OFAL 10-Q
OFA Group (OFAL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission
file number
(Exact name of registrant as specified in its charter)
State or other jurisdiction of incorporation or organization |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The |
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 every Interactive Data File required to be submitted 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 such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 13, 2026, there were shares of Class A Ordinary Shares outstanding and shares of Class B Ordinary Shares outstanding.
TABLE OF CONTENTS
| PART I FINANCIAL INFORMATION | ||
| ITEM 1. | FINANCIAL STATEMENTS (Unaudited) | F-1 |
| Condensed Consolidated Balance Sheets | F-1 | |
| Condensed Consolidated Statements of Operations | F-2 | |
| Condensed Consolidated Statement of Comprehensive Income (Loss) | F-3 | |
| Condensed Consolidated Statements of Stockholders’ Equity | F-4 | |
| Condensed Consolidated Statements of Cash Flows | F-6 | |
| Notes to the Condensed Consolidated Financial Statements | F-7 | |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 3 |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 14 |
| ITEM 4. | CONTROLS AND PROCEDURES | 14 |
| PART II OTHER INFORMATION | ||
| ITEM 1. | LEGAL PROCEEDINGS | 15 |
| ITEM 1A. | RISK FACTORS | 15 |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 16 |
| ITEM 6. | EXHIBITS | 16 |
| SIGNATURES | 17 | |
| 2 |
ITEM 1. FINANCIAL STATEMENTS:
OFA GROUP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. Dollars, except for the number of shares)
| June 30, 2026 | March 31, 2026 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash-held by affiliate | ||||||||
| Prepaid expense | ||||||||
| Contract assets | ||||||||
| Account receivables, net | ||||||||
| Deferred offering costs | ||||||||
| Total current assets | ||||||||
| NON-CURRENT ASSETS: | ||||||||
| Rent deposit | ||||||||
| Right-of-use asset - operating lease | ||||||||
| Property, plant and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Account payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Contract liabilities | ||||||||
| Current maturities of loan payable | ||||||||
| Due to related parties | ||||||||
| Operating lease liabilities | ||||||||
| Commitment fee payable | ||||||||
| Total current liabilities | ||||||||
| Non-Current liabilities: | ||||||||
| Loan payable, net of current | ||||||||
| Operating lease liabilities | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Mezzanine Equity | ||||||||
| Series A Convertible Redeemable Preferred Shares, $ par value, shares authorized as of June 30, 2026 and March 31, 2026, respectively, and shares issued and outstanding as of June 30, 2026 and March 31, 2026, respectively. | ||||||||
| Preferred stock payable | ||||||||
| Total mezzanine equity | ||||||||
| Shareholders’ equity: | ||||||||
| Class A Ordinary Shares, with $ par value, shares authorized, and shares issued and outstanding as of June 30, 2026 and March 31, 2026, respectively | ||||||||
| Class B Ordinary Shares, with $ par value, shares authorized, shares issued and outstanding as of June 30, 2026 and March 31, 2026 | ||||||||
| Additional paid-in capital | ||||||||
| Share payable | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total shareholders’ equity (deficit) | ||||||||
| Total liabilities, Mezzanine Equity and shareholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| * | Giving retroactive effect to the one-for-ten share consolidation announced on July 27, 2026 and effective on July 31, 2026, as described in Note 1. |
| F-1 |
OFA GROUP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. Dollars, except for the number of shares)
| For The Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Revenue | ||||||||
| Project income | ||||||||
| Cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Depreciation and amortization | ||||||||
| Selling, general and administrative | ||||||||
| Professional services | ||||||||
| Advertising and marketing | ||||||||
| Salaries and wages | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Other income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Interest income | ||||||||
| Total other income, net | ||||||||
| Loss from operations before income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ( | ) | ||||||
| Net Loss | ( | ) | ( | ) | ||||
| Dividends and accretion to redeemable preferred stock | ( | ) | ||||||
| Net Loss attributable to common shareholders | ( | ) | ( | ) | ||||
| Basic and diluted net loss per share, Class A Ordinary Shares | ) | ) | ||||||
| Weighted average shares outstanding, Class A Ordinary Shares | ||||||||
| Basic and diluted net loss per share, Class B Ordinary Shares | ||||||||
| Weighted average shares outstanding, Class B Ordinary Shares | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-2 |
OFA GROUP
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Expressed in U.S. Dollars, except for the number of shares)
| For The Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Net Loss | ( | ) | ( | ) | ||||
| Other comprehensive loss | ||||||||
| Foreign currency adjustments | ( | ) | ||||||
| Comprehensive loss | ( | ) | ( | ) | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-3 |
OFA GROUP
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Expressed in U.S. Dollars, except for the number of shares)
| Ordinary Shares | Additional | Accumulated | Total | |||||||||||||||||||||||||||||||||
| Class A | Class B | Paid-in | Share | Accumulated | Comprehensive | Shareholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | payable | Deficit | Income | Deficit | ||||||||||||||||||||||||||||
| Balance, March 31, 2025 (Audited) | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Shareholder Investment | - | - | ||||||||||||||||||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||||||||||||||
| Shares to be issued for professional services | - | |||||||||||||||||||||||||||||||||||
| Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other issuance costs | - | |||||||||||||||||||||||||||||||||||
| Deferred IPO costs reclassified to APIC | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, June 30, 2025 (Unaudited) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance, March 31, 2026 (Audited) | ( | ) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ||||||||||||||||||||||||||||||||||
| Issuance of common stock upon conversion of Series A Preferred Shares | - | |||||||||||||||||||||||||||||||||||
| Dividends on Series A Preferred Shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Adjustment to redemption value | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, June 30, 2026 (Unaudited) | ( | ) | ||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
*Giving retroactive effect to the one-for-ten share consolidation announced on July 27, 2026 and effective on July 31, 2026, as described in Note 1.
| F-4 |
OFA GROUP
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY
(Expressed in U.S. Dollars, except for the number of shares)
| Mezzanine Equity | ||||||||
| Shares | Amount | |||||||
| Balance, March 31, 2026 | ||||||||
| Preferred stock payable | ||||||||
| Conversion | ( | ) | ( | ) | ||||
| Dividends on Series A Preferred Shares | - | |||||||
| Adjustment to redemption value | - | ( | ) | |||||
| Balance, June 30, 2026 | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-5 |
OFA GROUP
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in U.S. Dollars, except for the number of shares)
| For The Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash flows from operating activities: | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Share-based compensation expense | ||||||||
| Shares issued for professional services | ||||||||
| Shareholder investment | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Due to related party | ( | ) | ||||||
| Contract assets | ( | ) | ( | ) | ||||
| Account receivables | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Rent deposit | ( | ) | ||||||
| Right-of-use asset | ( | ) | ||||||
| Right-of-use liabilities | ( | ) | ||||||
| Contract liabilities | ||||||||
| Account payable | ( | ) | ||||||
| Accrued expenses | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of Class A Ordinary Shares upon initial public offering, net of underwriting discounts, commissions and other offering costs | ||||||||
| Proceeds from the issuance of Series A Preferred Shares, net | ||||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash | ( | ) | ||||||
| Effect of currency translation on cash and cash equivalents | ( | ) | ||||||
| Cash and restricted cash, beginning of the period | ||||||||
| Cash and restricted cash, end of the period | $ | $ | ||||||
| Reconciliation of cash and cash equivalents and restricted cash to the consolidated balance sheet: | ||||||||
| Cash | ||||||||
| Restricted cash | ||||||||
| Total cash and cash equivalents and restricted cash | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Establishment of ROU assets and liabilities | $ | $ | ||||||
| Accretion to redeemable preferred equity | $ | $ | ||||||
| Dividends on Series A Preferred Shares | ||||||||
| Deferred IPO costs reclassified to APIC | $ | $ | ||||||
| Ordinary Shares issued for conversion of Series A Preferred Shares | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-6 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
NOTE 1. NATURE OF BUSINESS AND ORGANIZATION
OFA Group (the “Company” or “OFA”) is a limited liability company established under the laws of the Cayman Islands on August 27, 2024. It is a holding company with no business operation.
OFA, through its wholly-owned subsidiary, Office For Fine Architecture Limited (“OFA HK”), provides a wide range of service in Hong Kong, including interior design, fit out services, project management and application service. OFA HK provides design and fit out services for commercial and residential buildings. The design service includes both the consultation with its staff and the actual design work and OFA HK provides a specific conceptualized design with layout plans, detailed design drawings, advice relating to, among other things, budgetary consideration, optimal use of space, the materials, fittings, furniture, appliances and other items to be used with an aim to produce a preliminary design plan and quotation for clients’ considerations. Fit out works include installing protective materials to cover floors or walls, installing or constructing partition walls, windows and window frames and decorative fittings, furniture or fixtures, installing plumbing systems as well as installing switches, power outlets, telephone wiring, computer outlet covers and other electrical and wiring works. OFA HK is also focused on innovation, efficiency, and scalability, transitioning from a traditional project-based model to a subscription-based model for AI tools, real estate development and senior care infrastructure.
In May 2025, OFA HK entered into a Co-Development Agreement (the “Co-Development Agreement”) with a third-party contractor to co-develop the OFA QikBIM system. Under that agreement the contractor will develop AI software for automated architectural design and generation of structural and MEP construction drawings. The system is being designed for use by architects and designers, with potential future inclusion of building authorities.
In March 2026, the Company entered into a Real World Asset Tokenization Service Agreement (the “Tokenization Agreement”) with MD Queens Development LLC, or its designated special purpose vehicle (the “MD Queens”), in connection with a proposed mixed-use real estate development project located in Long Island City, New York (the “MD Queens Project”). Pursuant to the Tokenization Agreement, the Company, through its Hearth RWA tokenization platform, will provide certain blockchain-based tokenization infrastructure and related technology services in connection with the MD Queens Project.
In April 2026, the Company further expanded its international operations through the establishment of two wholly-owned subsidiaries in Japan, OFA Japan Inc. and OFA Japan Asset Management, Inc. OFA Japan Inc. will focus on project management services for land and real estate development projects in Japan. OFA Japan Asset Management is in the early stage of setup and development and will provide investment management, asset management, investment advisory and related financial consulting services. The establishment of these subsidiaries supports the Company’s continued expansion of its real estate development and asset management businesses in Asia.
| F-7 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as follows:
Date of Incorporation |
Jurisdiction of Formation |
Percentage of direct/indirect Economic Ownership |
Principal Activities | |||
Initial Public Offering
On
May 22, 2025, OFA completed its initial public offering (the “IPO”) of ( shares before giving effect to
the share consolidation) Ordinary Shares, par value $ per share, at a public offering price of $ ($ per share pre-share
consolidation) per share, generating gross proceeds of $
Prior to the completion of the IPO, deferred offering costs, which consisted primarily of accounting, legal and other professional fees directly attributable to the IPO, were capitalized within other current assets in the consolidated balance sheet. Upon the completion of the IPO, such deferred offering costs were reclassified to shareholders’ equity as a reduction of the IPO proceeds.
Share Consolidation
On
July 27, 2026, the Company announced a consolidation of its Class A Ordinary Shares at a ratio of one-for-ten (the “share consolidation”),
which became effective at 12:01 a.m. Eastern Time on July 31, 2026, following approval by the Company’s shareholders at an extraordinary
general meeting held on May 21, 2026. At the effective time,
All references to the number of Class A Ordinary Shares, share-based awards, and per-share amounts in these unaudited condensed consolidated financial statements and the accompanying notes have been retroactively adjusted to reflect the share consolidation for all periods presented, unless otherwise indicated.
| F-8 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
NOTE 2. BASIS OF PRESENTATION
Basis of Presentation
The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation, have been included. All intercompany balances and transactions have been eliminated in consolidation. These interim results are not necessarily indicative of the results to be expected for the year ending March 31, 2027, or for any other interim period or for any other future year.
There have been no material changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended March 31, 2026.
Transition from Foreign Private Issuer Status
The Company previously qualified as a “foreign private issuer” (as defined in Rule 3b-4 under the Securities Exchange Act of 1934, as amended) and reported with the U.S. Securities Exchange Commission (the “SEC”) on foreign private issuer forms, including its annual report on Form 20-F. As required, the Company re-assessed its foreign private issuer status as of September 30, 2025 and determined that it no longer qualified as a foreign private issuer as of that date.
Accordingly, effective April 1, 2026, the Company became subject to the reporting and other requirements applicable to U.S. domestic registrants. Beginning with the period covered by our Annual Report on Form 10-K for the year ended March 31, 2026, the Company files periodic reports with the SEC on the forms applicable to U.S. domestic issuers, including Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, when applicable, Annual Reports on Form 10-K, and is subject to the SEC’s proxy rules, Regulation FD, and the reporting requirements of Section 16 of the Exchange Act. Annual periods prior to March 31, 2026 were reported on Form 20-F as a foreign private issuer.
Going Concern
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.
For
the three months ended June 30, 2026, the Company incurred a net loss of $
In response to these conditions, management has developed plans intended to alleviate such substantial doubt, including: (i) proceeds upon the completion of the Company’s on-going real world asset tokenization agreements; (ii) access to additional committed equity financing under the Company’s PIPE Purchase Agreement; (iii) the management of operating expenditures and discretionary spending to preserve liquidity; and (iv) the continued generation of revenue from the Company’s design, fit-out, project management and platform services. In addition, a portion of the Company’s current liabilities consists of contract liabilities representing consideration received in advance of the satisfaction of performance obligations, which are expected to be settled through the delivery of services rather than the payment of cash.
| F-9 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
Management believes that these plans, which are probable of being effectively implemented, will provide the Company with sufficient liquidity to meet its obligations as they become due for at least twelve months from the date these consolidated financial statements are issued. Accordingly, management has concluded that its plans alleviate the substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may 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 its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, 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 election to opt out is irrevocable. The Company has 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, the Company, 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 the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which opted out of utilizing the emerging growth company reduced reporting requirements difficult.
Use of Estimates and Assumptions
The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Significant estimates required to be made by management, include, but are not limited to, the allowance for doubtful accounts, allowance for deferred tax assets, uncertain tax position, incremental borrowing rates used in calculation of the operating lease right-of-use assets and operating lease liabilities, the estimated cost and the input measure method used in revenue recognition, the valuation of share-based compensation expenses, and where consideration is received in cryptocurrency, fair value at the date of contract inception and the appropriate principal-market reference. Actual results could differ from those estimates, and as such, differences could be material to the unaudited condensed consolidated financial statements.
Reclassification of Prior Year Presentation
Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.
| F-10 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
Foreign Currency Translation and Transaction
The Company’s principal country of operations is Hong Kong. The financial position and results of its operations are determined using their respective functional currencies, including Hong Kong Dollars (“HK$”), Renminbi (“RMB”), Japanese Yen (“JPY”) and U.S. Dollars (“US$”), based on the primary economic environment in which each entity operates. The Company’s unaudited condensed consolidated financial statements are reported using the U.S. Dollars (“US$” or “$”). Under the current rate method, the results of operations and the consolidated statements of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income (loss) included in condensed consolidated statements of changes in shareholders’ equity. Gains and losses from foreign currency transactions are included in the Company’s condensed consolidated statements of operations and comprehensive income (loss).
The following table outlines the currency exchange rates that were used in preparing the consolidated financial statements:
| June 30, 2026 | June 30, 2025 | |||||||
| Period-end spot rate | US$1=HK$ | US$1=HK$ | ||||||
| US$1=RMB | - | |||||||
| US$1=JPY | - | |||||||
| Average rate | US$1=HK$ | US$1=HK$ | ||||||
| US$1=RMB | - | |||||||
| US$1=JPY | - | |||||||
Recently issued accounting pronouncements
Recently issued accounting pronouncements not yet adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2025, for emerging growth companies, with early adoption permitted. The amendments should be applied prospectively however; retrospective application is also permitted. The Company is in the process of assessing the impact of this ASU on its consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40). The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is also permitted. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements once adopted. We are currently evaluating the provisions of this ASU.
In November 2024, the FASB issued ASU No. 2024-04, Debt-Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements related to accounting for the settlement of a debt instrument as an induced conversion. The amendments in this update are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.
| F-11 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this update provide a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current classified accounts receivable and contract assets. This update is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years. Adoption of this ASU can be applied prospectively for reporting periods after its effective date. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU simplifies the capitalization guidance by removing all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout ASC 350-40. The ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years. Adoption of this ASU can be applied prospectively for reporting periods after its effective date; or follow a modified transition approach that is based on the status of the respective projects and whether software costs were capitalized before the date of adoption; or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is permitted. We are currently evaluating the provisions of this ASU.
NOTE 3. ACCOUNT RECEIVABLES, NET
Accounts receivable, net consisted of the following at June 30, 2026 and March 31, 2026:
| June 30, 2026 | March 31, 2026 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: allowance for doubtful accounts | ||||||||
| Accounts receivable, net | $ | $ | ||||||
The movement of allowance for doubtful accounts are as follows:
| June 30, 2026 | March 31, 2026 | |||||||
| Beginning balance | $ | |||||||
| Write-off | ( | ) | ||||||
| Addition | ||||||||
| Exchange difference | ||||||||
| Ending balance | $ | |||||||
| F-12 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
NOTE 4. CONTRACT ASSETS/(LIABILITIES)
Projects with performance obligations recognized over time that have revenue recognized to date in excess of cumulative billings are reported on the Company’s balance sheets as “Contract assets”. Provisions for estimated losses of contract assets on uncompleted contracts are made in the period in which such losses are determined. Contract assets that have billing terms with unconditional rights to be billed beyond one year are classified as non-current assets.
Contract assets consisted of the following at June 30, 2026 and March 31, 2026:
| June 30, 2026 | March 31, 2026 | |||||||
| Revenue recognized to date | $ | $ | ||||||
| Less: progress billings to date | ( | ) | ( | ) | ||||
| Exchange difference | ||||||||
| Contract assets | $ | $ | ||||||
| Contract assets, current | $ | $ | ||||||
Contract liabilities consisted of the following at June 30, 2026 and March 31, 2026:
| June 30, 2026 | March 31, 2026 | |||||||
| Billings in advance of performance obligation under contracts | $ | $ | ||||||
Contract liabilities related to contracts are balances due to customers under contracts. This arises if a particular milestone payment exceeds the revenue recognized to date under the cost-to-cost method.
The movement in contract liabilities is as follows:
| June 30, 2026 | March 31, 2026 | |||||||
| Beginning Balance | $ | $ | ||||||
| Decrease in contract liabilities as a result of recognizing revenue during the period was included in the contract liabilities at the beginning of the period | ( | ) | ||||||
| Increase in contract liabilities as a result of billings in advance of performance obligation under contracts | ||||||||
| Exchange difference | ( | ) | ( | ) | ||||
| Ending Balance | $ | $ | ||||||
Real World Asset Tokenization Service Agreement with Vero 60 LLC and Vero Beach Land Development LLC
On May 8, 2026, the Company entered into a Real World Asset Tokenization Service Agreement (the “Vero 60 Agreement”) through its proprietary Hearth RWA tokenization platform with Vero 60 LLC and Vero Beach Land Development LLC (or its designated special purpose vehicle) (the “Vero 60”).
Under
the Vero 60 Agreement, the Company will provide blockchain-based tokenization technology infrastructure services in connection with Vero
60’s residential real estate development project located in Vero Beach, Florida (the “Vero 60 Project”). The Vero 60
Project consists of the redevelopment of an existing agriculture property into a low-density residential community. The projected stabilized
value of the completed Vero 60 Project, as estimated by Vero 60, is approximately $
As
consideration for the technology and tokenization infrastructure services described in the Vero 60 Agreement, Vero 60 has agreed to pay
the Company a platform technology fee of $
On
May 13, 2026, the Company received PPDF tokens in purported settlement of the first installment of the Platform Technology
Fee, which had a stated contractual amount of $
| F-13 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
NOTE 5. PROPERTY AND EQUIPMENT
Property and equipment, net consisted of the following:
| June 30, 2026 | March 31, 2026 | |||||||
| Office equipment | ||||||||
| Hardware | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Exchange difference | ( | ) | ||||||
| Property, plant and equipment, net | $ | |||||||
During
the three months ended June 30, 2026 and 2025, the Company incurred depreciation expense of $
NOTE 6. INTANGIBLE ASSETS
On
May 23, 2025, the Company entered into a Co-Development Agreement with Alan to AI Consultancy Co. Limited (“the Contractor”)
for the co-development of the Acquired IP. This system is an AI software designed for architecture design and automated generation of
structural and MEP (Mechanical, Electrical, and Plumbing) construction drawings. Under the agreement, while the core QikBIM (or “QikBIM”)
system intellectual property (IP) initially remains with the Contractor, the Company secures a perpetual, irrevocable, worldwide, royalty-free
license to use, modify, and distribute the software, including access to its source code. Crucially, the Company holds exclusive rights
for the use, management, and operation of the system in North America and Hong Kong for five years from final completion, after which
the license becomes non-exclusive globally. Furthermore, the Company has an option, exercisable within three years of final completion,
to either purchase the IP rights for the North American and Hong Kong version of the system or acquire equity in the Contractor (“the
Option”). All development fees paid by the Company will be converted towards the acquisition cost if this option is exercised.
The total contractual consideration for the acquisition was $
On
March 31, 2026, the Company entered into an Intellectual Property Assignment and Co-Ownership Agreement with Alan To AI Consultancy Co.
Limited, which amended, restated and superseded the license and option arrangements under the Co-Development Agreement. Pursuant to the
new agreement, the Company acquired a
| F-14 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
As
of June 30, 2026, the unpaid balance was HK$
Intangible assets consisted of the following at each balance sheet date:
| Costs: | March 31, 2026 | Additions | Disposals | Exchange Difference | June 30, 2026 | |||||||||||||||
| Artificial intelligence software | $ | $ | ( | ) | $ | |||||||||||||||
| Blockchain application development | ||||||||||||||||||||
| Total | ( | ) | ||||||||||||||||||
| Accumulated amortization: | ||||||||||||||||||||
| Artificial intelligence software | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Blockchain application development | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Total | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Carrying amounts | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||
Amortization
of the intangible asset during the three months ended June 30, 2026, was $
As
of June 30, 2026, the Company’s intangible assets had an aggregate gross carrying amount of $
In
addition, during the year ended March 31, 2026, the Company completed the development of the Hearth real world asset (“RWA”)
technology platform. Based on management’s assessment that the platform was fully delivered, operational, available for its intended
use and capable of generating future economic benefits beyond a single customer engagement, the related blockchain application development
costs were capitalized as intangible assets and are being amortized over an estimated useful life of
No revenue related to QikBIM or the Hearth RAW tokenization platform has been generated for the three months ended June 30, 2026.
The future amortization of the intangible asset is as follows:
| As of June 30, | Amount | |||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Total Intangible Asset Amortization | $ | |||
NOTE 7. ACCRUED LIABILITIES
As of June 30, 2026 and March 31, 2026, accrued liabilities were comprised of the following:
| June 30, 2026 | March 31, 2026 | |||||||
| System migration services | ||||||||
| Intangible assets purchase | ||||||||
| Professional fees for legal and accounting services | ||||||||
| Payroll liabilities | ||||||||
| Other short-term liabilities | ||||||||
| Total accrued liabilities | $ | $ | ||||||
| F-15 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
NOTE 8. RELATED PARTY TRANSACTIONS
Amounts Due to Directors and Executive Officers
As
of June 30, 2026 and March 31, 2026, the Company had amounts due to related parties of $
Greentree Financial Group
On April 28, 2025, the Company entered into a service agreement (the “Agreement”) with Greentree Financial Group, Inc. (“Greentree”), a consulting company providing corporate governance, Nasdaq listing, and accounting services, in which Thomas M. Gaffney holds a minority membership interest and was the Managing Member from March 2024 to September 2024. Pursuant to the Agreement Greentree agreed to provide professional services regarding compliance with U.S. GAAP and SEC rules. As consideration for these services, the Company issued Class A Ordinary Shares ( shares before giving effect to the share consolidation) to Greentree. The service fees were considered fully earned upon the execution of the Agreement. The Company recognized stock-based compensation expense based on the split-adjusted fair value of the shares at $ ($ per share pre-share consolidation) per share, referencing the offering price on May 19, 2025, the date the Company’s shares commenced trading. Accordingly, the Company recognized stock-based compensation expense of $ related to this grant during the period ended December 31, 2025. On December 18, 2025, the Company and Greentree entered into an amendment to the Agreement (the “Addendum”). Under the terms of the Addendum, the Company agreed to issue an additional Class A Ordinary Shares ( shares before giving effect to the share consolidation) to Greentree as a professional service fee. These shares were issued and vested immediately upon the signing of the Addendum. Accordingly, the Company recognized share-based compensation expense of $ (the shares were valued at a split-adjusted price of $ per share based on the closing market price on the date of issuance) related to this grant during the year ended March 31, 2026.
On
October 29, 2025, the Company entered into the PIPE Purchase Agreement with Greentree (as one of the buyers) and issued
Preferred Shares to Greentree for net proceeds of $
On
February 26, 2026, the Company received net proceeds of $
On
March 30, 2026, Greentree elected to convert Preferred Shares into Class A Ordinary Shares of the Company pursuant to the Certificate
of Designations. The aggregate conversion amount of $
Precursor Capital Limited
On
April 2, 2024, the Company entered a $
| F-16 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
TriCore Foundation, LLC
On
October 29, 2025, the Company entered into purchase agreement (the “PIPE Purchase Agreement”) with a group of institutional
investors (collectively, the “Buyers”), providing for the issuance and sale, in multiple closings, of up to $
On
June 22, 2026, pursuant to the PIPE Purchase Agreement and the related Waiver Agreement, the Company received aggregate
cash proceeds of $
In
addition, as of June 30, 2026, the Company had received $
As of June 30, 2026, TriCore held Class A Ordinary Shares ( shares before giving effect to the share consolidation) and Preferred Shares.
Li Hsien Wong - Employment Agreement
On
August 30, 2024, the Company entered into an Executive Employment Agreement with Mr. Li Hsien Wong, the Chief Executive Officer. The
agreement became effective on May 15, 2025 (the “Effective Date”), coinciding with the effectiveness of the Company’s
registration statement on Form F-1. Pursuant to the agreement, Mr. Wong is entitled to an annual equity grant of Class A Ordinary
Shares ( shares before giving effect to the share consolidation). For the calendar year 2025, Mr. Wong will receive an initial
grant pro-rated for the period from the Effective Date through December 31, 2025.
share-based compensation expense was recorded during the three months ended June 30, 2026.
| F-17 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
Strategic Investors
On December 30, 2025, the Company executed the purchase agreement with FNHK Inc., CP COWORK LIMITED and R-OPUS Inc (the “Purchasers”). As of February 2026, the Company had fully received the consideration and issued Class B Ordinary Shares to FNHK Inc., Class B Ordinary Shares to CP COWORK LIMITED and Class B Ordinary Shares to R-OPUS Inc, a par value of US$ each.
No additional shares were issued to, or consideration received from, the Purchasers during the three months ended June 30, 2026.
Finuvia LLC
The
Company had restricted cash of $
On
May 2, 2026, the Company entered into a new financial advisory service agreement with Finuvia. The agreement has a term through
May 31, 2028 and provides monthly payments by the Company of $
NOTE 9. LOAN PAYABLE
On
October 5, 2023, the Company borrowed a
On
January 2, 2025, due to a general decline in the market lending rate, the applicable annual interest rate was automatically adjusted
by the lender from
On
March 2, 2026, the lender approved a revised repayment schedule under the original loan agreement. Under the revised repayment
schedule, the Company was granted a 20-month principal moratorium, during which it is required to make interest-only payments. Principal
repayments will resume in December 2027 in accordance with the revised repayment schedule. As of June 30, 2026, the outstanding loan
balance was $
Loan payable is as follows as of June 30, 2026 and March 31, 2026:
| Interest rate | June 30, 2026 | March 31, 2026 | ||||||||||
| HSBC (Hong Kong) - 100% Guarantee Loan | % | $ | $ | |||||||||
| Less: current portion of long-term bank borrowings | ( | ) | ( | ) | ||||||||
| Non-current portion of long-term bank borrowings | $ | $ | ||||||||||
Interest
expense pertaining to the above bank borrowings for the three months ended June 30, 2026 and 2025 amounted to $
Maturities of the loan payable were as follows:
| As of June 30, | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| 2032 and thereafter | ||||
| Total bank borrowings repayments | $ | |||
| F-18 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
NOTE 10. LEASE
The Company leases office space in Hong Kong under a non-cancelable operating lease agreement executed on June 26, 2023, with a term ending August 15, 2025. This lease has been extended to end on August 17, 2027.
In April 2024, the Company entered two additional non-cancelable operating lease agreements for office spaces located in Rolling Hills Estates, California. The first lease commenced on April 10, 2024, and expired on November 30, 2025. The Company has renewed the lease agreement with leasing period from December 1, 2025 to December 31, 2026. The second lease began on April 22, 2024, and was terminated on April 30, 2025. This has been extended to October 30, 2026. In November 2024, the Company entered another lease for office space in Rolling Hills Estates, which commenced on November 11, 2024, and will expire on December 31, 2025 and this lease has been extended to December 31, 2026.
On December 26, 2025, the Company entered an operating lease agreement for its office in Guangzhou, PRC. The lease will be expired on December 25, 2026.
On May 1, 2026, the Company, through its subsidiary OFA Japan Inc., entered into a non-cancelable operating lease agreement for office space and one adjacent parking space located in Choshi City, Chiba Prefecture, Japan. The lease has an initial term of two years, commencing on May 1, 2026 and expiring on April 30, 2028. Unless either party provides written notice of termination at least six months prior to the expiration date, the lease will automatically renew for an additional two-year term under the same terms and conditions.
The balances for the operating leases where the Company is the lessee are presented within the balance sheets as follows:
As of June 30, 2026 | As of March 31, 2026 | |||||||
| Operating leases: | ||||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| Operating lease liabilities, current | $ | $ | ||||||
| Operating lease liabilities, noncurrent | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
| Weighted average remaining lease term (in years) | ||||||||
The components of lease expenses for the three months ended June 30, 2026 and 2025 were as follows:
| For the three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Operating lease cost | $ | $ | ||||||
| Cost of other leases with period less than one year and variable lease costs | ||||||||
| Total lease expenses | $ | $ | ||||||
| Weighted average discount rate (%) | % | % | ||||||
| F-19 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
Supplemental cash flow information related to leases for the three months ended June 30, 2026 and 2025 were as follows:
| For the three months ended June 30, | ||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | 2026 | 2025 | ||||||
| Operating cash flows from operating leases | $ | $ | ||||||
| Supplemental noncash information: | ||||||||
| Right-of-use assets obtained in exchange for lease obligation: | $ | $ | ||||||
As of June 30, 2026, the maturities of operating lease liabilities (excluding short-term lease) are as follows:
| As of June 30, | Operating Lease | |||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Less: Imputed interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
| Less: current portion | ( | ) | ||
| Lease obligations, noncurrent | ||||
As of March 31, 2026, the maturities of operating lease liabilities (excluding short-term lease) are as follows:
| As of March 31, | Operating Lease | |||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Total lease payments | ||||
| Less: Imputed interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
| Less: current portion | ( | ) | ||
| Lease obligations, noncurrent | ||||
NOTE 11. SHAREHOLDERS’ EQUITY
Class A Ordinary Shares
The Company is authorized to issue Class A Ordinary Shares, par value of $ (the “Class A Ordinary Shares”) and Class B Ordinary Shares, par value $ per share (the “Class B Ordinary Shares”). As of June 30, 2026 and March 31, 2026, the Company had ( shares before giving effect to the share consolidation) and ( shares before giving effect to the share consolidation) Class A Ordinary Shares issued and outstanding, respectively.
On
April 2, 2024, the Company entered a $
| F-20 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
On
March 26, 2026, L&H Inc. delivered a conversion notice electing to convert shares of Series A Preferred Shares, with aggregate
stated value of $, reflecting the 110% multiplier, and an aggregate conversion amount of $
On
March 31, 2026, L&H Inc. delivered a conversion notice electing to convert shares of Series A Preferred Shares, with aggregate
stated value of $, reflecting the 110% multiplier, and an aggregate conversion amount of $
On
May 1, 2026, L&H Inc. elected to convert shares of Series A Preferred Shares (aggregate stated value of $, reflecting the
110% multiplier, and an aggregate conversion amount of $
Share-based Compensation
For the year ended March 31, 2026, a total of shares ( shares before giving effect to the share consolidation) were issued for professional service. Please refer to Note 14 for more information.
No additional share-based compensation was recognized during the three months ended June 30, 2026.
IPO
On
May 22, 2025, the Company completed its IPO of ( shares before giving effect to the share consolidation) Ordinary Shares,
at a public offering price of $ ($ per share pre-share consolidation), resulting in gross proceeds of approximately $
Atsion Opportunity Fund LLC Agreement
On
July 14, 2025, the Company entered into the Purchase Agreement (the “Atsion Purchase Agreement”) with Atsion Opportunity
Fund LLC – Series 1 (“Atsion”), pursuant to which the Company have the right, but not the obligation, to sell up to
$
| F-21 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
In
consideration for entering into the Purchase Agreement, the Company have agreed to issue Atsion Commitment Shares. If the aggregate
value of the Commitment Shares, as determined pursuant to the Purchase Agreement, is less than $
The
remaining Commitment Fee is payable in accordance with a Conditional Waiver of Covenant dated March 25, 2026 (the “Waiver”),
under which the Company and the Atsion agreed to a payment schedule consisting of: (i) $
On June 3, 2026, the Company and Atsion entered into Amendment No. 1 to the Waiver, granting the Company the right, upon a payment default, to settle all or any portion of the unpaid balance by issuing Ordinary Shares (“Default Shares”) in a number equal to the unpaid amount divided by the volume-weighted average price of the Ordinary Shares on the trading day immediately preceding issuance, subject to a cap of shares. In connection therewith, the Company delivered irrevocable instructions to its transfer agent reserving Ordinary Shares for potential issuance as Default Shares and agreed to file an amended registration statement on Form S-1 registering such shares.
The
registration statement was declared effective on June 24, 2026. As of June 30, 2026, the initial $
Class B Ordinary Shares
On November 24, 2025, the Company held an extraordinary general meeting of shareholders (the “EGM”). The Company’s shareholders approved the following proposals:
(i) Proposal 1: As an ordinary resolution, to increase the Company’s authorized share capital from US$ divided into Ordinary Shares of a par value of US$ each, to US$ divided into Ordinary Shares of a par value of US$ each;
(ii)
Proposal 2: As an ordinary resolution, subject to the approval of Proposal 1 by the shareholders, to amend the authorized share capital
of the Company by (i) re-classifying and re-designating Ordinary Shares as Class A Ordinary Shares, par value
US$, each with one vote per share and Class B Ordinary Shares, par value US$ each, with
(iii) Proposal 3: As a special resolution, subject to the approval of Proposal 1 and Proposal 2 by the shareholders, to amend and restate the Company’s amended and restated memorandum and articles of association (the “M&A”) by the deletion in their entirety and to approve and adopt the substitution in their place of the second amended and restated memorandum and articles of association (the “Second M&A”), with immediate effect in substitution for and to the exclusion of the M&A;
| F-22 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
(iv)
Proposal 4: As an ordinary resolution, subject to the approval of Proposals 1 – 3 by the shareholders, to issue Class
B Ordinary Shares each in the capital of the Company to the Purchasers at par value each, for an aggregate consideration of US$
(v)
Proposal 5: As an ordinary resolution, (i) the Company be authorized to enter into, execute, deliver and perform all obligations under
the Securities Purchase Agreement, the Certificate of Designations and the Registration Rights Agreement (the “RRA,” and
together with the Purchase Agreement and the Certificate of Designations, the “Transaction Documents”), in each case substantially
in the forms presented to the shareholders; (ii) the Company is authorized to issue and sell up to Preferred Shares, having an
aggregate stated value of up to US$
(vi) Proposal 6: As an ordinary resolution, to establish and maintain a digital asset treasury for the purpose of holding, managing and investing in digital assets including cryptocurrencies and blockchain-based assets; and
(vii) Proposal 7: As an ordinary resolution, to adjourn the EGM to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the EGM, there are not sufficient votes to approve any other proposal(s).
On December 30,2025, the Company executed the purchase agreement with the Purchasers. As of February 2026, the Company had fully received the consideration and issued Class B Ordinary Shares to FNHK Inc., Class B Ordinary Shares to CP COWORK LIMITED and Class B Ordinary Shares to R-OPUS Inc, a par value of US$ each.
As of June 30, 2026 and March 31, 2026, the Company had Class B Ordinary Shares issued and outstanding.
Preferred Shares — Mezzanine Equity
On
October 29, 2025, the Company entered into a PIPE Purchase Agreement with institutional investors to sell up to $
On
February 26, 2026, the Company received net proceeds of $
| F-23 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
On
March 27, 2026, TriCore a Notice of Conversion pursuant to the Certificate of Designations of Preferred Shares (the “Certificate
of Designations”). TriCore elected to convert Preferred Shares (aggregate stated value of $
On
March 30, 2026, Greentree elected to convert Preferred Shares into Class A Ordinary Shares of the Company pursuant to the Certificate
of Designations. The aggregate conversion amount of $
On June 22, 2026, pursuant to the PIPE Purchase Agreement and the related Waiver Agreement, the Company received
aggregate cash proceeds of $
During
June 2026, the Company received $
Attributes of Preferred Shares include but are not limited to the following:
Ranking. The Preferred Shares, with respect to the payment of dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company, ranks senior to all other classes of shares of the Company, unless the Required Holders (as defined in the Certificate of Designations) consent to the creation of other class of shares in the Company that is senior or equal in rank to the Preferred Shares.
Dividends.
The holders of Preferred Shares will be entitled to a
Triggering Events. The Certificate of Designations contains triggering events (each, a “Triggering Event” including certain Bankruptcy Triggering Event (as defined therein)), including but not limited to: (i) failure of a registration statement for the shares of Class A Ordinary Shares underlying to be maintained effective; (ii) the suspension from trading or the failure to list the Class A Ordinary Shares within certain time periods; (iii) failure to declare or pay any dividend when due; (iv) the occurrence of any default under, redemption of or acceleration prior to maturity above agreed thresholds, (v) the Company’s failure to cure a conversion failure of failure to deliver shares of the Class A Ordinary Shares upon conversion, or notice of the Company’s intention not to comply with a request for conversion of any Preferred Shares, and (vi) bankruptcy or insolvency of the Company.
From
and after the occurrence and during the continuance of any Triggering Event, the Dividend Rate in effect shall automatically be increased
to the Default Rate of (i)
Triggering Event Redemption Right. Upon the occurrence and continuance of and Triggering Event, and following the expiration of any applicable cure period, a Holder has the right, exercisable at its option by written notice to the Company to redeem all or any portion of such Holder’s outstanding stated value of the Preferred Shares for cash. Upon notice, the Company shall immediately redeem in cash all amounts due under the Preferred Shares at a redemption price equal to 110% of the Conversion Amount (as defined in the Certificate of Designations).
| F-24 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
Voting Rights. The holders of the Preferred Shares shall have no voting power and no right to vote on any matter at any time, either as a separate series or class or together with any other series or class of share, and shall not be entitled to call a meeting of such holders for any purpose nor shall they be entitled to participate in any meeting of the holders of Class A Ordinary Shares, except as provided in the Certificate of Designations (or as otherwise required by applicable law).
The Preferred Shares were accounted for as mezzanine equity in accordance with ASC 480 - Distinguishing Liabilities from Equity.
As of March 31, 2026, the closing price of the Company’s Class A Ordinary Shares was $ per share before giving effect to the share consolidation. The Company received a Nasdaq minimum bid price deficiency notice on December 17, 2025, with a compliance deadline of June 9, 2026. For the periods that management determined it was probable that the Preferred Shares would become redeemable, the Company had elected to carry the shares at the maximum redemption value, or fair value, in mezzanine equity on the consolidated balance sheets. For all the reporting periods through June 30, 2026, all Preferred Shares were recognized at their maximum redemption value.
During
the three months ended June 30, 2026 and 2025, the Company recognized dividends of $ and , respectively, on the Preferred Shares.
During the same periods, the Company recorded decreases of $
Conversion of Preferred Shares
On
March 30, 2026, Greentree elected to convert Preferred Shares into Class A Ordinary Shares of the Company pursuant to the Certificate
of Designations. The aggregate conversion amount of $
On
March 27, 2026, TriCore elected to convert Preferred Shares (aggregate stated value of $
On
March 26, 2026, L&H Inc. delivered a conversion notice electing to convert Preferred Shares, with aggregate stated value of $
On
March 31, 2026, L&H Inc. delivered a conversion notice electing to convert Preferred Shares, with aggregate stated value of
$
On
May 1, 2026, L&H Inc. elected to convert Preferred Shares (aggregate stated value of $
| F-25 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
The share consolidation has been applied retroactively to the weighted average number of Class A Ordinary Shares outstanding and to loss per Class A Ordinary Share for all periods presented. The Class B Ordinary Shares were not subject to the share consolidation, and accordingly the weighted average number of Class B Ordinary Shares outstanding has not been adjusted.
| For the three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Class A Ordinary Shares | ||||||||
| Net loss attributable to the Class A ordinary shareholders, basic and diluted | ( | ) | ( | ) | ||||
| Weighted average shares outstanding, Class A Ordinary Shares | ||||||||
| Basic and diluted net loss per share, Class A Ordinary Shares | $ | ) | $ | ) | ||||
| Class B Ordinary Shares | ||||||||
| Net loss attributable to the Class B ordinary shareholders, basic and diluted | ||||||||
| Weighted average shares outstanding, Class B Ordinary Shares | ||||||||
| Basic and diluted net loss per share, Class B Ordinary Shares | ||||||||
NOTE 13. INCOME TAXES
Cayman Islands
Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends by the Company in the Cayman Islands to its shareholders, no Cayman Islands withholding tax will be imposed.
Hong Kong
In
accordance with the relevant tax laws and regulations of Hong Kong, a company registered in Hong Kong is subject to income taxes within
Hong Kong at the applicable tax rate on taxable income. With effect from the year of assessment of 2018/2019, Hong Kong profit tax rates
are
U.S.
The
Company’s subsidiary OFA Financial was incorporated in Delaware and is treated as United States corporations for US federal income
tax purposes per the Internal Revenue Code (US) and are thereby subject to federal income tax on its worldwide income. The applicable
U.S. federal corporate income tax rate is
The
Company’s subsidiary Office for Fine Architecture, Inc. was incorporated in California and is treated as a United States corporation
for US federal income tax purposes per the Internal Revenue Code (US) and are thereby subject to federal income tax on its worldwide
income at a statutory rate of
| F-26 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
PRC
Guangzhou
Zhiyi Consulting Services Co., Ltd. is governed by the income tax laws of the PRC and the income tax provisions in respect to operations
in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations
and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises
and Foreign Investment Enterprises (the “FIEs”) are usually subject to a unified
Japan
The income tax provision consisted of the following:
| For the three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Current | ||||||||
| U.S. | $ | $ | ||||||
| Cayman | ||||||||
| PRC | ||||||||
| Hong Kong | ||||||||
| Japan | ||||||||
| Deferred | ||||||||
| U.S. | ||||||||
| Cayman | ||||||||
| PRC | ||||||||
| Hong Kong | ||||||||
| Japan | ||||||||
| Provision for income taxes | $ | $ | ||||||
The Company measures deferred tax assets and liabilities based on the difference between the unaudited condensed consolidated financial statement and tax bases of assets and liabilities at the applicable tax rates. Components of the Company’s deferred tax asset and liability are as follows as of June 30, 2026 and March 31, 2026:
| Deferred tax assets: | As of June 30, 2026 | As of March 31, 2026 | ||||||
| Net operating loss carryforwards | $ | $ | ||||||
| Total deferred tax assets | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net | $ | $ | ||||||
There
was
As
of June 30, 2026, the Company had accumulated net operating loss carryforwards of approximately $
| F-27 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
The following table reconciles statutory rates to the Company’s effective tax:
| For the three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Profit (loss) before income taxes | $ | ( | ) | $ | ( | ) | ||
| Change in estimated taxes upon return finalization | ( | ) | ||||||
| Income tax expense computed at applicable statutory tax rates | ( | ) | ( | ) | ||||
| Reconciling items: | ||||||||
| Change in valuation allowance | ||||||||
| Income tax expense | $ | ( | ) | $ | ||||
Uncertain tax positions
The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of June 30, 2026 and March 31, 2026, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur any interest and penalties related to potential underpaid income taxes for the three months ended June 30, 2026 and 2025. The Company also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from June 30, 2026.
On
September 25, 2024, the Company issued ( shares before giving effect to the share consolidation) Class A Ordinary Shares
for professional services provided for the initial public offering. The total fair value of the shares issued was $
| Fair value per share | ||||
| Discount rate (after tax) | % | |||
| Discount for lack of marketability (“DLOM”) | % |
On April 28, 2025, the Agreement with Greentree, pursuant to which Greentree agreed to provide professional services regarding compliance with U.S. GAAP and SEC rules. As consideration for these services, the Company issued ( shares before giving effect to the share consolidation) shares of its Class A Ordinary Shares to Greentree. The service fees were considered fully earned upon the execution of the Agreement. The Company recognized stock-based compensation expense based on the split-adjusted fair value of the shares at $ ($ per share pre-Share consolidation) per share, referencing the offering price on May 19, 2025, the date the Company’s shares commenced trading. Accordingly, the Company recognized stock-based compensation expense of $ related to this grant during the period ended December 31, 2025. On December 18, 2025, the Company and Greentree entered into the Addendum. Under the terms of the Addendum, the Company agreed to issue an additional ( shares before giving effect to the share consolidation) shares of Class A Ordinary Shares to Greentree as a professional service fee. These shares were issued and vested immediately upon the signing of the Addendum. Accordingly, the Company recognized share-based compensation expense of $ (the shares were valued at a split-adjusted price of $ per share based on the closing market price on the date of issuance) related to this grant during the year ended March 31, 2026.
On August 30, 2024, the Company entered into an Executive Employment Agreement with Mr. Li Hsien Wong, the Chief Executive Officer. The agreement became effective on May 15, 2025, coinciding with the effectiveness of the Company’s registration statement on Form F-1. Pursuant to the agreement, Mr. Wong is entitled to an annual equity grant of Class A Ordinary Shares ( shares before giving effect to the share consolidation). For the calendar year 2025, Mr. Wong will receive an initial grant pro-rated for the period from the Effective Date through December 31, 2025. Subsequent annual grants of ( shares before giving effect to the share consolidation) Class A Ordinary Shares are scheduled to be awarded on January 1 of each year during the employment period, subject to continued employment. For the initial grant awarded on the Effective Date, the Company determined the split-adjusted grant-date fair value to be $ per share, based on the market closing price on May 21, 2025. Accordingly, the Company recognized share-based compensation expense of $ related to this grant during the year ended March 31, 2026.
No share-based compensation expense was recorded during the three months ended June 30, 2026.
| F-28 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
NOTE 15. COMMITMENTS AND CONTINGENCIES
Commitments
As
of June 30, 2026, the Company had an unpaid balance of $
In
addition, the Company entered into a financial advisory agreement with Finuvia LLC covering the period from June 2026 through May 2028,
with total contractual fees of $
Except for the commitment fee payable to Atsion (Note 11), the Company had no significant capital or other commitments as of June 30, 2026.
Contingencies
The Company is subject to legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but the Company does not anticipate that the final outcome arising out of any such matters will have a material adverse effect on its financial position, cash flows or results of operations on an individual basis or in the aggregate. As of June 30, 2026 and March 31, 2026, the Company is not a party to any material legal or administrative proceedings.
NOTE 16. SEGMENT INFORMATION
In
accordance with ASC 280-10, Segment Reporting: Overall, the CODM reviews the consolidated results of operations when making decisions
about allocating resources and assessing performance of the Company as a whole; hence, the Company has only
The Company’s segment operating income (loss) ,which is the primary performance metric utilized by management and the Company’s chief operating decision maker (“CODM”) to assess segment performance and make decisions regarding resource allocation. Gross profit is also reviewed by management for operational analysis. The Company concluded that the CODM is Mr. Li Hsien “Larry” Wong, CEO.
Summarized financial information concerning the Company’s reportable segments is shown as below:
| 1) | By Business Unit: |
As of June 30, and for the three months ended June 30, | ||||||||
| Item | 2026 | 2025 | ||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Segment operating loss | ( | ) | ( | ) | ||||
| Segment other income (expense) | ||||||||
| Segment assets | ||||||||
| F-29 |
OFA GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
| 2) | Revenue by Geography: |
| For the three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Hong Kong/Asia-Pacific | $ | |||||||
| United States | ||||||||
| Total | $ | |||||||
| a. | The Company’s key revenues streams are as below: |
| For the three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Project Income | ||||||||
| Design and fit-out | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
| b. | Major customers representing at least 10% of net revenue |
| Period | Project Name | Revenue Type | Property Type | Percentage of Total Revenue | ||||||
| For the three months ended June 30, 2026 | % | |||||||||
| % | ||||||||||
| For the three months ended June 30, 2025 | % | |||||||||
| % | ||||||||||
NOTE 17. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that the condensed consolidated financial statements are issued. Other than the material subsequent events disclosed above in the notes to financial statements and below, the Company identified no other material subsequent events requiring recognition or disclosure.
Under the Company’s agreement
with Atsion Opportunity Fund LLC, an installment payment of $
On July 31,2026, theSeries A Convertible Preferred Shares associated with TriCore’s additional closing completed in June 2026, as described in Notes 8 and 11, were converted into ( shares before giving effect to the share consolidation) Class A Ordinary Shares.
On August 13, 2026, pursuant to the Atsion Purchase Agreement, the Company consummated the transaction with Atsion, issuing an aggregate of Class A Ordinary Shares to Atsion.
The Company’s initial deadline to regain compliance with Nasdaq’s minimum bid price requirement was June 9, 2026. The Company did not regain compliance during the initial compliance period. On July 27, 2026, the Company announced that it would implement a one-for-ten share consolidation, effective July 31, 2026, in support of its efforts to maintain the listing of its Class A Ordinary Shares on the Nasdaq Capital Market. As of the date of issuance of these unaudited condensed consolidated financial statements, the Company had not received written confirmation from Nasdaq that it had regained compliance with the minimum bid price requirement.
| F-30 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) covers information pertaining to the Company for the three months ended June 30, 2026 and 2025 and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes of the Company as of June 30, 2026 and March 31, 2026 and for the three months ended June 30, 2026 and 2025. Except as otherwise noted, the financial information contained in this MD&A and in the financial statements has been prepared in accordance with accounting principles generally accepted in the United States of America. All amounts are expressed in U.S. dollars unless otherwise noted. This discussion contains forward-looking statements that involve risks and uncertainties, including those discussed below and elsewhere in this quarterly report, particularly under “Risk Factors.” Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors.
Critical Accounting Policies and Critical Accounting Judgments and Estimates
The Company prepared the condensed consolidated financial statements in accordance with U.S. GAAP. These accounting principles require the Company to make judgments, estimates and assumptions on the reported amounts of assets and liabilities at the end of each period, and the reported amounts of revenues and expenses during each period. The Company continually evaluates these judgments and estimates based on its own historical experience, knowledge and assessment of current business and other conditions, its expectations regarding the future based on available information, which together form its basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of the accounting policies require a higher degree of judgment than others in their application.
Critical accounting policies
When reading our condensed consolidated financial statements, you should consider our selection of critical accounting policies, including revenue recognition, contract assets, contract liabilities, mezzanine equity and income taxes, of which the details are set out in our condensed consolidated financial statements.
Recently Issued Accounting Pronouncements
See the discussion of recently issued accounting pronouncements contained in Note 2 to the unaudited condensed consolidated financial statements for the three months ended June 30, 2026 and 2025.
Critical accounting estimates
You should also consider the judgment and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions. The Company believes the following accounting policies involve the most significant judgments and estimates used in the preparation of our consolidated financial statements.
Revenue Recognition
The Company adopted the revenue standard Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers.
As a professional interior design and fit-out service provider, the Company recognizes revenue based on the effort or inputs to the satisfaction of a performance obligation over time as work progresses because of the continuous transfer of control to the customer and the right to bill the customer as costs are incurred.
| 3 |
The Company uses the ratio of actual costs incurred to total estimated costs since costs incurred (an input method) represent a reasonable measure of progress towards the satisfaction of a performance in order to estimate the portion of revenue earned. This method faithfully depicts the transfer of value to the customer when the Company is satisfying a performance obligation that entails a number of interrelated tasks or activities for a combined output that requires the Company to coordinate the work of employees and subcontractors. Contract costs typically include direct labor, subcontract and consultant costs, materials and indirect costs related to contract performance. Changes in estimated costs to complete these obligations result in adjustments to revenue on a cumulative catch-up basis, which causes the effect of revised estimates to be recognized in the current period. Changes in estimates can routinely occur over the contract term for a variety of reasons including, changes in scope, unanticipated costs, delays or favorable or unfavorable progress than original expectations. When the outcome of the contract cannot be reasonably measured, revenue is recognized only to the extent of contract costs incurred that are expected to be recovered. In situations where the estimated costs to perform exceeds the consideration to be received, the Company accrues the entire estimated loss during the period the loss becomes known.
Our operating subsidiary’s contracts may contain variable consideration in the form of unpriced or pending change orders or claims that either increase or decrease the contract price. Variable consideration is generally estimated using the expected value method but may from time to time be estimated using the most likely amount method depending on the circumstance. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are based upon historical experience and known trends.
Service Arrangement Settled in Digital Assets
During the year ended March 31, 2026, the Company, acting through its Hearth RWA tokenization platform, entered into the Tokenization Agreement, dated March 31, 2026, with the MD Queens to provide blockchain-based tokenization infrastructure and related technology services in connection with MD Queens’ mixed-use real estate development project located in Long Island City, New York. Under the Tokenization Agreement, the Company is entitled to a non-refundable Platform Technology Fee of $15,000,000, payable in two equal installments and settleable in U.S. dollars or cryptocurrency.
On May 8, 2026, the Company entered into the Vero 60 Agreement with Vero 60 to provide blockchain-based tokenization technology infrastructure services for the Vero 60 Project. This agreement provides for a Platform Technology Fee of $7.5 million, payable in two installments of $3.75 million each upon satisfaction of the applicable contractual milestones.
The consideration received under these arrangements constitutes noncash consideration under ASC 606. Noncash consideration is measured at the fair value of the consideration received at contract inception.
MD Queens elected to settle the first installment of the Platform Technology Fee under the Tokenization Agreement through the transfer of 12,500,000 PPDF tokens on March 31, 2026. On May 13, 2026, the Company received an additional 6,250,000 PPDF tokens in connection with the first $3,750,000 installment under the Vero 60 Agreement. The PPDF tokens were issued by the customer and were established on March 25, 2026, shortly before the initial transfer to the Company. As of their respective dates of receipt, the PPDF tokens did not have sufficient established trading history, were not traded in an active market and were subject to significant liquidity restrictions. Based on these factors, the Company determined that the fair value of the noncash consideration received under both agreements was not reliably measurable as of June 30, 2026.
Because the services under the Tokenization Agreement had not been performed as of June 30, 2026, and the Company had performed only internal preparatory activities and had not made any substantive deliverables to the client under the Vero 60 Agreement, the Company did not recognize any revenue with respect to either service arrangement for the period. Consistent with its policy for consideration received in advance of performance, the arrangements were treated as contract liabilities; however, because the fair value of the consideration received could not be reliably measured, the contract liabilities and the related digital assets were recorded at zero carrying amounts as of June 30, 2026. Accordingly, no contract liabilities were recognized based on the stated values of the installments received, which were $7,500,000 under the Tokenization Agreement and $3,750,000 under the Vero 60 Agreement.
| 4 |
The Company will reassess these arrangements in subsequent periods. Revenue, and any associated remeasurement of the consideration received, will be recognized when (i) the related performance obligation are satisfied and (ii) the fair value of the consideration received becomes reliably measurable, such as upon the development of an active trading market for the PPDF or upon disposition. Any subsequent recognition could differ materially from the stated contract value, and the ultimate amount realized, if any, is subject to significant uncertainty. There is no guarantee that any revenues will be generated under the arrangement or the PPDF will increase or maintain its value.
Results of Operations
Comparison of The Three Months Ended June 30, 2026 and 2025
The following table sets forth key components of the results of operations for the three months ended June 30, 2026 and 2025:
For the three months ended June 30, | % of | |||||||||||||||
| 2026 | 2025 | Variance | variance | |||||||||||||
| Revenue | $ | 14,879 | $ | 18,955 | $ | (4,076 | ) | (21.50 | )% | |||||||
| Cost of revenue | 3,977 | 12,697 | (8,720 | ) | (68.68 | )% | ||||||||||
| Gross profit | 10,902 | 6,258 | 4,644 | 74.21 | % | |||||||||||
| Operating expenses | ||||||||||||||||
| Depreciation and amortization | 924,586 | 40 | 924,546 | N/M | ||||||||||||
| Selling, general and administrative | 243,574 | 173,031 | 70,543 | 40.77 | % | |||||||||||
| Professional services | 254,035 | 1,167,823 | (913,788 | ) | (78.25 | )% | ||||||||||
| Advertising and marketing | 43,135 | 57,988 | (14,853 | ) | (25.61 | )% | ||||||||||
| Salaries and wages | 449,795 | 340,889 | 108,906 | 31.95 | % | |||||||||||
| Total operating expenses | 1,915,125 | 1,739,771 | 175,354 | 10.08 | % | |||||||||||
| Loss from operations | (1,904,223 | ) | (1,733,513 | ) | (170,710 | ) | 9.85 | % | ||||||||
| Other income (expense) | ||||||||||||||||
| Other income | 6,306 | 9,026 | (2,720 | ) | (30.14 | )% | ||||||||||
| Interest expense | (3,234 | ) | (3,542 | ) | 308 | (8.70 | )% | |||||||||
| Interest income | 4 | 252 | (248 | ) | (98.41 | )% | ||||||||||
| Total other income (expense), net | 3,076 | 5,736 | (2,660 | ) | (46.37 | )% | ||||||||||
| Loss before income tax expense | (1,901,147 | ) | (1,727,777 | ) | (173,370 | ) | 10.03 | % | ||||||||
| Income tax expense | (4 | ) | - | (4 | ) | N/M | ||||||||||
| Net loss | $ | (1,901,151 | ) | $ | (1,727,777 | ) | $ | (173,374 | ) | 10.03 | % | |||||
Revenue
The following table sets forth the breakdown of the revenue by major revenue type for the three months ended June 30, 2026 and 2025, respectively:
| For the three months ended June 30, | ||||||||||||||||||||||||
| 2026 | 2025 | Variance | ||||||||||||||||||||||
| (US$) | % of revenue | (US$) | % of revenue | Amount | % | |||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Design and fit-out | 3,330 | 22.38 | % | 11,522 | 60.79 | % | (8,192 | ) | (71.10 | )% | ||||||||||||||
| Others | 11,549 | 77.62 | % | 7,433 | 39.21 | % | 4,116 | 55.37 | % | |||||||||||||||
| Total revenue | 14,879 | 100.00 | % | 18,955 | 100.00 | % | (4,076 | ) | (21.50 | )% | ||||||||||||||
| 5 |
The Company’s revenue decreased by $4,076, or 21.50%, from $18,955 for the three months ended June 30, 2025 to $14,879 for the three months ended June 30, 2026. The decrease was primarily attributable to lower revenue from design and fit-out services, partially offset by increased revenue from application and project management services. Revenue may continue to fluctuate from period to period based on the timing, size and stage of individual projects.
The Company’s backlog of ongoing projects provides a certain degree of revenue stability going forward. As of June 30, 2026, the Company had 7 projects in progress with a total contract amount of $615,538 and recognized the related revenue of $45,698 up to the three months ended June 30, 2026. The Company expects that such projects in progress as of June 30, 2026 will be completed and the remaining related revenue of $569,840 will be recognized during the year ending March 31, 2027. While overall market conditions remain uncertain, due to the recovery in client activities, new projects are secured, which may support revenue growth in the coming periods.
In addition, preliminary discussions are underway regarding potential new projects and strategic collaborations, which would support revenue growth in the coming periods. The Company is expanding its footprint beyond Hong Kong into the Greater Bay Area and international markets to improve the market diversification. Efforts are also made for vertical integration across the whole project lifecycle. The Company is also focused on innovation, efficiency, and scalability, transitioning from a traditional project-based model to a subscription-based model for AI tools, real estate development and senior care infrastructure. The Company has started to implement AI-driven digital transformation to optimize design workflows and cost structures. OFA QikBIM is an AI-powered Building Information Modeling (“BIM”) platform designed to automate portions of the architectural and engineering design process, including the generation of coordinated architectural drawings, structural plans, BIM models, and related project documentation. The Company, through its Hearth RWA tokenization platform, will provide certain blockchain-based tokenization infrastructure and related technology services in connection with certain projects.
Revenue from design and fit-out services decreased by $8,192, or 71.10%, from $11,522 for the three months ended June 30, 2025 to $3,330 for the three months ended June 30, 2026. The decrease primarily reflected the timing and level of design and fit-out project activity during the current period compared with the prior-year period.
Other revenue, consisting principally of application and project management services, increased by $4,116, or 55.37%, from $7,433 for the three months ended June 30, 2025 to $11,549 for the three months ended June 30, 2026. The increase partially offset the decline in design and fit-out revenue.
The decrease in revenue is primarily attributable to the cyclical nature of the Company’s project-based business model. Revenue from architectural design and fit-out services is inherently lumpy and subject to the timing of contract execution, project commencement, and milestone achievement. The quarter ended June 30, 2026 reflected a transitional period in which several legacy Hong Kong projects reached completion while new engagements — including overseas contracts signed in early 2026 — had not yet progressed to revenue-generating milestones. This pattern is consistent with the Company’s historical experience, where revenue concentration tends to be weighted toward the second half of the fiscal year as new projects ramp up and reach billable stages. Management does not view the quarter-over-quarter decline as indicative of a structural deterioration in demand, but rather a function of project lifecycle timing and the Company’s ongoing geographic diversification efforts.
The following table presents revenue by property type for the three months ended June 30, 2026 and 2025, respectively:
| For the three months ended June 30, | ||||||||||||||||||||||||
| 2026 | 2025 | Variance | ||||||||||||||||||||||
| (US$) | % of revenue | (US$) | % of revenue | Amount | % | |||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Commercial | $ | 7,091 | 47.66 | % | $ | 8,122 | 42.85 | % | $ | (1,031 | ) | (12.69 | )% | |||||||||||
| Industrial | 4,457 | 29.95 | % | 7,432 | 39.21 | % | (2,975 | ) | (40.03 | )% | ||||||||||||||
| Institutional | - | - | % | - | - | % | - | - | ||||||||||||||||
| Residential | 3,331 | 22.39 | % | 3,401 | 17.94 | % | (70 | ) | (2.06 | )% | ||||||||||||||
| Total revenue | $ | 14,879 | 100.00 | % | $ | 18,955 | 100.00 | % | $ | (4,076 | ) | (21.50 | )% | |||||||||||
| 6 |
Revenue from commercial projects decreased by $1,031, or 12.69%, from $8,122 for the three months ended June 30, 2025 to $7,091 for the three months ended June 30, 2026. The decrease reflected lower commercial project activity during the current period.
Revenue from industrial projects decreased by $2,975, or 40.03%, from $7,432 for the three months ended June 30, 2025 to $4,457 for the three months ended June 30, 2026. The decrease primarily reflected the timing and volume of industrial project work performed during the current period.
No revenue from institutional projects was recognized during either of the three months ended June 30, 2026 or 2025.
Revenue from residential projects decreased by $70, or 2.06%, from $3,401 for the three months ended June 30, 2025 to $3,331 for the three months ended June 30, 2026. Residential project revenue remained relatively stable between the two periods.
Cost of revenue
The following table sets forth the breakdown of the cost of revenue for the three months ended June 30, 2026 and 2025:
| For the three months ended June 30, | ||||||||||||||||||||||||
| 2026 | 2025 | Variance | ||||||||||||||||||||||
| (US$) | % of cost of revenue | (US$) | % of cost of revenue | Amount | % | |||||||||||||||||||
| Cost of revenue | ||||||||||||||||||||||||
| Subcontracting and material costs | $ | 2,935 | 73.80 | % | $ | 4,000 | 31.50 | % | $ | (1,065 | ) | (26.63 | )% | |||||||||||
| Project staff costs | 1,042 | 26.20 | % | 8,697 | 68.50 | % | (7,655 | ) | (88.02 | )% | ||||||||||||||
| Total cost of revenue | $ | 3,977 | 100.00 | % | $ | 12,697 | 100.00 | % | $ | (8,720 | ) | (68.68 | )% | |||||||||||
Cost of revenue decreased by $8,720, or 68.68%, from $12,697 for the three months ended June 30, 2025 to $3,977 for the three months ended June 30, 2026. The decrease was greater than the decline in revenue and primarily reflected lower project staff costs and subcontracting and material costs during the current period.
The Company generally outsources fit-out work to internally approved subcontractors. Subcontracting costs represent charges and fees paid to subcontractors that provide labor and services for fit-out work, and material costs represent amounts paid to suppliers for fit-out materials. Subcontracting and material costs decreased by $1,065, or 26.63%, from $4,000 for the three months ended June 30, 2025 to $2,935 for the three months ended June 30, 2026, primarily reflecting the lower level and mix of project activity during the current period.
Project staff costs represent salaries and mandatory provident fund contributions for project management and design personnel directly involved in providing project services. Project staff costs decreased by $7,655, or 88.02%, from $8,697 for the three months ended June 30, 2025 to $1,042 for the three months ended June 30, 2026, primarily due to lower direct staffing costs allocated to active projects during the current period.
| 7 |
Gross profit
Gross profit from major revenue type is summarized as follows:
| For the Three Months Ended June 30, | % of | |||||||||||||||
| 2026 | 2025 | Variance | Variance | |||||||||||||
| Design and fit-out | ||||||||||||||||
| Gross profit | $ | 340 | $ | (425 | ) | $ | 765 | (180.00 | )% | |||||||
| Gross profit margin | 10.21 | % | (3.69 | )% | 13.90 | % | ||||||||||
| Others | ||||||||||||||||
| Gross profit | $ | 10,562 | $ | 6,683 | $ | 3,879 | 58.04 | % | ||||||||
| Gross profit margin | 91.45 | % | 89.91 | % | 1.54 | % | ||||||||||
| Total | ||||||||||||||||
| Gross profit | $ | 10,902 | $ | 6,258 | $ | 4,644 | 74.21 | % | ||||||||
| Gross profit margin | 73.27 | % | 33.02 | % | 40.25 | % | ||||||||||
Total gross profit increased by $4,644, or 74.21%, from $6,258 for the three months ended June 30, 2025 to $10,902 for the three months ended June 30, 2026. Gross profit margin increased by 40.25 percentage points, from 33.02% to 73.27%. The increase reflected the greater contribution from higher-margin application and project management services and the significant reduction in project staff costs, partially offset by lower total revenue.
The improvement in gross profit margin also reflected the current-period revenue mix and lower direct project costs. Other revenue represented 77.62% of total revenue for the three months ended June 30, 2026, compared with 39.21% in the prior-year period, while project staff costs decreased substantially. These factors increased gross profit despite the decline in total revenue.
Gross profit from major project type is summarized as follows:
| For the three months ended June 30, | % of | |||||||||||||||
| 2026 | 2025 | Variance | variance | |||||||||||||
| Commercial | ||||||||||||||||
| Gross profit | $ | 6,050 | $ | (2,469 | ) | $ | 8,519 | (345.04 | )% | |||||||
| Gross profit margin | 85.32 | % | (30.40 | )% | 115.72 | % | ||||||||||
| Industrial | ||||||||||||||||
| Gross profit | $ | 4,457 | $ | 7,432 | $ | (2,975 | ) | (40.03 | )% | |||||||
| Gross profit margin | 100.00 | % | 100.00 | % | 0.00 | % | ||||||||||
| Institutional | ||||||||||||||||
| Gross profit | $ | - | $ | - | $ | - | - | |||||||||
| Gross profit margin | - | - | - | |||||||||||||
| Residential | ||||||||||||||||
| Gross profit | $ | 395 | $ | 1,295 | $ | (900 | ) | (69.50 | )% | |||||||
| Gross profit margin | 11.86 | % | 38.08 | % | (26.22 | )% | ||||||||||
| Total | ||||||||||||||||
| Gross profit | $ | 10,902 | $ | 6,258 | $ | 4,644 | 74.21 | % | ||||||||
| Gross profit margin | 73.27 | % | 33.02 | % | 40.25 | % | ||||||||||
Gross profit from commercial projects improved by $8,519, from a gross loss of $2,469 for the three months ended June 30, 2025 to gross profit of $6,050 for the three months ended June 30, 2026. The gross profit margin increased from (30.40%) to 85.32%, primarily reflecting the mix of commercial work and lower direct project costs in the current period.
Gross profit from industrial projects decreased by $2,975, or 40.03%, from $7,432 for the three months ended June 30, 2025 to $4,457 for the three months ended June 30, 2026. The gross profit margin was 100.00% in both periods based on the costs allocated to these projects.
No gross profit from institutional projects was recognized during either of the three months ended June 30, 2026 or 2025.
| 8 |
Gross profit from residential projects decreased by $900, or 69.50%, from $1,295 for the three months ended June 30, 2025 to $395 for the three months ended June 30, 2026. Gross profit margin decreased from 38.08% to 11.86%, primarily reflecting the mix and stage of residential work performed during the current period.
No gross profit from land projects was recognized during either of the three months ended June 30, 2026 or 2025.
Operating expenses
Operating expenses consist of the following:
For the three months ended June 30, | % of | |||||||||||||||
| 2026 | 2025 | Variance | variance | |||||||||||||
| Depreciation and amortization | $ | 924,586 | $ | 40 | $ | 924,546 | N/M | % | ||||||||
| Selling, general and administrative | 243,574 | 173,031 | 70,543 | 40.77 | % | |||||||||||
| Professional services | 254,035 | 1,167,823 | (913,788 | ) | (78.25 | )% | ||||||||||
| Advertising and marketing | 43,135 | 57,988 | (14,853 | ) | (25.61 | )% | ||||||||||
| Salaries and wages | 449,795 | 340,889 | 108,906 | 31.95 | % | |||||||||||
| Total operating expenses | $ | 1,915,125 | $ | 1,739,771 | $ | 175,354 | 10.08 | % | ||||||||
Depreciation and amortization increased by $924,546, from $40 for the three months ended June 30, 2025 to $924,586 for the three months ended June 30, 2026. The increase primarily resulted from depreciation and amortization of property and equipment and intangible assets placed in service after the prior-year period.
Selling, general and administrative expenses increased by $70,543, or 40.77%, from $173,031 for the three months ended June 30, 2025 to $243,574 for the three months ended June 30, 2026. The increase primarily reflected higher administrative and corporate operating costs associated with the Company’s expanded operations.
Professional services decreased by $913,788, or 78.25%, from $1,167,823 for the three months ended June 30, 2025 to $254,035 for the three months ended June 30, 2026. The decrease primarily reflected higher legal, accounting, consulting and public-company readiness costs incurred in the prior-year period in connection with the Company’s IPO and related regulatory matters.
Advertising and marketing expenses decreased by $14,853, or 25.61%, from $57,988 for the three months ended June 30, 2025 to $43,135 for the three months ended June 30, 2026, primarily due to lower marketing and promotional spending during the current period.
Salaries and wages increased by $108,906, or 31.95%, from $340,889 for the three months ended June 30, 2025 to $449,795 for the three months ended June 30, 2026. The increase primarily reflected additional personnel and compensation costs associated with the Company’s expanded operations, including its U.S. activities.
The team is currently focused on establishing the Company’s presence in the U.S. through relationship-building with local firms, early-stage engagement with clients, and preparation for launching AI-driven architectural services and tokenization services of certain projects. While still in the investment phase, these initiatives are expected to support the Company’s long-term positioning in high-growth markets and demonstrate early operational traction.
Other income (expense)
Other income (expense) primarily consists of other income, interest income and interest expense.
Interest income. The Company recorded interest income of $4 and $252 for the three months ended June 30, 2026 and 2025, respectively.
| 9 |
Interest expense on bank borrowings. Interest expense was $3,234 and $3,542 for the three months ended June 30, 2026 and 2025, respectively.
Other income includes miscellaneous income recognized during the respective periods.
Other income. The Company recorded other income of $6,306 and $9,026 for the three months ended June 30, 2026 and 2025, respectively.
Income tax expense. Our Company is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, our Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.
Our operating subsidiary, Office for Fine Architecture Limited, is subject to income taxes within Hong Kong at the applicable tax rate on taxable income. Hong Kong profit tax rates are 8.25% on assessable profits up to $255,102 (HK$2,000,000), and 16.5% on any part of assessable profits over $255,102 (HK$2,000,000). The Company believes there were no uncertain tax positions as of June 30, 2026 and 2025, respectively.
The Company’s subsidiary OFA Financial was incorporated in Delaware and is treated as United States corporations for US federal income tax purposes per the Internal Revenue Code (US) and are thereby subject to federal income tax on its worldwide income. The applicable U.S. federal corporate income tax rate is 21%. The Company is exempt from Delaware state corporate income tax as it does not conduct business within the state of Delaware, though it remains subject to the annual Delaware franchise tax.
The Company’s subsidiary Office for Fine Architecture, Inc. was incorporated in California and is treated as a United States corporation for US federal income tax purposes per the Internal Revenue Code (US) and are thereby subject to federal income tax on its worldwide income at a statutory rate of 21%. In addition, Office for Fine Architecture, Inc. is subject to California state corporate tax laws and, if it conducts business or has income sourced to California, is generally subject to California corporation tax and applicable California franchise tax obligations.
Guangzhou Zhiyi Consulting Services Co., Ltd. is governed by the income tax laws of the PRC and the income tax provisions in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIEs”) are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on a case-by-case basis.
The Company’s subsidiaries incorporated in Japan are subject to Japanese national and local corporate income taxes on their worldwide taxable income. For qualifying small and medium-sized enterprises with paid-in capital of JPY100 million or less, the national corporate tax rate is 15% on annual taxable income up to JPY8 million and 23.2% on annual taxable income exceeding JPY8 million. Including applicable local taxes, the effective statutory tax rate generally ranges from approximately 21.94% to 34.43% for fiscal years beginning on or after April 1, 2026, depending on taxable income and the applicable local tax rates.
The Company believes there were no uncertain tax positions as of June 30, 2026 and March 31, 2026. The Company does not expect that its assessment regarding unrecognized tax positions will materially change over the next 12 months. The Company is not currently under examination by an income tax authority and has not been notified that an examination is contemplated.
Net loss. As a result of the foregoing, the Company reported a net loss of $1,901,151for the three months ended June 30, 2026, compared with a net loss of $1,727,777 for the three months ended June 30, 2025.
Other comprehensive loss. Foreign currency translation adjustment amounted to $1,335 and ($11,524) for the three months ended June 30, 2026 and 2025, respectively. For the 2026 period, the Company translated the financial statements of its foreign operations using period-end exchange rates of US$1.00 to HK$7.84, RMB6.79 and JPY162.58, and average exchange rates of US$1.00 to HK$7.84, RMB6.80 and JPY159.44. For the 2025 comparative period, the applicable period-end and average Hong Kong dollar exchange rates were US$1.00 to HK$7.84 and US$1.00 to HK$7.80, respectively; the PRC and Japan subsidiaries were not included in the comparative period. Changes in the HK$, RMB and JPY exchange rates relative to the U.S. dollar may affect the Company’s reported financial results without reflecting an underlying change in its business or operating performance.
| 10 |
Liquidity and Capital Resources
To date, the Company has financed its operations primarily through equity financings, bank borrowings and related-party funding. The Company expects to support future operations through available cash, cash generated from operations, existing financing arrangements and additional capital-raising activities, as needed. The availability and terms of additional financing are subject to market conditions and the satisfaction of applicable contractual conditions.
As reflected in the unaudited condensed consolidated financial statements, the Company incurred a net loss of $1,901,151 for the three months ended June 30, 2026, compared with a net loss of $1,727,777 for the three months ended June 30, 2025. As of June 30, 2026, the Company had unrestricted cash of $178,057 and restricted cash of $1,680,000, compared with unrestricted cash of $1,033,466 and restricted cash of $1,680,000 as of March 31, 2026. The Company had a working capital deficit of $4,577,805 as of June 30, 2026, compared with a working capital deficit of $4,111,677 as of March 31, 2026. Working capital requirements are influenced by the size of the Company’s operations, the volume and value of sales contracts, the progress of customer contracts and the timing of collections and payments.
As of June 30, 2026, the Company had outstanding bank borrowings of $469,880, of which $1,505 was payable within one year and $468,375 was payable after one year. The bank borrowings bear interest at an annual rate of 3.000%.
On December 11, 2025, the Company received a letter from the Staff notifying the Company that the closing bid price per share for its Class A Ordinary Shares was below $1.00 for a period of 30 consecutive business days and that the Company did not meet the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2).
Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company had until the Compliance Period, to regain compliance with Nasdaq’s minimum bid price requirement.
On June 9, 2026, the Company received the Letter from the Staff notifying the Company that the Company is eligible for the Second Compliance Period, or until the Compliance Date, to regain compliance, based on the Staff’s determination of the Company meeting the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq, with the exception of the minimum bid price requirement, and the Company’s written notice to Nasdaq of its intention to cure the deficiency during the Second Compliance Period, by effecting a share consolidation, if necessary. The Letter has no immediate impact on the listing of the Company’s Ordinary Shares on Nasdaq. If at any time during the Second Compliance Period the closing bid price of the Company’s Ordinary Shares is at least $1.00 per share for a minimum of 10 consecutive business days (which may be extended to be a period of up to 20 consecutive business days in the discretion of the Staff), Nasdaq will provide the Company with written confirmation of compliance. The Letter does not result in the immediate delisting of the Company’s Class A Ordinary Shares, and the shares will continue to trade uninterrupted under the symbol “OFAL.”
If the Company does not regain compliance by the Compliance Date, the Staff will provide written notification that the Company’s Ordinary Shares is subject to delisting. At that time, the Company may appeal the delisting determination to a hearings panel pursuant to the procedures set forth in the applicable Nasdaq listing rules. However, there can be no assurance that, if the Company receives a delisting notice and appeals the delisting determination by Nasdaq to the panel, such appeal would be successful.
On May 21, 2026, at an extraordinary general meeting, the shareholders approved and authorized the Board to effect a one-for-ten share consolidation of the Company’s Class A Ordinary Shares. On July 27, 2026, the Company announced that the share consolidation would become effective at 12:01 a.m. Eastern Time on July 31, 2026. All Class A share and per-share amounts presented in the condensed consolidated financial statements have been retroactively adjusted to reflect the share consolidation.
The Company’s Ordinary Shares have been redesignated as Class A Ordinary Shares and have commenced trading on Nasdaq on December 17, 2025 as Class A Ordinary Shares under the same symbol “OFAL.”
| 11 |
The Company believes that its current cash and cash flows provided by operating activities, loans from banks, and the net proceeds from its IPO will be sufficient to meet its working capital needs in the next 12 months from the balance sheet date. If additional funding is needed, the Company believes it would have access to supplemental bank facilities or bridge financing options, subject to prevailing market conditions. No assurance can be given, however, that additional financing, if required, would be available at all or on favorable terms. Such financing may include the use of additional debt or the sale of additional equity securities. Any financing which involves the sale of equity securities or instruments that are convertible into equity securities could result in immediate and possibly significant dilution to the existing shareholders.
Even though the management believes that it will be able to successfully execute its business plan, which includes increasing market acceptance of the Company’s services to boost its sales volume to achieve economies of scale while applying more effective marketing strategies and cost control measures to better manage operating cash flow position, third-party financing and capital issuance, and meet the Company’s future liquidity needs, there can be no assurances in that regard.
In response to the net loss of $1,901,151 for the three months ended June 30, 2026 and the working capital deficit of $4,577,805 as of June 30, 2026, the Company has implemented, and continues to pursue, measures designed to strengthen its liquidity and capital position.
First, in May 2025 the Company completed its IPO, generating net proceeds of approximately $15.3 million that materially strengthened its cash position and capital base. Second, the Company has secured access to committed equity financing: (i) on October 29, 2025, it entered into the PIPE Purchase Agreement with Greentree and TriCore, providing for the issuance and sale, in multiple closings, of up to $50,000,000 in stated value of Preferred Shares; and (ii) on July 14, 2025, it entered into a Purchase Agreement with Atsion, establishing the Equity Facility. The Equity Facility is entirely at the Company’s discretion and does not represent a committed obligation or guaranteed proceeds; amounts are drawn, if at all, solely at the Company’s election and subject to the terms of the Atsion Purchase Agreement. Third, through the arrangement with the Contractor, the Company intends to commercialize the platform and to transition a portion of its design operations from a traditional project-based model toward a scalable, subscription-based AI software offering, which management expects to broaden the Company’s revenue base and support its longer-term growth and liquidity objectives. Fourth, the Company continues to generate recurring revenue from its core design, fit-out, project-management and platform services, and is expanding beyond Hong Kong into the Greater Bay Area and international markets to diversify its revenue base. In addition to its U.S. operations, the Company maintains business activities and market presence in Hong Kong and Japan through its subsidiaries, strategic partnerships, and project development initiatives. Fifth, holders of the Company’s Preferred Shares have elected to convert a portion of their holdings into Class A Ordinary Shares, reducing the Company’s potential cash redemption obligations. Finally, the Company continues to actively manage operating expenditures and discretionary spending—including staffing, subcontractor and marketing costs—to preserve liquidity, and it retains access to existing bank credit facilities and may pursue short-term bridge financing if required. Based on these plans, which management believes are probable of being effectively implemented, management believes the Company will have sufficient liquidity to meet its obligations as they become due for at least twelve months from the date these consolidated financial statements are issued. The Company is well-positioned to support its operations and execute its growth strategies over at least the next twelve months. As a result, management has concluded that there is no substantial doubt about the Company’s ability to continue as a going concern, and accordingly the unaudited condensed consolidated financial statements do not include any related adjustments.
The following table sets forth a summary of the cash flows for the three months ended June 30, 2026 and 2025:
| For the three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash used in operating activities | $ | (1,331,758 | ) | $ | (12,647,578 | ) | ||
| Net cash used in investing activities | $ | (3,264 | ) | $ | (1,442 | ) | ||
| Net cash provided by financing activities | $ | 471,000 | $ | 15,308,000 | ||||
| Net increase (decrease) in cash and restricted cash | $ | (864,022 | ) | $ | 2,658,980 | |||
| Effect of currency translation on cash and cash equivalents | $ | 8,613 | $ | (19,567 | ) | |||
| Cash and restricted cash at the beginning of the period | $ | 2,713,466 | $ | 31,950 | ||||
| Cash and restricted cash at the end of the period | $ | 1,858,057 | $ | 2,671,363 | ||||
| 12 |
As of June 30, 2026, the Company had total cash and restricted cash of $1,858,057, compared with $2,713,466 as of March 31, 2026. Of this amount, $178,057 represented unrestricted cash available for general corporate and working-capital purposes, and $1,680,000 represented restricted cash held in a non-interest-bearing escrow account maintained at East West Bank by Finuvia LLC, an affiliate of Precursor, a shareholder of the Company. The restricted cash is not available for general use and is subject to release only upon satisfaction of the conditions specified in the underlying agreements. The Company had a working capital deficit of $4,577,805 as of June 30, 2026, compared with $4,111,677 as of March 31, 2026, and incurred a net loss of $1,901,151 for the three months ended June 30, 2026. Accordingly, liquidity available for general operations is more limited than the total cash and restricted cash balance.
Operating Activities
Net cash used in operating activities was $1,331,758 for the three months ended June 30, 2026, primarily due to the net loss of $1,901,151 partially offset by noncash depreciation and amortization of approximately $924,586. Changes in related-party balances, accounts payable, accrued expenses and other working-capital accounts also affected operating cash flows during the period.
Net cash used in operating activities was $12,647,578 for the three months ended June 30, 2025, primarily due to the net loss of $1,727,777 and a $12,047,040 increase in prepaid expenses related to the purchase of intellectual property. These cash outflows were partially offset by noncash share-based compensation of $83,571 and shares issued for professional services of $800,000, together with changes in working-capital accounts.
Investing Activities
Net cash used in investing activities was $3,264 for the three months ended June 30, 2026 and consisted of purchases of property and equipment.
Net cash used in investing activities was $1,442 for the three months ended June 30, 2025, primarily attributable to purchases of property and equipment of $1,442.
Financing Activities
Net cash provided by financing activities was $471,000 for the three months ended June 30, 2026, attributable to advance proceeds received for preferred stock subscriptions that had not been issued as of the balance sheet date and were recorded as preferred stock payable. Net cash provided by financing activities was $15,308,000 for the three months ended June 30, 2025, attributable to the net proceeds from the Company’s IPO.
Trend Information
Except for the information disclosed, the Company is not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition. However, the Company remains cautiously optimistic about the medium-term outlook, particularly in light of new residential contracts signed in February 2026 and a gradual pickup in client engagement activity in the following period. Historically focused on the Hong Kong market, we are actively pursuing geographic diversification to expand our operational footprint to oversea markets. We are also investing in digital transformation initiatives, specifically leveraging artificial intelligence (AI) to enhance design efficiency, optimize labor costs and create new revenue stream.
Commitments and Contingencies
Commitments
Except for the commitment fee payable to Atsion described above (Note 11), the Company had no significant capital or other commitments as of June 30, 2026.
| 13 |
Contingencies
The Company is subject to legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but the Company does not anticipate that the final outcome arising out of any such matters will have a material adverse effect on its financial position, cash flows or results of operations on an individual basis or in the aggregate. As of June 30, 2026 and 2025, the Company is not a party to any material legal or administrative proceedings.
The following table summarizes the contractual obligations as of June 30, 2026:
| Payments due by period | ||||||||||||||||||||
| Less than | 1 – 3 | 4 – 5 | More than | |||||||||||||||||
| Contractual obligations | Total | 1 year | years | years | 5 years | |||||||||||||||
| Bank borrowings | $ | 469,880 | $ | 1,505 | $ | 80,321 | $ | 99,451 | $ | 288,603 | ||||||||||
| Future lease payments | 694,562 | 113,702 | 278,338 | 258,484 | $ | 44,038 | ||||||||||||||
| $ | 1,164,442 | $ | 115,207 | $ | 358,659 | $ | 357,935 | $ | 332,641 | |||||||||||
Inflation
While global inflation has retreated from its peak levels, the economic landscape remains constrained by persistently elevated interest rates. The prolonged high-rate environment continues to dampen financing activity and discretionary spending in Hong Kong. Consequently, we face ongoing inflationary pressure on operating costs, particularly wages and materials, while simultaneously contending with softening client demand. This dual pressure creates a challenging margin environment, requiring stringent cost controls to preserve profitability. In order to adapt, we and our subsidiaries would endeavor to seek new business opportunities and would continue to take a conservative approach to cost budgeting, including, but not limited to, withholding distribution of staff bonuses, reconsidering staffing needs and applying greater pressure on the pricing negotiations with subcontractors and suppliers.
Seasonality
The nature of our business does not appear to be affected by seasonal variations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation of internal controls that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 14 |
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is aware of a lawsuit filed in New York State Court asserting that approximately 70 different IPO issuers and underwriters violated Sections 11, 12 and 15 of the federal securities laws. The Company has not yet been served with the lawsuit, and although it appears to have been named as a defendant, there are no allegations specific to the company in the complaint. The Company denies any allegations of wrongdoing of the type alleged vaguely in the complaint. Because the allegations are vague and general, out of an abundance of caution the Company believes it is premature for to determine whether the lawsuit is material.
We are not currently a party to any material litigation or governmental or other proceeding. However, from time to time, we have been, are and will likely continue to be involved in legal proceedings, administrative proceedings and claims that arise in the ordinary course of business with customers, subcontractors, suppliers, regulatory bodies or others. In general, litigation claims or regulatory proceedings can be expensive and time consuming to bring or defend against, which may result in the diversion of management’s attention and resources from our business and business goals and could result in settlement or damages that could significantly affect financial results and the conduct of our business.
ITEM 1A. RISK FACTORS
Except for the additional risk factors set forth below, factors that could cause our actual results to differ materially from those in this Quarterly Report are described in the Form 10-K for the year ended March 31, 2026, any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. Except as described below, as of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in the Form 10-K for the year ended March 31, 2026. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
Nasdaq may delist our Class A Ordinary Shares from its exchange which could limit your ability to make transactions in our securities and subject us to additional trading restrictions. In particular, we may not satisfy Nasdaq’s new minimum market value of listed securities continued listing requirement, which could result in our Class A Ordinary Shares being suspended from trading on, and ultimately delisted from, Nasdaq.
On July 22, 2026, the Securities and Exchange Commission approved a Nasdaq rule requiring companies listed on Nasdaq to maintain a minimum market value of listed securities, or MVLS, of at least $5 million. Under the rule, a company that fails to maintain an MVLS of at least $5 million for 30 consecutive business days may be subject to immediate suspension and delisting proceedings and is not entitled to a customary compliance or cure period prior to the issuance of a delisting determination. Although a company may appeal a delisting determination, its securities may be suspended from trading on Nasdaq while that appeal is pending.
As of July 22, 2026, our market value of listed securities was approximately $2.9 million, which is below the $5 million threshold required under Nasdaq’s continued listing standards. Accordingly, we may become subject to suspension and delisting proceedings if we do not increase our market value of listed securities and satisfy the applicable Nasdaq listing standards.
If our Class A Ordinary Shares is delisted, for failure to comply with the new MVLS requirement or other Nasdaq continued listing requirements, including the $1.00 minimum bid price requirement, it could trade on an over-the-counter market, which could adversely affect the liquidity and market price of our Class A Ordinary Shares, reduce analyst coverage and institutional investor interest, impair our ability to raise additional capital on favorable terms or at all, and make it more difficult for investors to buy or sell our securities. Any delisting could also negatively affect our reputation, relationships with business partners and access to strategic opportunities. Accordingly, there can be no assurance that we will be able to maintain the listing of our Class A Ordinary Shares on Nasdaq.
| 15 |
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sale of Unregistered Equity Securities
Except as set for the below, no unregistered sales of equity securities occurred in the quarter ended June 30, 2026.
On July 22, 2025, the Company entered into the Atsion Purchase Agreement with Atsion, pursuant to which the Company, among others, was prohibited from entering into any variable rate transaction (the “Restriction”). On October 28, 2025, the Company and Atsion entered into a waiver, pursuant to which Atsion agreed to waive the Restriction in relation to an initial closing of a certain purchase agreement, dated as of October 29, 2025, by and among the Company and certain investors (the “PIPE”). Further, on March 25, 2026, the Company and Atsion entered into a conditional waiver for the second and third closing of the PIPE (the “Original Waiver”). On June 4, 2026, the Company entered into Amendment No. 1 to the Conditional Waiver of Covenant (the “Amendment”) with Atsion, amending certain provisions of the Original Waiver. Further, the Original Waiver amended the Atsion Purchase Agreement to subject the Company’s obligation to pay Atsion a commitment fee of $1,000,000 to a payment schedule therein, and if the Company defaults in any of the payments, the entire remaining unpaid balance of the commitment fee shall, at the Atsion’s election, become immediately due and payable, and liquidated damages shall accrue at one percent (1%) of the commitment fee each day. Pursuant to the Amendment, if the Company defaults in the payment of commitment fee, the remaining unpaid balance of the commitment fee shall be converted into Class A Ordinary Shares (“Default Shares”) at a conversion price equal to volume-weighted average price of Company’s Class A Ordinary Shares on the day immediately prior to the Share Transfer Date (as defined in the Amendment), provided, however, that the number of Default Shares will not exceed 3,000,000 shares.
On July 6, 2026, the Company completed an additional closing (the “Additional Closing”) under a certain securities purchase agreement, dated October 29, 2025 (as amended, supplemented or waived from time to time, the “Purchase Agreement”) with TriCore. At the Additional Closing, the Company issued and sold to TriCore 356 Preferred Shares for an aggregate proceeds of $320,400. The Preferred Shares issued at the Additional Closing have an aggregate stated value of $356,000.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
ITEM 5. OTHER INFORMATION
During
the quarterly period ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Exchange
Act)
On May 21, 2026 the shareholders of the Company approved a 1-for-10 share consolidation of all of the Company’s Class A Ordinary Shares (issued an unissued), which became effective on July 31, 2026, in order to regain compliance with the minimum bid price requirement for continued listing under Nasdaq Listing Rule 5550(a)(2).
ITEM 6. EXHIBITS
| * | Filed herewith. |
| ** | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on August 14, 2026.
| OFA GROUP | |
| August 14, 2026 | /s/ Li Hsien Wong |
| Li Hsien Wong | |
| Chief Executive Officer and Director (Principal Executive Officer) | |
| August 14, 2026 | /s/ Ernest Yeung |
| Ernest Yeung | |
| Chief Financial Officer (Principal Financial Officer) |
| 17 |