Consulting Limited serves the executive training and corporate finance consulting arm of the Company.
Shenzhen Zhenjing Investment Consulting Co., Ltd. is limited liability company formed under the laws of the PRC on May 7, 2025. Shenzhen Zhenjing Investment Consulting Co., Ltd. principally engaged in the provision of executive training, executive training curriculum design, and corporate finance consulting services.
Corporate Information
Our principal executive offices are located at Suite 2701, 27/F, Tower 1, Admiralty Center, 18 Harcourt Road, Admiralty, Hong Kong. Our registered office in the BVI is at Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. Grande Capital maintains a website at https://grande-capital.com/. The information contained on our website is not a part of this annual report. Our agent for service of process in the United States is Cogency Global Inc. located at 122 East 42nd Street, 18th Floor, New York, NY 10168.
4.B. Business Overview
Our mission is to become one of the most successful integrated financial service providers in Hong Kong and offer tailored, innovative financial solutions to clients in Asia.
Headquartered in Hong Kong, we are a holding company incorporated in the British Virgin Islands, and all of our business are carried out by our Operating Subsidiaries in Hong Kong and Mainland China, Grande Capital, Wicens International, and Shenzhen Zhenjing.
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Grande Capital is a boutique financial firm that focuses on providing quality corporate finance advisory services to clients in Asia. Grande Capital is a licensed corporation under the SFO to engage in Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities in Hong Kong. Since Grande Capital first obtained the licenses under the SFO on January 23, 2018, Grande Capital has sponsored and completed 16 successful IPOs (i.e. IPO that successfully closed and listed) on the HKSE.
Wicens International focuses on providing underwriting and placing, securities dealing and brokerage services to clients in Hong Kong. Wicens International acts as (i) book runner, lead manager, or underwriter of listing applicants in IPOs or other fundraising activities; and (ii) placing agent of listed companies in connection with their issuance or sale of securities, in return for underwriting and/or placing commission. Wicens International also provides securities dealing and brokerage services for trading in securities on the Hong Kong Stock Exchange and in other overseas markets. Wicens International acts as an intermediary between buyers and sellers of securities listed on the Main Board and GEM of the Hong Kong Stock Exchange and facilitate the clients’ trading of securities listed on selected overseas stock exchanges, in return for brokerage commission income. Wicens International is a licensed corporation under the SFO to engage in Type 1 (dealing in securities) regulated activities in Hong Kong.
Grande Consulting, through Shenzhen Zhenjing, principally engaged in the provision of executive training and corporate finance consulting services. It currently operates under a business-to-business model, which supply high-quality course materials to executive training course providers, for their corporate operation training and capital market/corporate finance education for entrepreneurs and corporate executives. The course materials are strategically formulated to assist high-growth enterprises in understanding capital market dynamics, regulatory compliance, and listing frameworks for both the Hong Kong Stock Exchange and the Nasdaq Capital Market. Shenzhen Zhenjing is incorporated under the law of the PRC and operate in Mainland China and Hong Kong.
Our services include:
(1) IPO sponsorship and related services
Grande Capital acts as sponsor to companies aspiring to list on the HKSE. Grande Capital takes the principal role of advising and guiding listing applicants throughout the IPO process, coordinating the listing progress, conducting due diligence, performing all duties of a sponsor as required under the applicable rules and regulations and acting as the primary channel of communication with the regulators such as the HKSE and the HKSFC concerning the listing, in return for a sponsor’s fee. The clients pay us by way of progress payment based on achievement of certain milestones, such as signing of the engagement letter, submission of listing application, and first dealing of shares, in the IPO progress and we recognize the listing sponsorship services fee as our revenue when the performance obligation is satisfied.
(2) Corporate financial advisory services
Grande Capital also provides a wide range of corporate financial advisory services to clients, which can be broadly classified into the following 3 categories:
General advisory services: these mainly include (i) advisory works for private companies, public companies listed on HKSE, as well as their shareholders, advising them on the terms and structures of proposed transactions, such as takeovers, merger & acquisitions, and investment, and the relevant implications of the Hong Kong regulatory framework, which primarily include the HK Listing Rules and HK Takeovers Codes, in relation to the transactions; and (ii) project coordination works for clients pursuing listing on other stock exchanges, such as on U.S. exchanges. Our Operating Subsidiary charges a fixed fee payable by progress payment based on achievement of certain milestones, such as submission to the regulators, receiving approvals from the regulators and/or publishing the relevant documents on the HKSE.
Independent financial advisory services: these mainly include providing advice to the independent board committee and independent shareholders of companies listed on HKSE rendering recommendation and opinions, in return for a fixed fee paid by progress payment based on achievement of certain milestones, such as submission to the regulators, receiving approvals from the regulators and/or publishing the relevant documents on the HKSE.
Compliance advisory services: these mainly include advisory works to listed companies in Hong Kong in relation to post-listing compliance matters, in return for a monthly fee.
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(3) Referral services
Since mid-2024, Grande Capital also provides referral services to other professional parties, such as financial institutions, for equity and debt fund raising exercises, for referral fees. Occasionally we may on a case by case basis come across fund-raising exercises which require the introduction of other professional parties in which we may obtain referral fees. Such referral fee is generally based on a percentage of the fee charged by our clients in the particular fund-raising exercises.
(4) Underwriting, Placing, and Securities Brokerage Services
Since late April 2026, we have commenced our underwriting, placing, and securities brokerage services through Wicens International. Wicens International acts as (i) book runner, lead manager, or underwriter of listing applicants in IPOs or other fundraising activities; and (ii) placing agent of listed companies in connection with their issuance or sale of securities, in return for underwriting and/or placing commission. Wicens International also provides securities dealing and brokerage services for trading in securities on the Hong Kong Stock Exchange and in other overseas markets. Wicens International acts as an intermediary between buyers and sellers of securities listed on the Main Board and GEM of the Hong Kong Stock Exchange and facilitate the clients’ trading of securities listed on selected overseas stock exchanges, in return for brokerage commission income. Wicens International is a licensed corporation under the SFO to engage in Type 1 (dealing in securities) regulated activities in Hong Kong.
Although Wicens International completed its operational setup and commenced business activities in late April 2026, as of the date of this annual report and during the fiscal year ended March 31, 2026, it did not generate any recognized revenue. We anticipate that Wicens International will contribute to our revenue stream in subsequent period.
(5) Executive Training and Corporate Finance Consulting Services
Following our acquisition of Shenzhen Zhenjing, through Grande Consulting and Shenzhen Zhenjing, we expanded our footprint into executive training and corporate finance consulting services. The acquisition of Shenzhen Zhenjing is an important part of growth strategies to promote and enhance our brand locally and overseas and to strengthen the ECM and corporate finance advisory services. Shenzhen Zhenjing develops and delivers executive training curriculum and teaching material under a business-to-business (“B2B”) model as an upstream provider of proprietary executive training course content and educational framework to independent downstream course operators, rather than directly providing end-user training. These course materials focus on corporate operational management, capital market dynamics, regulatory compliance, and listing execution frameworks for small and medium-sized enterprises (“SMEs”). The curriculum is strategically tailored to assist founders and senior executives of high-growth enterprises in navigating their corporate management and corporate finance needs. Shenzhen Zhenjing also offers targeted corporate finance consulting services to enterprise clients seeking strategic expansion and future capital market entry.
The table below sets out a breakdown of our revenue by business segments for the years ended March 31, 2026, 2025 and 2024:
| For the years ended March 31, | For the years ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | 2024 | ||||||||||||||||||||||
| US$ | % | US$ | % | US$ | % | |||||||||||||||||||
| IPO Sponsorship And Related Services | 105,497 | 4.1 | 257,775 | 5.9 | 3,341,819 | 73.8 | ||||||||||||||||||
| Corporate Financial Advisory Services | 1,223,605 | 47.5 | 2,486,433 | 57.3 | 1,187,377 | 26.2 | ||||||||||||||||||
| Referral Services | 769,231 | 29.9 | 1,594,619 | 36.8 | — | — | ||||||||||||||||||
| Underwriting And Placing Services | — | — | — | — | — | — | ||||||||||||||||||
| Securities Dealing And Brokerage Services | — | — | — | — | — | — | ||||||||||||||||||
| Executive Training and Corporate Finance Consulting Services | 478,541 | 18.5 | — | — | — | — | ||||||||||||||||||
| Total | 2,576,874 | 100 | 4,338,827 | 100 | 4,529,196 | 100 | ||||||||||||||||||
We aspire to expand our business and become an integrated platform for providing one-stop financial services tailored to our customers’ specific needs.
Our revenue decreased from approximately US$4.3 million for the year ended March 31, 2025 to approximately US$2.6 million for the year ended March 31, 2026; while our profit before tax decreased from approximately US$1.9 million to a loss before taxes of approximately US$3.6 million in the corresponding years.
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This decrease in revenue was primarily driven by lower number of advisory engagements and slower progress in ongoing projects which resulted in fewer milestone achievements, as well as a significant reduction in referral arrangements during the year. This decline was partially offset by a new revenue stream from course material supply following our acquisition of Proplus in October 2025, which expands our business in Mainland China and diversifies our revenue streams.
Our transition to a loss before taxes of approximately US$3.6 million was because of the revenue decline, together with a significant increase in operating expenses and goodwill impairment loss. This was mainly due to a goodwill impairment loss of approximately US$1.9 million recognized during the year ended March 31, 2026, as the carrying amount of the Proplus reporting unit exceeded its estimated fair value. The increase was also caused by discretionary one-time bonuses payable to staff, higher traveling and entertainment expenses for getting new clients, and increased maintenance costs for our US listing requirements.
Competitive Strengths
Integrated capital market ecosystem driven by powerful cross-entity synergies
Our core competitive advantage lies in our fully integrated, “closed-loop” financial services ecosystem connecting Grande Consulting, Grande Capital, and Wicens International. Through Shenzhen Zhenjing, Grande Consulting in Hong Kong serves as our upstream lead-generation engine, incubating high-growth SME clients through executive training and education and corporate finance consulting services. As these clients mature, Grande Capital—licensed by the HKSFC to conduct Type 6 (Advising on Corporate Finance) regulated activities—executes their offshore listing strategy through expert IPO sponsorship services and financial advisory services post- IPO.
Completing this ecosystem, Wicens International—holding an unrestricted Type 1 (Dealing in Securities) license—serves as the placement and underwriting arm to capture downstream capital market opportunities. Wicens International executes diverse equity fundraising transactions for public and IPO-bound issuers, acting as joint bookrunner, lead manager, underwriter, sub-underwriter, placing agent, or sub-placing agent. By seamlessly bridging upstream client sourcing with core advisory execution pre-IPO and post- IPO and equity distribution, we maximize client monetization, drive sustainable cross-selling, and deliver a comprehensive end-to-end service suite.
A wide range of corporate finance advisory services.
We are positioned as a boutique financial firm aiming to offer tailored, innovative financial solutions to clients in Asia according to their specific needs. We take pride in the ability to address clients’ needs at their different development stages in the equity markets, starting from pre-IPO planning to post-IPO fund-raising. As a licensed corporation under the SFO to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities, our Operating Subsidiary, Grande Capital, can carry out listing sponsorship, financial advisory, compliance advisory, and takeovers and related advisory services under the HK Takeovers Codes. Grande Capital may serve our clients at the pre-IPO stage by acting as financial adviser by advising them on different aspects, including corporate reorganization, financial management, selection of professional parties and formulation of business strategies. During an IPO, Grande Capital provides service to our clients by acting as sponsor by advising and guiding the issuers in preparation of the listing and coordinating the listing progress. Subsequent to the IPO, Grande Capital may act as financial adviser in advising them on transactions involving the HK Listing Rules or HK Takeovers Codes or as an independent financial adviser rendering recommendations and opinions. Grande Capital also acts as compliance advisers and provide compliance advisory services to clients to ensure compliance with the relevant HK Listing Rules, HK Takeovers Codes and other relevant regulations. We believe all-rounded service portfolio and service quality are crucial to our success and contribute to our ability to adapt in the ever-changing financial market.
A strong track record of successful IPO cases.
Since Grande Capital, our Operating Subsidiary, first obtained its licenses under the SFO on January 23, 2018, we have sponsored and completed 16 successful IPOs in Hong Kong. As of the date of this annual report, we have one ongoing project which we act as sponsor for IPO(s) on the HKSE. We believe our track record in successful IPO cases strengthens our market presence and corporate image. Furthermore, in the Hong Kong financial market in which reputation is vital and opportunities are created through word-of-mouth, we believe our strong track record enables us to obtain referrals from our clients and create new business opportunities for us, which is essential for us to create a sustainable business income and thrive in the highly-competitive market.
Established client base and strong business network across different industry sectors and geographic locations.
We have an established customer base. We believe that market reputation is essential to sustaining a strong market position. The proven track record of successful IPO cases and active participation in other corporate financial advisory engagements enable us to establish a stable business relationship with our clients. We and our subsidiaries have built up stable contacts with listed companies in Hong Kong. Our client portfolio covers business enterprises which are headquartered and conduct operations in Hong Kong, Singapore and the PRC. Our clients are engaged in a variety of industry sectors, including construction, garment, alcohols, agriculture and bio-medical companies.
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Growth Strategies
Our principal business objective is to further develop into an integrated financial service provider in Hong Kong, and explore new business opportunities in relation to listing in international capital markets, in particular the U.S. for our clients. We intend to achieve our plan by adopting the following key strategies:
Continue to develop the corporate finance advisory business
Throughout the operating history of our group, corporate finance advisory business has been the core income generating source and we have experienced tremendous growth in our client base since our establishment. We believe it is vital for us to strive to strengthen our competitiveness and expand our market share. We continue to strengthen our manpower by recruiting additional project execution staff. We intend to recruit talents from the financial industry to provide all-rounded, quality services to client. We believe that by investing in the human resources we would be able to increase our work capacity and maintain the consistency in the service quality of Grande Capital.
To further develop the equity capital market services and elevate market brand presence
We are committed to broadening our equity capital market (service offerings to drive business growth and enhance our overall brand image. In April 2026, Wicens International, formerly known as Grande Securities, became operational as our dedicated placing, underwriting, and securities brokerage services entity. Fully licensed by the SFC to conduct Type 1 (Dealing in Securities) regulated activities under the SFO without restrictions, Wicens International enables us to expand beyond underwriting our own sponsored IPOs into executing secondary fundraising transactions and third-party sponsored IPO syndicates. The operational launch of Wicens International acts as a major strategic catalyst to promote and elevate our brand reputation among institutional investors, corporate clients, and market peers. By participating in diverse equity distribution and syndication capacities, we enhance our brand authority across Hong Kong’s financial markets. We intend to allocate additional capital to support Wicens International’s operational expansion, and recruit specialized ECM talent to capture broader deal flow through their established industry networks.
To develop our asset management business
We plan to set up an asset management team and apply to the HKSFC for licenses to carry on Type 4 (advising on securities) and Type 9 (asset management) regulated activities, by, among other things, recruiting professionals with relevant experiences and networks. We are of the view that the asset management business could enable us to provide more comprehensive services to our institutional and professional investor clients.
We also intend to work with business ventures companies to set up potential funds for investors to invest in portfolio consisting primarily of equities and debt investments in companies with strong growth potentials, promising product-line, and/or strong research and development capabilities, in the highly sought after investment such as artificial intelligence, semi-conductor and developing markets. We intend to enhance our research and analytical capabilities to provide a unique insight to our potential customers, such as high-net-worth individuals and companies, by continuously seeking research analysts to support our asset management team.
To promote and enhance our brand locally and in the overseas
We believe that our market reputation and clients’ confidence in our brand are essential to our success. Leveraging our established reputation in Hong Kong, with the strategic acquisition of Shenzhen Zhenjing, which we have significantly expanded our capability to build brand awareness directly among high-growth enterprises and entrepreneurs in Greater China, we intend to continue to enhance our client sourcing capability and industry position by conducting additional marketing and public relation activities, such as participating in additional industry events and marketing activities locally in Hong Kong and globally in Asia and the U.S.
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Our Services and Business Model
IPO sponsorship and related services
Since establishment, Grande Capital has focused on providing listing sponsorship services to clients pursuing listing on the HKSE. Companies seeking listing on the HKSE are required under the regulatory regime in Hong Kong to engage a sponsor to coordinate the IPO process. Grande Capital acts as the listing sponsor for companies seeking listing on the HKSE by providing assurance to the HKSE and the market that the listing applicant complies with the relevant Listing Rules and other relevant legal and regulatory requirements. In addition to ensuring that the listing document provides sufficient particulars and information for potential investors to form a valid and justifiable opinion of the listing applicants’ shares, financial condition, and profitability, Grande Capital also advises and guides the listing applicant as to the Listing Rules and other relevant regulatory requirements.
The services provided by Grande Capital to its clients as listing applicants include the overall coordination of the listing process, formulating listing plans, offering strategies and a feasible listing timetable, conducting due diligence, and preparing and reviewing all relevant documents such as the prospectus alongside other professional parties. Grande Capital also assists with the submission of the listing application to the HKSE, liaises and communicates with regulators, and responds to queries during the vetting process. Additionally, Grande Capital liaises with the underwriting syndicate on matters related to the share offering under the IPO and manages the public offer to ensure that it is conducted in a fair and orderly manner.
Beyond the scope of services provided by Grande Capital to its clients, Grande Capital holds a significant responsibility to the HKSFC under the SFO. As a sponsor for companies seeking listing on the HKSE, Grande Capital is committed to adhering to a high level of regulatory requirements. This includes ensuring that all listing applicants meet to the appropriate regulatory requirements, and that the disclosures in the listing documents are true, accurate, complete and not misleading.
As the listing sponsor, Grande Capital generally enters into engagement letters with the listing applicants. Although the terms of the engagement letters may vary, the material terms that are generally contained are set out below:
| Duration | Generally two years | |
| Scope of Service | Grande Capital is responsible for, among others: |
| ● | Advising and guiding the listing applicants in preparation of the IPO | ||
| ● | Coordinating the IPO process | ||
| ● | Conducting due diligence in respect of the listing applicant in accordance with the regulatory framework | ||
| ● | Acting as the primary channel of communication with the regulatory authorities concerning the IPO | ||
| ● | Overseeing the preparation of the listing documents and other related documents in relation to the IPO | ||
| ● | Ensuring the listing applicant’s compliance with the regulatory regime and take reasonable steps to ensure true, accurate and complete disclosure to the regulators and the public | ||
| ● | Overall coordination of the underwriting process |
| Fee | Grande Capital generally charges our customer a fixed fee by way of progress payment based on achievement of certain milestone in the IPO progress. These milestones generally include (i) signing of the engagement letter; (ii) submission of listing application; and (iii) first dealing of shares. |
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| Termination |
Grande Capital generally has the right to terminate should there be any material breaches of the engagement letter by the listing applicants or if we have, after discussion with the listing applicants, come to a reasonable opinion that it is impractical or inadvisable to proceed with the IPO.
The listing applicants generally have the right to terminate the engagement letter in the event that Grande Capital commits a material breach of the engagement letter or if Grande Capital fails to maintain sufficient human resources for performing the services under the engagement.
Grande Capital and the listing applicants have the right to terminate the engagement letter by giving the other party a one-month’s prior notice in writing.
Any termination of the engagement letter will not affect any accrued rights or obligations of the parties, including but not limited to those relating to the payment of the fee and expenses. |
Effective from 5 August 2022, as stipulated by Main Board Listing Rules Rule 3A.02 and Rule 3A.43, in the case of Main Board listing on the HKSE, a sponsor for IPOs in HKSE must also be appointed as one of the overall coordinators (commonly known as the “Sponsor Coupling” requirement by the HKSE). The overall coordinator is the underwriter who acts as the “head of syndicates” responsible for the overall management of the share offering, coordination of book building or placing activities, and exercise control over book building activities and market allocation recommendations to the issuer.
In response to, and to be in compliance with, the Main Board Listing Rules Rule 3A.02 and Rule 3A.43, on August 1, 2022, Grande Capital obtained the Type 1 (Dealing in Securities) license under the SFO for participating in underwriting syndicates for the IPOs that Grande Capital acted as sponsors, as part of Grande Capital’s listing sponsorship services, in return for underwriting commissions. In respect of the underwriting commissions, Grande Capital generally charges the client a percentage of the gross proceeds received by the listing applicant from the IPO.
The Type 1 (Dealing in Securities) license is obtained by Grande Capital for the purpose of conducting the underwriting activities that are directly related to Grande Capital’s listing sponsor engagements to satisfy the “Sponsor Coupling” requirement. As part of the licensing condition/restrictions by the HKSFC to Grande Capital’s Type 1 (Dealing in Securities) license and Type 6 (Advising on Corporate Finance), Grande Capital are not permitted to engage in the brokerage, trading or dealing in securities on behalf of its clients, unless such activity relates to its corporate finance engagements, and are not permitted to hold client assets, i.e., establishing or maintaining any client accounts that would involve holding or controlling client funds or securities, and accepting, managing, or safeguarding any money or securities on behalf of clients. See “Licenses” below regarding the details and restrictions of Grande Capital’s Type 1 and Type 6 licenses.
The tables below sets out a breakdown of our successful IPOs (i.e. IPO that successfully closed and listed), all listed on the HKSE, by (i) the principal places of business of the listing applicants; (ii) range of offering sizes; and (iii) the industry segments of the listing applicants, since Grande Capital, one of our Operating Subsidiaries, has sponsored since it first obtained its licenses under the SFO on January 23, 2018:
| Principal place of business of the listing applicants | ||||
| Hong Kong | 10 | |||
| The PRC | 3 | |||
| Singapore | 3 | |||
| Total | 16 | |||
| Range of offering sizes | ||||
| Below HK$100 million (approximately US$12.8 million) | 1 | |||
| From HK$100 million to HK$200 million (approximately US$12.8 million to US$25.6 million) | 15 | |||
| Total | 16 | |||
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| Industry segments of the listing applicants | ||||
| Construction | 14 | |||
| Manufacturing | 1 | |||
| Agriculture | 1 | |||
| Total | 16 | |||
Corporate financial advisory services
Grande Capital’s corporate financial advisory services can be broadly classified into the following 3 categories:
Financial advisory services: these mainly include (i) advisory works for private companies, public companies listed on HKSE, as well as their shareholders, advising them on the terms and structures of proposed transactions, such as takeovers, merger and acquisitions, and investment, and the relevant implications of the Hong Kong regulatory framework, which primarily include the HK Listing Rules and the HK Takeovers Codes, in relation to the transactions; and (ii) project coordination works for clients pursuing listing on other stock exchanges, such as U.S. exchanges. The Operating Subsidiary charges a fixed fee payable by progress payment based on achievement of certain milestones, such as submission to the regulators, receiving approvals from the regulators and/or publishing the relevant documents on the HKSE.
In relation to transactions concerning companies listed on the HKSE, the scope of services generally include: (i) assisting in the coordination of work of all professional parties; (ii) advising the client on the implication of the regulatory framework; (iii) drafting, reviewing and commenting, with the other advisers, all documentation to be published by the company under the regulatory framework; and (iv) assisting the client to address any comments from the regulatory authorities.
In relation to clients seeking listing on other stock exchanges, Grande Capital’s role is mainly focused on project coordination and we will act as a key communication channel between the clients and other professional parties involved in the proposed listing.
Independent financial advisory services: these mainly include providing advice to the independent board committee and independent shareholders of companies listed on HKSE rendering recommendation and opinions, in return for a fixed fee paid by progress payment based on achievement of certain milestones, such as submission to the regulators, receiving approvals from the regulators and/or publishing the relevant documents on the HKSE.
The scope of services generally include (i) discussing with the company concerning the terms of the transaction; (ii) preparing a letter of advice to advise the independent board committee of the company in relation to the transaction and whether the transaction is fair and reasonable and as to its acceptance; (iii) liaise with the regulatory authorities to obtain necessary clearance and approval for the letter and the transaction; and (iv) other activities incidental to the transaction.
Compliance advisory services: these mainly include advisory services to listed companies in Hong Kong in relation to post-listing compliance matters, in return for a monthly fee.
The Operating Subsidiary generally charges our client a fixed monthly fee of the service, payable quarterly in advance. The scope of services generally includes (i) providing the client with guidance as to compliance with the HK Listing Rules and all other applicable regulatory framework in respect of the company’s obligations and responsibility and (ii) advising the company on its obligations in respect of any transactions under the HK Listing Rules.
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Referral services
Since mid-2024, Grande Capital also provide referral services to other professional parties, such as financial institutions, for equity and debt fund raising exercises, for referral fees. Occasionally we may on a case by case basis come across fund-raising exercises which require the introduction of other professional parties in which we may obtain referral fees. Such referral fee is generally based on a percentage of the fee charged by our clients in the particular fund-raising exercises.
We generally enter into a client referral agreement with the professional party. Under the referral agreement, we would introduce clients to the professional party to utilize the professional party’s service in the particular fund raising exercises. Such referral agreement specifies that we shall receive a percentage of the fees charged by the professional party from its clients for such fund-raising projects. The payment shall be made by the professional party to the Operating Subsidiary on a monthly basis or at any other interval as agreed by the parties from time to time.
Placing and Underwriting Services
As part of our growth strategies to develop our ECM services, we have launched placing and underwriting capabilities through Wicens International (formerly known as Grande Securities Limited). To capitalize on synergies with our core corporate finance advisory business, Grande Securities Limited was subsequently rebranded and renamed to Wicens International and commenced business operations in April, 2026. Wicens International is fully licensed by SFC to carry on Type 1 (Dealing in Securities) regulated activities under the SFO without restrictions.
Wicens International, which is licensed under the SFO to carry on Type 1 (dealing in securities) regulated activity as defined under the SFO, participates in different kinds of fund-raising exercises for companies listed on the Hong Kong Stock Exchange by acting as the joint-bookrunner, lead manager, co-lead manager, underwriter, sub-underwriter, sub-agent, placing agent or sub-placing agent. Those fund-raising exercises included placing and IPO of shares of newly-listed companies, placing of new shares of listed companies under general mandate or specific mandate, top-up placement of shares of listed companies, issue of new shares of listed companies by way of rights issue or open offer and unlisted debt securities by listed companies. Wicens International may also be engaged as placing agents for listed companies to place bulk volume of securities in the secondary market. During the course of providing the placing and underwriting services, Wicens International may engage sub-placing agents or sub-underwriters, to form placing and/or underwriting syndicates.
For the underwriting exercise, Wicens International generally underwrites IPOs on a fully underwritten basis, by which Wicens International is obliged to take up or procure the applications of any unsubscribed shares offered by the issuer in the IPO up to our maximum underwriting commitment, as agreed with the lead bookrunner or manager and the issuer in the relevant underwriting agreement, in the event of any under-subscription of shares in the relevant share offer. For placing exercises, Wicens International usually agrees with the contracting party to place a number of securities on an agreed price on a best-effort basis within a period of time. Wicens International charges a commission for acting as a placing agent, a sub-placing agent or a sub-agent in a fund-raising exercise based on the aggregate placing price of the number of securities successfully placed by Wicens International to its placees or sub-agents. The placing commission rates are subject to negotiation on a case-by-case basis with the listing applicants or listed issuer and is generally determined with reference to, among other matters, the type of securities offered, fundraising size, market condition and prevailing market rate.
For acting as a bookrunner, a lead manager, a co-lead manager, a co-manager, an underwriter or a sub-underwriter in a fund-raising exercise, our commission is based on the underwriting commitment and the aggregate offer price of the number of securities underwritten by Wicens International. The underwriting commissions are typically either a pre-determined fixed fee or a fixed percentage of the aggregate offer price of the number of securities underwritten. Depending on the role under various fund-raising exercises, Wicens International collects commission either from the listed companies, the shareholders of the listed companies or our immediate distributors of the fund-raising exercises. Wicens International also charges investors a brokerage commission when they subscribe for or acquire securities in respect of offerings of listed issuers who engaged Wicens International to provide placing and underwriting services in respect of the relevant securities.
Wicens International also offers securities trading services, including dealing and brokerage services for trading of securities on the Hong Kong Stock Exchange and on other overseas exchanges. Wicens International also facilitates subscriptions to IPOs and secondary placings, either conducted by Hong Kong issuers who engage our placing and underwriting services or conducted by other financial services providers in Hong Kong, such as investment banks and other securities brokerage firms.
Although Wicens International completed its operational setup and commenced business activities in late April 2026, as of the date of this annual report and during the fiscal year ended March 31, 2026, it did not generate any recognized revenue. We anticipate that Wicens International will contribute to our revenue stream in subsequent period.
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Executive Training and Corporate Finance Consulting Services
Following our acquisition of Shenzhen Zhenjing, we expanded our footprint into executive training and corporate finance consulting services. The acquisition of Shenzhen Zhenjing is an important part of growth strategies to promote and enhance our brand locally and overseas and to strengthen the ECM and corporate finance advisory services. Shenzhen Zhenjing plays a critical role in expanding our deal pipeline, which functions as a strategic lead-generation engine that connects our corporate finance ecosystem with high-growth companies and their leaderships at an early stage, and those seeking equity capital market solutions, IPO sponsorship, or financial advisory services are seamlessly integrated into our core corporate finance business (conducted via our licensed corporation in Hong Kong). This integrated funnel drives sustainable client acquisition and strengthens our end-to-end service ecosystem.
Shenzhen Zhenjing develops and delivers executive training curriculum and teaching material under a B2B model as an upstream provider of proprietary executive training course content and educational framework to independent downstream course operators, rather than directly providing end-user training. These course materials focus on corporate operational management, capital market dynamics, regulatory compliance, and listing execution frameworks for SMEs. The curriculum is strategically tailored to assist founders and senior executives of high-growth enterprises in navigating their corporate management and corporate finance needs.
Shenzhen Zhenjing also offers targeted corporate finance consulting services to enterprise clients seeking strategic expansion and future capital market entry. Rather than acting as a financial intermediary, Shenzhen Zhenjing operates as an executive-level strategic advisor to assist various SME founders and management teams in optimizing their corporate architecture prior to accessing international capital markets and assisting these clients with capital raising strategy formulation and long-term equity financing roadmaps.
Pricing Policy
The corporate finance advisory fees charged by Grande Capital are determined on a case-by-case basis after negotiations with each client. In determining the fee, we generally consider (i) the nature and complexity of the transaction; (ii) scope of our duties; (iii) length of time and manpower required; and (iv) the expected workload.
The placing and underwriting commission charged by Wicens International may be a fixed fee or a fee charged as a percentage of the fundraising size, which is determined on a case-by-case basis after arm’s length negotiations with each client and/or among the members of the underwriting syndicate, based on various factors including but not limited to, the proposed fund raising size, proposed pricing and valuation of the offering, prevailing market conditions and sentiments, target types and geographical locations of investors, perceived market response to and demand for the offering, the expected amount of time and resources required for performing our roles and duties in the book building process, the business and financial performance of the relevant listing applicant or listed issuers, number of underwriters and/or placing agents involved and number of shares to be placed or underwritten by Wicens International. The commission rates for the placing and underwriting projects may vary to a wide extent.
Our Clients
Our clients mainly comprise listing applicants and listed companies on the HKSE (and their respective management and shareholders), financial institutions, various companies and their leaderships. We recorded revenue of 72.2%, 57.2%, and 78.1% from our top five clients for the years ended March 31, 2026, 2025 and 2024, respectively. The following table sets out the percentage of revenue generated from our top five clients:
For the year ended March 31, 2026:
| Name of client | Types of services provided by us | Revenue % | ||||||
| Largest client | Yellow River Securities Limited | Referral services | 29.9 | |||||
| 2nd largest client | Guangdong Shitong Film & Television Media Co., Ltd. | Course materials supplying | 14.4 | |||||
| 3rd largest client | Mirxes Holding Company Limited | Independent financial advisory services | 9.9 | |||||
| 4th largest client | Swift Ascent Limited | Financial advisory services | 9.0 | |||||
| 5th largest client | China VC Holdings Limited | Financial advisory services | 9.0 | |||||
| Total | 72.2 | |||||||
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For the year ended March 31, 2025:
| Name of client | Types of services provided by us | Revenue % | ||||||
| Largest client | Yellow River Securities Limited | Referral services | 30.8 | |||||
| 2nd largest client | China Wacan Group Company Limited | Financial advisory services | 8.2 | |||||
| 3rd largest client | S&T Holdings Limited | Financial advisory services and compliance advisory services | 6.3 | |||||
| 4th largest client | Shenzhen Yueyuan Construction Company Limited | IPO sponsorship and related services | 6.0 | |||||
| 5th largest client | MS (HK) Engineering Limited | Financial advisory services | 5.9 | |||||
| Total | 57.2 | |||||||
For the year ended March 31, 2024:
| Name of client | Types of services provided by us | Revenue % | ||||||
| Largest client | Qingdao Fujing Agriculture Development Company Limited | IPO sponsorship and related services | 28.2 | |||||
| 2nd largest client | Easy Smart Engineering Limited Easy Smart Group Holdings Limited | IPO sponsorship and related services; compliance advisory services | 25.2 | |||||
| 3rd largest client | Wing Kei Management Limited | IPO sponsorship and related services; compliance advisory services | 18.9 | |||||
| 4th largest client | Asia Piling Co Pte. Ltd | IPO sponsorship and related services | 3.3 | |||||
| 5th largest client | Hubei Qiangda Packaging Industry Company Limited | Compliance advisory services | 2.5 | |||||
| Total | 78.1 | |||||||
Sales & Marketing
The sales and marketing function of Grande Capital and Wicens International are performed by the management and project execution team based in Hong Kong, constituted by industry veterans with extensive experience and connections in the corporate finance and financial services industry. They are responsible for maintaining relationships with the management of existing clients, exploring leads from new clients, and maintaining relationships with professional parties partners and industry players in the corporate finance and financial services industry. The new clients and projects of Grande Capital and Wicens International primarily originate from the professional networks of our management and their project execution team, and the referrals from existing clients, professional parties and relevant market players in the corporate finance and financial service industries; rest of our clients and projects are originated from the direct approaches by the management of the clients connected through the previous business or professional relationships, or due to our market reputation in the Hong Kong corporate finance and capital market industry.
For Shenzhen Zhenjing, it develops its customers and clients primarily through referrals from industry professionals and existing clients. It also participates in various in third-party organized professional conferences and seminars
Therefore, due to the business model and the nature of services of our Operating Subsidiaries, we and our Operating Subsidiaries do not advertise our services to the general public, market our services through mass media, or publicly solicit for clients.
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Licenses
The financial services market in Hong Kong is highly regulated. The principal business and the responsible personnel of the Operating Subsidiaries are subject to a number of legislations and regulations and the respective rules of the HKSFC and the HKSE. In particular, due to the licensing requirements of the HKSFC, Grande Capital and Wicens International are required to obtain necessary licenses under the SFO to conduct its business in Hong Kong and its business and responsible personnel are subject to the relevant laws and regulations and the respective rules of the HKSFC.
As of the date of this annual report, Grande Capital is currently licensed under the SFO to carry on Type 1 (dealing in securities) regulated activities in Hong Kong and Type 6 (advising on corporate finance) regulated activities in Hong Kong. Wicens International is currently licensed under the SFO to carry on Type 1 (dealing in securities) regulated activities in Hong Kong. See “Item 4. Information On The Company — 4.B. Business Overview — “Regulations — Licensing regime under the SFO.”
These licenses have no expiry date and will remain valid unless they are suspended, revoked or cancelled by the HKSFC. Grande Capital and Wicens International pay standard annual fees to the HKSFC and are subject to continuing regulatory obligations and requirements, including the maintenance of minimum paid-up share capital and liquid capital, maintenance of segregated accounts, and submission of audited accounts and other required documents, among others. See “Item 4. Information On The Company — 4.B. Business Overview — Regulations — Licensing requirements.”
The following table summarizes the licenses and permissions held by our Operating Subsidiaries under the SFO, and the restrictions to such licenses and permission.
| License/Permit | Issuing Authority |
Licensee | Term | Restrictions and Licensing Conditions | ||||
| Type 1 license (dealing in securities) | HKSFC | Grande Capital | No expiration date |
The licensee shall not engage in dealing activities other than those relating to corporate finance.(1)
The licensee shall not hold client assets.(2) | ||||
| Type 6 license (advising on corporate finance) | HKSFC | Grande Capital | No expiration date | The licensee shall not hold client assets.(2) | ||||
| Type 1 license (dealing in securities) | HKSFC | Wicens International | No expiration date | None. |
| (1) | Under this restriction, Grande Capital is not permitted to engage in the brokerage, trading, or dealing in securities on behalf of its clients unless such activity relates to its corporate finance engagements. An example of a permissible activity under Type 1 (dealing in securities) license Grande Capital has is where Grande Capital acts as an underwriter/overall coordinator in an initial public offering on the HKSE for which it also serves as the sponsor under the “Sponsor Coupling” requirement by the HKSE. In such cases, the underwriting activities are directly related to Grande Capital’s corporate finance engagements and are conducted in compliance with its licensing conditions. |
| (2) | Under this restriction, Grande Capital is prohibited from (i) establishing or maintaining accounts that would involve holding or controlling client funds or securities; and (ii) accepting, managing, or safeguarding any money or securities on behalf of clients. |
During the years ended March 31, 2026, 2025 and 2024, and up to the date of this annual report, we and our Operating Subsidiaries had obtained all requisite licenses, permits, and certificates necessary to conduct the operations as set out in this annual report and we had complied with all applicable laws, regulations, rules, codes, and guidelines in Hong Kong in connection with the business and operation in all material respects.
Seasonality
Up to the date of this annual report, we have not experienced any pronounced seasonality.
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Insurance
Grande Capital maintains employees’ compensation insurance for our directors and employees at our office, which covers the liability to make payment in the case of death, injury or disability of all our employees under the Employees’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong) and at common law for injuries sustained at work. We believe that our current insurance policies are sufficient for our operations.
As per the SFO, to carry out Type 1 regulated activities (dealing with securities), Wicens International is required to take out and maintain insurance in relation to fidelity and crime risks in the manner prescribed by the Securities and Futures (Insurance) Rules. Wicens International has in place the License Holders Insurance Scheme (LHI). The LHI does not cover professional indemnity or pure unauthorized trading where there is no intent or direct fund. The LHI, however, covers fidelity and crime risks, such as loss of client assets due to theft of employees or other fraudulent acts.
Shenzhen Zhenjing participates in various government statutory social security plans in Mainland China, including a pension contribution plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan, a maternity insurance plan and a housing provident fund.
Properties
As of the date of this annual report, we are party to the following lease agreement:
| Location | Term of Lease | Usage | ||
| Room 2701, 27/F, Tower 1, Admiralty Center, No. 18 Harcourt Road, Hong Kong | February 15, 2025 to February 14, 2029 | Office |
As of the date of this annual report, Wicens International is a party to the following office space sharing agreement.
| Location | Term of License | Usage | ||
| Unit 2C, 35/F, East Tower, Cheung Kong Center II, No.10 Harcourt Road, Central, Hong Kong | April 1, 2026 to April 1, 2028 | Office |
Intellectual Property
Our Operating Subsidiary, Grande Capital is the registered owner of the domain names https://grande-capital.com/. Wicens International is the registered owner of the domain names https://wicens.com.hk/.
As of the date of this annual report, Grande Capital had registered three trademarks under the jurisdiction of Hong Kong:
| Place of registration |
Trademark | Status | Trademark Number |
Classes | Expiry Date | |||||
| Hong Kong | Registered, December 27, |
304380877 | 36 | December 26, 2027 | ||||||
| 2017 | ||||||||||
| Hong Kong | Registered, December 27, 2017 |
304380886 | 36 | December 26, 2027 | ||||||
| Hong Kong | Registered, December 27, 2017 |
304380895 | 36 | December 26, 2027 | ||||||
| Hong Kong |
|
Application Details Checked, Application Pending | 307255323 |
36 | - |
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Legal Proceedings
As of the date of this annual report, we and our subsidiaries had not been involved in any legal proceedings, investigations, claims nor had we been aware of any pending or threatened litigation, arbitration or other claims which would have a material adverse impact on the operations, financial position and reputation of our Group.
Regulations
Licensing regime under the SFO
Our business operations in Hong Kong are conducted through Grande Capital and Wicens International (formerly known as “Grande Securities Limited”), both are licensed corporations under the SFO. They are subject to various Hong Kong laws and regulations and the jurisdictions of the SFC. This section summarizes the most significant rules and regulations that affect our business activities in Hong Kong.
Licensing and Registration under the SFO Administered by the HKSFC
The HKSFC is an independent statutory body set up in 1989 to regulate Hong Kong’s securities and futures markets. It operates independently of the Government of Hong Kong, and is funded mainly by transaction levies and licensing fees.
The HKSFC derives its investigative, remedial and disciplinary powers from the SFO and the subsidiary legislations thereunder. The SFO, in particular, vested the HKSFC with multiple roles and sets out its regulatory objectives, including:
| i. | to maintain and promote the fairness, efficiency, competitiveness, transparency and orderliness of the securities and futures industry; |
| ii. | to promote understanding by the public of financial services including the operation and functioning of the securities and futures industry; |
| iii. | to provide protection for members of the public investing in or holding financial products; |
| iv. | to minimize crime and misconduct in the securities and futures industry; |
| v. | to reduce systemic risks in the securities and futures industry; and |
| vi. | to assist the Financial Secretary of Hong Kong in maintaining the financial stability of Hong Kong by taking appropriate steps in relation to the securities and futures industry. |
Overview of licensing regime
Generally, the SFO provides that a corporation which is not an authorized financial institution and is (i) carrying on a business in a regulated activity (or holding out as carrying on a business in a regulated activity); or (ii) actively marketing (whether in Hong Kong or from a place outside Hong Kong) to the public any services it provides, which would constitute a regulated activity if provided in Hong Kong, has to be licensed by the HKSFC to carry out that regulated activity, unless one of the exemptions under the SFO applies.
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In addition, an individual performing a regulated function (meaning any function performed for or on behalf of or by arrangement with the person relating to the regulated activity, other than work ordinarily performed by an accountant, clerk or cashier) for the principal which is a licensed corporation in relation to a regulated activity carried on as a business has to be licensed separately under the SFO as a Licensed Representative accredited to the principal.
For each regulated activity conducted by a licensed corporation, it must appoint no less than two Responsible Officers, at least one of them must be an executive director, to supervise the business of such regulated activity. As defined in section 113(1) of the SFO, “executive director”, in relation to a licensed corporation, means a director of the corporation who (i) actively participates in; or (ii) is responsible for directly supervising the business of a regulated activity for which the corporation is licensed. All the executive director(s) must seek the HKSFC’s approval as Responsible Officer(s) accredited to the licensed corporation.
The same individual could apply to be a Responsible Officer for more than one regulated activity simultaneously provided that he/she meets the fit and proper (including competence) requirements for the regulated activity concerned, and demonstrate that there is no conflict of interest for he/she to carry on the regulated activities concurrently. In addition, the same individual could apply to be a Responsible Officer for more than one licensed corporation simultaneously provided that he/she can demonstrate there is no conflict of interest.
It is an offence for a person to conduct any regulated activity without the required license.
Types of regulated activities
Schedule 5 to the SFO stipulates 10 types of regulated activities, namely:
| ● | Type 1: Dealing in securities |
| ● | Type 2: Dealing in futures contracts |
| ● | Type 3: Leveraged foreign exchange trading |
| ● | Type 4: Advising on securities |
| ● | Type 5: Advising on futures contracts |
| ● | Type 6: Advising on corporate finance |
| ● | Type 7: Providing automated trading services |
| ● | Type 8: Securities margin financing |
| ● | Type 9: Asset management |
| ● | Type 10: Providing credit rating services |
As of the date of this annual report, we are licensed for and carried on Type 1 and Type 6 of the above regulated activities. The foregoing licenses of Grande Capital have no expiry date and remain in force until suspended or revoked, subject to certain continuing obligations, such as payment of annual fee and submission of annual return.
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Licensed corporation
For application as a licensed corporation, the applicant has to be incorporated and the licensed corporation has to satisfy the HKSFC that it has proper business structure, good internal control systems and qualified personnel to ensure the proper management of risks that it will encounter in carrying on the proposed regulated business as detailed in the business plan submitted to the HKSFC.
Responsible Officer
A Licensed Representative who is also approved as a Responsible Officer under section 126 of the SFO to supervise the regulated activity of the licensed corporation to which he/she is accredited.
Licensed representative
An individual who is granted a license under section 120(1) of the SFO to carry on one or more regulated activities for a licensed corporation to which he/she is accredited.
Licensing requirements
Fit and proper requirements
Section 116(3) of the SFO provides that the HKSFC shall refuse to grant a license to carry on a regulated activity unless the applicant for license satisfies the HKSFC that, inter alia, the applicant is a fit and proper person to be licensed for the regulated activity. The applicant must remain fit and proper at all times after the grant of such licenses by the HKSFC.
In simple terms, a fit and proper person means one who is financially sound, competent, honest, reputable and reliable. Pursuant to section 129(1) of the SFO, in considering whether a person, an individual, corporation or institution, is fit and proper for the purpose of licensing or registration, the HKSFC shall, in addition to any other matter that the HKSFC may consider relevant, have regard to the following:
| ● | financial status or solvency; |
| ● | educational or other qualifications or experience having regard to the nature of the functions to be performed; |
| ● | ability to carry on the regulated activity concerned competently, honestly and fairly; and |
| ● | reputation, character, reliability and financial integrity of the applicant and other relevant persons as appropriate. |
The above fit and proper criteria serve as the fundamental basis when the HKSFC considers each license or registration application. Detailed guidelines are contained in the Fit and Proper Guidelines, the Licensing Handbook and the Guidelines on Competence issued by the HKSFC.
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Licensed corporation
For application as a licensed corporation, the applicant has to be incorporated in Hong Kong or an overseas company registered with the Companies Registry of Hong Kong and the licensed corporation has to satisfy the HKSFC that it has proper business structure, good internal control systems and qualified personnel to ensure the proper management of risks that it will encounter in carrying on the proposed regulated business as detailed in the business plan submitted to the HKSFC. Detailed guidelines to meet the requirements and expectations of the HKSFC are contained in the following documents issued by the HKSFC:
| ● | the Guidelines on Competence; |
| ● | the Code of Conduct; |
| ● | Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the HKSFC; |
| ● | the Fit and Proper Guidelines; |
| ● | the Corporate Finance Adviser Code of Conduct published by the HKSFC in October 2013 (the “CFA Code”); and |
| ● | the Fund Manager Code of Conduct published by the HKSFC in November 2018. |
Responsible Officer
A person who intends to apply to be a Responsible Officer must demonstrate that he/she fulfils the requirements on both competence and sufficient authority. An applicant should possess appropriate ability, skills, knowledge and experience to properly manage and supervise the corporation’s regulated activity(ies). Accordingly, the applicant has to fulfil certain requirements on academic or professional qualifications, industry experience, management experience and regulatory knowledge as stipulated by the HKSFC.
If a Responsible Officer intends to conduct regulated activities in relation to matters falling within the ambit of a particular code issued by the HKSFC, he/she might be subject to additional requirements. For instance, in order to be eligible to undertake activities in connection with matters regulated by the HK Takeovers Codes, the licensed corporation is required to be licensed for Type 6 regulated activity and meet additional competence requirements specific to undertaking activities in connection with matters regulated by HK Takeovers Codes.
Sponsors and Compliance Advisers
A sponsor is a licensed corporation or registered institution licensed or registered under the SFO for Type 6 (advising on corporate finance) regulated activity and permitted under its license or certificate of registration to undertake work as a sponsor appointed to act as a sponsor in respect of an application for the listing of any securities on a recognized stock market under the HK Listing Rules.
Under the sponsor regime established in January 2007, in order to act as a sponsor, apart from holding a Type 6 (advising on corporate finance) license, an application for sponsor license should be submitted to the HKSFC to demonstrate that it can meet the eligibility criteria pursuant to the Sponsor Guidelines. In considering the sponsor license application, the HKSFC will take into account the competency of the firm to act as a sponsor, based on the criteria set out in the Sponsor Guidelines, and will also consider more generally the firm’s fitness and properness as a corporate finance advisory firm under the Fit and Proper Guidelines.
The HK Listing Rules, the Sponsor Guidelines and the CFA Code regulate sponsor’s obligations and responsibilities. The intermediary and its management (includes a sponsor’s board of directors, managing director, chief executive officer, Responsible Officers, executive officers and other senior management personnel) shall be responsible for ensuring that the firm satisfies all specific and ongoing eligibility criteria of the Sponsor Guidelines and paragraph 17 of the Code of Conduct, as well as complies with all other relevant codes, guidelines and regulations prescribed by the HKSFC.
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In order to maintain the eligibility as sponsor, a sponsor should have at least two sponsor principals, who should be engaged by the sponsor for the purpose of conducting sponsor-related work on a full-time basis, at all times to discharge its role in supervising the transaction team.
Effective from 1 October 2013, the enhanced regulations on sponsors and the key obligations of sponsors have been consolidated in paragraph 17 of the Code of Conduct. The key requirements for a sponsor under the sponsor regime are as follows:
| ● | to advise and guide a listing applicant in preparation for a listing; |
| ● | to take reasonable due diligence steps in respect of a listing application; |
| ● | to take reasonable steps to ensure that true, accurate and complete disclosure about a listing applicant is made to the public; |
| ● | to deal with the regulators in a truthful, cooperative and prompt manner; |
| ● | to maintain proper books and records that are sufficient to demonstrate its compliance with the Code of Conduct; |
| ● | to maintain sufficient resources and effective systems and controls for proper implementation and adequate management oversight of the sponsor work; |
| ● | to act as the overall manager of a public offer to ensure that the public offer is conducted in a fair and orderly manner; and |
| ● | to take reasonable steps to ensure analysts do not receive material information not disclosed in the listing document. |
A compliance adviser is a licensed corporation or registered institution licensed or registered under the SFO for Type 6 (advising on corporate finance) regulated activity and permitted under its license or certificate of registration to undertake work as a sponsor, which is appointed to act as a compliance adviser under the HK Listing Rules. The HK Listing Rules require an issuer to appoint a compliance adviser during an initial period after being admitted to listing and the main role of a compliance adviser is to ensure that the listed company is properly guided and advised as to compliance with the HK Listing Rules and all other applicable rules, laws, codes and guidelines. Only licensed corporation or registered institution eligible to act as sponsors are eligible to act as compliance advisers.
Key ongoing obligations
Remaining fit and proper
Licensed corporations, Licensed Representatives, Responsible Officers and registered institutions must remain fit and proper as defined under the SFO at all times. They are required to comply with all applicable provisions of the SFO and its subsidiary legislations as well as the codes and guidelines issued by the HKSFC.
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Minimum capital requirements
Section 145 of the SFO provides that depending on the types of regulated activity a licensed corporation conducts, a licensed corporation is required to maintain at all times paid-up share capital and liquid capital not less than the specified amounts in the FRR. The following table summarizes the minimum paid-up capital and liquid capital that a licensed corporation is required to maintain for Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities:
| Minimum paid-up share capital (HK$) | Minimum liquid capital (HK$) | |||||||
| Regulated activity | ||||||||
| Type 1 (dealing in securities) | ||||||||
| (a) in the case where the corporation is an approved introducing agent or a trader | N/A | 500,000 | ||||||
| (b) in the case where the corporation provides securities margin financing or acts as a custodian of a private Open-ended Fund Companies | 10,000,000 | 3,000,000 | ||||||
| (c) in any other case | 5,000,000 | 3,000,000 | ||||||
| Type 6 (advising on corporate finance) | ||||||||
| (a) in the case where the corporation acts as a sponsor: | ||||||||
| – hold client assets | 10,000,000 | 3,000,000 | ||||||
| – not hold client assets | 10,000,000 | 100,000 | ||||||
| (b) in the case where the corporation does not act as a sponsor: | ||||||||
| – hold client assets | 5,000,000 | 3,000,000 | ||||||
| – not hold client assets | N/A | 100,000 | ||||||
Pursuant to the FRR, if the licensed corporation is licensed for more than one regulated activity, the minimum paid-up share capital and liquid capital that the corporation should maintain shall be the highest amount required among those regulated activities. As at July 31, 2024, the paid-up share capital of Grande Capital was HK$12,000,000, exceeding the minimum paid-up share capital required under the FRR of HK$10,000,000. As at July 31, 2024, the liquid capital of Grande Capital was over HK$11,000,000, exceeding the minimum liquid capital required under the FRR of HK$3,000,000.
Further, pursuant to the FRR, liquid capital is the amount by which a licensed corporation’s liquid assets exceeds its ranking liabilities where (i) liquid assets are the amount of assets held by the licensed corporation, adjusted for such factors to take into account liquidity of certain assets as well as credit risks; and (ii) ranking liabilities are the sum of liabilities on the balance sheet of the licensed corporation (including, without limitation, any amounts payable by it in respect of any overdraft or loan, any accrued interest payable to any other person, accrued expenses, taxes and provisions for contingent liabilities), adjusted for such factors to take into account market risks and contingency. The method of calculating liquid assets and ranking liabilities is set out in Divisions 3 and 4 of the FRR respectively.
The FRR stipulates that a licensed corporation shall maintain minimum liquid capital at all times which shall be the higher of the amount of (a) and (b) below (as applicable to our Group):
| (a) | the amount of minimum liquid capital as set out in the table above; and |
| (b) | its variable required liquid capital, meaning the basic amount which is 5% of the aggregate of: |
| a. | the licensed corporation’s on-balance sheet liabilities including provisions made for liabilities already incurred or for contingent liabilities but excluding certain amounts stipulated in the definition of “adjusted liabilities” under the SFO; |
| b. | the aggregate of the initial margin requirements in respect of outstanding futures contracts and outstanding options contracts held by it on behalf of its customers; and |
| c. | the aggregate of the amounts of margin required to be deposited in respect of outstanding futures contracts and outstanding options contracts held by it on behalf of its customers, to the extent that such contracts are not subject to the requirement of payment of initial margin requirement. |
If the licensed corporation applies for more than one type of regulated activity, the minimum paid-up share capital and liquid capital that the corporation should maintain shall be the higher or the highest amount required amongst those regulated activities applied for.
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Notification to the HKSFC of certain events and changes
Pursuant to sections 123 and 135 of the SFO and the Securities and Futures (Licensing and Registration)(Information) Rules (Chapter 571S of the Laws of Hong Kong), licensed corporations, licensed individuals and registered institutions are required to notify the HKSFC within the specified time limit of certain events and changes in their particulars, which include, inter alia, any intended cessation to carry on any regulated activity for which he/she/it is licensed, any intended change of address at which it proposes to carry on the regulated activity for which it is licensed and any cessation to be a director of a licensed corporation.
Submission of audited accounts
Section 156(1) of the SFO provides that licensed corporations and associated entities of intermediaries (except those which are authorized financial institutions) shall submit their audited accounts and other required documents within four months after the end of each financial year.
If a licensed corporation ceases carrying on all of the regulated activities for which it is licensed, it should submit to the HKSFC its audited accounts and other required documents, made up to the date of cessation, not later than four months after the date of the cessation. The same requirement applies to an associated entity (which is not an authorized financial institution) of an intermediary upon its ceasing to be an associated entity of the intermediary under section 156(2) of the SFO.
Submission of financial resources returns
Licensed corporations are required to submit monthly financial resources returns to the HKSFC. However, pursuant to section 56 of the FRR, corporations that are licensed only for Type 4 (advising on securities), Type 5 (advising on futures contracts), Type 6 (advising on corporate finance), Type 9 (asset management) and/or Type 10 (providing credit rating services) regulated activities and whose licenses are subject to the condition that they shall not hold client assets, are only required to submit semi-annual financial resources returns.
As of the date of this annual report, Grande Capital is subject to the condition that it shall not hold client assets.
Payment of annual fees
Sections 138(1) and (2) of the SFO provide that each licensed person or registered institution shall pay an annual fee to the HKSFC within one month after each anniversary date of his/her/its license or registration. Failure to make full payment of the annual fee before the due date will attract a surcharge on the outstanding amount and possible suspension and revocation of a license or registration under sections 138(3), 195(4)(a) and195(6) of the SFO.
Submission of annual returns
Section 138(4) of the SFO stipulates that each licensed corporation or licensed individual is required to submit an annual return to the HKSFC within one month after each anniversary date of his/her/its licenses. Failure to submit annual return before the due date could result in suspension and revocation of the license under sections 195(4)(b) and 195(6) of the SFO.
Continuous professional training (“CPT”)
Licensed corporations and registered institutions are primarily responsible for designing and implementing a continuous education programme best suited to the training needs of the Licensed Representatives or relevant individuals they engage.
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With effect from January 2022, licensed individuals and relevant individuals of registered institutions are required to complete 10 CPT hours per calendar year, regardless of the number and types of regulated activities he or she engages in. Five of these 10 CPT hours must be on topics directly relevant to the regulated activities for which he or she is licensed at the time the CPT hours are undertaken. Individuals who engage in the sponsor work or Codes on Takeovers transaction work for a firm are required to attend 2.5 CPT hours per calendar year on topics that are relevant to their sponsor work or Codes on Takeovers advisory work. Responsible officers and executive officers required to take two additional CPT hours per calendar year on regulatory compliance.
Obligation for substantial shareholders
Under section 132 of the SFO, a person (including a corporation) has to apply for the HKSFC’s approval prior to becoming or continuing to be, as the case may be, a substantial shareholder of a corporation licensed undersection 116 of the SFO. A person who has become aware that he/she/it has become a substantial shareholder of a licensed corporation without the HKSFC’s prior approval should, as soon as reasonably practicable and in any event within three business days after he/she/it becomes so aware, apply to the HKSFC for approval to continue to be a substantial shareholder of the licensed corporation.
Variation of regulated activity specified in license or certificate of registration
Under section 127(1) of the SFO, a licensed corporation may apply in the prescribed manner and payment of the prescribed fee to the HKSFC to vary the regulated activity specified in its license or certificate of registration. Prior approval would also need to be obtained from the HKSFC in cases such as addition or reduction of regulated activity, modification or waiver of licensing conditions and change of financial year end.
Modification or waiver of licensing requirements
Under the licensing requirements, a licensed corporation may apply in the prescribed manner and payment of the prescribed fee to the HKSFC for modification or waiver of the conditions imposed or certain other requirements specified in section 134 of the SFO.
Other key ongoing obligations
Outlined below are other key ongoing obligations of a licensed corporation relevant to our business:
| ● | payment of the prescribed fees to the HKSFC as described in Schedule 1 to the Securities and Futures (Fees) Rules (Chapter 571AF of the Laws of Hong Kong); |
| ● | keep records in accordance with the requirements under the Securities and Futures (Keeping of Records) Rules (Chapter 571O of the Laws of Hong Kong); |
| ● | submission of audited accounts and other required documents in accordance with the requirements under the Securities and Futures (Accounts and Audit) Rules (Chapter 571P of the Laws of Hong Kong); |
| ● | exhibit the printed license or certificate of registration (as the case may be) in a prominent place at its principal place of business in accordance with the requirements under the Securities and Futures (Miscellaneous) Rules (Chapter 571U of the Laws of Hong Kong); and |
| ● | compliance with business conduct requirements under the Code of Conduct, the Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the HKSFC and other applicable codes and guidelines issued by the HKSFC. |
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Anti-Money Laundering and Terrorist Financing
Licensed corporations are required to comply with the applicable anti-money laundering and counter-terrorist financing laws and regulations in Hong Kong as well as the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Corporations) published by the HKSFC.
In Hong Kong, legislation dealing with money laundering and terrorist financing includes the following:
| (i) | the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615 of the Laws of Hong Kong) (“AMLO”) The AMLO imposes requirements relating to client due diligence and record-keeping and provides regulatory authorities with the powers to supervise compliance with the requirements under the AMLO. |
| (ii) | Drug Trafficking (Recovery of Proceeds) Ordinance (Chapter 405 of the Laws of Hong Kong) (“DTROP”) It is an offence under the DTROP if a person deals with any property knowing or having reasonable grounds to believe it in whole or in part directly or indirectly represents the proceeds of drug trafficking. The DTROP requires a person to report to an authorized officer if he/she knows or suspects that any property (directly or indirectly) represents the proceeds of drug trafficking or is intended to be used or was used in connection with drug trafficking. Failure to make such disclosure constitutes an offence under the DTROP. |
| (iii) | Organized and Serious Crimes Ordinance (Chapter 455 of the Laws of Hong Kong) (“OSCO”) The OSCO empowers officers of the Hong Kong Police Force and the Hong Kong Customs and Excise Department to investigate organized crime and triad activities, and it gives the courts jurisdiction to confiscate the proceeds of organized and serious crimes, to issue restraint orders and charging orders in relation to the property of defendants of specified offences. The OSCO extends the money laundering offence to cover the proceeds of all indictable offences in addition to drug trafficking. |
| (iv) | United Nations (Anti-Terrorism Measures) Ordinance (Chapter 575 of the Laws of Hong Kong) (“UNATMO”) The UNATMO provides that it would be a criminal offence to: (i) provide or collect funds (by any means, directly or indirectly) with the intention or knowledge that the funds will be used to commit, in whole or in part, one or more terrorist acts; or (ii) make any funds or financial (or related)services available, directly or indirectly, to or for the benefit of a person knowing that, or being reckless as to whether, such person is a terrorist or terrorist associate. The UNATMO also requires a person to report his knowledge or suspicion of terrorist property to an authorized officer, and failure to make such disclosure constitutes an offence under the UNATMO. |
| (v) | United Nations Sanctions Ordinance (Chapter 537 of the Laws of Hong Kong) (“UNSO”) The UNSO implements in Hong Kong the United Nations Security Council resolutions to impose targeted sanctions against certain jurisdictions as instructed by the Ministry of Foreign Affairs of the PRC. As at December 31, 2022, such sanctions cover jurisdictions such as Lebanon, Libya, Afghanistan, Democratic People’s Republic of Korea and the Democratic Republic of the Congo. There are prohibitions against trade-related activities, which include making available to, or for the benefit of, certain persons or entities, any funds or other financial assets or economic resources, or dealing with funds or other financial assets or economic resources of certain persons or entities from the above jurisdictions. |
| (vi) | Weapons of Mass Destruction (Control of Provision of Services) Ordinance (Chapter 526 of the Laws of Hong Kong) (“WMDO”) The WMDO provides that it is a criminal offence for a person to provide services to another person where the first-mentioned person believes or suspects, on reasonable grounds, that the services will or may assist the development, production, acquisition or stockpiling of weapons of mass destruction. The provision of services for the purposes of the WMDO covers a wide range of activities. The WMDO also provides for the criminal liability of the director, manager, secretary or other similar officer of a body corporate for offences committed by the body corporate with the consent and connivance of such officials. |
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Further, the Anti-Money Laundering Guideline sets out the anti-money laundering and counter-financing of terrorism statutory and regulatory requirements, and the anti-money laundering and counter-financing of terrorism standards which licensed corporations should meet in order to comply with the statutory requirements. It also provides practical guidance to assist licensed corporations and their senior management in designing and implementing their own anti-money laundering and counter-terrorist financing policies, procedures and controls in order to meet the relevant legal and regulatory requirements in Hong Kong.
Employee Dealings
As mentioned in the Code of Conduct, a licensed or registered person should have a policy which has been communicated to employees (including directors other than non-executive directors) in writing on whether employees are permitted to deal or trade for their own accounts in securities, futures contracts or leveraged foreign exchange contracts. In the event that employees of a licensed or registered person are permitted to deal or trade for their own accounts in securities, futures contracts or leveraged foreign exchange contracts:
| ● | the written policy should specify the conditions on which employees may deal for their own accounts; |
| ● | employees should be required to identify all related accounts (including accounts of their minor children and accounts in which the employees hold beneficial interests) and report them to senior management; |
| ● | employees should generally be required to deal through the licensed or registered person or its affiliates; |
| ● | if the licensed or registered person provides services in securities listed or traded on one of the Hong Kong exchanges or in derivatives, including over-the-counter derivatives written over such securities, and its employees are permitted to deal through another dealer, in those securities, the licensed or registered person and employee should arrange for duplicate trade confirmations and statements of account to be provided to senior management of the licensed or registered person; |
| ● | any transactions for employees’ accounts and related accounts should be separately recorded and clearly identified in the records of the licensed or registered person; and |
| ● | transactions of employees’ accounts and related accounts should be reported to and actively and monitored by senior management of the licensed or registered person who should not have any beneficial or other interest in the transactions and who should maintain procedures to detect irregularities and ensure that the handling by the licensed or registered person of these transactions or orders is not prejudiced to the interests of the licensed or registered person’s other customers. |
A licensed or registered person should not knowingly deal in securities for another licensed or registered person’s employee unless it has received written consent from that licensed or registered person.
Supervision By the HKSFC
The HKSFC supervises licensed corporations and intermediaries operating in the market. The HKSFC conducts on-site inspections and off-site monitoring to ascertain and supervise intermediaries’ business conduct and compliance with relevant regulatory requirements, as well as to assess and monitor the financial soundness of intermediaries.
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Disciplinary power of the HKSFC
Under Part IX of the SFO, subject to the due process for exercising disciplinary powers laid down in section 198 of the SFO, the HKSFC may exercise any of the following disciplinary actions against a regulated person (including a licensed person or a registered institution) if that person is found to be guilty of misconduct or not fit and proper to be or remain the same type of regulated person (sections 194 and 196 of the SFO):
| ● | revocation or suspension of all or part of a license or registration in relation to any of the regulated activities for which a regulated person is licensed or registered; |
| ● | revocation or suspension of the approval granted to a Responsible Officer; |
| ● | public or private reprimand on a regulated person; |
| ● | prohibition of a regulated person from applying to be licensed or registered or to be approved as a Responsible Officer; |
| ● | prohibition of a regulated person from, among others, applying to be licensed, registered or approved as a Responsible Officer in relation to such regulated activity(ies), for such period as the HKSFC may specify; and |
| ● | pecuniary penalty of the greater of an amount not exceeding HK$10 million or three times the profit gained or loss avoided as a result of the conduct in question. |
Takeovers and Mergers
Financial advisers and independent financial advisers licensed by the HKSFC may act for Hong Kong listed issuers as regards transactions principally involving the HK Listing Rules and the HK Takeovers Codes.
In Hong Kong, any takeover, merger, privatization and share repurchase activities affecting public companies are regulated by the HK Takeovers Codes which is issued by the HKSFC in consultation with the Takeovers and Mergers Panel. The primary purpose of the HK Takeovers Codes is to afford fair treatment for shareholders who are affected by takeovers, mergers, privatizations and share buy-backs. The HK Takeovers Codes seeks to achieve fair treatment by requiring equality of treatment of shareholders, mandating disclosure of timely and adequate information to enable shareholders to make an informed decision as to the merits of an offer and ensuring that there is a fair and informed market in the shares of companies affected by takeovers, mergers, privatizations and share buy-backs. The HK Takeovers Codes also provides an orderly framework within which takeovers, mergers, privatizations and share buy-backs activities are to be conducted.
In addition, any other persons who issue circulars or advertisements to shareholders in connection with takeovers, mergers, privatizations and share buy-backs must observe the highest standards of care and consult with the Executive Director of the Corporate Finance Division of the HKSFC or any delegate thereof (the “Executive”) prior to the release thereof.
The roles and responsibilities of financial advisers and other professional advisers are of particular importance given the non-statutory nature of the HK Takeovers Codes, and it is part of their responsibilities to use all reasonable efforts, subject to any relevant requirements of professional conduct, to ensure that their customers understand, and abide by, the requirements of the HK Takeovers Codes, and to co-operate to that end by responding to inquiries from the Executive or any delegate thereof, the Takeovers and Mergers Panel or the Takeovers Appeal Committee.
The HKSE
Apart from the HKSFC, the HKSE also plays a leading role in regulating companies seeking admission to the Hong Kong markets and supervising those companies once they are listed. The HKSE is a recognized exchange controller under the SFO. It owns and operates the only stock exchange and futures exchange in Hong Kong, namely the HKSE and Hong Kong Futures Exchange Limited, and their related clearing houses. The duty of the HKSE is to ensure orderly and fair markets and that risks are managed prudently, and shall act in the interest of the public and in particular, the interests of the investing public.
In its role as the operator and frontline regulator of the central securities and derivatives marketplace in Hong Kong, the HKSE (i) regulates listed issuers; (ii) administers listing, trading and clearing rules; and (iii) provides services at the wholesale level, to participants and users of its exchanges and clearing houses, including issuers and intermediaries (such as investment banks or sponsors, securities and derivatives brokers, custodian banks and information vendors) which service investors directly. These services comprise trading, clearing and settlement, depository and nominee services, and information services.
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Compliance with the Relevant Requirements
We confirms that we and our Operating Subsidiaries in Hong Kong, i.e. Grande Capital and Wicens International, have obtained all relevant licenses and certificates for our existing operations in Hong Kong and that we complied with all applicable laws, regulations, rules, codes and guidelines in Hong Kong in connection with our business and operations in all material respects during the year ended March 31, 2026, 2025 and 2024.
Registration/Filing Requirements and the Regulatory Regime under the Trial Administrative Measures
In addition to various laws and regulations in Hong Kong that operations of our Hong Kong Operating Subsidiaries are subject to, our Hong Kong Operating Subsidiaries, in particular, Grande Capital, may be subject to various long-arm regulatory oversight by the CSRC, as a portion of Grande Capital’s existing clients and potential clients are companies located in Mainland China, who are listing applicants for initial public offerings on the HKSE or public companies listed on the HKSE.
For the fiscal years ended March 31, 2026, 2025 and 2024, and until the date of this annual report, the Mainland China companies who engaged Grande Capital for Grande Capital’s listing sponsorship services for overseas listing in Hong Kong are “PRC domestic companies” under the Trial Administrative Measures and their overseas listings in Hong Kong are subject to CSRC’s review procedures and approval.
As stipulated and required by the Trial Administrative Measures, as a condition for the “overseas securities companies” outside of Mainland China, such as Grande Capital, to engage PRC domestic companies as client to act as their listing sponsors (i.e. in our case, to conduct Type 6 (advising on corporate finance activities) for their overseas listings outside of Mainland China, overseas securities companies, such as Grande Capital, shall be subject to the filing/reporting, verification and supervisory obligations to the CSRC regarding the overseas listing projects of the PRC domestic companies engaged, including: (1) filing and registering with CSRC as sponsors or underwriters who are being engaged by PRC domestic companies for their overseas listing, and submitting report to the CSRC annually on the relevant business activities of such overseas securities companies regarding overseas listings of PRC domestic companies; and (2) for each projects engaged by the overseas securities companies, submitting the undertakings to the CSRC that such offshore securities companies have verified and examined the documents submitted to CSRC by its clients in relation to their overseas listing, and that such documents are true, accurate and complete.
Currently, Grande Capital is registered with the CSRC under Article 21 of Trial Administrative Measures as an overseas securities company and has provided the undertakings to the CSRC in relation to the PRC domestic companies clients that engaged Grande Capital as the listing sponsor for their overseas listings in Hong Kong. As long as Grande Capital conducts the regulated activities in Hong Kong that involves PRC domestic companies, Grande Capital could be subject to the regulatory oversights from the CSRC and regulations of the Trial Administrative Measures for its business of providing listing sponsorship of PRC domestic companies, including:
Registration and Reporting Obligations
According to the Article 21 of the Trial Administrative Measures and its Supporting Guideline No. 5, Parts 1 and 2, as transitional arrangements, sponsors and lead underwriters engaged before 31 March 2023 for overseas listing applications to the CSRC by the PRC domestic companies shall make filing with the CSRC within 30 working days after 31 March 2023 in a prescribed form specified in Supporting Guideline No.5. Sponsors or lead underwriters who are being engaged for Overseas Listings after 31 March 2023, shall within 10 working days after signing its first engagement agreement, submit to the CSRC a prescribed form specified in Supporting Guideline No.5. Such filing only needs to be done once, not on case-by-case basis. They must update the CSRC within 10 working days in case of changes of details previously filed. According to the Article 21 of the Trial Administrative Measures, no later than January 31 each year, offshore securities companies that serve as sponsors or lead underwriters for Overseas Listings shall submit an annual report to the CSRC on its relevant business activities in the previous year on all overseas listings.
Supporting Guideline No. 3 Part 1 of the Trial Administrative Measures provides requires the Specific IPO Case Report shall be submitted in the names of the sponsor or lead underwriter, together with the listing applicant. The Specific IPO Case Report should include a summary of the share issuance, such as methods of listing, stock codes of applicant, general listing timetable, expected listing proceeds, listing expenses, offering size and structure, underwriting amount, pricing, details of cornerstone investors. Such report be submitted in the names of the listing applicant or listed issuer, together with the sponsor or lead underwriter, and to be filed after listing.
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Verification and Supervisory Obligations
According to the Article 20 of the Trial Administrative Measures, securities companies, including the offshore securities companies, have the obligation to thoroughly examine and verify the documents for the CSRC Filing. Securities companies shall ensure that: (i) the documents do not contain material inconsistencies, are properly drafted and that the conditions for overseas listings are satisfied; (ii) the timely report of material events. The CSRC Filing documentary requirements include: (i) Filing Reports with specified contents; (ii) undertakings to be signed by the listing applicants, their sponsors (or lead underwriters) and the company’s PRC counsels; (iii) PRC legal opinions; (iv) where applicable, copies of regulatory opinions, filings or approvals on national security review and/or industry regulation obtained from applicable PRC authorities.
Written Undertakings & Confirmations Obligations
As required by the Supporting Guideline No. 5 Appendix and the Supporting Guideline No. 2 page 18 of the Trial Administrative Measures, at the “1-time filing” under Article 21 of Trial Administrative Measures, an undertaking shall be made to the CSRC that all information submitted thereunder are true, accurate and complete, and that reporting obligation to submit an annual report to the CSRC will be complied with. Furthermore, as part of the CSRC Filing made by the listing applicant seeking to list overseas, an undertaking by the overseas securities companies acting as the underwriter or sponsor shall be submitted together to the CSRC confirming that due review and inspection of the filing documents have been conducted, and that the documents are true, accurate and complete.
Where a securities company or securities service institution fails to perform duties with due diligence, and there are false records, misleading statements or major omissions in the documents prepared and issued according to the laws, administrative regulations and relevant rules of the state, or there are false records, misleading statements or major omissions in the documents prepared and issued according to the rules on overseas offering and listing, which disturbs the domestic market order and impairs the lawful rights and interests of domestic investors, the CSRC or the relevant competent department under the State Council shall order it to take corrective action, give a warning to it, and impose a fine of not less than one time nor more than 10 times the business income upon it; and where there is no business income or the business income is less than 500,000 yuan, a fine of not less than 500,000 yuan nor more than 5 million yuan shall be imposed upon it. A warning shall be given to and a fine of not less than 200,000 yuan nor more than 2 million yuan shall be imposed upon the directly liable person in charge and other directly liable persons.
Regulatory Power of the CSRC
Article 24 of Trial Administrative Measures provides that the CSRC may impose administrative regulatory measures including order for correction, regulatory talks and warning letters in case of violations of the Trial Administrative Measures by securities companies, securities service providers and relevant practitioners who provided the relevant services in the Mainland China.
Furthermore, the Trial Administrative Measure explicitly stipulated that the CSRC may also refer the relevant information concerning the alleged misconduct or violation to CSRC’s regulatory counterparts in overseas jurisdiction, i.e., the HKSFC in Hong Kong, which governs and regulates the business operation of Grande Capital, we and Grande Capital could be subject to inquiries, reviews or investigations, disciplinary actions, revocation or suspension of licenses, public or private reprimand or imposition of pecuniary penalties, by the HKSFC.
In the case of securities companies failing to ensure listing applicants’ or listed issuer’s compliance with the obligations set out in the Trial Administrative Measures, the CSRC has a right to issue warnings and impose fine in an amount from RMB500,000 up to RMB5,000,000, and on their direct persons-in-charge in an amount from RMB200,000 up to RMB2,000,000. In the case of securities companies failing to exercise proper diligence, and misrepresentations are made in documents issued pursuant to PRC laws and regulations (or issued pursuant to rules of overseas stock markets, which disrupt PRC domestic market order), the CSRC has rights to issue correction order and warnings, and impose a fine in an amount between 1 to 10 times of their revenue (in absence of revenue, a fine in an amount from RMB500,000 up to RMB5,000,000), and on their direct persons-in-charge in an amount from RMB200,000 up to RMB2,000,000.
Compliance with the Relevant Requirements
Although the offering of our securities in the United States and the operation of our Operating Subsidiaries in Hong Kong do not require approvals, licenses, permits, or qualifications from the PRC authorities, such as the CSRC or the CAC, as long as Grande Capital conducts regulated activities in Hong Kong that involve PRC domestic companies, Grande Capital is subject to regulatory oversight from the CSRC under the Trial Administrative Measures for its business of providing listing sponsorship of PRC domestic companies.
As of the date of this annual report, neither we nor our Operating Subsidiaries have been informed by any PRC governmental authority, including the CSRC, of the violation of the undertaking or any obligations to the CSRC. We believe our Operating Subsidiaries and we have complied with all applicable laws and regulations in connection with the engagement with PRC clients in Mainland China in all material respects.
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Regulations relating to Shenzhen Zhenjing’s operation in Mainland China
Regulations on Foreign Investment
The Foreign Investment Law of the PRC was adopted by the 2nd session of the thirteenth National People’s Congress on March 15, 2019 and became effective on January 1, 2020. The Foreign Investment Law sets out the basic regulatory framework for foreign investments and proposes to implement a system of pre-entry national treatment with a negative list for foreign investments, pursuant to which (i) foreign natural persons, enterprises or other organizations, collectively the foreign investors, shall not invest in any sector forbidden by the negative list for access of foreign investment, (ii) for any sector restricted by the negative list, foreign investors shall conform to the investment conditions provided in the negative list, and (iii) sectors not included in the negative list shall be managed under the principle that domestic investment and foreign investment shall be treated equally. The Foreign Investment Law also sets forth necessary mechanisms to facilitate, protect and manage foreign investments and proposes to establish a foreign investment information report system in which foreign investors or foreign-funded enterprises shall submit the investment information to competent departments of commerce through the enterprise registration system and the enterprise credit information publicity system.
On December 30, 2019, the Ministry of Commerce and the State Administration for Market Regulation issued the Measures for the Reporting of Foreign Investment Information, which came into effect on January 1, 2020 and replaced Interim Administrative Measures. Since January 1, 2020, for foreign investors carrying out investment activities directly or indirectly in China, the foreign investors or foreign-invested enterprises shall submit investment information to the commerce authorities pursuant to these measures.
Special Administrative Measures for the Entry of Foreign Investment (Negative List) (2024 Version)
The Special Administrative Measures for the Entry of Foreign Investment (Negative List) (2024 Version)(the “Negative List”) was jointly promulgated by the Ministry of Commerce and the National Development and Reform Commission as Decree No. 23 on September 8, 2024 and became effective on November 1, 2024. The 2024 version replaced and abolished the 2021 version of the same regulation, and reduces the number of nationwide foreign investment access restrictions from 31 to 29 items, with manufacturing-sector restrictions fully lifted.
Pursuant to the Negative List:
| 1. | Foreign investors shall not invest in sectors explicitly “prohibited” by the Negative List. |
| 2. | For sectors “restricted” (but not prohibited) by the Negative List, foreign investors must obtain prior approval for market access. |
| 3. | Sectors not covered by the Negative List are subject to the principle of equal treatment for domestic and foreign investments. |
The core businesses of Shenzhen Zhenjing —executive training for corporate clients, corporate finance consulting, and related B2B course material supply—are not listed as restricted or prohibited sectors for foreign investment under the 2024 Negative List. Our executive training services are oriented toward corporate operation training and capital market literacy for SME entrepreneurs and corporate executives, which are distinct from the “kindergarten, senior high school, or higher education institutions” that are subject to the Sino-foreign cooperative operation requirement, and do not involve compulsory education or religious education. Accordingly, our establishment and operation as a wholly foreign-owned enterprise (WFOE) comply with the Foreign Investment Law and the 2024 Negative List.
Regulations on Intellectual Property Rights
Patent. Patents in the PRC are principally protected under the Patent Law of the PRC. The duration of a patent right is 10 years, 15 years or 20 years from the date of application, depending on the type of patent right.
Copyright. Copyrights in the PRC, including copyrighted software, is principally protected under the Copyright Law of the PRC and related rules and regulations. Under the Copyright Law, the term of protection for copyrighted software is 50 years.
Trademark. The PRC Trademark Law has adopted a “first-to-file” principle with respect to trademark registration. Registered trademarks are protected under the Trademark Law of the PRC and related rules and regulations. Trademarks are registered with the Trademark Office of the SAIC. Where registration is sought for a trademark that is identical or similar to another trademark which has already been registered or given preliminary examination and approval for use in the same or similar category of commodities or services, the application for registration of such trademark may be rejected. Trademark registrations are effective for a renewable ten-year period, unless otherwise revoked.
Domain Names. Domain name registrations are handled through domain name service agencies established under the relevant regulations, and applicants become domain name holders upon successful registration.
Regulations on Internet Information Services
According to the Administrative Measures on Internet Information Services promulgated by the State Council on September 25, 2000, and amended on January 8, 2011, internet information services are classified into two categories: (1) profitable internet information services; and (2) non-profitable internet information services. Profitable internet information services refer to the provision, via the internet, of information or webpage development etc. for payment to internet users. Non-profitable internet information services refer to the provision, via the internet, of open or sharable information for free to internet users. PRC applies the license system to profitable internet information services and applies the record-filing system to non-profitable internet information services.
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Regulations on Employment and Labor
Our PRC subsidiary, Shenzhen Zhenjing, maintains a team of local employees to support its B2B operations and executive training business. As an employer in mainland China, the subsidiary’s employment practices are governed by a comprehensive framework of labor laws and regulations. The Labor Law of the PRC, adopted by the 8th Session of the Standing Committee of the 8th National People’s Congress on July 5, 1994 and effective from January 1, 1995, was amended twice on August 27, 2009 and December 29, 2018, and serves as the foundational statute governing employment relationships, working hours, wages, labor safety, social insurance, and labor dispute resolution. The Labor Contract Law of the PRC, adopted on June 29, 2007 and effective from January 1, 2008, with its amendment adopted on December 28, 2012 and effective from July 1, 2013, mandates that employers execute written labor contracts with employees, specifies the obligations of both parties regarding contract formation, performance, modification, dissolution, and termination, and imposes stringent requirements for statutory severance and penalties for non-compliance. Complementing these statutes, the Social Insurance Law of the PRC, adopted on October 28, 2010 and effective from July 1, 2011, with its amendment adopted on December 29, 2018, requires employers to register and make contributions to five statutory insurance schemes—pension, medical, work injury, unemployment, and maternity insurance—on behalf of their employees, while the Labor Dispute Mediation and Arbitration Law, adopted on December 29, 2007 and effective from May 1, 2008, establishes the procedural framework for resolving employment disputes through mediation and arbitration. In compliance with these regulations, our subsidiary executes written labor contracts with all employees, pays wages in a timely and full manner, makes statutory social insurance contributions, and adheres to mandated working hour and leave entitlements, thereby managing its employment-related compliance obligations in the ordinary course of business.
Regulations on Personal Information Protection
The Personal Information Protection Law of the PRC(the “PIPL”), adopted by the 30th Session of the Standing Committee of the 13th National People’s Congress on August 20, 2021 and effective from November 1, 2021, governs the processing of personal information within mainland China. Although our PRC subsidiary does not provide internet information services directly to the public and does not operate any website or domain targeting the PRC market, the PIPL nonetheless applies to our subsidiary’s processing of personal information in the course of its business operations, particularly in relation to its local employees.
The PIPL defines “personal information” broadly to include any information related to an identified or identifiable natural person, and “sensitive personal information” to include biometric data, religious beliefs, medical and health information, financial accounts, location data, and personal information of minors under 14. In the employment context, our subsidiary processes its employees’ personal information — including names, identification numbers, contact details, compensation and benefits data, and other employment-related information — in accordance with the PIPL.
Pursuant to the PIPL, our subsidiary, as a personal information processor, must adhere to the following core obligations: (i) process personal information lawfully, with a clear and reasonable purpose, and limit processing to the minimum scope necessary to achieve the purpose; (ii) notify employees of the purpose, method, and categories of processing; (iii) obtain employees’ consent where consent serves as the legal basis, or rely on other legal bases enumerated under Article 13 of the PIPL (e.g., necessity for the execution of an employment contract or for human resource management); (iv) where sensitive personal information is processed, satisfy the requirements of specific purpose, sufficient necessity, strict protective measures, and separate consent; (v) implement security measures including encryption, de-identification, access controls, and incident response plans; and (vi) honor employees’ rights to access, copy, correct, delete, and withdraw consent.
With respect to cross-border data transfers, the Provisions on Promoting and Regulating Cross-Border Data Flows(CAC Decree No. 16, effective March 22, 2024) provide that non-CII operators transferring fewer than 100,000 individuals’ non-sensitive personal information overseas on a cumulative basis from January 1 of the current year are exempted from the security assessment, standard contract, and certification requirements. Should our subsidiary need to transfer employees’ personal information to our Hong Kong parent company or other offshore entities within the Group, it will obtain employees’ separate consent and, depending on the volume and sensitivity of the data, either rely on the exemption or complete the applicable cross-border transfer mechanism (standard contract, certification, or security assessment) as required under the PIPL and the 2024 Provisions.
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4.C. Organizational structure.
The following is a list of our subsidiaries as of the date of this annual report.
| Name of Subsidiary | Jurisdiction of Incorporation or Organization | |
| Grande Capital Limited | Hong Kong | |
| Proplus Company Limited | British Virgin Islands | |
| Grande Consulting Limited | Hong Kong | |
| Shenzhen Zhenjing Investment Consulting Co., Ltd. | People’s Republic of China | |
| China CreateAlliance Holdings Limited | British Virgin Islands | |
| Wicens International Securities Limited | Hong Kong | |
| Sparkward Holding Limited | British Virgin Islands | |
| Grande Digital Ventures Limited | Hong Kong |
The following diagram illustrates the corporate structure of Grande Group Limited and its subsidiaries as of the date of this annual report:
4.D. Property, Plant and Equipment
Facilities
Our principal executive offices are located at Suite 2701, 27/F, Tower 1, Admiralty Center, 18 Harcourt Road, Admiralty, Hong Kong. Our registered office in the BVI is at Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.
As of the date of this annual report, we are party to the following lease agreement:
| Location | Term of Lease | Usage | ||
| Room 2701, 27/F, Tower 1, Admiralty Center, No. 18 Harcourt Road, Hong Kong | February 15, 2025 to February 14, 2029 | Office |
As of the date of this annual report, Wicens International is a party to the following office space sharing agreement.
| Location | Term of License | Usage | ||
| Unit 2C, 35/F, East Tower, Cheung Kong Center II, No.10 Harcourt Road, Central, Hong Kong | April 1, 2026 to April 1, 2028 | Office |
Intellectual Property
Grande Capital is the registered owner of the domain names https://grande-capital.com/. Wicens International is the registered owner of the domain names https://wicens.com.hk/.
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As of the date of this annual report, the Company has registered three trademarks under the jurisdiction of Hong Kong, through Grande Capital and Wicens International :
| Place of registration |
Trademark | Status | Trademark Number |
Classes | Expiry Date | |||||
| Hong Kong | Registered, December 27, |
304380877 | 36 | December 26, 2027 | ||||||
| 2017 | ||||||||||
| Hong Kong | Registered, December 27, 2017 |
304380886 | 36 | December 26, 2027 | ||||||
| Hong Kong | Registered, December 27, 2017 |
304380895 | 36 | December 26, 2027 | ||||||
| Hong Kong | Application Details Checked, Application Pending | 307255323 | 36 | - |
Item 4A. Unresolved Staff Comments
None.
Item 5. Operating and Financial Review and Prospects
Overview
Our mission is to become one of the most successful integrated financial service providers in Hong Kong and offer tailored, innovative financial solutions to clients in Asia.
Headquartered in Hong Kong, we are a holding company incorporated in the British Virgin Islands, and all of our business are carried out by our Operating Subsidiaries in Hong Kong and Mainland China, Grande Capital, Wicens International, and Shenzhen Zhenjing.
Grande Capital is a boutique financial firm that focuses on providing quality corporate finance advisory services to clients in Asia. Grande Capital is a licensed corporation under the SFO to engage in Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities in Hong Kong. Since Grande Capital first obtained the licenses under the SFO on January 23, 2018, Grande Capital has sponsored and completed 16 successful IPOs (i.e. IPO that successfully closed and listed) on the HKSE.
Wicens International focuses on providing underwriting and placing, securities dealing and brokerage services to clients in Hong Kong. Wicens International acts as (i) book runner, lead manager, or underwriter of listing applicants in IPOs or other fundraising activities; and (ii) placing agent of listed companies in connection with their issuance or sale of securities, in return for underwriting and/or placing commission. Wicens International is a licensed corporation under the SFO to engage in Type 1 (dealing in securities) regulated activities in Hong Kong.
Grande Consulting, through Shenzhen Zhenjing, principally engaged in the provision of executive training and corporate finance consulting services. It currently operates under a business-to-business model, which supply high-quality course materials to executive training course providers, for their corporate operation training and capital market/corporate finance education for entrepreneurs and corporate executives. The course materials are strategically formulated to assist high-growth enterprises in understanding capital market dynamics, regulatory compliance, and listing frameworks for both the Hong Kong Stock Exchange and the Nasdaq Capital Market. Shenzhen Zhenjing is incorporated under the law of the PRC and operate in Mainland China and Hong Kong.
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For the years ended March 31, 2026, 2025 and 2024, our total revenue was approximately $2.6 million, $4.3 million and $4.5 million, respectively. Our gross profit and net loss were $1.6 million and $3.5 million, respectively, for the year ended March 31, 2026, as compared to our gross profit and net income of $3.3 million and $1.6 million, respectively, for the year ended March 31, 2025, as compared to our gross profit and net income of $3.0 million and $1.8 million, respectively, for the year ended March 31, 2024.
The services we offer include:
(1) IPO sponsorship and related services
Grande Capital acts as sponsor to companies aspiring to list on the HKSE. Grande Capital takes the principal role of advising and guiding listing applicants throughout the IPO process, coordinating the listing progress, conducting due diligence, performing all duties of a sponsor as required under the applicable rules and regulations and acting as the primary channel of communication with the regulators such as the HKSE and the HKSFC concerning the listing, in return for a sponsor’s fee. The clients pay us by way of progress payment based on achievement of certain milestones, such as signing of the engagement letter, submission of listing application, and first dealing of shares, in the IPO progress and we recognize the listing sponsorship services fee as our revenue when the performance obligation is satisfied.
Since 2022, as part of the IPO sponsorship services, the Operating Subsidiary has also started participating in underwriting syndicates for those IPOs that the Operating Subsidiary acted as sponsors, in return for underwriting commissions.
(2) Corporate financial advisory services
Grande Capital also provides a wide range of corporate financial advisory services to clients, which can be broadly classified into the following 3 categories:
General advisory services: these mainly include (i) advisory works for private companies, public companies listed on HKSE, as well as their shareholders advising them on the terms and structures of proposed transactions, such as takeovers, merger and acquisition or investment, and the relevant implications of the Hong Kong regulatory framework, which primarily included the HK Listing Rules and HK Takeovers Codes, in relation to the transactions; and (ii) project coordination works for clients pursuing listing on other stock exchanges, such as the U.S. exchanges. The Operating Subsidiary charged a fixed fee payable by progress payment based on achievement of certain milestones, such as submission to the regulators, receiving approvals from the regulators and/or publishing the relevant documents on the HKSE.
Independent financial advisory services: these mainly include providing advice to the independent board committee and independent shareholders of companies listed on HKSE, rendering recommendation and opinions, in return for a fixed fee paid by progress payment based on achievement of certain milestones, such as submission to the regulators, receiving approvals from the regulators and/or publishing the relevant documents on the HKSE.
Compliance advisory services: these mainly include advisory works to listed companies in Hong Kong in relation to post-listing compliance matters, in return for a monthly fee.
(3) Referral services
Since mid-2024, Grande Capital also provide referral services to other professional parties, such as financial institutions, for equity and debt fund raising exercises, for referral fees. Occasionally we may on a case by case basis come across fund-raising exercises which require the introduction of other professional parties in which we may obtain referral fees. Such referral fee is generally based on a percentage of the fee charged by our clients in the particular fund-raising exercises.
(4) Underwriting, Placing, and Securities Brokerage Services
Since late April, 2026, we have commenced our underwriting, placing, and securities brokerage services through Wicens International. Wicens International acts as (i) book runner, lead manager, or underwriter of listing applicants in IPOs or other fundraising activities; and (ii) placing agent of listed companies in connection with their issuance or sale of securities, in return for underwriting and/or placing commission. Wicens International also provides securities dealing and brokerage services for trading in securities on the Hong Kong Stock Exchange and in other overseas markets. Wicens International acts as an intermediary between buyers and sellers of securities listed on the Main Board and GEM of the Hong Kong Stock Exchange and facilitate the clients’ trading of securities listed on selected overseas stock exchanges, in return for brokerage commission income. Wicens International is a licensed corporation under the SFO to engage in Type 1 (dealing in securities) regulated activities in Hong Kong.
(5) Executive Training and Corporate Finance Consulting Services
Following our acquisition of Shenzhen Zhenjing, through Grande Consulting and Shenzhen Zhenjing, we expanded our footprint into executive training and corporate finance consulting services. The acquisition of Shenzhen Zhenjing is an important part of growth strategies to promote and enhance our brand locally and overseas and to strengthen the ECM and corporate finance advisory services. Shenzhen Zhenjing develops and delivers executive training curriculum and teaching material under a business-to-business (“B2B”) model as an upstream provider of proprietary executive training course content and educational framework to independent downstream course operators, rather than directly providing end-user training. These course materials focus on corporate operational management, capital market dynamics, regulatory compliance, and listing execution frameworks for small and medium-sized enterprises (“SMEs”). The curriculum is strategically tailored to assist founders and senior executives of high-growth enterprises in navigating their corporate management and corporate finance needs. Shenzhen Zhenjing also offers targeted corporate finance consulting services to enterprise clients seeking strategic expansion and future capital market entry.
Our revenue decreased from approximately US$4.3 million for the year ended March 31, 2025 to approximately US$2.6 million for the year ended March 31, 2026; while our profit before tax decreased from approximately US$1.9 million to a loss before taxes of approximately US$3.6 million in the corresponding years. This decrease was mainly due to further delays in our ongoing IPO projects where Grande Capital acted as a sponsor but has not finished them yet. It was also caused by a lower number of advisory engagements and slower progress in ongoing projects which resulted in fewer milestone achievements, as well as a significant reduction in referral arrangements during the year. This decline was partially offset by a new revenue stream from course material supply following our acquisition of Proplus in October 2025, which expands our business in Mainland China and diversifies our revenue streams.
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Our revenue decreased from approximately $4.5 million for the year ended March 31, 2024 to approximately $4.3 million for the year ended March 31, 2025; while our profit before tax decreased from approximately $2.1 million to $1.9 million in the corresponding years. The decrease was mainly due to our ongoing IPO projects where Grande Capital acted as a sponsor but did not finish them during that year.
Key factors affecting operating results
We believe the following key factors may affect our results of operations:
Economic conditions in Hong Kong
Our operations are located in Hong Kong. Accordingly, our business, prospects, financial condition and results of operations are influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in Hong Kong.
Ability of our Group to stay competitive in the equity capital market
The sustainability of our revenue and net income will depend upon our ability to remain competitive in the equity capital market and to obtain new customers on a consistent basis.
Our ability to maintain our major customers
For the years ended March 31, 2026, 2025 and 2024, approximately 72.2%, 57.2% and 78.1% of our total revenues, respectively, were generated by five customers. There are no any known trends and uncertainties related to these customers that are reasonably likely to have a material effect on the financial results due to the non-recurring nature of the revenue from these projects. Revenue from these customers is not expected to recur after completion of these projects. Since Grande Capital’s listing sponsorship services and financial and compliance advisory services are non-recurring in nature, there is no assurance that we can continue to secure the engagements comparable to those secured for the year ended March 31, 2026 in the future. If we are unable to continuously secure new sizable mandates, or if the market conditions become unfavorable, our business and the results of operations may be materially and adversely affected.
Results of Operations
Comparison of Years Ended March 31, 2026, 2025 and 2024
The following table sets forth the consolidated results of our operations for the years ended March 31, 2026, 2025 and 2024, respectively:
| 2026 | 2025 | 2024 | ||||||||||
| Revenue | $ | 1,807,643 | $ | 4,338,827 | $ | 4,529,196 | ||||||
| Revenue – related party | 769,231 | — | — | |||||||||
| Cost of revenue | (976,073 | ) | (1,019,658 | ) | (1,519,277 | ) | ||||||
| Gross profit | 1,600,801 | 3,319,169 | 3,009,919 | |||||||||
| General and administrative expenses | (2,966,105 | ) | (1,418,069 | ) | (887,036 | ) | ||||||
| Goodwill impairment loss | (1,942,266 | ) | — | — | ||||||||
| Total operating expenses | (4,908,371 | ) | (1,418,069 | ) | (887,036 | ) | ||||||
| Operating (loss) income | (3,307,570 | ) | 1,901,100 | 2,122,883 | ||||||||
| Other (expense) income | ||||||||||||
| Interest income | 96,048 | 9,350 | 9,261 | |||||||||
| Government subsidies | — | 2,605 | — | |||||||||
| Other miscellaneous income | — | 321 | — | |||||||||
| Loss on disposal of equity securities | (414,653 | ) | — | — | ||||||||
| Total other (expense) income | (318,605 | ) | 12,276 | 9,261 | ||||||||
| (Loss) Income before taxes | (3,626,175 | ) | 1,913,376 | 2,132,144 | ||||||||
| (Benefit from) Provision for income taxes | (88,966 | ) | 294,179 | 334,071 | ||||||||
| Net (loss) income | (3,537,209 | ) | $ | 1,619,197 | $ | 1,798,073 | ||||||
| Less: Net loss attributable to non-controlling interest | 62,534 | — | — | |||||||||
| Net (loss) income attributable to shareholders of the Company | $ | (3,474,675 | ) | $ | 1,619,197 | $ | 1,798,073 | |||||
| (Loss) Income per share – Basic and diluted | $ | (0.14 | ) | $ | 0.11 | $ | 0.18 | |||||
| Basic and diluted weighted average shares outstanding* | 24,353,510 | 14,680,821 | 10,000,000 | |||||||||
| * | Shares presented on a retroactive basis to reflect the Share Subdivision and Share Redesignation. |
Revenue
Revenue decreased by approximately $1.7 million or 40.6% from $4.3 million in the year ended March 31, 2025 to $2.6 million in the year ended March 31, 2026, mainly because of a lower number of advisory engagements and slower progress in ongoing projects which resulted in fewer milestone achievements, as well as a significant reduction in referral arrangements during the year. This decline was partially offset by a new revenue stream from course material supply following our acquisition of Proplus in October 2025, which expands our business in Mainland China and diversifies our revenue streams.
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Revenue decreased by approximately $0.2 million or 4.2% from $4.5 million in the year ended March 31, 2024 to $4.3 million in the year ended March 31, 2025, mainly because of the decrease in revenue from IPO sponsorship services offset by the increase in revenue from referral services and general advisory services. To generate alternative streams of income, Grande Capital provides referral services to other professional parties such as financial institutions, for equity and debt fund raising exercises, for referral fees. Grande Capital also provides a wide range of corporate financial advisory services to clients which mainly include (i) advisory works for private companies, public companies listed on HKSE, as well as their shareholders advising them on the terms and structures of proposed transactions, such as takeovers, merger and acquisition or investment, and the relevant implications of the Hong Kong regulatory framework, which primarily included the HK Listing Rules and HK Takeovers Codes, in relation to the transactions; and (ii) project coordination works for clients pursuing listing on other stock exchanges, such as the U.S. exchanges, in return for general advisory fee.
The table below sets out our revenue resulting from fixed fees and commissions and performance based fees for the years ended March 31, 2026, 2025 and 2024.
| March 31, | ||||||||||||||||||||||||
| 2026 | % | 2025 | % | 2024 | % | |||||||||||||||||||
| Fixed fees | $ | 2,576,874 | 100 | % | $ | 4,338,427 | 100 | % | $ | 4,059,529 | 89.6 | % | ||||||||||||
| Commissions and performance based fees | — | 0 | % | — | 0 | % | 469,667 | 10.4 | % | |||||||||||||||
| Total | $ | 2,576,874 | 100 | % | $ | 4,338,827 | 100 | % | $ | 4,529,196 | 100 | % | ||||||||||||
The table below sets out our revenue by service categories and geographical location of our clients for the years ended March 31, 2026, 2025 and 2024.
| March 31, | ||||||||||||
| Total revenues as of | 2026 | 2025 | 2024 | |||||||||
| IPO sponsorship services | $ | 105,497 | $ | 257,775 | $ | 2,872,152 | ||||||
| - Hong Kong | — | — | 1,583,250 | |||||||||
| - the PRC | 105,497 | 257,775 | 1,137,749 | |||||||||
| - Singapore | — | — | 151,153 | |||||||||
| Underwriting and placing services | — | — | 469,667 | |||||||||
| - Hong Kong | — | — | 331,205 | |||||||||
| - the PRC | — | — | 138,462 | |||||||||
| Referral services | 769,231 | 1,594,619 | — | |||||||||
| - Hong Kong | 769,231 | 1,594,619 | — | |||||||||
| General advisory services | 817,662 | 1,648,747 | 594,872 | |||||||||
| - Hong Kong | 817,662 | 1,206,439 | 471,795 | |||||||||
| - the PRC | — | 141,026 | 20,513 | |||||||||
| - Singapore | — | 301,282 | 102,564 | |||||||||
| Independent financial advisory services | 173,590 | 98,910 | 145,949 | |||||||||
| - Hong Kong | 173,590 | 34,615 | 111,205 | |||||||||
| - the PRC | — | 42,500 | 34,744 | |||||||||
| - Singapore | — | 21,795 | — | |||||||||
| Compliance advisory services | 232,353 | 738,776 | 446,556 | |||||||||
| - Hong Kong | 149,276 | 493,466 | 183,894 | |||||||||
| - the PRC | 76,923 | 205,310 | 207,790 | |||||||||
| - Singapore | 6,154 | 40,000 | 54,872 | |||||||||
| Course materials supplying | 478,541 | — | — | |||||||||
| - the PRC | 478,541 | — | — | |||||||||
| Total | $ | 2,576,874 | 4,338,827 | 4,529,196 | ||||||||
Revenues derived from clients in Hong Kong decreased by approximately $1.4 million or 42.64% from $3.3 million in the year ended March 31, 2025 to $1.9 million in the year ended March 31, 2026. Revenues derived from clients in the PRC slightly increased by $14,350 or 2.2% from $646,611 in the year ended March 31, 2025 to $660,961 in the year ended March 31, 2026. Revenues derived from clients in Singapore significantly decreased by 356,923 or 98.3% from $363,077 in the year ended March 31, 2025 to $6,154 in the year ended March 31, 2026, due to the expiration of our general advisory service contracts in the region.
Revenues derived from clients in Hong Kong increased by approximately $0.6 million or 24.2% from $2.7 million in the year ended March 31, 2024 to $3.3 million in the year ended March 31, 2025. Revenues derived from clients in the PRC decreased by approximately $0.9 million or 58.0% from $1.5 million in the year ended March 31, 2024 to $0.6 million in the year ended March 31, 2025. Revenues derived from clients in Singapore increased by approximately $0.1 million or 17.7% from $0.3 million in the year ended March 31, 2024 to $0.4 million in the year ended March 31, 2025.
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Cost of revenue
Cost of revenue consists primarily of staff costs and project related costs. Our cost of revenue decreased by $43,585 or 4.3% from $1,019,658 for the year ended March 31, 2025 to $976,073 for the year ended March 31, 2026. This slight reduction was mainly driven by a decrease in bonuses resulting from a decrease in the number of projects executed during the year.
Our cost of revenue decreased by approximately $0.5 million or 32.9% from $1.5 million for the year ended March 31, 2024 to $1.0 million for the year ended March 31, 2025. This reduction was mainly due to reduced bonuses payable to employees in the project execution function.
Gross profit
Our gross profit decreased by approximately $1.7 million, or 51.8%, from $3.3 million for the year ended March 31, 2025 to $1.6 million for the year ended March 31, 2026. Profit margin decreased from approximately 76.5% in the year ended March 31, 2025 to 62.1% in the year ended March 31, 2026. This decrease in gross profit margin was mainly due to a significant decrease in revenue while the cost of revenue decreased slightly.
Our gross profit increased by approximately $0.3million, or 10.3%, from $3.0 million for the year ended March 31, 2024 to $3.3 million for the year ended March 31, 2025. Profit margin increased from approximately 66.5% in the year ended March 31, 2024 to 76.5% in the year ended March 31, 2025. The increase in gross profit margin in the year ended March 31, 2025 was mainly attributable to the increase in the provision of referral services and general advisory services while such services are provided by our in-house employees and their salaries, which are a core part of our cost of revenue and recorded a decrease during the year.
General and administrative expenses
General and administrative expenses were approximately 115.1%, 32.7% and 19.6% of total sales in the year ended March 31, 2026, March 31, 2025 and the year ended March 31, 2024 respectively. General and administrative expenses are mainly management and office salaries and employee benefits, depreciation of office equipment and leasehold improvement, operating lease cost, transportation and entertainment and other office expenses.
Our general and administrative expenses increased by approximately $1.6 million, or 109.2% from $1.4 million for the year ended March 31, 2025 to $3.0 million for the year ended March 31, 2026. This increase was mainly due to discretionary one-time bonuses payable to employees in administrative functions and higher traveling and entertainment expenses for client acquisition purposes, and higher maintenance costs associated with our US listing requirements.
Our general and administrative expenses increased by approximately $0.5 million, or 59.9% from $0.9 million for the year ended March 31, 2024 to $1.4 million for the year ended March 31, 2025. The increase in general and administrative expenses was mainly attributable to the increase in audit fee by $0.3 million for the year ended March 31, 2025.
Goodwill impairment loss
On October 1, 2025, the Company completed the acquisition of 100% of the equity interests of Proplus for a total cash consideration of $10,000,000. The purchase resulted in $835,382 in identifiable net assets and $9,164,618 in goodwill. From the acquisition date through March 31, 2026, Proplus contributed $478,541 in revenues and a net loss of $1,911,850 to our consolidated results of operations.
On March 31, 2026, the Company performed its annual goodwill impairment assessment using the income approach based on discounted cash flow method. The annual goodwill impairment assessment, which reflected management’s estimates and assumptions regarding the reporting unit’s future cash flows and other key valuation inputs as of the annual testing date, took into consideration the challenging economic and market conditions in the Chinese Mainland. Based on the assessment, we recognized a goodwill impairment loss of $1,942,266 during the year, as the carrying amount of the Proplus reporting unit exceeded its estimated fair value.
Other income
Government subsidies
Our government subsidies were subsidies received from the Hong Kong government as reimbursements of maternity leave pay and relief measures against COVID-19 during the year ended March 31, 2025. No similar government subsidies were received during the years ended March 31, 2026 and 2024.
Interest income
Our interest income mainly comprised bank interest income. Interest income increased by $86,698, or 927.25%, from $9,350 for the year ended March 31, 2025 to $96,048 for the year ended March 31, 2026, and such increase was in line with the increase in interest rate and increase in bank balance. Interest income increased by $89, or 0.96%, from $9,261 for the year ended March 31, 2024 to $9,350 for the year ended March 31, 2025, the increase was mainly attributable to the increase in interest rate.
Other miscellaneous income
Other miscellaneous income mainly was the refund of medical and severance payment from insurance companies during the year ended March 31, 2025. No such miscellaneous income was received during the year ended March 31, 2026 and 2024.
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Loss on disposal of equity securities
During December 2025, the equity securities were disposed of for consideration of $85,347. The Company recognized a loss on disposal of equity securities of approximately $414,653 during the year, reflecting the decline in the quoted market price of ALT5 Sigma’s shares. As of March 31, 2026, the outstanding consideration of $85,347 from the disposal was included within “Prepaid expenses and other current assets” in the consolidated balance sheets.
Subsequent to March 31, 2026 and prior to the issuance date of these consolidated financial statements, the Company received the outstanding balance of $85,347 in full.
Income tax expense
We and our subsidiaries are subject to income tax on an entity basis on profit arising in or derived from the jurisdiction in which the Company and its subsidiaries are domiciled or operate. Income tax expense is comprised mainly of Hong Kong income tax and PRC Enterprise Income Tax.
The income tax expense decreased by $383,145, or 130.2%, from $294,179 for the year ended March 31, 2025 to an income tax benefit $88,966 for the year ended March 31, 2026. The decrease was mainly due to the net loss before provision for income taxes. The effective tax rate remained relatively stable at 15.4% for the year ended March 31, 2025 and 2.5% for the year ended March 31, 2026, respectively.
The income tax expense decreased by approximately $39,892, or 11.9%, from $334,071 for the year ended March 31, 2024 to $294,179 for the year ended March 31, 2025. The decrease was mainly due to the decrease in net income before provision for income taxes. The effective tax rate remained relatively stable at 15.7% for the year ended March 31, 2024 and 15.4% for the year ended March 31, 2025, respectively.
Net (loss) income
We recorded a net loss of approximately $3.5 million for the year ended March 31, 2026, compared to a net income of approximately $1.6 million for the year ended March 31, 2025. Such turnaround to a net loss was attributable to the revenue decline, together with a significant increase in operating expenses and a goodwill impairment loss.
We recorded a net income of approximately $1.6 million for the year ended March 31, 2025, compared to $1.8 million for the year ended March 31, 2024. Such decrease was attributable to the decrease in revenue, partially offset by the decrease in cost of revenue.
Liquidity and Capital Resources
On June 30, 2025, the Company closed its IPO of Class A ordinary shares. Subsequently, in July 2025, the underwriter fully exercised the over-allotment option. The IPO and the over-allotment option generated total gross proceeds of $10,781,250, before deducting underwriting discounts, commissions, and offering expenses. Net of these issuance costs, the Company received total net proceeds of $8,621,139, which significantly strengthened our balance sheet.
Our ability to maintain sufficient cash provided by operating activities is dependent on our ability to maintain and expand our client base, enhance our relationships with partners, make adjustments to our business operations to adopt to the business environment, attract and retain our employees, manage our future growth, improve the operational efficiency of our Operating Subsidiary and navigate an evolving regulatory environment. If we fail to address the aforementioned risks and challenges, our business may be materially and adversely affected. There is no assurance that we will sustain profitability or positive cash provided by operating activities. Current capability to maintain sufficient cash provided by operating activities is not indicative of future operating results.
As of March 31, 2026, we had cash and cash equivalents of approximately $1.5 million. As of March 31, 2026, our current assets were approximately $2.6 million, and our current liabilities were approximately $4.8 million. As of March 31, 2025, we had cash and cash equivalents of approximately $2.1 million. As of March 31, 2025, our current assets were approximately $3.5 million, and our current liabilities were approximately $2.6 million. Our current ratio decreased from approximately 1.4 times in the year ended March 31, 2025 to approximately 0.5 times in the year ended March 31, 2026. This decline was primarily driven by the full cash settlement of a major acquisition during the year, combined with an increase in contract liabilities and advances due to related parties.
Prior to the transaction, the Company held no equity interest in Proplus Company Limited(“Proplus”). On October 9, 2025, the Company completed the acquisition of 100% of the issued and outstanding shares of Proplus, at a total consideration of US$10 million, which was paid in full upon completion. Upon completion, Proplus became a wholly-owned subsidiary of the Company.
In view of the current cash and bank balances, funds generated by our operating activities and amounts due to related party, being Grande Holding Limited, our ability to meet our financial obligations over the next 12 months is dependent upon the ongoing financial support from our related party. Grande Holding Limited has indicated their intent to provide sufficient financial accommodations and has agreed not to demand repayment of the outstanding balances unless the Company has sufficient resources. Based on this forbearance infrastructure, we believe the Company will have sufficient resources to meet its working capital needs. As of March 31, 2026, 2025 and 2024, the amounts due to Grande Holding Limited were $2,612,698, $1,821,726 and $1,852,115, respectively. However, our ability to meet the liquidity and capital requirements will be subject to future economic conditions and other factors which are beyond our control.
We may declare or pay dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments.
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Cash Flow
The following table sets forth a summary of our consolidated cash flows for the years ended March 31, 2026, 2025 and 2024, respectively:
| 2025 | 2024 | 2023 | ||||||||||
| Net cash (used in) provided by operating activities | $ | (734,152 | ) | $ | 794,147 | $ | 1,157,742 | |||||
| Net cash used in investing activities | (10,354,468 | ) | (139,153 | ) | - | |||||||
| Net cash provided by (used in) financing activities | 10,474,044 | (1,357,622 | ) | (331,021 | ) | |||||||
| Net (decrease)/increase in cash and cash equivalents | $ | (614,576 | ) | $ | (702,628 | ) | $ | 826,721 | ||||
Cash (used in) provided by operating activities
For the year ended March 31, 2026, our net cash used in operating activities was approximately $0.7 million, which primarily reflected cash outflow from our net loss of 3.5 million adjusted for (i) net non-cash expenses of $3.0 million, representing non-cash lease expense, goodwill impairment loss, loss on disposal of equity securities, depreciation and provision for expected credit losses, and (ii) net decrease in cash flow from changes in operating assets and liabilities of $0.2 million mainly attributable to cash outflow arising from contract liabilities of $0.2 million, prepaid expenses and other current assets of $0.2 million and lease liabilities of $0.2 million respectively, which were offset by cash inflow arising from contract assets of $0. 2 million and accounts receivable of $0.2 million respectively
For the year ended March 31, 2025, our net cash provided by operating activities was approximately $0.8 million, which primarily reflected cash inflow from our net income of 1.6 million adjusted for (i) net non-cash expenses of $0.3 million, representing non-cash lease expense, depreciation and provision for expected credit losses, and (ii) net decrease in cash flow from changes in operating assets and liabilities of $1.1 million mainly attributable to cash outflow arising from accounts receivable of $0.6 million and contract assets of $0.2 million respectively.
For the year ended March 31, 2024, our net cash provided by operating activities was approximately $1.2 million, which primarily reflected cash inflow from our net income of $1.8 million adjusted for (i) net non-cash expenses of $0.2 million, representing non-cash lease expense, depreciation, reversal of provision for expected credit losses and deferred tax expenses, and (ii) net decrease in cash flow from changes in operating assets and liabilities of $0.9 million mainly attributable to cash outflow arising from contract liabilities of $1.1 million, which were offset by cash inflow arising from accrued expenses and other liabilities of $0.3 million.
Cash used in investing activities
For the year ended March 31, 2026, cash used in investing activities was approximately $10.4 million, which was mainly due to the cash outflow arising from investment in equity securities and acquisition of Proplus (which represents the $10,000,000 total purchase consideration, net of $145,532 in cash acquired) of $0.5 million and $9,854,468, respectively.
For the year ended March 31, 2025, cash used in investing activities was approximately $0.1 million, which mainly consists of purchase of equipment.
Cash provided by (used in) financing activities
For the year ended March 31, 2026, net cash provided by financing activities was approximately $10.5 million, which mainly consists of advance from related parties and net proceeds from initial public offering of approximately $0.8 million and $9.8 million, respectively.
For the year ended March 31, 2025, net cash used in financing activities was $1.4 million, which mainly consists of payments of dividend and offering costs related to the initial public offering.
For the year ended March 31, 2024, net cash used in financing activities was $0.3 million, which mainly consists of payments of offering costs related to the initial public offering.
Off-Balance Sheet Arrangements
We had not entered any material off-balance sheet transactions and arrangements during the years ended March 31, 2026, 2025 and 2024.
Leased Properties
Our Operating Subsidiary, Grande Capital, leases an office in Room 2701, 27/F, Tower 1, Admiralty Center, No. 18 Harcourt Road, Hong Kong, with a term from February 15, 2025 to February 14, 2029. The monthly rent for the office is $12,131 (HK$94,626).
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Contractual Obligations
The following table summarizes our contractual obligations as of March 31, 2026:
| Payment due by period | ||||||||||||||||
| Less than 1 year | 1 to 3 years | More than 3 years | Total | |||||||||||||
| Future minimum payments under operating leases | 176,348 | 275,524 | — | 451,872 | ||||||||||||
| Less: imputed interest | (18,330 | ) | (13,562 | ) | — | (31,892 | ) | |||||||||
| Lease obligation | 158,018 | 261,962 | — | 419,980 | ||||||||||||
The following table summarizes our contractual obligations as of March 31, 2025:
| Payment due by period | ||||||||||||||||
| Less than 1 year | 1 to 3 years | More than 3 years | Total | |||||||||||||
| Future minimum payments under operating leases | 165,868 | — | — | 165,868 | ||||||||||||
| Less: imputed interest | (5,160 | ) | — | — | (5,160 | ) | ||||||||||
| Lease obligation | 160,708 | — | — | 160,708 | ||||||||||||
Capital Expenditures
For the year ended March 31, 2026, the Company incurred no capital expenditures for equipment or leasehold improvements. In comparison, total capital expenditures for equipment were $139,153 during the year ended March 31, 2025. Our Group incurred no capital expenditure during the year ended March 31, 2024.
Use of Estimates
The preparation of the consolidated financial statements in conformity with the U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
Significant estimates include:
| revenue recognition; | |
| fair value measurements associated with business combinations; | |
| valuation of identifiable intangible asset; | |
| impairment assessments of goodwill; | |
| estimated useful lives of finite-lived intangible asset; and | |
| assumptions utilized in discounted cash flow analyses. |
Management makes these estimates using the best information available when the calculations are made; however, actual results could differ materially from those estimates.
Item 6. Directors, Senior Management and Employees
6.A. Directors and Senior Management
The following table provides information regarding our executive officers, directors and other key employee as of the date hereof:
| Name | Age | Position(s) | ||
| Yujie, CHEN | 36 | Chief Executive Officer, Chair of the board, and Director | ||
| Sha, XIA | 30 | Director | ||
| Ka Yan, YING | 27 | Chief Financial Officer | ||
| Henry Cheuk Sang, WONG | 40 | Independent Director | ||
| Jin, LI | 45 | Independent Director | ||
| Sing Kwong Simon, LAM | 66 | Independent Director |
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Yujie, CHEN is the chief executive officer, Director and the Chair of the board of the Company and is responsible for our Group’s overall management, strategic planning and business development. Ms. Chen joined Grande Capital in January 2020 and has served as a director of Grande Capital since January 2023. Ms. Chen has over 10 years of experience in corporate finance, business and administrative management. From April 2013 to April 2014, Ms. Chen served as the manager-in-charge of the retail banking division of China Guangdong Development Bank, Shenzhen Branch. From April 2015 to December 2019, Ms. Chen worked at Boyuan Hongsheng Investment as a Partner, responsible for advising on corporate investment, pre-IPO investment and mergers and acquisitions. Ms. Chen obtained a Bachelor of Accountancy from Wuhan University in September 2011 and a Master of Business Administration from the University of Hong Kong in July 2023.
Sha, XIA is Company’s director. Ms. Xia is a seasoned executive training and c-level education professional. Prior to joining the Company, Ms. Xia has been serving as the Executive Education Curriculum Development Manager at Shenzhen 4Reasons Corporate Education & Training Co., Ltd., where she directs curriculum development and investment research across digital assets, AI-enabled finance, Web3 infrastructure, and quantitative investing. From September 2022 to November 24, Ms. Xia co-founded Beijing Gushan Yiju Culture Media Co., Ltd., a media and entertainment startup, and served as its Head of Finance and Strategy, where she was overseeing financial planning, budgeting, resource allocation, business development and expansion. Ms. Xia is currently a Master of Science candidate in Wealth Management at The Hong Kong Polytechnic University, and Ms. Xia holds a Bachelor of Science (Honours) degree in Software Engineering from Asia Pacific University of Technology & Innovation and Staffordshire University.
Ka Yan, YING is our Chief Financial Officer. Ms. Ying has over 4 years of experience in audit, accounting and internal control
experience, gained from serving as the auditor of various audit firms in Hong Kong. Prior to joining the Company, Ms. Ying served as
senior auditor of RSM Hong Kong from 2023 to 2025 and the audit associate from 2020 to 2023. Ms. Ying obtained a Bachelor of Business
Administration with honors in professional accounting from Hong Kong Metropolitan University in 2021. Ms. Ying is student member of the
Certified Practicing Accountants, Australia since 2022.
Henry Cheuk Sang, WONG is our independent director and also the chairman of the audit committee and the member of the nominating committee and the compensation committee. Mr. Wong has over 15 years of experience in the financial industry. From September 2018 to August 2023, Mr. Wong worked in Morgan Stanley Asia Limited as vice president of global risk and analysis, investment management. From August 2014 to August 2018, Mr. Wong worked in Morgan Stanley Investment Management with his last position as vice president of global risk and analysis. From February 2014 to August 2014, Mr. Wong worked in Mizuho Bank Ltd as assistant vice president in the risk management division. From October 2011 to February 2014, Mr. Wong worked in Depository Trust and Clearing Corporation as a senior analyst. From November 2007 to October 2011, Mr. Wong worked in Markit Group Ltd with his last position as vice president. Mr. Wong obtained a Bachelor of Science in applied economics and management from Cornell University in 2007 and a Master of Applied Data Science from the University of Michigan in 2022. Mr. Wong has been a chartered financial analyst of the CFA Institute since 2011 and a financial risk manager of Global Association of Risk Professionals since 2013.
Jin, LI is our independent director and also the chairman of the nominating committee and the member of the audit committee and the compensation committee. Prof. Li has been Zhang Yonghong Professor in economics and strategy since September 2022 and the area head of management and strategy of faculty of business and economics of the University of Hong Kong since September 2020. From July 2017 to July 2018, Prof Li has been an associate professor of managerial economics and strategy (with tenure) of the London School of Economics. From September 2007 to June 2017, Prof. Li has been an assistant professor of strategy of the Kellogg School of Management in the Northwestern University. Prof. Li obtained a Bachelor of Arts in economics and math from Wesleyan University in 2002, a Bachelor of Science in applied math from the California Institute of Technology in 2002 and a doctor of philosophy in economics from Massachusetts Institute of Technology in 2007.
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Sing Kwong Simon, LAM is our independent director and also the chairman of the compensation committee and the member of the audit committee and the nominating committee. Prof. Lam has been a professor in management and strategy of the faculty of business and economics in the University of Hong Kong since 2006. From 2017 to 2020, Prof. Lam has been the area head of management and strategy area of the faculty of business and economics in the University of Hong Kong. Prof. Lam has been a non-executive director of Jacobson Pharma Corporation Limited (HKEx: 2633), a company listed on the Stock Exchange of Hong Kong Limited, from April 2016 to November 2021 and an independent non-executive director since November 2021. Prof. Lam has been an independent non-executive director of Kwan On Holdings Limited (HKEx: 1559), a company listed on the Stock Exchange of Hong Kong Limited, since March 2015 and an independent non-executive director of Overseas Chinese Town (Asia) Holdings Limited (HKEx: 3366), a company listed on the Stock Exchange of Hong Kong Limited, since May 2009. Prof. Lam has been an independent non-executive director of Qingci Games Inc. (HKEx: 6633), a company listed on the Stock Exchange of Hong Kong Limited, since June 2021. From March 2014 to June 2023, Prof. Lam was an independent non-executive director of Sinomax Group Limited (HKEx: 1418), a company listed on the Stock Exchange of Hong Kong Limited. Prof. Lam obtained a Doctor of Philosophy in commerce from the Australian National University in 1996.
Family Relationships
None of the directors or executive officers have a family relationship as defined in Item 401 of Regulation S-K.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors, director appointees or executive officers has, during the past ten years, been involved in any legal proceedings described in subparagraph (f) of Item 401 of Regulation S-K.
6.B. Compensation
For the year ended March 31, 2026, the aggregate cash compensation and benefits that we paid to the executive officers and directors were approximately HK$2,606,000 (approximately US$334,103), as compensation to our directors and executive officers, as well as an aggregate of HK$56,000 (approximately US$7,179) as contributions to the Mandatory Provident Fund (“MPF”), a statutory retirement scheme introduced after the enactment of the Mandatory Provident Fund Schemes Ordinance in Hong Kong.
For the fiscal year ended March 31, 2026, we have paid approximately HK$530,000 (approximately US$67,949), as compensation to the independent non-executive directors, as well as an aggregate of nil as contributions to the Mandatory Provident Fund (“MPF”).
Except our contribution to the MPF, we have not set aside or accrued any amount to provide pension, retirement, or other similar benefits to our directors and executive officers. We do not have any equity incentive plan in place as of the date of this annual report.
Compensation Recovery Policy
Our board of directors has adopted an executive compensation recovery policy (the “Compensation Recovery Policy” or “Clawback Policy”), providing for the recovery of certain incentive-based compensation from current and former executive officers of the Company in the event the Company is required to restate any of its financial statements filed with the SEC under the Exchange Act in order to correct an error that is material to the previously-issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. Adoption of the Clawback Policy was mandated by new Nasdaq listing standards introduced pursuant to Exchange Act Rule 10D-1. The Clawback Policy is in addition to Section 304 of the Sarbanes-Oxley Act of 2002 which permits the SEC to order the disgorgement of bonuses and incentive-based compensation earned by a registrant issuer’s chief executive officer and chief financial officer in the year following the filing of any financial statement that the issuer is required to restate because of misconduct, and the reimbursement of those funds to the issuer. A copy of the Compensation Recovery Policy has been filed herewith as Exhibit 97.1.
Employment Agreements and Indemnification Agreements
We have entered into employment agreements under Hong Kong law. with our executive officers and directors, namely, Ms. Yujie, CHEN (the Director, Chief Executive Officer, and the Chair of the Board), Ms. Sha, XIA (the Director), and Ms. Ka Yan, YING (the Chief Financial Officer) (collectively, the Directors and Officer Employment Agreements) (Ms. Chen, Ms. Xia and Ms. Ying are collectively referred as the Named Directors and Officers). The initial term of employment under the Directors and Officer Employment Agreements is for a term of one year unless terminated earlier. Upon expiration of the initial-year term, the Directors and Officer Employment Agreements shall be automatically extended for successive one-year terms unless a three-months prior written notice to terminate the Directors and Officer Employment Agreement or unless terminated earlier pursuant to the terms of the Directors and Officer Employment Agreements.
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Pursuant to the Directors and Officer Employment Agreements, Ms. Chen receives cash compensation of annual salary of HK$720,000 (US$92,308) from Grande Capital, and nil from Grande; Ms. Ka Yan, YING receives cash compensation of annual salary of HK$348,000 (US$44,401) from Grande Capital, and nil from Grande; and Ms. Sha, XIA receives cash compensation of salary HK$ 180,000 (US$22,967) from Grande annually and nil from the Company’s subsidiaries.
Grande is entitled to terminate their agreement for cause at any time without remuneration for certain acts of the Named Directors and Officers, as being convicted of any criminal conduct, any act of gross or willful misconduct, or any severe, willful, grossly negligent, or persistent breach of any employment agreement provision, or engaging in any conduct which may make the continued employment of such officer detrimental to our company. The Named Directors and Officers have agreed to hold, both during and after the terms of his or her agreement, in confidence and not to use for their benefit or the benefit of any third party, any trade secrets, other information of a confidential nature or non-public information of or relating to us in respect of which we owe a duty of confidentiality to a third party. In addition, each Named Directors and Officers has agreed not to, for a period of one year following the termination of his employment, carry on any business in direct competition with the business of the Grande group of companies, solicit or seek or endeavor to entice away any customers, clients, representative, or agent of the Grande group of companies or in the habit of dealing with the Grande group of companies who is or shall at any time within two years prior to such cessation have been a customer, client, representative, or agent of the Grande group of companies, and use a name including the words used by the Grande group of companies in its name or in the name of any of its products, services or their derivative terms, or Chinese or English equivalent in such a way as to be capable of or likely to be confused with the name of the Grande group of companies.
Agreements with independent directors
We entered into director offer letters with each of our independent directors which agreements set forth the terms and provisions of their engagement.
Equity Compensation Plan Information
We have not adopted any equity compensation plans.
Outstanding Equity Awards at Fiscal Year-End
As of March 31, 2025, 2024 and 2023, we had no outstanding equity awards.
6.C. Board Practices
Board of Directors
Our board of directors consists of 5 directors, comprising 2 executive directors and 3 independent directors. A director is not required to hold any shares in our Company to qualify to serve as a director.
A director may vote, attend a board meeting or sign a document on our behalf with respect to any contract or transaction in which he or she is interested. A director must promptly disclose the interest to all other directors after becoming aware of the fact that he or she is interested in a transaction we have entered into or are to enter into. A general notice or disclosure to the board or otherwise contained in the minutes of a meeting or a written resolution of the board or any committee of the board that a director is a shareholder, director, officer or trustee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company will be sufficient disclosure, and, after such general notice, it will not be necessary to give special notice relating to any particular transaction. A director may be counted for a quorum upon a motion in respect of any contract or arrangement which he shall make with our company, or in which he is so interested and may vote on such motion.
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Committees of the Board of Directors
We have established three committees under the board of directors: of an Audit Committee, a Compensation Committee and a Nominating Committee. Even though we are exempted from corporate governance standards because we are a foreign private issuer, we have voluntarily adopted a charter for each of the three committees. Each committee’s members and functions are described below.
Audit Committee. Our audit committee consists of Mr. Henry Cheuk Sang, Wong, Prof. Jin, Li and Prof. Sing Kwong Simon, Lam. Mr. Henry Cheuk Sang, Wong is the chair of our audit committee. The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:
| ● | appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; |
| ● | reviewing with the independent auditors any audit problems or difficulties and management’s response; |
| ● | discussing the annual audited financial statements with management and the independent auditors; |
| ● | reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; |
| ● | reviewing and approving all proposed related party transactions; |
| ● | meeting separately and periodically with management and the independent auditors; and |
| ● | monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. |
Compensation Committee. Our compensation committee consists of Mr. Henry Cheuk Sang, Wong, Prof. Jin, Li and Prof. Sing Kwong Simon, Lam. Prof. Sing Kwong Simon, Lam is the chair of our compensation committee. The compensation committee is responsible for, among other things:
| ● | reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; |
| ● | reviewing and recommending to the shareholders for determination with respect to the compensation of our directors; |
| ● | reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and |
| ● | selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management. |
Nominating Committee. Our nominating committee consists of Mr. Henry Cheuk Sang, Wong, Prof. Jin, Li and Prof. Sing Kwong Simon, Lam. Prof. Jin, Li is the chair of our nominating committee. We have determined that Mr. Henry Cheuk Sang, Wong, Prof. Jin, Li and Prof. Sing Kwong Simon, Lam satisfy the “independence” requirements under Nasdaq Rule 5605. The nominating committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating committee is responsible for, among other things:
| ● | selecting and recommending to the board nominees for election by the shareholders or appointment by the board; |
| ● | reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; |
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| ● | making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and |
| ● | advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken. |
Duties of Directors
Under British Virgin Islands law, our directors owe fiduciary duties both at common law and under statute, including a statutory duty to act honestly, in good faith and with a view to our best interests. When exercising powers or performing duties as a director, our directors also have a duty to exercise the care, diligence and skills that a reasonable director would exercise in comparable circumstances, taking into account, without limitation, the nature of the Company, the nature of the decision and the position of the director and the nature of the responsibilities undertaken by him. In exercising the powers of a director, the directors must exercise their powers for a proper purpose and shall not act or agree to the Company acting in a manner that contravenes our Amended and Restated Memorandum and Articles of Association or the BVI Act. In fulfilling their duty of care to us, our directors must ensure compliance with our Amended and Restated Memorandum and Articles of Association. A shareholder may in certain limited exceptional circumstances have the right to seek damages if a duty owed by our directors is breached.
Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functions and powers of our board of directors include, among others:
| ● | convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; |
| ● | declaring dividends and distributions; |
| ● | appointing officers and determining the term of office of the officers; |
| ● | exercising the borrowing powers of our company and mortgaging the property of our company; and |
| ● | approving the transfer of shares in our company, including the registration of such shares in our share register. |
Remuneration
The directors may receive such remuneration as our board of directors may determine from time to time. The compensation committee will assist the directors in reviewing and approving the compensation structure for the directors.
Qualification
There are no membership qualifications for directors. Further, there are no share ownership qualifications for directors. There are no other arrangements or understandings pursuant to which our directors are selected or nominated.
Meetings of directors
Our business and affairs are managed by our board of directors, who will make decisions by voting on resolutions of directors. Our directors are free to meet at such times and in such manner and places within or outside the BVI as the directors determine to be necessary or desirable. A director must be given not less than 3 days’ notice of a meeting of directors. At any meeting of directors, a quorum will be present if not less than one half of the total number of directors is present, unless there are only 2 directors in which case the quorum is 2. An action that may be taken by the directors at a meeting may also be taken by a resolution of directors consented to in writing by a majority of the directors. A person other than an individual which is a shareholder may by a resolution of its directors or other governing body authorize any individual it thinks fit to act as its representative at any meeting of shareholders. The duly authorized representative shall be entitled to exercise the same powers on behalf of the person which he represents as that person could exercise if it were an individual.
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6.D. Employees
We had 24, 18 and 14 full-time employees as of March 31, 2026, 2025 and 2024, respectively. The following table sets forth the number of our full-time employees categorized by function as of March 31, 2026, 2025 and 2024:
| Function | As of March 31, 2026 | As of March 31, 2025 | As of March 31, 2024 | |||||||||
| General management | 2 | 3 | 2 | |||||||||
| Project execution | 7 | 10 | 10 | |||||||||
| Administrative | 13 | 5 | 2 | |||||||||
| Course material development | 2 | — | — | |||||||||
| Total | 24 | 18 | 14 | |||||||||
As of March 31, 2026, 3 of our employees were based in Mainland China and 21 employees were located in Hong Kong.
We consider that we have maintained a good relationship with the employees and have not experienced any significant disputes with the employees or any disruption to the operations due to any labor disputes. In addition, our Operating Subsidiaries has not experienced any difficulties in the recruitment and retention of experienced core staff or skilled personnel. Our remuneration package includes salary and discretionary bonuses. In general, we determine employees’ salaries based on their qualifications, position and seniority.
In order to attract and retain valuable employees, we review the performance of our employees annually, which will be taken into account in annual salary review and promotion appraisal. We provide a defined contribution to the Mandatory Provident Fund as required under the Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong) for our eligible employees based in Hong Kong.
As required by PRC regulations, Shenzhen Zhenjing participates in various government statutory employee benefit plans, including social insurance funds, namely a pension contribution plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing provident fund. Shenzhen Zhenjing is required under PRC law to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government from time to time. As of the date of this report, Shenzhen Zhenjing has made adequate employee benefit payments.
6.E. Share Ownership
Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our Ordinary Shares as of the date of this annual report by:
| ● | Each person who is known by us to beneficially own more than 5% our outstanding Class A Ordinary Shares and Class B Ordinary Shares; |
| ● | Each of our Directors and named executive officers; and |
| ● | All Directors and named executive officers as a group. |
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Percentage of beneficial ownership of each listed person is based on 19,906,250 Class A Ordinary Shares, par value US$0.00001 per share, and 5,000,000 Class B Ordinary Shares, par value US$0.00001 per share, issued and outstanding as of the date of this annual report.
Holders of Class A Ordinary Share will be entitled to one vote per share. Holders of Class B Ordinary Shares will be entitled to twenty (20) votes per share. Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of more than 5% of either Class A Ordinary Shares or Class B Ordinary Shares. Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power with respect to securities.
In computing the number of Class A Ordinary Shares and Class B Ordinary Shares beneficially owned by a person listed below and the percentage ownership of such person, Class A Ordinary Shares and Class B Ordinary Shares underlying options, warrants or convertible securities held by each such person that are exercisable or convertible within 60 days of the date of this annual report are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. Except as otherwise indicated in the footnotes to this table, or as required by applicable community property laws, all persons listed have sole voting and investment power for all Class A Ordinary Shares and Class B Ordinary Shares shown as beneficially owned by them.
| Class A Ordinary Shares Beneficially Owned (2) | Class B Ordinary Shares Beneficially Owned(2) | Voting Power (2) | ||||||||||||||||||
| Name of Beneficial Owner | Number | % | Number | % | % | |||||||||||||||
| Directors, and Named Executive Officers: | ||||||||||||||||||||
| Yujie, CHEN(1) | — | — | — | — | — | |||||||||||||||
| Ying Wo Sammy, HO | — | — | — | — | — | |||||||||||||||
| Ka Wing Eric, LAW | — | — | — | — | — | |||||||||||||||
| Henry Cheuk Sang, WONG | — | — | — | — | — | |||||||||||||||
| Jin, LI | — | — | — | — | — | |||||||||||||||
| Sing Kwong Simon, LAM | — | — | — | — | — | |||||||||||||||
| Directors, and Named Executive Officers as a group (6 persons) | — | — | — | — | — | |||||||||||||||
| 5% or Greater Shareholders: | ||||||||||||||||||||
| Grande Holding Limited(1) | 15,194,000 | 76.33 | % | 5,000,000 | 100 | % | 96.07 | % | ||||||||||||
| (1) | Grande Holding Limited is a company incorporated under the laws of the Cayman Islands. The registered address for Grande Holding Limited is 71 Fort Street, PO Box 500, George Town, Grand Cayman, KY1-1106, Cayman Islands. Grande Holding Limited is owned 68.18% by Blazing Success Holdings Limited, 22.73% by Ocean Empire Group Limited, and 9.09% by Ms. Tianhang Zhao. Mr. Tak Kai Raymond, Tam owns 100% of the equity interests in Rosy Beauty Investment Limited, which owns 99% of the equity interests in Blazing Success Holdings Limited. Ms. Yujie, Chen, the Chief Executive Officer and Chair of the Board of the Company, owns 99% of the equity interests in Ocean Empire Group Limited. Tianhang, Zhao directly holds 9.09% of the issued shares of Grande Holding Limited and serves as the Director of Grande Holding Limited. Ms. Zhao and Mr. Tam share voting and dispositive power with respect to the shares of Grande held by Grande Holding Limited and Ms. Zhao and Mr. Tam are therefore deemed to be the beneficial owners of the shares held by Grande Holding Limited. Effective June 17, 2026, Ms. Yujie, Chen resigned as the director of Grande Holding Limited. However, as a minority indirect shareholder without a directorship or other arrangement conferring voting or dispositive power over the shares of Grande, Ms. Chen is no longer deemed to beneficially own the Ordinary Shares of Grande. |
| (2) | Percentage total voting power represents voting power with respect to all shares of our Class A Ordinary Shares and Class B Ordinary Shares, as a single class. Each holder of Class B Ordinary Shares shall be entitled to twenty (20) votes per Class B Ordinary Share and each holder of Class A Ordinary Shares shall be entitled to one (1) vote per Class A Ordinary Share on all matters submitted to our shareholders for a vote. The Class A Ordinary Shares and Class B Ordinary Shares vote together as a single class on all matters submitted to a vote of our shareholders, except as may otherwise be required by law. Class A Ordinary Shares and Class B Ordinary Shares are not convertible into each other. |
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6.F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation.
Not applicable.
Item 7. Major Shareholders and Related Party Transactions
7.A. Major Shareholders
Please refer to “Item 6. Directors, Senior Management and Employees — 6.E. Share Ownership.”
7.B. Related Party Transactions
Employment Agreements
See “Item 6. Directors, Senior Management and Employees—6.B. Compensation—Employment Agreements and Indemnification Agreements.”
Other Transactions with Related Parties
| (a) | Names and relationship of related parties: |
| Name | Relationship with the Company | |
| Yujie, Chen | Chief executive officer and director of the Company | |
| Grande Holding Limited | Controlling shareholder | |
| Zhu Weijiang | Director of certain subsidiaries of the Company | |
| Tin Duk Victor, Chang | Shareholder of Wicens International Securities Limited, holding 49% equity interest | |
| Ji Feng Hong Kong Limited | Company for which Yujie, Chen served as a director | |
| Yellow River Securities Limited | Company for which Yujie, Chen has served as a director since November 5, 2025 |
| (b) | Summary of balances with related parties: |
| Amounts due to related parties | 2026 | 2025 | 2024 | |||||||||
| Grande Holding Limited | $ | (2,612,698 | ) | $ | (1,821,726 | ) | (1,852,115 | ) | ||||
| Zhu Weijiang | (5,950 | ) | — | |||||||||
| Total | (2,618,648 | ) | (1,821,726 | ) | (1,852,115 | ) | ||||||
| March 31, | ||||||||
| Amounts due from related parties | 2026 | 2025 | ||||||
| Tin Duk Victor, Chang | $ | — | $ | 6 | ||||
| Ji Feng Hong Kong Limited | 2,248 | — | ||||||
| Less: allowance for expected credit loss | (18 | ) | — | |||||
| Total | $ | 2,230 | $ | 6 | ||||
As of March 31, 2026, 2025 and 2024, the amounts due to Grande Holding, our Controlling Shareholder solely represented amounts due to, in the form of shareholder loan to the Company, for the purpose of: (1) the working capital for the daily operation of Grande Capital; and (2) the capital to develop the Type 1 (dealing in securities) and Type 9 (asset management) business lines. These amounts are unsecured, interest-free, payable on demand and have no fixed term of payment, and are not governed by or subject to any written agreements. During the years ended March 31, 2026, 2025, and 2024, the Company repaid nil, $30,389, and 5,730, respectively, to Grande Holding. Mr. Tak Kai Raymond, TAM, the majority shareholder of the Controlling Shareholder, is the source of the funds that the Controlling Shareholder loaned to the Company.
| C. | Summary of related party transactions: |
A summary of trade transactions with related parties for the years ended March 31, 2026, 2025 and 2024 are listed below:
| March 31, | ||||||||||||
| Consultation fee paid to senior management | 2026 | 2025 | 2024 | |||||||||
| Tak Kai Raymond, Tam | $ | — | $ | — | $ | 5,769 | ||||||
| Total | $ | — | $ | — | $ | 5,769 | ||||||
| March 31, | ||||||||||||
| Referral services income received from a related party | 2026 | 2025 | 2024 | |||||||||
| Yellow River Securities Limited | $ | 769,231 | $ | — | $ | — | ||||||
| Total | $ | 769,231 | $ | — | $ | — | ||||||
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7.C. Interests of Experts and Counsel
Not applicable.
Item 8. Financial Information
A. Consolidated Statements and Other Financial Information
Please refer to “Item 18. Financial Statements.”
Legal Proceedings
As of the date of this annual report, we and our subsidiaries had not been involved in any legal proceedings, investigations, claims nor had we been aware of any pending or threatened litigation, arbitration or other claims which would have a material adverse impact on the operations, financial position and reputation of us.
Dividend Policy
On June 25, 2024, Grande Capital Limited declared a cash dividend of HK$6 million (approximately US$769,231) to our Controlling Shareholder, Grande Holding Limited, for the purpose of distribution of profits obtained during the year. Save as previously disclosed, as of the date of the annual report, and the years ended March 31, 2026, 2025, and 2024 neither Grande nor its subsidiaries have declared or made any dividend or contribution to their respective shareholders.
We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends to public shareholders of Grande in the foreseeable future.
Subject to the BVI Act and our Amended and Restated Memorandum and Articles of Association, our board of directors may, by resolution of directors, authorize and declare a dividend to Grande’s shareholders at such time and of such an amount as they think fit if they are satisfied, on reasonable grounds, that immediately after the distribution (a) we will be able to pay our debts as they fall due; and (b) the value of our assets exceeds our liabilities.
As we are a holding company, we rely on dividends paid to us by our subsidiaries for our cash requirements, including funds to pay any dividends and other cash distributions to our shareholders, service any debt we may incur and pay our operating expenses. Grande’s ability to pay dividends to the shareholders will depend on, among other things, the availability of dividends from our Operating Subsidiaries. According to the BVI Act, a BVI company may make dividends distribution to the extent that immediately after the distribution, the value of the company’s assets exceeds its liabilities and that such company is able to pay its debts as they fall due. There is no further British Virgin Islands statutory restriction on the amount of funds which may be distributed by us by dividend. Even if we decide to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.
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8.B. Significant Changes
Except as otherwise disclosed in this report, we have not experienced any significant changes since the date of our audited consolidated financial statements included herein.
Item 9. The Offer and Listing
9.A. Offer and listing details
Our Class A Ordinary Shares are listed on the Nasdaq Capital Market under the symbol “GRAN.”
9.B. Plan of distribution
Not applicable for annual reports on Form 20-F.
9.C. Markets
Our Class A Ordinary Shares are listed on the Nasdaq Capital Market under the symbol “GRAN.”
9.D. Selling shareholders
Not applicable for annual reports on Form 20-F.
9.E. Dilution
Not applicable for annual reports on Form 20-F.
9.F. Expenses of the issue
Not applicable for annual reports on Form 20-F.
Item 10. Additional Information
10.A. Share capital
Not applicable for annual reports on Form 20-F.
10.B. Memorandum and articles of association
We incorporate by reference into this annual report the description of our third Amended And Restated Memorandum and Articles Of Association, as currently in effect and filed as Exhibit 1.1 to this annual report, and the description of our securities filed as Exhibit 2.1 to this annual report.
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10.C. Material contracts
Other than those described in this annual report, we have not entered into any material agreements other than in the ordinary course of business.
10.D. Exchange controls
Hong Kong Exchange Controls
There is currently no restriction or limitation under the laws of Hong Kong on the conversion of Hong Kong dollars into foreign currencies and the transfer of currencies out of Hong Kong. The foreign currency regulations of Mainland China do not currently have any material impact on the transfer of cash between our Company and our Hong Kong subsidiaries. However, the PRC government may impose controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, there is a possibility that certain PRC laws and regulations, including existing laws and regulations and those enacted or promulgated in the future were to become applicable to our Hong Kong subsidiaries in the future, and the PRC government may prevent our cash maintained in Hong Kong from leaving or restrict the deployment of the cash into our business or for the payment of dividends in the future.
See “Item 3.D. Risk Factors- Risks relating to our Corporate Structure-We rely on dividends and other distributions of equity paid by our subsidiaries to fund any cash and financing requirements we may have. In the future, funds may not be available to fund operations or for other uses outside of Hong Kong, due to interventions in, or the imposition of restrictions and limitations on, our ability or our subsidiary by the PRC government to transfer cash. Any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business and might materially decrease the value of our Class A Ordinary Shares or cause them to be worthless.” for more information. Although the exchange rate between the Hong Kong dollar to the U.S. dollar has been pegged since 1983, we cannot assure you that this policy will not be changed in the future. See “Item 3.D. Risk Factors - Risks Relating to Doing Business in the Jurisdictions in which we Operate – Because our business is conducted in Hong Kong dollars and the price of our Class A Ordinary Shares is quoted in United States dollars, changes in currency conversion rates may affect the value of your investments.”
British Virgin Islands Exchange Controls
There are no exchange controls restrictions on payment of dividends, interest or other payments to the holders of our Ordinary Shares or on the conduct of our operations in the BVI, where we were incorporated. There are no BVI laws that impose any exchange controls on us or that affect the payment of dividends, interest or other payments to nonresident holders of our ordinary shares. BVI law and our articles of association do not impose any material limitations on the right of non-residents or foreign owners to hold or vote our Ordinary Shares.
The PRC (Mainland China) Exchange Controls
The principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, most recently amended in August 2008. Under the PRC foreign exchange regulations, payments of current account items, such as profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. By contrast, approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital account items, such as direct investments, repayment of foreign currency-denominated loans, repatriation of investments and investments in securities outside of China.
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In November 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, which substantially amends and simplifies the current foreign exchange procedure. Pursuant to this circular, the opening of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of RMB proceeds derived by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously. In addition, SAFE promulgated another circular in May 2013, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC must be conducted by way of registration and banks must process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches. On February 28, 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Notice 13. After SAFE Notice 13 became effective on June 1, 2015, instead of applying for approvals regarding foreign exchange registrations of foreign direct investment and overseas direct investment from SAFE, entities and individuals may apply for such foreign exchange registrations from qualified banks. The qualified banks, under the supervision of SAFE, may directly review the applications and conduct the registration.
On March 30, 2015, SAFE promulgated Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises nationwide. Circular 19 came into force and replaced both previous Circular 142 and Circular 36 on June 1, 2015. On June 9, 2016, SAFE promulgated Circular 16 to further expand and strengthen such reform. Under Circular 19 and Circular 16, foreign-invested enterprises in the PRC are allowed to use their foreign exchange funds under capital accounts and RMB funds from exchange settlement for expenditure under current accounts within its business scope or expenditure under capital accounts permitted by laws and regulations, except that such funds shall not be used for (i) expenditure beyond the enterprise’s business scope or expenditure prohibited by laws and regulations; (ii) investments in securities or other investments than banks’ principal-secured products; (iii) granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) construction or purchase of real estate for purposes other than self-use (except for real estate enterprises).
In January 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or SAFE Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before remitting the profits. Further, according to SAFE Circular 3, domestic entities shall make detailed explanations of the sources of capital and utilization arrangements, and provide board resolutions, contracts and other proof when completing the registration procedures in connection with an outbound investment.
SAFE issued SAFE Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, that became effective in July 2014, replacing the previous SAFE Circular 75. SAFE Circular 37 regulates foreign exchange matters in relation to the use of special purpose vehicles, or SPVs, by PRC residents or entities to seek offshore investment and financing or conduct round trip investment in China. Under SAFE Circular 37, a SPV refers to an offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the purpose of seeking offshore financing or making offshore investment, using legitimate onshore or offshore assets or interests, while “round trip investment” refers to direct investment in China by PRC residents or entities through SPVs, namely, establishing foreign-invested enterprises to obtain the ownership, control rights and management rights. SAFE Circular 37 provides that, before making contribution into an SPV, PRC residents or entities are required to complete foreign exchange registration with SAFE or its local branch. SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment in February 2015, which took effect on June 1, 2015. This notice has amended SAFE Circular 37 requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.
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PRC residents or entities who had contributed legitimate onshore or offshore interests or assets to SPVs but had not obtained registration as required before the implementation of the SAFE Circular 37 must register their ownership interests or control in the SPVs with qualified banks. An amendment to the registration is required if there is a material change with respect to the SPV registered, such as any change of basic information (including change of the PRC residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, and mergers or divisions. Failure to comply with the registration procedures set forth in SAFE Circular 37 and the subsequent notice, or making misrepresentation on or failure to disclose controllers of the foreign-invested enterprise that is established through round-trip investment, may result in restrictions being imposed on the foreign exchange activities of the relevant foreign-invested enterprise, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant PRC residents or entities to penalties under PRC foreign exchange administration regulations.
10.E. Taxation
United States Federal Income Tax Considerations
The following discussion is a summary of United States federal income tax considerations relating to the ownership and disposition of our Class A Ordinary Shares by a U.S. holder (as defined below) that holds our Class A Ordinary Shares as “capital assets” (generally, property held for investment) under the United States Internal Revenue Code of 1986, as amended (the “Code”). This discussion is based upon existing United States federal income tax law, which is subject to differing interpretations and may be changed, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service (the “IRS”) with respect to any United States federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary position. This discussion does not address all aspects of United States federal income taxation that may be important to particular investors in light of their individual circumstances, including investors subject to special tax rules (for example, banks or other financial institutions, insurance companies, broker-dealers, pension plans, cooperatives, traders in securities that have elected the mark-to-market method of accounting for their securities, partnerships and their partners, regulated investment companies, real estate investment trusts, and tax-exempt organizations (including private foundations)), holders who are not U.S. holders, holders who own (directly, indirectly, or constructively) 10% or more of our voting shares, holders who will hold their Ordinary Shares as part of a straddle, hedge, conversion, constructive sale, or other integrated transaction for United States federal income tax purposes, or investors that have a functional currency other than the United States dollar, all of whom may be subject to tax rules that differ significantly from those summarized below. In addition, this discussion does not discuss any non-United States, alternative minimum tax, state, or local tax considerations, or the Medicare tax on net investment income. Each U.S. holder is urged to consult its tax advisors regarding the United States federal, state, local, and non-United States income and other tax considerations with respect to the ownership and disposition of our Class A Ordinary Shares.
General
For purposes of this discussion, a “U.S. holder” is a beneficial owner of our Class A Ordinary Shares that is, for United States federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for United States federal income tax purposes) created in, or organized under the laws of, the United States or any state thereof or the District of Columbia, (iii) an estate the income of which is subject to United States federal income taxation regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise elected to be treated as a United States person under applicable United States Treasury regulations.
If a partnership (or other entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of our Class A Ordinary Shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding our Class A Ordinary Shares and partners in such partnerships are urged to consult their tax advisors as to the particular United States federal income tax consequences of an investment in our Class A Ordinary Shares.
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Passive Foreign Investment Company Considerations
A non-United States corporation, such as our company, will be a “passive foreign investment company,” or “PFIC,” for United States federal income tax purposes, if, in any particular taxable year, either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the average quarterly value of its assets (as determined on the basis of fair market value) during such year produce or are held for the production of passive income. For this purpose, cash is categorized as a passive asset and the company’s unbooked intangibles associated with active business activities may generally be classified as active assets. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock.
The discussion below under “Dividends” and “Sale or Other Disposition of Ordinary Shares” is written on the basis that we will not be or become a PFIC for United States federal income tax purposes. The United States federal income tax rules that apply if we are a PFIC for the current taxable year or any subsequent taxable year are generally discussed below under “Passive Foreign Investment Company Rules.”
Dividends
Subject to the PFIC rules discussed below, any cash distributions (including the amount of any tax withheld) paid on our Class A Ordinary Shares out of our current or accumulated earnings and profits, as determined under United States federal income tax principles, will generally be includible in the gross income of a U.S. holder as dividend income on the day actually or constructively received by the U.S. holder. Because we do not intend to determine our earnings and profits on the basis of United States federal income tax principles, any distribution paid will generally be reported as a “dividend” for United States federal income tax purposes. A non-corporate recipient of dividend income will generally be subject to tax on dividend income from a “qualified foreign corporation” at a reduced United States federal tax rate rather than the marginal tax rates generally applicable to ordinary income provided that certain holding period requirements are met.
A non-United States corporation (other than a corporation that is a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) will generally be considered to be a qualified foreign corporation (a) if it is eligible for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange of information program, or (b) with respect to any dividend it pays on stock which is readily tradable on an established securities market in the United States. In the event we are deemed to be a resident enterprise under the PRC Enterprise Income Tax Law, we may be eligible for the benefits of the United States-PRC income tax treaty (which the U.S. Treasury Department has determined is satisfactory for this purpose) and in that case we would be treated as a qualified foreign corporation with respect to dividends paid on our Class A Ordinary Shares. Each non-corporate U.S. holder is advised to consult its tax advisors regarding the availability of the reduced tax rate applicable to qualified dividend income for any dividends we pay with respect to our Class A Ordinary Shares. Dividends received on the Ordinary Shares will not be eligible for the dividends received deduction allowed to corporations.
Dividends will generally be treated as income from foreign sources for United States foreign tax credit purposes and will generally constitute passive category income. In the event that we are deemed to be a PRC “resident enterprise” under the Enterprise Income Tax Law, a U.S. holder may be subject to PRC withholding taxes on dividends paid on our Class A Ordinary Shares. In that case, a U.S. holder may be eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any foreign withholding taxes imposed on dividends received on Class A Ordinary Shares. A U.S. holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction, for United States federal income tax purposes, in respect of such withholdings, but only for a year in which such U.S. holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex. U.S. holders are advised to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.
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Sale or Other Disposition of Ordinary Shares
Subject to the Passive Foreign Investment Company (PFIC) rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and your tax basis (in U.S. dollars) in the Ordinary Shares. The gain or loss will be treated as a capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the Ordinary Shares for more than one year, you will be eligible for reduced tax rates. The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize will generally be treated as United States source income or loss for foreign tax credit limitation purposes.
Passive Foreign Investment Company Rules
A non-U.S. corporation is considered a PFIC, as defined in Section 1297(a) of the US Internal Revenue Code (“IRC”), for any taxable year if either:
| ● | at least 75% of its gross income is passive income; or |
| ● | at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the “asset test”). |
Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock. In determining the value and composition of our assets for purposes of the PFIC asset test, (1) the cash we raised in the IPO will generally be considered to be held for the production of passive income and (2) the value of our assets must be determined based on the market value of our securities from time to time, which could cause the value of our non-passive assets to be less than 50% of the value of all of our assets (including the cash raised in the IPO) on any particular quarterly testing date for purposes of the asset test.
Based on our operations and the composition of our assets we do not expect to be treated as a PFIC under the current PFIC rules. We must make a separate determination each year as to whether we are a PFIC, and there can be no assurance with respect to our status as a PFIC for any future taxable years. Notwithstanding the cash we raised in the IPO, together with other assets held for the production of passive income, it is believed, for our current taxable year, we are not a PFIC. We will continue to make this determination following each tax year. However, because the value of our assets for purposes of the asset test will generally be determined based on the market price of our securities and because cash is generally considered to be an asset held for the production of passive income, our PFIC status will depend in large part on the market price of our securities and the amount of cash we have utilized from the past IPO. Accordingly, fluctuations in the market price of our securities may cause us to become a PFIC. In addition, the application of the PFIC rules is subject to uncertainty in several respects and the composition of our income and assets will be affected by how, and how quickly, we spent the cash we raised in the IPO. We are under no obligation to take steps to reduce the risk of our being classified as a PFIC, and as stated above, the determination of the value of our assets will depend upon material facts (including the market price of our Ordinary Shares from time to time and the amount of cash we raised in the IPO) that may not have been within our control. If we are a PFIC for any year during which you hold our securities, we will continue to be treated as a PFIC for all succeeding years during which you hold our securities. If we cease to be a PFIC and you did not previously make a timely “mark-to-market” election as described below, you will continue to be treated as a PFIC, however, you may avoid some of the adverse effects of the PFIC regime by making a “purging election” (as described below) with respect to our securities.
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If we are a PFIC for any taxable year during which you hold Ordinary Shares, you will be subject to special tax rules with respect to any “excess distribution” that you receive and any gain you realize from a sale or other disposition (including a pledge) of the Ordinary Shares, unless you make a “mark-to-market” election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the Ordinary Shares will be treated as an excess distribution. Under these special tax rules:
| ● | the excess distribution or gain will be allocated ratably over your holding period for the Ordinary Shares; |
| ● | the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, |
| ● | the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year, and |
| ● | An additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year. |
The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the Class A Ordinary Shares cannot be treated as capital, even if you hold the Class A Ordinary Shares as capital assets.
A U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for such stock to elect out of the tax treatment discussed above. If you make a mark-to-market election for the Class A Ordinary Shares, you will include in income each year an amount equal to the excess, if any, of the fair market value of the Class A Ordinary Shares as of the close of your taxable year over your adjusted basis in such Class A Ordinary Shares. You are allowed a deduction for the excess, if any, of the adjusted basis of the Class A Ordinary Shares over their fair market value as of the close of the taxable year. However, deductions are allowable only to the extent of any net mark-to-market gains on the Class A Ordinary Shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the Class A Ordinary Shares, are treated as ordinary income. Ordinary loss treatment also applies to the deductible portion of any mark-to-market loss on the Class A Ordinary Shares, as well as to any loss realized on the actual sale or disposition of the Class A Ordinary Shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such Class A Ordinary Shares. Your basis in the Class A Ordinary Shares will be adjusted to reflect any such income or loss amounts.
The mark-to-market election is available only for “marketable stock”, which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter (“regularly traded”) on a qualified exchange or other market (as defined in applicable U.S. Treasury regulations), including the Nasdaq Capital Market. If the Class A Ordinary Shares are regularly traded on the Nasdaq Capital Market and if you are a holder of Class A Ordinary Shares, the mark-to-market election would be available to you were we to be or become a PFIC.
Alternatively, a U.S. Holder of stock in a PFIC may make a “qualified electing fund” election with respect to such PFIC to elect out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally include in gross income for a taxable year such holder’s pro rata share of the corporation’s earnings and profits for the taxable year. However, the qualified electing fund election is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election. If you hold Class A Ordinary Shares in any year in which we are a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 regarding distributions received on the Class A Ordinary Shares and any gain realized on the disposition of the Class A Ordinary Shares.
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If you do not make a timely “mark-to-market” election (as described above), and if we were a PFIC at any time during the period you hold our Ordinary Shares, then such Ordinary Shares will continue to be treated as stock of a PFIC with respect to you even if we cease to be a PFIC in a future year, unless you make a “purging election” for the year we cease to be a PFIC. A “purging election” creates a deemed sale of such Ordinary Shares at their fair market value on the last day of the last year in which we are treated as a PFIC. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, you will have a new basis (equal to the fair market value of the Class A Ordinary Shares on the last day of the last year in which we are treated as a PFIC) and holding period (which new holding period will begin the day after such last day) in your Class A Ordinary Shares for tax purposes.
IRC Section 1014(a) provides for a step-up in basis to the fair market value for our Class A Ordinary Shares when inherited from a decedent that was previously a holder of our Class A Ordinary Shares. However, if we are determined to be a PFIC and a decedent that was a U.S. Holder did not make either a timely qualified electing fund election for our first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) our Class A Ordinary Shares, or a mark-to-market election and ownership of those Class A Ordinary Shares are inherited, a special provision in IRC Section 1291(e) provides that the new U.S. Holder’s basis should be reduced by an amount equal to the IRC Section 1014 basis minus the decedent’s adjusted basis just before death. As such if we are determined to be a PFIC at any time prior to a decedent’s passing, the PFIC rules will cause any new U.S. Holder that inherits our Class A Ordinary Shares from a U.S. Holder to not get a step-up in basis under IRC Section 1014 and instead will receive a carryover basis in those Class A Ordinary Shares.
You are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our Ordinary Shares and the elections discussed above.
Information Reporting
Dividend payments with respect to our Class A Ordinary Shares and proceeds from the sale, exchange or redemption of our Class A Ordinary Shares may be subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding at a current rate of 24%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on U.S. Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the U.S. Internal Revenue Service and furnishing any required information. We do not intend to withhold taxes for individual shareholders. However, transactions effected through certain brokers or other intermediaries may be subject to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such taxes.
Under the Hiring Incentives to Restore Employment Act of 2010, certain U.S. Holders are required to report information relating to our Ordinary Shares, subject to certain exceptions (including an exception for Ordinary Shares held in accounts maintained by certain financial institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold Ordinary Shares. Failure to report the information could result in substantial penalties. You should consult your own tax advisor regarding your obligation to file Form 8938.
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Hong Kong Taxation
Profits Tax
No tax is imposed in Hong Kong in respect of capital gains from the sale of property, such as our Ordinary Shares. Generally, gains arising from disposal of the Ordinary Shares which are held more than two years are considered capital in nature. However, trading gains from the sale of property by persons carrying on a trade, profession or business in Hong Kong where such gains are derived from or arise in Hong Kong from such trade, profession or business will be chargeable to Hong Kong profit tax. Liability for Hong Kong profits tax would therefore arise in respect of trading gains from the sale of Ordinary Shares realized by persons in the course of carrying on a business of trading or dealing in securities in Hong Kong where the purchase or sale contracts are effected (being negotiated, concluded and/or executed) in Hong Kong. Effective from April 1, 2018, profits tax is levied on a two-tiered profits tax rate basis, with the first HK$2 million of profits being taxed at 8.25% for corporations and 7.5% for unincorporated businesses, and profits exceeding the first HK$2 million being taxed at 16.5% for corporations and 15% for unincorporated businesses. In addition, Hong Kong does not impose withholding tax on gains derived from the sale of stock in Hong Kong companies and does not impose withholding tax on dividends paid outside of Hong Kong by Hong Kong companies. Accordingly, investors will not be subject to Hong Kong withholding tax with respect to a disposition of their Ordinary Shares or with respect to the receipt of dividends on their Ordinary Shares, if any. No income tax treaty relevant to the acquiring, withholding or dealing in the Class A Ordinary Shares exists between Hong Kong and the United States.
Stamp duty
Hong Kong stamp duty is generally payable on the transfer of “Hong Kong stocks”. The term “stocks” refers to shares in companies incorporated in Hong Kong, as widely defined under the Stamp Duty Ordinance (Cap. 117 of the laws of Hong Kong), or SDO, and includes shares. However, our Ordinary Shares are not considered “Hong Kong stocks” under the SDO since the transfer of the Ordinary Shares are not required to be registered in Hong Kong given that the books for the transfer of Ordinary Shares are located in the United States. The transfer of Ordinary Shares is therefore not subject to stamp duty in Hong Kong. If Hong Kong stamp duty applies, both the purchaser and the seller are liable for the stamp duty charged on each of the sold note and bought note at the ad valorem rate of 0.1% on the higher of the consideration stated on the contract notes or the fair market value of the shares transferred. In addition, a fixed duty, currently of HK$5.00, is payable on an instrument of transfer.
Estate Duty
The Revenue (Abolition of Estate Duty) Ordinance 2005 came into effect on February 11, 2006 in Hong Kong. No Hong Kong estate duty is payable and no estate duty clearance papers are needed for an application for a grant of representation in respect of holders of Class A Ordinary Shares whose death occurs on or after February 11, 2006.
BVI Taxation
The following is a discussion on certain British Virgin Islands income tax consequences of an investment in our securities. The discussion is a general summary of present law, which is subject to prospective and retroactive change. It is not intended as tax advice, does not consider any investor’s particular circumstances, and does not consider tax consequences other than those arising under British Virgin Islands law.
Payments of dividends and capital in respect of our securities will not be subject to taxation in the British Virgin Islands and no withholding will be required on the payment of a dividend or capital to any holder of the securities nor will gains derived from the disposal of the securities be subject to British Virgin Islands income or corporation tax.
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The British Virgin Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the Government of the British Virgin Islands except to the extent that we have any interest in real property in the BVI, all instruments relating to transactions in respect of the shares, debt obligations or other securities of the Company and all instruments relating to other transactions relating to the business of the Company are exempt from the payment of stamp duty in the BVI. There are no exchange control regulations or currency restrictions in the British Virgin Islands. Under the laws of the British Virgin Islands, no stamp duty is payable in the British Virgin Islands on the issue of shares by, or any transfers of shares of, British Virgin Islands companies (except those which hold interests in land in the British Virgin Islands).
There are currently no withholding taxes or exchange control regulations in the BVI applicable to our Company.
People’s Republic of China Taxation
According to the Enterprise Income Tax Law of the PRC (the “Income Tax Law”) and the Implementation Regulations of Enterprise Income Tax Law of the PRC, the enterprise income tax for both domestic and foreign-invested enterprises are unified at 25%.
According to the Income Tax Law, income such as dividends, rental, interest and royalty from the PRC derived by a non-resident enterprise which has no establishment in the PRC or has establishment but the income has no relationship with such establishment is subject to a 10% withholding tax, which may be reduced if the foreign jurisdiction of incorporation has a tax treaty with the PRC that provides for a different withholding arrangement, unless the relevant income is specifically exempted from tax under the applicable income tax laws, regulations, notices and decisions which relate to foreign invested enterprises and their investors.
According to the arrangement between mainland China and Hong Kong, the withholding tax rate for dividends paid by a PRC resident enterprise to a Hong Kong resident enterprise is 5%, if the Hong Kong enterprise owns at least 25% of the PRC enterprise. According to the Notice of the State Administration of Taxation on Issues Relating to the Administration of the Dividend Provision in Tax Treaties, the corporate recipients of dividends distributed by PRC enterprises must satisfy the direct ownership thresholds at all times during the twelve (12) consecutive months preceding the receipt of the dividends.
Our PRC subsidiary is primarily engaged in the provision of executive training and educational content. In the ordinary course of business, it supplies proprietary course materials and related training services (the “Educational Services”) to downstream course providers. Pursuant to the Value-Added Tax Law(“VAT”)of the People’s Republic of China(effective January 1, 2026) and relevant implementing regulations, the supply of Educational Services is subject to VAT. Our subsidiary was classified as a Small-Scale Taxpayer before September 2025. As such, it was subject to a special simplified VAT collection rate of 3%. Starting from October 2025, our subsidiary is required to register as a General Taxpayer due to the scale of its operations. Upon the successful registration as a General Taxpayer, the applicable VAT treatment for our Educational Services will change significantly. Instead of the simplified 3% collection rate, our subsidiary will be required to adopt the general VAT calculation method, applying a standard 6% VAT rate on the sales of such services.
10.F. Dividends and paying agents
Not applicable for annual reports on Form 20-F.
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10.G. Statement by experts
Not applicable for annual reports on Form 20-F.
10.H. Documents on display
We have previously filed with the SEC our registration statements on Form F-1 (File No. 333-283705), as amended.
We are subject to the information requirements of the Exchange Act. In accordance with these requirements, the Company files reports and other information with the SEC. You may read and copy any materials filed with the SEC at the Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site at http://www.sec.gov that contains reports and other information regarding registrants that file electronically with the SEC.
10.I. Subsidiary Information
Not applicable.
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Credit risk
Accounts receivable
In order to minimize the credit risk, the management of the Company has delegated a team responsible for determination of credit limits and credit approvals. Other monitoring procedures are in place to ensure that follow-up action is taken to recover overdue debts. Internal credit rating has been given to each category of debtors after considering aging, historical observed default rates, repayment history and past due status of respective accounts receivable. Estimated loss rates are based on probability of default and loss given default with reference to an external credit report and are adjusted for reasonable and supportable forward-looking information that is available without undue costs or effort while credit-impaired trade balances were assessed individually. In this regard, the directors consider that the Company’s credit risk is significantly reduced. The maximum potential loss of accounts receivable for the year ended March 31, 2026 is $834,828.
Bank balances
The Company is exposed to concentration of credit risk on liquid funds. The Company maintains the bank accounts in Hong Kong. Cash balances in bank accounts in Hong Kong are insured under the Deposit Protection Scheme introduced by the Government of Hong Kong for a maximum amount of $102,564 (HK$800,000). Cash balances in bank accounts in Hong Kong are not otherwise insured by the Federal Deposit Insurance Corporation or other programs.
Other current assets
The Company assessed the impairment for other current assets individually based on internal credit rating and ageing of these debtors which, in the opinion of the directors, have had no significant increase in credit risk since initial recognition. Based on the impairment assessment performed by the Company, the directors consider the loss allowance for other current assets as of March 31, 2026 and 2025 is $668 and $166, respectively.
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Interest rate risk
Cash flow interest rate risk
The Company is exposed to cash flow interest rate risk through the changes in interest rates related mainly to the Company’s variable-rates bank balances.
The Company currently does not have any interest rate hedging policy in relation to fair value interest rate risk and cash flow interest rate risk. The directors monitor the Company’s exposures on an ongoing basis and will consider hedging the interest rate should the need arises.
Sensitivity analysis
The Company’s exposure to the risk of changes in cash flow interest rate relates primarily to the Company’s bank balances with floating interest rates.
The sensitivity analysis below has been determined assuming that a change in interest rates had occurred at the end of the reporting period and had been applied to the exposure to interest rates for financial instruments in existence at that date. 1% increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.
If interest rate on bank balances had been 1% higher or lower with all other variables held constant, the Company’s post tax profit for the years ended March 31, 2026, 2025 and 2024 would have increased or decreased by approximately $14,515, $20,661 and $27,687, respectively.
Foreign currency risk
Foreign currency risk is the risk that the holding of foreign currency assets will affect the Company’s financial position as a result of changes in foreign currency exchange rates.
The Company’s monetary assets and liabilities are primarily denominated in HK$ and RMB, which are the functional currencies of its Hong Kong and Chinese Mainland operating subsidiaries, respectively. Under the Linked Exchange Rate System in Hong Kong, HK$ is pegged to US$; accordingly, in the opinion of management of the Company, the foreign currency risk associated with US$ is considered insignificant.
The RMB is not freely convertible into foreign currencies. Remittances of foreign currencies into the Chinese Mainland or remittances of RMB out of the Chinese Mainland, as well as exchanges between RMB and foreign currencies, are subject to the rules and regulations of foreign exchange control promulgated by the PRC government. The State Administration of Foreign Exchange, under the authority of the People’s Bank of China, regulates the conversion of RMB into other currencies.
The Company currently does not use foreign currency hedging instruments to manage its foreign currency exposures. However, the directors closely monitor the related foreign currency exposure and will consider entering into foreign currency hedging arrangements should the need arise.
101
Economic and political risks
The Company’s operations are mainly conducted in Hong Kong and the Chinese Mainland. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by changes in the political, economic, and legal environments in Hong Kong.
The Company’s operations in Hong Kong and the Chinese Mainland are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in Hong Kong and the Chinese Mainland, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.
Inflation risk
Management monitors changes in prices levels. Historically inflation has not materially impacted the Company’s consolidated financial statements; however, significant increases in the price of labor that cannot be passed to the Company’s customers could adversely impact the Company’s results of operations.
Item 12. Description of Securities Other than Equity Securities
12.A. Debt Securities
Not applicable.
12.B. Warrants and Rights
Not applicable.
12.C. Other Securities
Not applicable.
12.D. American Depositary Shares
Not applicable.
102
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
We do not have any material defaults in the payment of principal, interest, or any installments under a sinking or purchase fund.
Item 14. Material Modifications to the Rights of Securities Holders and Use of Proceeds
14.A. – 14.D. Material Modifications to the Rights of Security Holders
See “Item 10. Additional Information” for a description of the rights of shareholders, which remain unchanged.
14.E. Use of Proceeds
The following “Use of Proceeds” information relates to the registration statement on Form F-1, as amended (File Number: 333- 283705) (the “F-1 Registration Statement”), in relation to our initial public offering of 2,156,250 Class A Ordinary Shares at an offering price of US$5.00 per share, including the full exercise of the underwriters’ over-allotment option. Our initial public offering closed on July 2, 2025. Cathay Securities, Inc. acted as the representatives of the underwriters (the “Representative”) for our initial public offering. On July 10, 2025, the Representative exercised the Over-Allotment Option in full to purchase an additional 281,250 Class A Ordinary Shares, at a price of US$5.00 per share.
The total expenses incurred for our company’s account in connection with our initial public offering were approximately $1.92 million, including underwriting discounts of $754,688, underwriters’ non-accountable expense of $107,813, and other expenses of $1,056,559. None of the fees and expenses were directly or indirectly paid to the directors, officers of our company or their associates, persons owning 10% or more of our equity securities or our affiliates or others.
After deducting the total expenses, we received net proceeds of approximately $8.86 million from our initial public offering.
As of the date of this annual report, we have utilized the net proceeds for the acquisition of Shenzhen Zhenjing and general working capital and corporate purpose.
None of the net proceeds from our initial public offering were directly or indirectly paid to the directors, officers of our company or their associates, persons owning 10% or more of our equity securities or our affiliates or others.
Item 15. Controls and Procedures
(a) Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, we carried out an evaluation of the effectiveness of our disclosure controls and procedures, which is defined in Rules 13a-15(e) of the Exchange Act. Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of March 31, 2026, our disclosure controls and procedures were ineffective. In connection with the audits of our consolidated financial statements for the years ended March 31, 2026, 2025 and 2024, we identified material weaknesses in our internal control over financial reporting as well as other disclosure control deficiencies for the above-mentioned periods. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. As defined in the standards established by the PCAOB, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
103
The material weaknesses identified related to: (1) our lack of sufficient in-house financial reporting and accounting personnel with understanding of U.S. GAAP to address complex U.S. GAAP technical issues, related disclosures in accordance with U.S. GAAP; (2) there was a lack of policies and procedures to ensure timely account reconciliation and analysis, review and detection of errors or inaccuracies in the consolidated financial statements; and (3) IT deficiencies, including lack of formal IT policies and procedures, risk and vulnerability assessments, recovery management, change management and system security.
To remediate our identified material weaknesses, we have implemented several measures to improve our internal control over financial reporting, including (i) engaging qualified financial and accounting advisory team, external consultants, and additional staff with working experience in U.S. GAAP and SEC reporting requirements to strengthen our financial reporting function, to further improve the efficiency and quality of our financial reporting, and to establish a comprehensive policy and procedure manual; (ii) implementing and refining the formal IT policies and procedures and enhancing our IT systems that support the Company’s revenue and related financial reporting processes; and (iii) developing an ongoing staff training plan on US GAAP and SEC reporting requirements and engage external subject matter experts to conduct practical training on all relevant accounting and reporting areas.
The process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligations. See “Item 3. KEY INFORMATION — 3.D. Risk Factors — Risks Relating to our Business and Operation — Any lack of effective internal controls over financial reporting may affect our ability to accurately report our financial results which may affect the market for and price of the Class A Ordinary Shares.”
As a company with less than $1.235 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards.
(b) Management’s Annual Report on Internal Control over Financial Reporting Attestation Report of the Registered Public Accounting Firm
This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting due to a transition period established by rules of the SEC for newly public companies.
(c) Attestation report of the registered public accounting firm
Since we are an “emerging growth company” as defined under the JOBS Act, we are exempt from the requirement to comply with the auditor attestation requirements that our independent registered public accounting firm attest to and report on the effectiveness of our internal control structure and procedures for financial reporting.
(d) Changes in Internal Control over Financial Reporting
Other than those disclosed above, there were no changes in our internal controls over financial reporting that occurred during the period covered by this Annual Report on Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 16. [Reserved]
104
Item 16A. Audit Committee Financial Expert
Our audit committee consists of Mr. Henry Cheuk Sang, Wong, Prof. Jin, Li and Prof. Sing Kwong Simon, Lam. Mr. Henry Cheuk Sang, Wong is the chair of our audit committee.
Mr. Henry Cheuk Sang, Wong, Prof. Jin, Li and Prof. Sing Kwong Simon, Lam, each satisfies the “independence” requirements of Rule 5605 of the Corporate Governance Rules of Nasdaq Stock Market and meets the independence standards under Rule 10A-3 under the Exchange Act. We have determined that Mr. Henry Cheuk Sang, Wong qualifies as an “audit committee financial expert.”
Item 16B. Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics that applies to the Company’s directors, officers, employees and advisors.
Item 16C. Principal Accountant Fees and Services
The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by WWC, P.C., our independent registered public accounting firm, for the periods indicated.
| Year Ended March 31, | ||||||||||||
| Services | 2026 | 2025 | 2024 | |||||||||
| US$ | US$ | US$ | ||||||||||
| Audit Fees - WWC, P.C (1) | 260,000 | 180,000 | 395,000 | |||||||||
| Audit-related fees(2) | 50,000 | 88,000 | - | |||||||||
| All other fees(3) | 43 | 325 | - | |||||||||
| Total | 310,043 | 268,325 | 395,000 | |||||||||
Note
| (1) | Audit fees include the aggregate fees billed in each of the fiscal years for professional services rendered by our independent registered public accounting firm for the audit of our annual financial statements, review of the interim financial statements and for the audits of our financial statements in connection with our initial public offering, and comfort letter in connection with the underwritten public offering. |
| (2) | Audit-related fees include the aggregate fees billed for assurance and related services by our principal auditors that are reasonably related to the performance of the audit or review of our financial statements and are not reported as audit fees. |
| (3) | All other fees refer to the fees not covered in (1) and (2) above. |
The policy of our audit committee is to pre-approve all audit and non-audit services provided by our independent registered public accounting firm, including audit services and audit-related services as described above, other than those for the minimum services which are approved by the audit committee prior to the completion of the audit.
Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not applicable.
Item 16F. Change in Registrant’s Certifying Accountant
Not applicable.
105
Item 16G. Corporate Governance
As a company listed on the Nasdaq Capital Market, we are subject to the Nasdaq corporate governance listing standards. Grande is considered a “foreign private issuer” under U.S. securities laws and Nasdaq listing rules. Nasdaq listing rules include certain accommodations in the corporate governance requirements that allow foreign private issuers, such as our Company, to follow “home country” corporate governance practices in lieu of the otherwise applicable corporate governance standards of Nasdaq. Certain corporate governance practices in the British Virgin Islands, which is our home country, may differ significantly from the Nasdaq corporate governance listing standards.
We are required to disclose each Nasdaq Stock Market Rule that we do not follow and describe the home country practice we do follow in lieu thereof. We currently follow BVI corporate governance practices in lieu of the following Nasdaq corporate governance standards:
| ● | Nasdaq Marketplace Rule 5635(a), which requires that shareholder approval is required prior to the issuance of securities in connection with the acquisition of the stock or assets of another company if: (1) where, due to the present or potential issuance of ordinary shares, including shares issued pursuant to an earn-out provision or similar type of provision, or securities convertible into or exercisable for ordinary shares, other than a public offering for cash: (A) the ordinary shares has or will have upon issuance voting power equal to or in excess of 20% of the voting power outstanding before the issuance of stock or securities convertible into or exercisable for ordinary shares; or (B) the number of shares of ordinary shares to be issued is or will be equal to or in excess of 20% of the number of shares of ordinary shares outstanding before the issuance of the stock or securities; or (2) any director, officer or substantial shareholder (as defined by Rule 5635(e)(3)) of the company has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the company or assets to be acquired or in the consideration to be paid in the transaction or series of related transactions and the present or potential issuance of ordinary shares, or securities convertible into or exercisable for ordinary shares, could result in an increase in outstanding common shares or voting power of 5% or more. | |
| ● | Nasdaq Marketplace Rule 5635(b), which requires that shareholder approval is required prior to the issuance of securities when the issuance or potential issuance will result in a change of control of the company. |
| ● | Nasdaq Marketplace Rule 5635(c), which requires that shareholder approval is required prior to the issuance of securities when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees, or consultants, except for: (1) warrants or rights issued generally to all security holders of the company or stock purchase plans available on equal terms to all security holders of the company (such as a typical dividend reinvestment plan); (2) tax qualified, non-discriminatory employee benefit plans (e.g., plans that meet the requirements of Section 401(a) or 423 of the Internal Revenue Code) or parallel nonqualified plans, provided such plans are approved by the company’s independent compensation committee or a majority of the company’s independent directors; or plans that merely provide a convenient way to purchase shares on the open market or from the company at Market Value; (3) plans or arrangements relating to an acquisition or merger as permitted under IM-5635-1; or (4) issuances to a person not previously an employee or director of the company, or following a bona fide period of non-employment, as an inducement material to the individual’s entering into employment with the company, provided such issuances are approved by either the company’s independent compensation committee or a majority of the company’s independent directors. Promptly following an issuance of any employment inducement grant in reliance on this exception, a company must disclose in a press release the material terms of the grant, including the recipient(s) of the grant and the number of shares involved. |
| ● | Nasdaq Marketplace Rule 5635(d), which requires that shareholder approval is required prior to a 20% Issuance at a price that is less than the Minimum Price. (A) “Minimum Price” means a price that is the lower of: (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq Official Closing Price of the ordinary shares (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement. (B) “20% Issuance” means a transaction, other than a public offering as defined in IM-5635-3, involving the sale, issuance or potential issuance by the Company of common stock (or securities convertible into or exercisable for common stock), which alone or together with sales by officers, directors or Substantial Shareholders of the Company, equals 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance. |
106
The “controlled company” exception to Nasdaq’s rules provides that a company of which more than 50% of the voting power is held by an individual, group or another company, a “controlled company” need not comply with certain requirements of Nasdaq’s corporate governance rules. As of the date of this annual report, Mr. Tak Kai Raymond, TAM (our ultimate controlling shareholder and majority shareholder of Grande Holding Limited, our Controlling Shareholder) and Ms. Tianhang, ZHAO beneficially own the majority of the voting power of our outstanding Ordinary Shares. Accordingly, we are a “controlled company” within the meaning of the corporate governance standards of Nasdaq. Under Nasdaq rules, a “controlled company” may elect not to comply with certain Nasdaq corporate governance requirements.
As a “controlled company,” we may elect not to comply with certain corporate governance standards, including that a majority of our board of directors consist of independent directors. For so long as we qualify as a controlled company, we may take advantage of these exemptions. Accordingly, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of these corporate governance requirements.
In the event that we cease to be a “foreign private issuer” under the rules of Nasdaq and cease to be a “controlled company” and our Class A Ordinary Shares continue to be listed on Nasdaq, the Company’s Board of Directors will take all action necessary to comply with the corporate governance rules of Nasdaq, including but not limited to, establishing certain committees composed entirely of independent directors, subject to a permitted “phase-in” period.
Notwithstanding the Company’s status as a foreign private issuer or a controlled company, the Company will remain subject to the corporate governance standard of Nasdaq that requires the Company to have an audit committee with at least three independent directors as well as composed entirely of independent directors. For purposes of the audit committee composition requirements, we must have at least one independent director on our audit committee at the time of listing, at least two independent directors within 90 days of listing and at least three independent directors within one year of listing, where at least one of the independent directors qualifies as an audit committee financial expert under SEC rules and as a financially sophisticated audit committee member under the Nasdaq rule.
Item 16H. Mine Safety Disclosure
Not applicable.
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
Item 16J. Insider Trading Policies
We have an
A copy of the insider trading policies is attached as an exhibit to this annual report.
Item 16K. Cybersecurity
107
PART III
Item 17. Financial Statements
See “Item 18. Financial Statements.”
Item 18. Financial Statements
Our consolidated financial statements are included at the end of this annual report, beginning with page F-1.
Item 19. Exhibits
| * | Filed herein |
108
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| Grande Group Limited | |||
| By: | /s/ Yujie, CHEN | ||
| Name: | Yujie, CHEN | ||
| Title: | Chief Executive Officer, Chair of the board, and Director | ||
Date: July 31, 2026
109
GRANDE GROUP LIMITED
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
| To: | The Board of Directors and Shareholders of |
| Grande Group Limited |
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Grande Group Limited and its subsidiaries (collectively the “Company”) as of March 31, 2026 and 2025, and the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended March 31, 2026, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2026 and 2025, and the results of its operations and its cash flows for each of the years in the three-year period ended March 31, 2026, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company had a working capital deficit, an accumulated deficit, a net loss, and net cash used in operating activities which raises substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is described in Note 2. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Certified Public Accountants
PCAOB ID No.
July 30, 2026
We have served as the Company’s auditor since February 29, 2024.
F-2
| GRANDE GROUP LIMITED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2026 AND 2025 (Stated in U.S. Dollars) |
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Accounts receivable, net – related party | ||||||||
| Contract assets, net | ||||||||
| Prepaid expenses and other current assets, net | ||||||||
| Due from related parties | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Leasehold improvement and equipment, net | ||||||||
| Right-of-use assets, operating lease | ||||||||
| Deferred initial public offering costs | ||||||||
| Goodwill | ||||||||
| Intangible asset | ||||||||
| Prepayment for internal use software costs | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Accrued expenses and other current liabilities | $ | $ | ||||||
| Contract liabilities | ||||||||
| Lease liabilities | ||||||||
| Due to related parties | ||||||||
| Income tax payable | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Lease liabilities – non-current | ||||||||
| Deferred tax liability | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitment and contingencies | ||||||||
| Equity | ||||||||
| Class A Ordinary Shares, par value $ | ||||||||
| Class B Ordinary Shares, par value $ | ||||||||
| Subscription receivables | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| (Accumulated deficit) Retained earnings | ( | ) | ||||||
| Total shareholders’ equity | ||||||||
| Non-controlling interest | ||||||||
| TOTAL EQUITY | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these consolidated financial statements.
F-3
| GRANDE GROUP LIMITED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED MARCH 31, 2026, 2025 AND 2024 (Stated in U.S. Dollars) |
| 2026 | 2025 | 2024 | ||||||||||
| Revenue | $ | $ | $ | |||||||||
| Revenue – related party | ||||||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ||||||
| Gross profit | ||||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Goodwill impairment loss | ( | ) | ||||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ||||||
| Operating (loss) income | ( | ) | ||||||||||
| Other (expense) income | ||||||||||||
| Interest income | ||||||||||||
| Government subsidies | ||||||||||||
| Other miscellaneous income | ||||||||||||
| Loss on disposal of equity securities | ( | ) | ||||||||||
| Total other (expense) income | ( | ) | ||||||||||
| (Loss) Income before taxes | ( | ) | ||||||||||
| (Benefit from) Provision for income taxes | ( | ) | ||||||||||
| Net (loss) income | ( | ) | $ | $ | ||||||||
| Less: Net loss attributable to non-controlling interest | ||||||||||||
| Net (loss) income attributable to shareholders of the Company | $ | ( | ) | $ | $ | |||||||
| (Loss) Income per share – Basic and diluted | $ | ( | ) | $ | $ | |||||||
| Basic and diluted weighted average shares outstanding* | ||||||||||||
| * |
The accompanying notes are an integral part of these consolidated financial statements.
F-4
| GRANDE GROUP LIMITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEARS ENDED MARCH 31, 2026, 2025 AND 2024 (Stated in U.S. Dollars) |
| Class A Ordinary Shares* |
Class B Ordinary Shares* |
(Accumulated | Total | |||||||||||||||||||||||||||||||||||||
| Number Of Shares |
Amount | Number Of Shares |
Amount | Subscription Receivables |
Additional Paid-in Capital |
Deficit) Retained Earnings |
Shareholders’ (Deficit) Equity |
Non- Controlling Interest |
Total (Deficit) Equity |
|||||||||||||||||||||||||||||||
| Balance, April 1, 2023 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Class A
Ordinary Shares* | Class B
Ordinary Shares* | |||||||||||||||||||||||||||||||||||||||
| Number Of Shares | Amount | Number Of Shares | Amount | Subscription Receivables | Additional
Paid-in Capital | Retained Earnings | Total Shareholders’ Equity | Non- Controlling Interest | Total Equity | |||||||||||||||||||||||||||||||
| Balance, April 1, 2024 | $ | | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Issuance of ordinary shares | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Dividends | — | — | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Acquisition of a subsidiary | — | — | — | |||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | ( | ) | $ | $ | $ | $ | | $ | |||||||||||||||||||||||||||||
| Class A
Ordinary Shares* | Class B Ordinary Shares* | Retained | ||||||||||||||||||||||||||||||||||||||
| Number Of Shares | Amount | Number Of Shares | Amount | Subscription Receivables | Additional
Paid-in Capital | Earnings (Accumulated Deficit) | Total Shareholders’ Equity | Non- Controlling Interest | Total Equity | |||||||||||||||||||||||||||||||
| Balance, April 1, 2025 | $ | $ | $ | ( | ) | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Contribution from a non-controlling equity holder of a subsidiary | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares through public offering, net | — | |||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2026 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these consolidated financial statements.
F-5
| GRANDE GROUP LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31, 2026, 2025 AND 2024 (Stated in U.S. Dollars) |
| 2026 | 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net (loss) income | $ | ( | ) | $ | $ | |||||||
| Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||||||||||
| Depreciation | ||||||||||||
| Amortization of operating lease right-of-use assets | ||||||||||||
| Amortization of intangible asset | ||||||||||||
| Allowance for (Reversal of) expected credit loss | ( | ) | ||||||||||
| Deferred tax (benefit) expense | ( | ) | ||||||||||
| Goodwill impairment loss | ||||||||||||
| Loss on disposal of equity securities | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | ( | ) | ( | ) | ||||||||
| Accounts receivable – related party | ( | ) | ||||||||||
| Contract assets | ( | ) | ||||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ( | ) | ||||||
| Accrued expenses and other liabilities | ( | ) | ||||||||||
| Contract liabilities | ( | ) | ( | ) | ||||||||
| Lease liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Income tax recoverable and payable | ( | ) | ( | ) | ||||||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||||||
| Cash flow from investing activities: | ||||||||||||
| Purchase of equipment | ( | ) | ||||||||||
| Investment in equity securities | ( | ) | ||||||||||
| Acquisition of a subsidiary, net of cash acquired | ( | ) | ||||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||||||
| Cash flow from financing activities: | ||||||||||||
| Advance from (Repayment to) related parties | ( | ) | ( | ) | ||||||||
| Net proceeds from initial public offering | ||||||||||||
| Payments of offering costs related to initial public offering | ( | ) | ( | ) | ( | ) | ||||||
| Contribution from a non-controlling shareholder of a subsidiary | ||||||||||||
| Dividends paid | ( | ) | ||||||||||
| Net cash provided by (used in) financing activities | ( | ) | ( | ) | ||||||||
| Net (decrease) increase in cash and cash equivalents | ( | ) | ( | ) | ||||||||
| Cash and cash equivalents at beginning of the year | ||||||||||||
| Cash and cash equivalents at end of the year | $ | $ | $ | |||||||||
| Supplementary cash flows information: | ||||||||||||
| Taxes paid | $ | $ | $ | |||||||||
| Non-cash investing and financing activities: | ||||||||||||
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ | $ | $ | |||||||||
| Derecognition of operating lease right-of-use asset and related operating lease liability upon early termination of lease | $ | |||||||||||
| Recognition of deferred initial public offering costs recorded in accrued expenses and other liabilities | $ | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 AND 2024 (Stated in U.S. Dollars) |
NOTE 1 — ORGANIZATION AND PRINCIPAL ACTIVITIES
Grande Group Limited (formerly known as Hero Intelligence Group Limited) (“Grande Group”) was incorporated in the British Virgin Islands (“BVI”) on August 6, 2020 as an investment holding company. The Company conducts its primary operations through its directly wholly owned subsidiary Grande Capital Limited (“Grande Capital”) which is incorporated and domiciled in Hong Kong (“Hong Kong”), the People’s Republic of China (“PRC”); Grande Capital is a licensed corporation under the Hong Kong Securities and Futures Ordinance to carry out regulated activities Type 1 “dealing in securities” and Type 6 “Advisory on corporate finance” under the Hong Kong Securities and Futures Ordinance. The principal activity of Grande Capital is the provision of corporate finance advisory services.
Effective May 22, 2024, the Company changed its name from Hero Intelligence Group Limited to Grande Group Limited.
On June 12, 2024, the Company acquired
On October 1, 2025, Grande Group entered into a Sale and Purchase Agreement
(the “SPA”) with United One Global Limited (the “Seller”). Pursuant to the SPA, Grande Group acquired
On August 21, 2025, the Company and the non-controlling
shareholder of Wicens Securities incorporated China CreateAlliance Holdings Limited (“China CreateAlliance”) in the BVI with
an initial issued share capital of $
On February 27, 2026, the Company and the non-controlling shareholder transferred their respective equity interests in Wicens Securities to China CreateAlliance as part of an internal group reorganization. Following the transfer, Wicens Securities became a direct wholly-owned subsidiary of China CreateAlliance, while the Company’s effective controlling interest in Wicens Securities remained unchanged.
On December 29, 2025, the Company incorporated Sparkward Holding Limited (“Sparkward”) in the BVI as a wholly-owned subsidiary. On January 7, 2026, Sparkward incorporated Grande Digital Ventures Limited (“Grande Digital”) in Hong Kong as its wholly-owned subsidiary. Sparkward and Grande Digital had not commenced operations as of March 31, 2026.
The following is an organization chart of the Company and its subsidiaries as of March 31, 2026:
F-7
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 AND 2024 (Stated in U.S. Dollars) |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
As of March 31, 2026, the Company’s subsidiaries are detailed in the table as follows:
| Name of Company | Place of incorporation | Attributable equity interest % | Issued capital | |||||||
| Grande Capital Limited | HK$ | |||||||||
| China CreateAlliance Holdings Limited | $ | |||||||||
| Wicens International Securities Limited (formerly known as Grande Securities Limited) | HK$ | |||||||||
| Proplus Company Limited | $ | |||||||||
| Grande Consulting Limited (formerly known as Harvest Group Limited) | HK$ | |||||||||
| Shenzhen Zhenjing Investment Consulting Co., Ltd. | RMB | |||||||||
| Sparkward Holding Limited | $ | |||||||||
| Grande Digital Ventures Limited | HK$ | |||||||||
Going concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will continue its operations in the ordinary course of business and that assets will be realized and liabilities will be settled at the amounts recorded in the consolidated financial statements.
As of March 31, 2026, the Company had a working
capital deficit of $
In assessing the Company’s ability to continue
as a going concern, management has considered its future liquidity, operating performance, and available sources of financing. Management’s
plans primarily include obtaining continued financial support from a related party. Grande Holding Limited, a related party of the Company,
has provided an irrevocable undertaking that it will not demand or require repayment of amounts due from the Company totaling $
Management has developed plans to address these conditions. However, there can be no assurance that these plans will be successfully implemented or that such plans will be sufficient to address these conditions.
Accordingly, the accompanying consolidated financial statements have been prepared on a going concern basis.
F-8
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 AND 2024 (Stated in U.S. Dollars) |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Initial Public Offering (“IPO”) and over-allotment option (“Over-allotment option”)
On June 30, 2025, the Company announced the closing
of its IPO of
On July 14, 2025, the Company announced the full
exercise of the Over-allotment option by the underwriter of its IPO to purchase an additional
The Company raised total net proceeds of $
Principles of consolidation and basis of presentation
The accompanying consolidated financial statements include the accounts of the Company and its subsidiary (collectively the “Company”). Management has eliminated all significant inter-company balances and transactions in preparing the accompanying consolidated financial statements.
Management has prepared the accompanying consolidated financial statements and these notes in accordance to generally accepted accounting principles in the United States (“U.S. GAAP”). The Company maintains its general ledger and journals with the accrual method accounting.
Use of estimates
The preparation of the consolidated financial statements in conformity with the U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
Significant estimates include:
| revenue recognition; | |
| fair value measurements associated with business combinations; | |
| valuation of identifiable intangible asset; | |
| impairment assessments of goodwill; and | |
| estimated useful lives of finite-lived intangible asset. |
Management makes these estimates using the best information available when the calculations are made; however, actual results could differ materially from those estimates.
F-9
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 AND 2024 (Stated in U.S. Dollars) |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Accounting for the impairment of long-lived assets
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. Impairment indicators may arise from factors such as changes in the industry, introduction of new technologies, or if the Company has inadequate working capital to utilize the long-lived assets to generate adequate profits. Impairment exists if the carrying amount of an asset exceeds its expected future undiscounted cash flows.
If an asset is considered impaired, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. impairment loss on long-lived assets was recognized for the years ended March 31, 2026, 2025 and 2024.
General and administrative expenses
General and administrative expenses include employee benefit expense, depreciation and other office expenses.
Cash and cash equivalents
The Company considers bank deposit and all highly liquid investments with original maturities of three months or less when purchased to be cash and cash equivalents. Cash consists primarily of cash in accounts held at financial institutions.
Lease
ASC 842, Leases, generally requires lessees to recognize operating and finance lease liabilities and corresponding right-of-use (“ROU”) assets on the consolidated balance sheets and to provide disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. Leases that transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as finance leases as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases.
Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similarly owned assets. The Company has elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Its leases generally do not provide a residual guarantee. The operating lease ROU assets also exclude lease incentives. Lease expense is recognized on a straight-line basis over the lease term. The Company also adopted the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component.
As of March 31, 2026 and 2025, there were
approximately $
The Company evaluates the impairment of its ROU assets consistently with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the assets from the expected undiscounted future pre-tax cash flows of the related operations. As of March 31, 2026, 2025 and 2024, the Company did not recognize any impairment loss against its ROU asset.
F-10
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Commitments and contingencies
From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The majority of these claims and proceedings related to or arise from commercial disputes. The Company first determine whether a loss from a claim is probable, and if it is reasonable to estimate the potential loss. The Company accrues costs associated with these matters when they become probable, and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Also, the Company disclose a range of possible losses, if a loss from a claim is probable but the amount of loss cannot be reasonably estimated, which is in line with the applicable requirements of ASC 450, Contingencies. The Company’s management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would have a material adverse impact on the Company’s consolidated financial position, results of operations and cash flows.
Related parties
The Company adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. Per ASC 850-10-50-5: “Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.”
Foreign currency
The accompanying consolidated financial statements are presented in United States dollar (“$”). The functional currency of the Company and all the other subsidiaries is $, Hong Kong Dollar (“HK$”) or Chinese Renminbi (“RMB”).
The consolidated financial statements of the Company
are translated from the functional currency into $. Assets and liabilities denominated in HK$ or RMB are translated into $ using the applicable
exchange rates at the balance sheet date. Equity accounts other than earnings generated in current period are translated into $ at the
appropriate historical rates. Revenues, expenses, gains and losses are translated into $ at the average rates of exchange for the year.
The resulting foreign currency translation adjustments are recorded in accumulated other comprehensive loss as a component of shareholders’
equity.
| March 31, | ||||||||||||||||||||||||
| 2026 | 2025 | 2024 | ||||||||||||||||||||||
| Year-end | Year-average | Year-end | Year-average | Year-end | Year-average | |||||||||||||||||||
| $: HK$ | ||||||||||||||||||||||||
| $: RMB | ||||||||||||||||||||||||
Foreign currency transaction gains and losses are a result of the effect of exchange rate changes on transactions denominated in currencies other than the functional currency of the respective subsidiary. Foreign currency denominated financial assets and liabilities are re-measured at the balance sheet date exchange rate. Exchange gains and losses resulting from those foreign currency transactions denominated in a currency other than the functional currency are recorded in the consolidated statements of operations.
Adoption of new accounting standard
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)-Improvements to Income Tax Disclosures. ASU No. 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. The Company adopted this update beginning April 1, 2025 and the required information was disclosed in Note 17.
F-11
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Accounts receivables, net
Accounts receivable, net includes amounts billed under the contract terms. The amounts are stated at amortized cost less an allowance for expected credit loss as needed. The Company maintains an allowance for expected credit loss to provide for the estimated number of receivables that will not be collected. The Company assess the allowance by pooling receivables that have similar risk characteristics and evaluates receivables individually when specific receivables no longer share those risk characteristics. The Company considers several factors in its estimate of the allowance, including knowledge of a client’s financial condition, its historical collection experience, and other factors relevant to assessing the collectability of such receivables. Bad debts are written off against allowances.
Leasehold improvement and equipment, net
Leasehold improvement and equipment are carried
at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method. The
Company typically applies a salvage value of
| Leasehold improvement | the lesser of useful life or term of lease | |
| Office equipment and others |
The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts, and any gain or loss are included in the Company’s results of operations. The costs of maintenance and repairs are recognized as incurred; significant renewals and betterments are capitalized.
Deferred IPO costs
Deferred IPO costs consist of costs incurred in connection with the Company’s planned IPO in the United States. These costs, together with the underwriting discounts and commissions, will be charged to additional paid-in capital upon completion of the planned IPO or charged to consolidated statements of operations if the planned IPO is not completed.
Upon the completion of the IPO during the year ended March 31, 2026, all deferred IPO costs, together with the underwriting discounts and commissions, were offset against the gross proceeds from the IPO and recorded as a reduction to additional paid-in capital.
As a result of the IPO completion, no deferred
IPO costs remained on the Company’s consolidated balance sheet as of as of March 31, 2026. Deferred offering costs amounted to $
Business combinations
The Company accounts for business combinations using the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method, the Company recognizes the identifiable assets acquired, liabilities assumed and any noncontrolling interests at their respective acquisition-date fair values.
The excess of (i) the aggregate of the consideration transferred, the fair value of any previously held equity interest in the acquiree and the amount of any noncontrolling interest over (ii) the fair value of the identifiable net assets acquired is recognized as goodwill.
The determination of the fair values assigned to assets acquired and liabilities assumed requires management to make significant estimates and assumptions. These estimates may include, among other items, projected future cash flows, discount rates, useful lives of identifiable intangible asset, market participant assumptions and other valuation inputs. Management utilizes information available as of the acquisition date to determine such estimates.
F-12
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Identifiable intangible assets are recognized separately from goodwill if they meet either the contractual-legal criterion or the separability criterion prescribed by ASC 805.
The Company records deferred tax assets and deferred tax liabilities arising from differences between the acquisition-date fair values assigned to assets acquired and liabilities assumed and their respective tax bases in accordance with ASC 740, Income Taxes.
The purchase price allocation is considered preliminary until the Company obtains all information necessary to finalize the fair values of assets acquired and liabilities assumed. During the measurement period, which shall not exceed one year from the acquisition date, the Company records measurement period adjustments retrospectively as if the accounting had been completed on the acquisition date.
Acquisition-related costs, including legal, accounting, valuation, consulting and other professional fees, are expensed as incurred and are included in general and administrative expenses in the accompanying consolidated statements of operations.
Goodwill
Goodwill represents the excess of the purchase consideration transferred over the fair value of the identifiable net assets acquired in a business combination.
Goodwill is not amortized but is tested for impairment at least annually as of March 31, or more frequently if events or changes in circumstances indicate that the carrying amount of a reporting unit may exceed its fair value.
The Company performs a quantitative impairment test by comparing the estimated fair value of each reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is recognized in an amount equal to such excess, limited to the carrying amount of goodwill allocated to that reporting unit.
The Company estimates the fair value of its reporting units using valuation techniques that are appropriate under the circumstances, including the income approach based on discounted cash flow method. Significant assumptions used in these analyses include expected future cash flows, terminal growth rates, discount rates and other assumptions that market participants would use in estimating fair value.
Impairment losses recognized for goodwill are not subsequently reversed.
Intangible assets
Identifiable intangible assets acquired in a business combination are recorded at their acquisition-date fair values.
Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives, which represent the periods over which the assets are expected to contribute directly or indirectly to future cash flows.
The estimated useful lives of finite-lived intangible assets are reviewed whenever events or changes in circumstances indicate that the remaining useful lives should be revised.
The Company evaluates finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.
Recoverability is assessed by comparing the carrying amount of the asset group with the estimated undiscounted future cash flows expected to result from the use and eventual disposition of the asset group. If the carrying amount exceeds the estimated undiscounted future cash flows, an impairment loss is recognized for the amount by which the carrying amount exceeds its estimated fair value.
Amortization expense is recognized within operating expenses in the accompanying consolidated statements of operations.
F-13
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Revenue recognition
Revenue from contracts with customers
The Company follows the rules and guidance set out under ASC 606, Revenue from Contracts with Customers, when recognizing revenue from contracts with customers. The core principle of ASC 606 requires an entity to recognize revenues to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. In according with ASC 606, revenues are recognized when the Company satisfies the performance obligations by delivering the promised services to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The following five steps are applied to achieve that core principle:
Step 1: Identify the contract with the customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the company satisfies a performance obligation
The Company identifies each distinct service as
a performance obligation. The recognition and measurement of revenues is based on the assessment of individual contract terms. The Company
applies a practical expedient to expense costs as incurred for those suffered in order to obtain a contract with a customer when the amortization
period would have been
Grande Capital is a licensed corporation under the Hong Kong Securities and Futures Ordinance to carry out regulated activities Type 1 “Dealing in securities” and Type 6 “Advisory on corporate finance” under the Hong Kong Securities and Futures Ordinance. Proplus principally engages in supplying course materials in the Chinese Mainland. The Company’s principal revenue streams include:
IPO sponsorship services
The Company enters into an agreement with its customers for advising and guiding listing applicants throughout the IPO process with various services, such as coordinating the listing progress, conducting due diligence, performing all duties of a sponsor as required under the applicable rules and regulations and acting as the primary channel of communication with the regulators such as the Stock Exchange of Hong Kong (the “Hong Kong Exchange”) and the Securities and Futures Commission of Hong Kong concerning the listing, in return for a sponsor’s fee.
The Company charged a fixed fee payable by progress
payment based on achievement of certain milestones as specified in the service agreements with an initial deposit of
The services carried out by the Company in its role as sponsor are usually highly interdependent and interrelated and therefore, in accordance with ASC 606-10-25-21 (c), these services also fail to satisfy the criterion in ASC 606-10-25-19 (b) of being distinct from one another within the context of the contract. Therefore, the Company accounts for all of the sponsorship services promised in the contract as a single performance obligation.
F-14
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Following the fact pattern provided, the sponsorship services does not meet criterion ASC 606-10-25-27 (a) because the listing applicant does not simultaneously receive and consume the benefits provided by the sponsor’s performance during the IPO process. The listing applicant only receives the benefits when the sponsor completes all of its services and the shares are successfully listed on the Hong Kong Exchange or another outcome. Applying paragraph 3A.18 of the Main Board Listing Rules of Hong Kong, “for the avoidance of doubt, a replacement sponsor shall not be regarded as having satisfied any of the obligations of a sponsor by virtue of work performed by a predecessor sponsor”, thus the performance obligation does not meet the condition in ASC 606-10-55-6 to be considered satisfied over time because a replacement sponsor would need to substantially re-perform all of the work performed by the existing sponsor, including reperformance of the due diligence work and coordination with other professional parties. Even if some of the work done by other professional parties (such as lawyers and auditors) has been completed, this work is not part of the role of the sponsor. The sponsor will still need to coordinate with other professional parties and perform its own due diligence on the information provided by these parties.
The sponsorship services also do not meet criterion ASC 606-10-25-27 (b) because there is no asset controlled by the listing applicant during the period.
The agreements entered into prior to April 1,
2024 do not have a right to payment clause. The initial deposit normally only represents
As a result, the services fee income is recognized at the point in time when the Company completes its sponsorship services.
For an agreement entered into since April 1, 2024, it has a right to payment clause, meaning the Company has a contractual right to receive payment pro-rata to its performance completed to date. Also, the Company’s performance does not create an asset with an alternative use to the Company. Consequently, the Company has an enforceable right to payment for its performance completed to date under the agreement and thus criterion ASC 606-10-25-27 (c) is met.
As a result, the services fee income is recognized over time and the Company uses an input method based on project labor hours incurred to date compared to total estimated project labor hours to measure its progress toward complete satisfaction of the performance obligation. The input method is the most representative depiction of the Company’s performance because it directly measures the value of the services transferred to the customer.
The Company considers the milestone payments as variable consideration because the amount it expects to receive can vary depending on the achievement of the future milestones. The Company uses the most likely amount method to estimate the variable consideration in its contract applying ASC 606-10-32-8 because it is the method that the Company expects to better predict the amount of consideration to which it will be entitled. However, given that the milestone payments are significant and the successful submission of the listing application is largely not within the control of the Company and subject to significant uncertainty, the Company determines that the probable criterion in ASC 606-10-32-11 is not met for the milestone payment. Nevertheless, the agreement contains a right to payment clause which entitles the Company to an enforceable right to payment for its performance completed to date at all times throughout the duration of the contract even if the respective next milestones are not achieved. Therefore, the Company applies its judgement and estimates the transaction price at contract inception. At each reporting date, the Company considers any change in expected outcome and updates its estimation of the transaction price (including updating its estimate of variable consideration and whether that estimate is constrained) by applying ASC 606-10-32-14.
Underwriting and placing services
The Company enters into the same agreement with the IPO services with its customers for underwriting syndicates for certain of those IPOs that the Company acted as sponsors, in return for underwriting commissions.
The underwriting and placing service are identified as a separate performance obligation. Placing commission income is recognized at a point in time when the performance obligation has been satisfied by the completion of provision of placing services under the respective engagement terms, which is typically at the closing of the transaction. The customer of the Company is the securities issuers. The placing commitment, as stated in the placing agreement with securities issuers, is that the Company is an agent to provide placing services by using its reasonable best efforts to procure potential subscribers to subscribe the funds raised by securities issuers. The Company is under no obligation to purchase the securities if the subscribers do not subscribe to any or all the securities. The Company is not primarily responsible for fulfilling the promise to provide the specified good or service to customers. The Company has no inventory risk before or after the specified good or service has been transferred to a customer. The Company has no discretion in setting prices to customers.
F-15
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Underwriting and placing commission income are generally charged at fixed rate with reference to size of funds raised in the transaction, subject to determination of securities issuers and the transaction price includes variable consideration. The Company estimates the amount of variable consideration to be included in the transaction price and recognizes revenue to the extent that it is probable that a significant reversal of cumulative revenue will not occur when the uncertainty associated with the performance-based fees is resolved. The Company does not receive or not entitled to any compensation if the related underwriting and placing transaction are not completed.
Referral services
Referral income generated by provision of referral services by acting as agent to corporate customers. The Company refers clients to corporate customers and earns referral income. The Company enters into distinct referral agreements with corporate customers for the provision of referral services. The referral service is distinct and is identified as one performance obligation. The transaction price is a variable consideration as the consideration is determined to be a fixed percentage of subscription amount in the transaction of fundraising activities. Revenue from providing referral services to corporate customers is recognized at a point in time when the transaction and the performance is completed, which is generally at the completion of fundraising activities.
General advisory services
The Company enters into an agreement with its customers for general advisory services mainly include (i) advisory works for companies listed on the Hong Kong Exchange as well as their shareholders, advising them on the terms and structures of proposed transactions, such as takeovers, and the relevant implications of the Hong Kong regulatory framework, which primarily included the Main Board Listing Rules of Hong Kong and Hong Kong Takeovers Codes, in relation to the transactions; and (ii) project coordination works for clients pursuing listing on other stock exchanges, such as the U.S. exchanges.
The Company charged a fixed fee payable by progress
payment based on achievement of certain milestones as specified in the service agreements with an initial deposit of
The services carried out by the Company can vary from project to project and generally involves a series of tasks which are usually highly interdependent and interrelated and are not separable or distinct as the Company’s customers cannot benefit from any standalone task and therefore, in accordance with ASC 606-10-25-21 (c) and ASC 606-10-25-19 (b), the Company generally accounts for all of the general advisory services promised in the contract as a single performance obligation.
Following the fact pattern provided, the general advisory services does not meet criterion ASC 606-10-25-27 (a) because the customer does not simultaneously receive and consume the benefits provided by the Company’s performance during the services period. The customer only receives the benefits when the Company completes all of its services.
The general advisory services also do not meet criterion ASC 606-10-25-27 (b) because there is no asset controlled by the customers during the period.
The agreements do not have a right to payment clause. The initial deposit
normally only represents
As a result, the services fee income is recognized at the point in time when the Company completes its general advisory services.
Independent financial advisory services
The Company enters into an agreement with its customers for independent financial advisory services mainly include providing advice to the independent board committee and independent shareholders of companies listed on the Hong Kong Exchange rendering recommendation and opinions.
F-16
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
The Company charged a fixed fee payable by progress
payment based on achievement of certain milestones as specified in the service agreements with an initial deposit of
The services carried out by the Company can vary from project to project and generally involves a series of tasks which are usually highly interdependent and interrelated and are not separable or distinct as the Company’s customers cannot benefit from any standalone task and therefore, in accordance with ASC 606-10-25-21 (c) and ASC 606-10-25-19 (b), the Company accounts for all of the independent financial advisory services promised in the contract as a single performance obligation.
Following the fact pattern provided, the independent financial advisory services does not meet criterion ASC 606-10-25-27 (a) because the customer does not simultaneously receive and consume the benefits provided by the Company’s performance during the services period. The customer only receives the benefits when the Company completes all of its services.
The independent financial advisory services also do not meet criterion ASC 606-10-25-27 (b) because there is no asset controlled by the customers during the period.
The agreements do not have a right to payment
clause. The initial deposit normally only represents
As a result, the services fee income is recognized at the point in time when the Company completes its independent financial advisory services.
Compliance advisory services
The Company enters into an agreement with its customers for compliance advisory services mainly include advisory works to listed companies in Hong Kong in relation to post-listing compliance matters, in return for a monthly fee.
The services carried out by the Company can vary from project to project and generally involves a series of tasks which are usually highly interdependent and interrelated and are not separable or distinct as the Company’s customers cannot benefit from any standalone task and therefore, in accordance with ASC 606-10-25-21 (c) and ASC 606-10-25-19 (b), the Company accounts for all of the compliance advisory services promised in the contract as a single performance obligation.
Following the fact pattern provided, the compliance advisory services meet criterion ASC 606-10-25-27 (a) because the customer simultaneously receives and consumes the benefits provided by the Company’s performance during the services period, i.e. ongoing advisory services. Also, the Company concludes that the services provided each month are substantially similar and result in the transfer of substantially similar services to the customers each month. That is, the benefit consumed by the customers is substantially similar each month, even though the exact volume of services may vary.
As a result, the Company recognizes revenues from compliance advisory services on a monthly basis when it satisfies its performance obligations throughout the contract terms.
F-17
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Course materials supplying
The Company enters into service agreements with its customers that outline the rights, responsibilities, and obligations of each party. The agreements also identify the scope of services, service fees, and payment terms. Agreements are acknowledged and signed by both parties. All the contracts have commercial substance, and it is probable that the Company will collect considerations from its customers for service component.
The Company derives its revenue from supplying course materials to the educational institution. Under each course arrangement, the customer specifies the type and requirements of the materials, and the Company charges a fixed price for each set of materials delivered. The Company does not participate in the delivery or administration of the course itself, and its responsibility is limited solely to preparing and providing the requested instructional materials.
Each set of course materials represents a separate performance obligation under ASC 606 because each set of materials provides stand-alone value to the customer and does not require integration with other materials to deliver its intended benefit. The materials are independently consumable and therefore are separately identifiable within the context of the contract. The customer obtains control of the materials upon delivery, at which point the Company has satisfied its performance obligation.
The Company is the principal in these contracts because (i) it has primary responsibility for satisfying the performance obligations that supplying course materials to the educational institution; (ii) the contract price is negotiated directly with the customer, i.e. the educational institution, by the Company.
The transaction price is determined based on the contracted fixed price per material set. Revenue is recognized at a point in time upon delivery of each set of materials to the educational institution, which is when control transfers and the customer has the right to use and benefit from the materials.
Payments for courses are typically received in advance.
The typical length of course can range from
As of March 31, 2026 and 2025, the Company had
transaction price allocated to the remaining unsatisfied performance obligations under the course arrangement regarding the course materials
not yet delivered amounting to $
Contract assets
Contract assets include unbilled amounts resulting
from advisory services, as the Company’s right to payment is conditional on completion of defined project milestones. Payment is
not due until each milestone is achieved, so a contract asset (unbilled revenue) is recorded until invoicing occurs. Contract assets are
generally classified as current assets given the short-term nature of these engagements. Contract assets (unbilled revenue) related to
general advisory services totaled and $
Contract liabilities
The Company generally requires the customers to make initial deposits upon entering into the service contracts and progressive payments throughout the contract terms before the completion of services.
Contract liabilities are recorded for any payments
received on such yet to be completed performance obligations. Contract liabilities related to IPO sponsorship services, general advisory
services, independent financial advisory services, compliance advisory and course materials supplying services totaled $
F-18
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Expected credit loss
ASU No. 2016-13, Financial Instruments — Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) requires entities to use a current lifetime expected credit loss methodology to measure impairments of certain financial assets. Using this methodology will result in earlier recognition of losses than under the current incurred loss approach, which requires waiting to recognize a loss until it is probable of having been incurred. There are other provisions within the standard that affect how impairments of other financial assets may be recorded and presented, and that expand disclosures.
Prepayments for software development costs
Prepayments for software development costs primarily relate to internal-use software. Such costs are capitalized in the application development stage in accordance with ASC 350-40, Internal-Use Software, when the preliminary project stage is completed, the management of the Company implicitly or explicitly authorizes and commits to funding the project and it is probable that the project will be completed, and the software will be used to perform the function intended.
The Company accounts for the cost of software developed for internal use by capitalizing qualifying costs, which are substantially incurred during the application development stage. Costs incurred in the preliminary and post-implementation stages of our products are expensed as incurred.
Retirement benefits
Retirement benefits in the form of mandatory government-sponsored defined
contribution plans are charged to either expense as incurred. During the years ended March 31, 2026, 2025 and 2024, the total amount charged
to the consolidated statements of operations in respect of the Company’s costs incurred in the plan was $
Income taxes
The Company recognizes deferred income tax assets or liabilities for expected future tax consequences of events recognized in the consolidated financial statements or tax returns. Under this method, deferred income tax assets or liabilities are determined based upon the difference between the consolidated financial statements and income tax bases of assets and liabilities using enacted tax rates expected to apply when the differences settle or become realized. Valuation allowances are provided when it is more likely than not that a deferred tax asset is not realizable or recoverable in the future.
Deferred tax liabilities arising from acquisition-date fair value adjustments recognized in a business combination are recognized as part of the purchase price allocation in accordance with ASC 805 and ASC 740.
The Company determines that the tax position is more likely than not to be sustained and records the largest amount of benefit that is more likely than not to be realized when the tax position is settled. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense.
F-19
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Value added tax (“VAT”)
The Company’s Chinese Mainland entity is
subject to VAT at rates ranged from
Loss/income per share
The Company computes loss/income per share following ASC 260, Earnings Per Share. Basic loss/income per share is measured as the loss/income available to common shareholders divided by the weighted average common shares outstanding for the period, including Class A Ordinary Shares and Class B Ordinary Shares. Diluted loss/income per share presents the dilutive effect on a per-share basis from the potential conversion of convertible securities or the exercise of options and or warrants; the dilutive impacts of potentially convertible securities are calculated using the as-if method; the potentially dilutive effect of options or warranties are computed using the treasury stock method. Potentially anti-dilutive securities (i.e., those that decrease loss per share or increase income per share) are excluded from diluted loss/income per share calculation. There were no potentially dilutive securities that were in-the-money that were outstanding during the years ended March 31, 2026, 2025 and 2024.
Segment reporting
ASC 280, Segment Reporting, establishes standards for companies to report in their financial statements information about operating segments, products, services, geographic areas, and major customers.
Based on the criteria established by ASC 280, the Company’s chief operating decision maker (“CODM”) has been identified as the Company’s chief executive officer. The CODM has determined that the Company operates as a single operating segment and uses consolidated net loss/income as measures of profit or loss on a consolidated basis when making decisions regarding resource allocation and performance assessment. The Company’s key financial metrics used by the CODM help make key operating decisions, including allocation of budget between cost of revenue and general and administrative expenses.
F-20
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Government assistance programs
Government incentives are recorded and presented in the consolidated financial statements on a gross basis as other income. The benefit is generally recorded when all conditions attached to the incentive have been met or are expected to be met and there is reasonable assurance of their receipt.
2022 Reimbursement of Maternity Leave Pay Scheme
The Hong Kong government launched the Reimbursement
of Maternity Leave Pay Scheme to reimburse employers for statutory maternity leave pay (“MLP”) paid to female employees who
gave birth on or after December 11, 2020. Under the scheme, employers may apply for reimbursement of the MLP for the 11th to
14th weeks of maternity leave (the four additional weeks), subject to a cap of HK$
Financial instruments
The Company’s financial instruments, including cash and cash equivalents, accounts receivable, other current assets, accrued expenses and other current liabilities and amounts due from/to related parties, have carrying amounts that approximate their fair values due to their short maturities. ASC 820, Fair Value Measurement, requires disclosing the fair value of financial instruments held by the Company. ASC 825, Financial Instruments, defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, other current assets, accrued expenses and other current liabilities and amounts due from to related parties, each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period between the origination of such instruments and their expected realization. The three levels of valuation hierarchy are defined as follows:
| Level 1: | inputs to the valuation methodology used quoted prices for identical assets or liabilities in active markets. | |
| Level 2: | inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and information that are observable for the asset or liability, either directly or indirectly, for substantially the financial instrument’s full term. | |
| Level 3: | inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging.
Recent accounting pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in the ASU require public entities to disclose specified information about certain costs and expenses. Additionally, in January 2025, FASB issued ASU No. 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date to clarify the effective date of ASU 2024-03. This ASU is effective for annual periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting the standard on the audited consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which provides updated guidance on how to recognize, measure, and present government grants. The ASU will be effective for annual reporting periods beginning after December 15, 2028, including interim periods within those fiscal years. with early adoption permitted. The Company is currently evaluating the impact of adopting the standard on the audited consolidated financial statements and related disclosures.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of operations and statements of cash flows.
F-21
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 3 — ACCOUNTS RECEIVABLE, NET AND ACCOUNTS RECEIVABLE, NET – RELATED PARTY
Accounts receivable, net and accounts receivables, net – related party consists of the following:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Accounts receivable, gross | $ | $ | ||||||
| Accounts receivable – related party, gross | ||||||||
| Less: allowance for expected credit loss | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
The aging analysis of gross accounts receivable, including related party balance, based on the due date is as follow:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Not yet past due | $ | $ | ||||||
| Within 30 days past due | ||||||||
| 31 to 60 days past due | ||||||||
| Over 90 days | ||||||||
| Total | $ | $ | ||||||
The movement of allowances for expected credit loss is as follow:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Balance at beginning of the year | $ | ( | ) | $ | ( | ) | ||
| Provision | ( | ) | ( | ) | ||||
| Write-offs | ||||||||
| Ending balance | $ | ( | ) | $ | ( | ) | ||
NOTE 4 — PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET
Prepaid expenses and other current assets, net consist of the following:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Prepaid expenses, gross | $ | $ | ||||||
| Prepayment for internal use software costs | ||||||||
| Deposits, gross | ||||||||
| Receivable from disposal of equity security (see Note 15) | ||||||||
| Other receivables | ||||||||
| Less: allowance for expected credit loss | ( | ) | ( | ) | ||||
| Total | ||||||||
| Portion classified as non-current asset | ( | ) | ||||||
| Current portion | $ | $ | ||||||
Prepayment for internal-use software costs of
$
The movement of allowances for expected credit loss is as follow:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Balance at beginning of the year | $ | ( | ) | $ | ( | ) | ||
| Provision | ( | ) | ( | ) | ||||
| Ending balance | $ | ( | ) | $ | ( | ) | ||
F-22
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 5 — LEASEHOLD IMPROVEMENT AND EQUIPMENT, NET
Leasehold improvement and equipment, net consist of the following:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| At cost: | ||||||||
| Leasehold improvement | $ | $ | ||||||
| Office equipment and others | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Depreciation expense for the years ended
March 31, 2026, 2025 and 2024 was $
NOTE 6 — ACQUISITION
On October 1, 2025, the Company completed the acquisition of
The acquisition was undertaken to expand the Company’s operations, enhance its service offerings, increase its customer base and generate expected operational synergies. The Company believes the acquisition strengthens its competitive position and provides opportunities for future growth.
The acquisition has been accounted for as a business combination under ASC 805, using the acquisition method of accounting.
Under the acquisition method, the Company recognized the assets acquired and liabilities assumed based on their respective estimated fair values as of September 30, 2025.
The fair values assigned to the identifiable assets acquired and liabilities assumed were determined with the assistance of an independent valuation specialist.
The following table summarizes the consideration transferred for the acquisition and the amounts of identified assets acquired and liabilities assumed at the acquisition date:
| Fair value of consideration transferred: | ||||
| Cash | $ | |||
| Total purchase consideration | $ | |||
| Recognized amounts of identifiable assets acquired and liabilities assumed: | ||||
| Cash | $ | |||
| Prepayment | ||||
| Prepayments for software development costs | ||||
| Intangible asset | ||||
| Other payables and accrued liabilities | ( | ) | ||
| Amounts due to related parties | ( | ) | ||
| Contract liabilities | ( | ) | ||
| Deferred tax liability | ( | ) | ||
| Total identifiable net assets | $ | |||
| Goodwill | $ | |||
Goodwill is attributable to the assembled workforce and anticipated synergies arising from the acquisition. The goodwill recognized is not deductible for income tax purposes.
Since the acquisition date, Proplus contributed
revenues of $
Pro forma financial information
The following unaudited supplemental pro forma
information presents the consolidated results of operations as if the acquisition had occurred on April 1, 2024.
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | $ | $ | ||||||
| Net (loss) income | $ | ( | ) | $ | ||||
F-23
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 7 — GOODWILL
The following table summarizes the changes in the carrying amount of goodwill:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Balance at beginning of the year | $ | $ | ||||||
| Goodwill recognized related to acquisition | ||||||||
| Impairment loss recognized | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
The Company performs its annual goodwill impairment assessment as of March 31, or more frequently whenever events or changes in circumstances indicate that the carrying amount of a reporting unit may exceed its estimated fair value.
The fair value of the reporting unit was estimated using the income approach, specifically a discounted cash flow method, which estimates the present value of the future cash flows expected to be generated by the reporting unit.
The valuation incorporated significant estimates and assumptions, including:
| expected future cash flows; | |
| terminal growth rate; | |
| discount rate; and | |
| assumptions that a market participant would use in pricing the reporting unit. |
Management believes the assumptions utilized in the valuation are reasonable and consistent with the assumptions that market participants would use under the circumstances.
The annual goodwill impairment assessment, which reflected management’s
estimates and assumptions regarding the reporting unit’s future cash flows and other key valuation inputs as of the annual testing
date, took into consideration the challenging economic and market conditions in the Chinese Mainland. Based on the assessment, the estimated
fair value of the reporting unit, determined using the income approach (discounted cash flow method), was lower than its carrying amount.
Accordingly, the Company recognized a goodwill impairment loss of $
NOTE 8 — INTANGIBLE ASSET
Intangible asset consisted of the following:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| At cost: | ||||||||
| Backlog | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ||||||
| Total | $ | $ | ||||||
The acquired backlog is considered a finite-lived
intangible asset and is amortized on a straight-line basis over its estimated useful life of
Amortization expense for the year ended March
31, 2026, 2025 and 2024 was $
The following table summarizes the estimated future amortization expense of the finite-lived intangible asset as of March 31, 2026:
| For the year ending March 31, | ||||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| Total remaining amortization expense | $ | |||
F-24
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 9 — CONCENTRATIONS OF RISK
Customer concentrations
For the years ended March 31, 2026,
2025 and 2024, revenue from top five customers of the Company accounted for an aggregate of
| March 31, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Customer A | * | * | % | |||||||||
| Customer B | * | * | % | |||||||||
| Customer C | * | * | % | |||||||||
| Customer D | % | % | * | |||||||||
| Customer E | % | * | * | |||||||||
| * |
As of March 31, 2026, 2025 and 2024, there were one, two and four customers each with accounts receivable accounting for 10% or more of the Company’s total accounts receivable, respectively. The details are as follows:
| March 31, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Customer A | * | * | % | |||||||||
| Customer F | * | * | % | |||||||||
| Customer G | * | * | % | |||||||||
| Customer H | * | * | % | |||||||||
| Customer D | % | % | * | |||||||||
| Customer I | * | % | * | |||||||||
| * |
NOTE 10 — DEFERRED IPO COSTS
Deferred IPO costs consisted of the following:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Legal fees | $ | $ | ||||||
| Accounting related fees | ||||||||
| Underwriting fees | ||||||||
| Other miscellaneous fees | ||||||||
| Total | $ | $ | ||||||
As a result of the IPO completion during the year ended March 31, 2026, all deferred IPO costs, together with the underwriting discounts and commissions, were offset against the gross proceeds from the IPO and recorded as a reduction to additional paid-in capital.
F-25
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 11 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Accrued staff costs | $ | $ | ||||||
| Accrued administrative expenses | ||||||||
| VAT payable | ||||||||
| Other payables | ||||||||
| Total | $ | $ | ||||||
NOTE 12 — CONTRACT ASSETS, NET AND CONTRACT LIABILITIES
Contract assets, net consisted of the following:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Contract assets, gross | $ | $ | ||||||
| Less: allowance for expected credit loss | ( | ) | ||||||
| Total | $ | $ | ||||||
The movement of contract assets, gross is as follows:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Balance at beginning of the year | $ | $ | ||||||
| Amounts reclassified to accounts receivable upon billing | ( | ) | ||||||
| Additions | ||||||||
| Total | $ | $ | ||||||
The movement of allowances for expected credit loss is as follow:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Balance at beginning of the year | $ | ( | ) | $ | ||||
| Reversal (Provision) | ( | ) | ||||||
| Ending balance | $ | $ | ( | ) | ||||
Contract liabilities are recognized when the Company receives initial deposits from customers. Contract liabilities will be recognized as revenue when promised services are provided. The Company’s contract liabilities are generally recognized as revenue within one year.
The movement of contract liabilities is as follows:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Balance at beginning of the year | $ | $ | ||||||
| Additions | ||||||||
| Acquisition of a subsidiary | — | |||||||
| Recognized to revenue during the year | ( | ) | ( | ) | ||||
| Ending balance | $ | $ | ||||||
F-26
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 13 — LEASES
The Company has an for office
space. The lease agreements do not specify an explicit interest rate. The Company’s management believes that the Hong Kong Dollar
Prime Rate ranged from
As of March 31, 2026 and 2025, the right-of-use
asset was $
As of March 31, 2026 and 2025, lease liabilities consists of the following:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Lease liabilities – current portion | $ | $ | ||||||
| Lease liabilities – non-current portion | ||||||||
| Total | $ | $ | ||||||
During the years ended March 31, 2026,
2025 and 2024, the Company incurred total operating lease expenses of $
Other lease information is as follows:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Weighted-average remaining lease term – operating leases | ||||||||
| Weighted-average discount rate – operating leases | % | % | ||||||
The following is a schedule of future minimum payments under operating leases as of March 31, 2026:
| Within 12 months | $ | |||
| More than 12 months and within 24 months | ||||
| More than 24 months and within 36 months | ||||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total operating lease liabilities, net of interest | $ |
NOTE 14 — EQUITY
Share Subdivision
On June 4, 2024, the then sole
shareholder of the Company, Grande Holding Limited, approved a share subdivision of its issued and unissued shares at a ratio of
Share Redesignation - dual class structure
On November 11, 2024, the Company
passed board and shareholder resolutions and approved that (i) re-designate (a)
F-27
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 14 — EQUITY (cont.)
The Company believe it is appropriate to reflect the above transactions of Share Subdivision and Share Redesignation on a retroactive basis and the Company has retroactively adjusted the shares and per share data for all periods presented.
Issuance of ordinary shares
On November 18, 2024, the Company further
issued
There were
As discussed in Note 2 to these consolidated
financial statements, during the year ended March 31, 2026, the Company completed its IPO and the subsequent exercise of the Over-allotment
Option, resulting in the issuance of a total of
Dividends
On June 25, 2024, the Company
declared and made dividends of $
IPO and Over-allotment option
As discussed in Note 2 to these consolidated
financial statements, the Company completed its IPO during the year ended March 31, 2026. In connection with the IPO, the Company issued
Subsequently, the underwriter exercised
its Over-allotment option in full, resulting in the issuance of an additional
The IPO and the Over-allotment option generated
total gross proceeds of $
NOTE 15 — INVESTMENT IN EQUITY SECURITIES
During August 2025, the Company entered into an
external investment arrangement through which it obtained beneficial ownership of
The Company invested through an external investment arrangement that provides the Company with beneficial ownership of equity interests in a publicly traded company. Accordingly, the investment is accounted for as equity securities in accordance with ASC 321, Investments—Equity Securities, and is measured at fair value based on the quoted market price of the underlying shares, consistent with the fair value measurement framework under ASC 820.
As ALT5 Sigma’s shares are actively traded in an open market, the investment is classified within Level 1 of the fair value hierarchy.
During December 2025, the equity securities were
disposed of for consideration of $
Subsequent to March 31, 2026 and prior to the
issuance date of these consolidated financial statements, the Company received the outstanding balance of $
F-28
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 16 — EMPLOYEE BENEFIT PLANS
Hong Kong
The Company has a defined contribution pension
scheme for its qualifying employees. The scheme assets are held under a provident fund managed by an independent fund manager. The Company
and its employees are each required to make contributions to the scheme calculated at
Chinese Mainland
As stipulated by the regulations of the Chinese Mainland, full-time employees of the Company in the Chinese Mainland participate in a government-mandated multiemployer defined contribution plan organized by municipal and provincial governments. Under the plan, certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. The Company is required to make contributions to the plan based on certain percentages of employees’ salaries.
NOTE 17 — PROVISION FOR INCOME TAXES
BVI
Grande Group are not subject to tax on income or capital gains under current BVI law. In addition, upon payments of dividends by these entities to their shareholders, no BVI withholding tax will be imposed.
Hong Kong
Under the two-tiered profits tax rates regime,
the first HK$
Accordingly, the Hong Kong profits tax is calculated
at
Chinese Mainland
Under the PRC Enterprise Income Tax Law, the statutory
enterprise income tax rate for domestic enterprises and foreign invested enterprises is
The current and deferred portions of the income tax expenses included in the consolidated statements of operations as determined in accordance with ASC 740 are as follows:
| March 31, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Current taxes | $ | $ | $ | |||||||||
| Deferred taxes | ( | ) | ||||||||||
| Income tax (benefit) expenses | $ | ( | ) | $ | $ | |||||||
The effective tax rates on (loss) income before
income tax for the years ended March 31, 2026, 2025 and 2024 was
F-29
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 17 — PROVISION FOR INCOME TAXES (cont.)
As previously disclosed for the years ended March 31, 2025 and 2024, prior to the adoption of ASU 2023-09, a reconciliations of the differences between the Hong Kong statutory income tax rate and the Company’s effective income tax rate are as follows:
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Hong Kong statutory income tax rate | % | % | ||||||
| – Non-taxable income | ( | )% | ( | )% | ||||
| – Non-deductible expenses | % | % | ||||||
| – Temporary difference not recognized | ( | )% | % | |||||
| – Tax reduction | ( | )% | ( | )% | ||||
| – Income tax at concessionary rate | ( | )% | ( | )% | ||||
| Effective tax rate | % | % | ||||||
The Company and its subsidiaries file separate
income tax returns. The applicable statutory income tax rate in BVI was
| March 31, | ||||||||
| 2026 | ||||||||
| Amount | Percentage | |||||||
| Statutory income tax rate | $ | ( | ) | % | ||||
| Foreign tax effect: | ||||||||
| Chinese Mainland statutory rate differential | ( | ) | % | |||||
| Chinese Mainland preferential tax rate | ( | ) | % | |||||
| Nontaxable or nondeductible items: | ||||||||
| Nontaxable income | ( | ) | % | |||||
| Nondeductible expenses | ( | )% | ||||||
| Change in valuation allowance | ( | )% | ||||||
| Effective tax rate | $ | ( | ) | % | ||||
The amount of cash paid for income taxes for the year ended March 31, 2026 is as follows:
| March 31, | ||||
| 2026 | ||||
| Hong Kong | $ | |||
| Chinese Mainland | ||||
| Total | $ | |||
F-30
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 17 — PROVISION FOR INCOME TAXES (cont.)
The Company measures deferred tax asset and liability
based on the difference between the consolidated financial statements and tax bases of asset and liability at the applicable tax rates.
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Deferred tax asset: | ||||||||
| Tax loss carryforwards | $ | $ | ||||||
| Gross deferred tax asset | ||||||||
| Valuation allowance | ( | ) | ||||||
| Total deferred tax asset | ||||||||
| Deferred tax liability: | ||||||||
| Intangible asset | ( | ) | ||||||
| Gross deferred tax liability | ( | ) | ||||||
| Deferred tax liability, net | $ | ( | ) | $ | ||||
Realization of the Company’s deferred tax asset is dependent upon the Company generating sufficient taxable income in future years to obtain benefit from the reversal of temporary differences.
As of March 31, 2026, the Company had net operating
loss carryforwards of approximately $
Uncertain tax positions are evaluated based upon the facts and circumstances that exist at each reporting period. Subsequent changes in judgment based upon new information may lead to changes in recognition, derecognition, and measurement. Adjustment may result, for example, upon resolution of an issue with the taxing authorities or expiration of a statute of limitations barring an assessment for an issue. As of March 31, 2026, 2025 and 2024, the Company has no uncertain tax positions.
The Company files income tax returns in Hong Kong and the Chinese Mainland. The Company’s tax returns from inception through March 31, 2026 remain open and subject to examination. The Company is not currently under examination by any taxing authorities.
The Company’s policy is to recognize interest and penalties related to income tax matters as a component of income tax expense. The Company has not recognized interest or penalties in its consolidated statements of operations since inception.
F-31
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 18 — DISAGGREGATED REVENUES
Information for the Company’s breakdown of revenues by service type for the years ended March 31, 2026, 2025 and 2024 are as follows:
| March 31, | ||||||||||||
| Total revenues as of: | 2026 | 2025 | 2024 | |||||||||
| IPO sponsorship services | $ | $ | $ | |||||||||
| Underwriting and placing services | ||||||||||||
| Referral services | ||||||||||||
| Referral services – related party | ||||||||||||
| General advisory services | ||||||||||||
| Independent financial advisory services | ||||||||||||
| Compliance advisory services | ||||||||||||
| Course materials supplying | ||||||||||||
| Total | $ | $ | $ | |||||||||
NOTE 19 — REGULATORY REQUIREMENTS
The following table illustrates the minimum liquid capital as established by the Securities and Futures Commission of Hong Kong that the Company’s subsidiary is required to maintain as of March 31, 2026 and 2025 and the actual amounts of capital that were maintained:
| Capital requirements as of March 31, 2026 | Minimum liquid capital requirements | Capital levels maintained | ||||||
| Grande Capital | $ | $ | ||||||
| Capital requirements as of March 31, 2025 | Minimum liquid capital requirements | Capital levels maintained | ||||||
| Grande Capital | $ | $ | ||||||
The Company’s operation subsidiary maintains a capital level greater than the minimum liquid capital requirements and it is in compliance with the minimum liquid capital established by the Securities and Futures Commission of Hong Kong.
NOTE 20 — RISKS
| A. | Credit risk |
Accounts receivable
In order to minimize the credit risk,
the management of the Company has delegated a team responsible for determination of credit limits and credit approvals. Other monitoring
procedures are in place to ensure that follow-up action is taken to recover overdue debts. Internal credit rating has been given to each
category of debtors after considering aging, historical observed default rates, repayment history and past due status of respective accounts
receivable. Estimated loss rates are based on probability of default and loss given default with reference to an external credit report
and are adjusted for reasonable and supportable forward-looking information that is available without undue costs or effort while credit-impaired
trade balances were assessed individually. In this regard, the directors consider that the Company’s credit risk is significantly
reduced. The maximum potential loss of accounts receivable for the year ended March 31, 2026 is $
F-32
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 20 — RISKS (cont.)
Bank balances
The Company is exposed to concentration
of credit risk on liquid funds. The Company maintains the bank accounts in Hong Kong. Cash balances in bank accounts in Hong Kong are
insured under the Deposit Protection Scheme introduced by the Government of Hong Kong for a maximum amount of $
Other current assets
The Company assessed the impairment
for other current assets individually based on internal credit rating and ageing of these debtors which, in the opinion of the directors,
have had no significant increase in credit risk since initial recognition. Based on the impairment assessment performed by the Company,
the directors consider the loss allowance for other current assets as of March 31, 2026 and 2025 is $
| B. | Interest rate risk |
Cash flow interest rate risk
The Company is exposed to cash flow interest rate risk through the changes in interest rates related mainly to the Company’s variable-rates bank balances.
The Company currently does not have any interest rate hedging policy in relation to fair value interest rate risk and cash flow interest rate risk. The directors monitor the Company’s exposures on an ongoing basis and will consider hedging the interest rate should the need arises.
Sensitivity analysis
The Company’s exposure to the risk of changes in cash flow interest rate relates primarily to the Company’s bank balances with floating interest rates.
The sensitivity analysis below has
been determined assuming that a change in interest rates had occurred at the end of the reporting period and had been applied to the exposure
to interest rates for financial instruments in existence at that date.
If interest rate on bank balances had
been
| C. | Foreign currency risk |
Foreign currency risk is the risk that the holding of foreign currency assets will affect the Company’s financial position as a result of changes in foreign currency exchange rates.
The Company’s monetary assets and liabilities are primarily denominated in HK$ and RMB, which are the functional currencies of its Hong Kong and Chinese Mainland operating subsidiaries, respectively. Under the Linked Exchange Rate System in Hong Kong, HK$ is pegged to $; accordingly, in the opinion of management of the Company, the foreign currency risk associated with $ is considered insignificant.
The RMB is not freely convertible into foreign currencies. Remittances of foreign currencies into the Chinese Mainland or remittances of RMB out of the Chinese Mainland, as well as exchanges between RMB and foreign currencies, are subject to the rules and regulations of foreign exchange control promulgated by the PRC government. The State Administration of Foreign Exchange, under the authority of the People’s Bank of China, regulates the conversion of RMB into other currencies.
The Company currently does not use foreign currency hedging instruments to manage its foreign currency exposures. However, the directors closely monitor the related foreign currency exposure and will consider entering into foreign currency hedging arrangements should the need arise.
F-33
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 20 — RISKS (cont.)
| D. | Economic and political risks |
The Company’s operations are mainly conducted in Hong Kong and the Chinese Mainland. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by changes in the political, economic, and legal environments in Hong Kong.
The Company’s operations in Hong Kong and the Chinese Mainland are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in Hong Kong and the Chinese Mainland, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.
| E. | Inflation risk |
Management monitors changes in prices levels. Historically inflation has not materially impacted the Company’s consolidated financial statements; however, significant increases in the price of labor that cannot be passed to the Company’s customers could adversely impact the Company’s results of operations.
NOTE 21 — RELATED PARTY TRANSACTIONS
A. | Names and relationship of related parties: |
The following table sets forth the Company’s related parties and their relationships with the Company:
| Name | Relationship with the Company | |
| Yujie, Chen | ||
| Grande Holding Limited | ||
| Weijiang, Zhu | ||
| Tin Duk Victor, Chang | ||
| Ji Feng Hong Kong Limited | ||
| Yellow River Securities Limited |
B. |
| March 31, | ||||||||
| Amounts due to related parties | 2026 | 2025 | ||||||
| Grande Holding Limited | $ | ( | ) | $ | ( | ) | ||
| Weijiang, Zhu | ( | ) | ||||||
| Total | ( | ) | ( | ) | ||||
| March 31, | ||||||||
| Amounts due from related parties | 2026 | 2025 | ||||||
| Tin Duk Victor, Chang | $ | $ | ||||||
| Ji Feng Hong Kong Limited | ||||||||
| Less: allowance for expected credit loss | ( | ) | ||||||
| Total | $ | $ | ||||||
The movement of allowances for expected credit loss is as follow:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Balance at beginning of the year | $ | $ | ||||||
| Provision | ( | ) | ||||||
| Ending balance | $ | ( | ) | $ | ||||
As of March 31, 2026 and 2025, the balances
with related parties are unsecured, interest-free, and have no fixed terms of repayment. During the years ended March 31, 2026, 2025,
and 2024, the Company repaid , $
F-34
| GRANDE GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026, 2025 and 2024 (Stated in U.S. Dollars) |
NOTE 21 — RELATED PARTY TRANSACTIONS (cont.)
| C. | Summary of related party transactions: |
A summary of trade transactions with related parties for the years ended March 31, 2026, 2025 and 2024 are listed below:
| March 31, | ||||||||||||
| Consultation fee paid to senior management | 2026 | 2025 | 2024 | |||||||||
| Tak Kai Raymond, Tam | $ | $ | $ | |||||||||
| Total | $ | $ | $ | |||||||||
| March 31, | ||||||||||||
| Referral services income received from a related party | 2026 | 2025 | 2024 | |||||||||
| Yellow River Securities Limited | $ | $ | $ | |||||||||
| Total | $ | $ | $ | |||||||||
NOTE 22 — SEGMENT INFORMATION
The Company uses the management approach in determining
its operating segments.
Geographic information
The Company generates revenues principally from
services provided in Hong Kong and the Chinese Mainland.
| March 31, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Hong Kong | $ | $ | $ | |||||||||
| Chinese Mainland | ||||||||||||
| Total | $ | $ | $ | |||||||||
Long-lived assets by geographic area, based on the location of the assets, consisted of the following:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Hong Kong | $ | $ | ||||||
| Chinese Mainland | ||||||||
| Total | $ | $ | ||||||
Long-lived assets consist primarily of leasehold improvements and equipment, operating lease right-of-use assets and intangible asset.
NOTE 23 — SUBSEQUENT EVENTS
The Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions that existed at the dates of the balance sheets, including the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date. The Company has analyzed its operations subsequent to March 31, 2026 to the date of July 30, 2026, these consolidated financial statements were issued, except for the following non-recognized events, the Company has determined that it does not have any material events to disclose.
On July 16, 2026, the Company entered into an
Ordinary Share Purchase Agreement with White Lion Capital, LLC, pursuant to which the Company may, from time to time and over a period
of
On the same date, the Company also entered into a Registration Rights Agreement with the investor, pursuant to which the Company agreed to file a registration statement covering the resale of the shares issuable under the Ordinary Share Purchase Agreement, subject to the terms of the agreement.
The Company is evaluating the timing and extent of any future issuances under the Ordinary Share Purchase Agreement. No shares had been issued under the Ordinary Share Purchase Agreement as of the date these consolidated financial statements were issued.
F-35
SCHEDULE I — PARENT ONLY FINANCIAL INFORMATION
The following presents condensed parent company only financial information of Grande Group.
Condensed balance sheets
As of March 31, 2026 and 2025
(Stated in U.S. Dollars)
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Prepayments and other current assets | ||||||||
| Due from a subsidiary | ||||||||
| Total current asset | ||||||||
| Investments in subsidiaries | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Accrued expenses and other current liabilities | $ | |||||||
| Due to related parties | $ | |||||||
| Due to subsidiaries | ||||||||
| TOTAL LIABILITIES | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Class A Ordinary Shares, par value $ | ||||||||
| Class B Ordinary Shares, par value $ | ||||||||
| Subscription receivables | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| (Accumulated deficit) Retained earnings | ( | ) | ||||||
| Total shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
| * |
Condensed statements of operations
For the years ended March 31, 2026, 2025 and 2024
(Stated in U.S. Dollars)
| 2026 | 2025 | 2024 | ||||||||||
| Expenses | ||||||||||||
| General and administrative expenses | $ | ( | ) | $ | $ | |||||||
| Total operating expenses | ( | ) | ||||||||||
| Other (expense) income | ||||||||||||
| Interest income | ||||||||||||
| Loss on disposal of equity securities | ( | ) | ||||||||||
| Total other (expense) income | ( | ) | ||||||||||
| (Loss) Income before taxes | ( | ) | ||||||||||
| Provision for income taxes | ||||||||||||
| Net (loss) income | $ | ( | ) | $ | $ | |||||||
F-36
Condensed statements of cash flows
For the years ended March 31, 2026, 2025 and 2024
(Stated in U.S. Dollars)
| 2026 | 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net (loss) income | $ | ( | ) | $ | $ | |||||||
| Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||||||||||
| Allowance for expected credit loss | ||||||||||||
| Loss on disposal of equity securities | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Prepayments and other current assets | ( | ) | ||||||||||
| Accrued expenses and other current liabilities | ||||||||||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||||||
| Cash flow from investing activities: | ||||||||||||
| Incorporation of subsidiaries | ( | ) | ||||||||||
| Subscription of new shares of a subsidiary | ( | ) | ||||||||||
| Investment in equity securities | ( | ) | ||||||||||
| Acquisition of a subsidiary | ( | ) | ||||||||||
| Net cash used investing activities | ( | ) | ||||||||||
| Cash flow from financing activities: | ||||||||||||
| Advance from related parties and subsidiaries | ||||||||||||
| Net proceeds from initial public offering | ||||||||||||
| Payments of offering costs related to initial public offering | ( | ) | ||||||||||
| Net cash provided by financing activities | ||||||||||||
| Net increase in cash | ||||||||||||
| Cash at beginning of the year | ||||||||||||
| Cash at end of the year | $ | $ | $ | |||||||||
| Supplementary cash flows information: | ||||||||||||
| Non-cash investing and financing activities: | ||||||||||||
| Dividends directly paid by a subsidiary to shareholders | $ | $ | $ | |||||||||
| Investment in a subsidiary recorded in amounts due to related parties | $ | $ | $ | |||||||||
| Recognition of deferred initial public offering costs recorded in accrued expenses and other liabilities | $ | $ | $ | |||||||||
| (i) | Basis of presentation |
The Company was incorporated in the BVI on August 6, 2020 as an investment holding company.
The condensed parent company financial information of the Company has been prepared using the same accounting policies as set out in the accompanying consolidated financial statements.
| (ii) | Restricted net assets |
Schedule I of Rule 5-04 of Regulation S-X requires the condensed financial information of registrant shall be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of the above test, restricted net assets of consolidated subsidiaries shall mean that amount of the registrant’s proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries in the form of loans, advances or cash dividends without the consent of a third party (i.e., lender, regulatory agency, foreign government, etc.).
The condensed parent company financial statements
have to be prepared in accordance with Rule 12-04, Schedule I of Regulation S-X if the restricted net assets of the subsidiaries of Grande
Group exceed
As of March 31, 2026 and 2025, there were no material contingencies, significant provisions of long term obligations, mandatory dividend or redemption requirements of redeemable stocks or guarantees of the Company, except for those which have been separately disclosed in the consolidated financial statements, if any.
F-37