RAY 20-F
Raytech Holding Ltd (RAY)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
OR
For the fiscal year ended
OR
OR
Date of event requiring this shell company report for the transition period from ____________to ____________
Commission file number:
(Exact Name of Registrant as Specified in its Charter)
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(Translation of Registrant’s Name into English)
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Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or Ordinary Shares as of the close of the period covered by the annual report:
As of March 31, 2026, the issuer had 2,724,911 Ordinary Shares issued and outstanding. As of the date hereof, the issuer had
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T 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, or an emerging growth company. See definition of “large accelerated filer,” accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Emerging growth company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
| † | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| ☒ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ | Other ☐ |
| * | If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐ |
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
TABLE OF CONTENTS
i
INTRODUCTION
Unless otherwise indicated, numerical figures included in this Annual Report on Form 20-F (the “Annual Report”) have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.
For the sake of clarity, this Annual Report follows the Hong Kong naming convention of last name followed by first name, regardless of whether an individual’s name is Chinese or English. This Annual Report includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, you are cautioned not to give undue weight to this information.
| ● | “BVI” are to the “British Virgin Islands”; |
| ● | “BVI Act” are to the BVI Business Companies Act (Law Revision 2020) (as amended); |
| ● | “China” or the “PRC” are to the People’s Republic of China; |
| ● | the “Company” or “Raytech Holding” are to Raytech Holding Limited, a BVI company; |
| ● | “Fluxen” are to Fluxen Limited, a company incorporated under the laws of Hong Kong with limited liability on June 12, 2026, a 60%-owned subsidiary of the Company. |
| ● | “Hong Kong” are to the Hong Kong Special Administrative Region of the People’s Republic of China for the purposes of this annual report only; |
| ● | “HKD” or “HK Dollar” are to the legal currency of Hong Kong; |
| ● | “Mainland China” are to the mainland of the People’s Republic of China excluding Taiwan and the special administrative regions of Hong Kong and Macau for the purposes of this Annual Report only; |
| ● | “Pure Beauty” are to Pure Beauty Manufacturing Company Limited, a company incorporated under the laws of Hong Kong with limited liability on April 15, 2013, a wholly-owned subsidiary of the Company; |
| ● | “Raytech Innovation” are to Raytech Innovation Limited, a company incorporated under the laws of Hong Kong with limited liability on May 6, 2025, a wholly-owned subsidiary of the Company; |
| ● | “$,” “dollars,” “US$” or “U.S. dollars” are to the legal currency of the United States; | |
| ● | “shares” or “Ordinary Shares” are to the ordinary shares of Raytech Holding Limited, par value $0.0001 per share. | |
| ● | “U.S. GAAP” are to generally accepted accounting principles in the United States; and | |
| ● | “we”, “us”, or the “Group” in this Annual Report are to Raytech Holding Limited, a BVI company and its subsidiaries, Pure Beauty Manufacturing Company Limited, Raytech Innovation Limited, Fluxen Limited and Worry free Group (Hong Kong) Limited, each a company incorporated under the laws of Hong Kong, unless the context otherwise indicates; | |
| ● | “Worry free” are to Worry free Group (Hong Kong) Limited, a company incorporated under the laws of Hong Kong with limited liability on April 8, 2024, a wholly-owned subsidiary of Raytech Innovation; |
Raytech Holding does not have any material operations of its own and Raytech Holding is a holding company with operations conducted in Hong Kong through its Hong Kong subsidiaries, Pure Beauty, Raytech Innovation, Fluxen and Worry free, using Hong Kong dollars, the currency of Hong Kong. Raytech Holding’s reporting currency is Hong Kong dollars. This Annual Report contains translations of certain foreign currency amounts into U.S. dollars for the convenience of the reader. Translations of amounts in the consolidated balance sheet, consolidated statements of income, consolidated statements of cash flows and the section titled “Compensation - Compensation of Executive Officers” from HKD into USD as of and for the year ended March 31, 2026 are solely for the convenience of the reader and were calculated at the noon buying rate of US$1 = HKD7.8400, as published in H.10 statistical release of the United States Federal Reserve Board. No representation is made that the HKD amounts could have been, or could be, converted, realized or settled into US$ at such rate, or at any other rate; Translations of the relevant amount from HKD into US$ as of and for the year ended March 31, 2025 are solely for the convenience of the reader and were calculated at the noon buying rate of US$1 = HKD7.7799, as published in H.10 statistical release of the United States Federal Reserve Board. No representation is made that the HKD amounts could have been, or could be, converted, realized or settled into US$ at such a rate, or at any other rate.
ii
FORWARD-LOOKING INFORMATION
This Annual Report contains forward-looking statements. These statements are made under the “safe harbor” provisions of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “may,” “intend,” “it is possible,” “subject to” and similar statements. Among other things, the sections titled “Item 3. Key Information—D. Risk Factors,” “Item 4. Information on the Company,” and “Item 5. Operating and Financial Review and Prospects” in this Annual Report, as well as our strategic and operational plans, contain forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements and are subject to change, and such changes may be material and may have a material and adverse effect on our financial condition and results of operations for one or more prior periods. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained, either expressly or impliedly, in any of the forward-looking statements in this Annual Report. All information provided in this Annual Report and in the exhibits is as of the date of this Annual Report, and we do not undertake any obligation to update any such information, except as required under applicable law.
iii
Part I
Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not Applicable.
Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not Applicable.
Item 3. KEY INFORMATION
A. [Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
1
D. Risk Factors
SUMMARY OF RISK FACTORS
Investment in our securities involves a high degree of risk. You should carefully consider the risks described below together with all the other information included in this Annual Report before making an investment decision. The risks and uncertainties described below represent our known material risks to our business. If any of the following risks occurs, our business, financial condition or results of operations could suffer. In that case, you may lose all or part of your investment.
Risks Related to Our Business. See “Item 3. Key Information— Risk Factors — Risks Related to Our Business” starting on page 6 of this Annual Report.
Risks and uncertainties related to our business and industry include, but are not limited to, the following:
| ● | Changes in capital markets, merger and acquisition activity, legal or regulatory requirements, general economic conditions and monetary or geopolitical disruptions, as well as other factors beyond our control, could reduce demand for our products, in which case our revenues and profitability could decline. |
| ● | Our revenues, operating income and cash flows are likely to fluctuate. |
| ● | Our expansion into the personal health care electronics sector is relatively new, and we may not successfully develop or commercialize products or services in this area. | |
| ● | Our expansion into new sector may require significant investment, and we may not realize an adequate return on such investment. | |
| ● | Personal health care electronic products may not perform as expected for all users, which could result in customer dissatisfaction, reputational harm, or liability exposure. |
| ● | We may not realize the anticipated benefits of our acquisition of Worry free Group (Hong Kong) Limited, which also exposes us to integration and financial risks. |
| ● | We have a substantial customer concentration, with a limited number of customers accounting for a substantial portion of our revenues. |
| ● | We rely heavily on one manufacturer, which we are affiliated with. A loss of this manufacturer could significantly negatively affect our business. |
| ● | Risks associated with our major manufacturer in mainland China could adversely affect our business, financial condition and results of operations. |
| ● | Inadequate or inaccurate external and internal information, including budget and planning data, could lead to inaccurate financial forecasts and inappropriate financial decisions. |
| ● | We may not manage our growth effectively, and our profitability may suffer. |
| ● | Our reputation is crucial to our business. Any harm to our reputation or failure to enhance our brand recognition may materially and adversely affect our business, financial condition and results of operations. |
| ● | We may not be able to continue to grow at our historical rate of growth, and if we fail to manage our growth effectively, our business may be materially and adversely affected. |
| ● | If we fail to prevent security breaches, improper access to or disclosure of our data or user data, or other hacking and attacks, we may lose users, and our business, reputation, financial condition and results of operations may be materially and adversely affected. |
| ● | We cannot assure that we could retain effective intellectual property rights. | |
| ● | We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations. |
| ● | Compromises of confidential or proprietary information could damage our reputation, harm our businesses and adversely impact our financial results. |
| ● | Increases in labor costs in Hong Kong may adversely affect our business and results of operations. |
| ● | Two of our largest shareholders may continue to exert substantial influence over the Company following the Offering, and their interests may not be aligned with those of our other shareholders. |
2
| ● | We face risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt our operations. |
| ● | Failure to comply with laws and regulations applicable to our business could subject us to fines and penalties and could also cause us to lose customers or otherwise harm our business. |
| ● | Members of our management team may in the future be involved in governmental investigations and civil litigations relating to the business affairs of companies with which they are, were or may in the future be affiliated with. |
| ● | If Raytech Holding becomes directly subject to the scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, Raytech Holding may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price and reputation and could result in a loss of your investment in Raytech Holding’s stock, especially if such matter cannot be addressed and resolved favorably. |
| ● | If we fail to compete effectively, we may miss new business opportunities or lose existing customers, and our revenues and profitability may decline. |
| ● | If we are unable to rely on the services and connections of our key personnel, or retain the current key personnel, our business could be adversely affected. |
| ● | Certain of our officers or directors may have actual or potential conflicts of interest because of their equity interests in or positions with Raytech Holdings and Zhongshan Raytech. |
| ● | Our employees may leave us to form or join competitors, and we may not have, or may choose not to pursue, legal recourse against such professionals. |
| ● | The business and sales of our subsidiary, Pure Beauty, are subject to the business strategies of the brand owners. |
| ● | We cannot assure you that our products can meet consumer preferences and needs, and will continue to gain market acceptance and secure market share. |
| ● | We rely on external manufacturers for the production of some of our products. |
| ● | Our operating results may fluctuate due to seasonality and other factors. |
| ● | A severe or prolonged downturn in the Chinese or global economy could materially and adversely affect our business and financial condition. |
| ● | Changes in U.S. and international trade policies, particularly with regard to China, may adversely impact our business and operating results. |
| ● | Our results of operations may be adversely affected by significant share-based compensation expenses, and the issuance of shares under our equity incentive plans will dilute existing shareholders. |
3
Risks Related to Our Corporate Structure. See “Item 3. Key Information— Risk Factors — Risks Related to Our Corporate Structure” starting on page 17 of this Annual Report.
We are also subject to risks and uncertainties related to our corporate structure, including, but not limited to, the following:
| ● | Raytech Holding may rely on dividends and other distributions on equity paid by its subsidiaries to fund any cash and financing requirements it may have, and any limitation on the ability of Raytech Holding’s subsidiaries to make payments to it could have a material adverse effect on Raytech Holding’s ability to conduct its business. |
| ● | Raytech Holding’s lack of effective internal controls over financial reporting may affect our ability to accurately report our financial results or prevent fraud which may affect the market for and price of Raytech Holding’s Ordinary Shares. |
| ● | If Raytech Holding ceases to qualify as a foreign private issuer, Raytech Holding would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and Raytech Holding would incur significant additional legal, accounting and other expenses that it would not incur as a foreign private issuer. |
| ● | Raytech Holding is an “emerging growth company” within the meaning of the Securities Act, and if Raytech Holding takes advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make it more difficult to compare Raytech Holding’s performance with other public companies. |
| ● | Raytech Holding incurs increased costs as a result of being a public company, particularly after Raytech Holding ceases to qualify as an “emerging growth company.” |
Risks Related to Doing Business in Hong Kong. See “Item 3. Key Information— Risk Factors — Risks Related to Doing Business in Hong Kong” starting on page 19 of this Annual Report.
All of our operations are in Hong Kong, so we face risks and uncertainties related to doing business in Hong Kong in general, including, but not limited to, the following:
| ● | All of our subsidiaries’ operations are in Hong Kong. However, due to the long arm provisions under the current laws and regulations of mainland China, the government of mainland China may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value of Raytech Holding’s Ordinary Shares. The government of mainland China may also intervene or impose restrictions on our ability to move money out of Hong Kong to distribute earnings and pay dividends or to reinvest in our business outside of Hong Kong. Changes in the policies, regulations, rules, and the enforcement of laws of the government of mainland China may also be quick with little advance notice and our assertions and beliefs of the risk imposed by the legal and regulatory system of mainland China cannot be certain. |
| ● | The enactment of Law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Hong Kong National Security Law”) could impact Raytech Holding’s subsidiary. |
| ● | There are political risks associated with conducting business in Hong Kong. |
| ● | There remain some uncertainties as to whether we will be required to obtain approvals from mainland China and Hong Kong authorities to list additional Raytech Holding’s securities on the U.S. exchanges and offer securities in the future, and if required, we cannot assure you that we will be able to obtain such approval. |
| ● | Rules for cross-border provision and examination of auditing records and other materials in connection with overseas securities issuance and listing were released by CSRC and became effective. The government of mainland China may impose more stringent requirement for domestic Chinese companies to share business and accounting records with foreign auditing firms and other securities service institutions, which could significantly limit or completely hinder Raytech Holding’s ability to offer or continue to offer its Ordinary Shares to investors and could cause the value of Raytech Holding’s Ordinary Shares to significantly decline or become worthless. |
| ● | It may be difficult for overseas shareholders and/or regulators to conduct investigation or collect evidence within mainland China. |
| ● | You may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing actions in Hong Kong against Raytech Holding or its management named in the Annual Report based on Hong Kong laws. |
| ● | We may be affected by the currency peg system in Hong Kong. |
4
Risks Related to Our Ordinary Shares. See “Item 3. Key Information— Risk Factors — Risks Related to Our Ordinary Shares” starting on page 27 of this Annual Report.
In addition to the risks described above, we are subject to general risks and uncertainties related to our Ordinary Shares, including, but not limited to, the following:
| ● | Although the audit report included in this Annual Report is prepared by U.S. auditors who are subject to PCAOB inspections on a regular basis, there is no guarantee that future audit reports will be prepared by auditors inspected by the PCAOB and, as such, in the future investors may be deprived of the benefits of such inspection. Furthermore, trading in Raytech Holding’s securities may be prohibited under the HFCA Act if the SEC subsequently determines Raytech Holding’s audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely, and as a result, U.S. national securities exchanges, such as the Nasdaq, may determine to delist Raytech Holding’s securities. Furthermore, on June 22, 2021, the U.S. Senate passed the AHFCAA, which would amend the HFCA Act and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the prohibition on trading. |
| ● | Raytech Holding’s Ordinary Shares are thinly traded and you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares. |
| ● | The market price for our shares may be volatile. |
| ● | Substantial future sales of Raytech Holding’s Ordinary Shares or the anticipation of future sales of Raytech Holding’s Ordinary Shares in the public market could cause the price of Raytech Holding’s Ordinary Shares to decline. |
| ● | Raytech Holding does not intend to pay dividends for the foreseeable future. |
| ● | If securities or industry analysts do not publish research or reports about our business, or if they publish a negative report regarding Raytech Holding’s Ordinary Shares, the price of Raytech Holding’s Ordinary Shares and trading volume could decline. |
| ● | Raytech Holding may experience extreme stock price volatility unrelated to its actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of Raytech Holding’s Ordinary Shares, and such volatility may subject Raytech Holding to securities litigation. |
| ● | You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because Raytech Holding is incorporated under British Virgin Islands law. |
| ● | As a foreign private issuer, Raytech Holding is permitted to, and Raytech Holding will, rely on exemptions from certain Nasdaq Stock Exchange corporate governance standards applicable to domestic U.S. issuers. This may afford less protection for holders of Raytech Holding’s shares. |
| ● | If Raytech Holding cannot continue to satisfy the initial listing requirements and other rules of the Nasdaq Capital Market, although it is exempt from certain corporate governance standards applicable to US issuers as a Foreign Private Issuer, Raytech Holding’s securities may be delisted, which could negatively impact the price of Raytech Holding’s securities and your ability to sell them. |
| ● | Because our business is conducted in Hong Kong dollars and the price of Raytech Holding’s Ordinary Shares is quoted in United States dollars, changes in currency conversion rates may affect the value of your investments. |
| ● | There can be no assurance that Raytech Holding will not be a passive foreign investment company (“PFIC”), for U.S. federal income tax purposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of Raytech Holding’s Ordinary Shares. |
| ● | The imposition of tariffs and escalating trade tensions have adversely affected, and may continue to adversely affect, our revenue and results of operations. |
| ● | We received a deficiency notice from Nasdaq regarding the minimum bid price requirement, and we may be unable to maintain compliance with Nasdaq continued listing requirements in the future. |
| ● | The share consolidation may not result in a sustained increase in the market price of our Ordinary Shares. |
| ● | Future issuances of our Ordinary Shares, including under our shelf registration statement, may cause substantial dilution and adversely affect the market price of our Ordinary Shares. |
| ● | We have engaged in transactions with related parties and have relied on the home country practice exemption from Nasdaq shareholder-approval requirements. |
5
RISK FACTORS
Risks Related to Our Business
Changes in capital markets, merger and acquisition activity, legal or regulatory requirements, general economic conditions and monetary or geopolitical disruptions, as well as other factors beyond our control, could reduce demand for our products, in which case our revenues and profitability could decline.
Different factors outside of our control could affect demand for our products. These include:
| ● | fluctuations in U.S. and/or global economies, including economic downturns or recessions and the strength and rate of any general economic recoveries; |
| ● | level of leverage incurred by countries or businesses; |
| ● | merger and acquisition activity; |
| ● | frequency and complexity of significant commercial litigation; |
| ● | over expansion by businesses causing financial difficulties; |
| ● | business and management crises, including the occurrence of alleged fraudulent or illegal activities and practices; |
| ● | new and complex laws and regulations, repeals of existing laws and regulations or changes of enforcement of laws, rules and regulations, including antitrust/competition reviews of proposed merger and acquisition transactions; |
| ● | other economic, geographic or political factors; and |
| ● | general business conditions. |
We are not able to predict the positive or negative effects that future events or changes to the U.S. or global economies will have on our business. Fluctuations, changes and disruptions in financial, credit, merger and acquisition and other markets, political instability and general business factors could impact various segments’ operations and could affect such operations differently. Changes to factors described above, as well as other events, including by way of example, contractions of regional economies, or the economy of a particular country, trade restrictions, monetary systems, banking, real estate and retail or other industries; debt or credit difficulties or defaults by businesses or countries; new, repeals of or changes to laws and regulations, including changes to the bankruptcy and competition laws of the U.S. or other countries; tort reform; banking reform; a decline in the implementation or adoption of new laws or regulation, or in government enforcement, litigation or monetary damages or remedies that are sought; or political instability may have adverse effects on our business.
Our revenues, operating income and cash flows are likely to fluctuate.
We experience fluctuations in our revenues and cost structure and the resulting operating income and cash flows and expect that this will continue to occur in the future. We may experience fluctuations in our annual and quarterly financial results, including revenues, operating income and earnings per share, for reasons that may include: (i) the number, size, timing and duration of customer orders for our personal care electrical appliances and of engagements for our product design and development, project advisory and marketing solutions services; (ii) the timing of revenue recognition under U.S. GAAP, including revenue recognized over time on a cost-to-cost basis for our design and development and project advisory services; (iii) the mix of revenue between sales of products, sales of tooling and our service lines, which carry different margins; (iv) the geographic locations of our customers and the markets into which they sell; (v) the length of billing and collection cycles and changes in amounts that may become uncollectible, in particular for our service businesses; (vi) the imposition of tariffs and other trade measures affecting products manufactured in mainland China; (vii) business and asset acquisitions, including our acquisition of Worry free; (viii) fluctuations in the exchange rates of various currencies against the U.S. dollar; and (ix) economic and geopolitical factors beyond our control.
6
The results of our business operation may be affected differently by the above factors. The positive effects of certain events or factors on our business may not be sufficient to overcome the negative effects of those same events or factors on other parts of our business.
Our results are subject to seasonal and other similar factors. While we assess our annual guidance at the end of each quarter and update such guidance when we think it is appropriate, unanticipated future volatility can cause actual results to vary significantly from our guidance, even where that guidance reflects a range of possible results and has been updated to take account of partial-year results.
Our expansion into the personal health care electronics sector is relatively new, and we may not successfully develop or commercialize products or services in this area.
We are expanding our strategic focus to include services relating to the design, development and consultation of personal health care electronic products. This business line is relatively new to us, and we have limited operating history in this sector. The development and commercialization of personal health care electronic products involve numerous risks, including technical feasibility challenges, evolving consumer preferences, supply chain complexities, and competitive pressures. We may encounter delays, cost overruns, design defects, or performance issues in developing such products. There can be no assurance that this expansion will generate meaningful revenues or achieve profitability. If we are unable to successfully execute our strategy in this area, our financial condition, results of operations and prospects may be adversely affected.
Our expansion into personal health care electronics may require significant investment, and we may not realize an adequate return on such investment.
The development of personal health care electronic products and related services may require significant expenditures, including costs associated with research and development, product design, regulatory compliance, testing, marketing, and working capital. We may need to devote substantial management time and financial resources to this business line. If anticipated demand does not materialize, or if we fail to achieve expected pricing or market acceptance, we may not recover our investments, which could materially and adversely affect our operating results and liquidity.
Personal health care electronic products may not perform as expected for all users, which could result in customer dissatisfaction, reputational harm, or liability exposure.
The effectiveness and user experience of personal health care electronic products may vary significantly depending on individual health conditions, usage patterns, environmental factors, and other variables beyond our control. Products may not deliver the results or benefits expected by customers, whether due to inherent technological limitations, improper use, or differences in individual physiology. Any failure of our products or services to meet customer expectations could lead to negative publicity, customer complaints, returns, warranty claims, or potential product liability claims. Such events could harm our reputation and adversely affect our business and financial results.
We may not realize the anticipated benefits of our acquisition of Worry free Group (Hong Kong) Limited, which also exposes us to integration and financial risks.
On December 23, 2025, our subsidiary Raytech Innovation Limited agreed to acquire 100% of the issued share capital of Worry free Group (Hong Kong) Limited for an aggregate consideration of US$6,099,000, comprising US$4,099,000 in cash and a US$2,000,000 promissory note bearing interest at 2% per annum and maturing on the second anniversary of its issuance. We may fail to integrate the acquired business successfully, to realize the anticipated benefits, or to identify liabilities accurately, and the acquisition has given rise to goodwill that may become impaired. Servicing the promissory note will also require cash resources. Any of these factors could materially and adversely affect our business, financial condition and results of operations.
7
We have a substantial customer concentration, with a limited number of customers accounting for a substantial portion of our revenues.
We are engaged in the sourcing and wholesaling of personal care electrical appliances for international brand owners, with manufacturing outsourced to external manufacturers, and, since fiscal 2026, the provision of product design and development services, project advisory services and marketing solutions services. We derive a significant portion of our revenues from a few major customers. We currently have two major customers: (i) Koizumi Seiki Corp., a Japanese company, having been doing business for over 300 years since 1716, which is one of the leading corporations specialized in small appliance market in Japan; the current contract we have with Koizumi Seiki Corp. was executed on July 1, 2014, automatically renewable on annual basis unless otherwise terminated by either party with a notice given at least six months prior to the expiration of then existing term of the contract; and (ii) another customer, a U.S. home appliance manufacturer.
For the year ended March 31, 2024, two major customers accounted for 74.1% and 16.5% of the Company’s total revenues, respectively, and for the year ended March 31, 2025, two major customers accounted for 64.0% and 29.5% of the Company’s total revenues, respectively. For the year ended March 31, 2026, one customer accounted for 62.5% of the Company’s total revenues.
Inherent risks exist whenever a large percentage of total revenues are concentrated with a limited number of customers. It is not possible for us to predict the future level of demand for the products of these customers in the marketplace or the future demand for our products and services by these customers. If any of these customers experience declining or delayed sales due to market, economic or competitive conditions, we could be pressured to reduce our prices or they could decrease the purchase quantity of our products, which could have an adverse effect on our margins and financial position, and could negatively affect our revenues and results of operations. If any of our major largest customers stop coming to us for customized products, such suspension would materially negatively affect our revenues, results of operations and financial condition.
We rely heavily on one manufacturer, which we are affiliated with. A loss of this manufacturer could significantly negatively affect our business.
We rely on a limited number of manufacturers who are responsible for manufacturing hair care and skincare products. For the years ended March 31, 2026 and 2025, we relied on Zhongshan Raytech Electrical Appliances Manufacturing Co. Ltd. (“Zhongshan Raytech”), a factory located in Zhongshan, China, and is owned by Mr. Ching Tim Hoi, who is also our founder, CEO and director as our major manufacturers. The current contract we have with Zhongshan Raytech was executed on January 1, 2021, automatically renewable on an annual basis unless otherwise terminated by either party with a notice given at least six months prior to the expiration of then-existing term of the contract. Pursuant to each contract with Zhongshan Raytech, we place orders with the manufacturer based on orders from our customers and the manufacturer is responsible to manufacture the products according to the requirements of each order. For the year ended March 31, 2025, payments to Zhongshan Raytech accounted for 88.2% of the total purchases of the Company. For the year ended March 31, 2026, payments to Zhongshan Raytech accounted for 62.1% of the total purchases of the Company.
We do not currently have other reliable alternatives or replacements for Zhongshan Raytech. This reliance on a limited number of manufacturers increases our risks. If we experience a significant increase in demand of our products, or if we need to replace an existing manufacturer, we may not be able to supplement service or replace them on acceptable terms, which may undermine our ability to deliver products to our customers in a timely manner. Identifying and approving suitable manufacturers could be an extensive process that requires us to become satisfied with their quality control, technical capabilities, responsiveness and service, financial stability, regulatory compliance, and labor and other ethical practices. Accordingly, a loss of any significant manufacturer would have an adverse effect on our business, financial condition and results of operations. In addition, our manufacturers may face supply chain risks and constraints of their own, which may impact on the availability and pricing of our products and delay for the deliveries of our products.
8
Risks associated with our major manufacturer in mainland China could adversely affect our business, financial condition and results of operations.
We relied on one major manufacturer, Zhongshan Raytech, which is located in Zhongshan, mainland China. Zhongshan Raytech is a related party of the Company. As of March 31, 2026, Zhongshan Raytech accounted for 62.1% of our total purchases. For the year ended March 31, 2025, payments to Zhongshan Raytech accounted for 88.2% of the total purchases of the Company. We depend on our ability to provide our customers with a wide range of products from our major manufacturers in a timely and efficient manner. Political and economic instability, global or regional adverse conditions, such as pandemics or other disease outbreaks or natural disasters, the financial stability of our manufacturers, our manufacturers’ ability to meet our standards, labor problems experienced by such manufacturers, the availability or cost of raw materials, merchandise quality issues, currency exchange rates, trade tariff developments, transport availability and cost, including import-related taxes, transport security, inflation, and other factors relating to our manufacturers are beyond our control. As an example, the any pandemic could adversely impact such manufacturer facilities and operations due to extended holidays, factory closures and risks of labor shortages, among other things, which may materially and adversely affect our business, financial condition and results of operations.
Further, we rely on our manufacturers’ representations of product quality, safety and compliance with applicable laws and standards. If our manufacturers or other vendors violate applicable laws, regulations, or implement practices regarded as unethical, unsafe, or hazardous to the environment, it could damage our reputation and negatively affect our operating results. Further, concerns regarding the safety and quality of products provided by our manufacturers could cause our customers to avoid purchasing those products from us. As such, any issue, or perceived issue, regarding the quality and safety of any items we sell, regardless of the cause, could adversely affect our reputation, operations and financial results.
We also are unable to predict whether Zhongshan Raytech in the future will be subject to new, different, or additional trade restrictions imposed by the PRC or foreign governments or the likelihood, type or effect of any such restrictions. Any event causing a disruption or delay of imports from manufacturers, including the imposition of additional export restrictions, restrictions on the transfer of funds or increased tariffs or quotas, could increase the cost or reduce the supply of products available to our customers and materially adversely affect our financial performance as well as our reputation. Furthermore, our manufacturer operations may be adversely affected by political and financial instability, resulting in the disruption of trade from exporting countries and regions, restrictions on the transfer of funds or other trade disruptions.
Additionally, the economy of mainland China differs from the economies of most developed countries in many respects, including the extent of government involvement, its level of development, its growth rate and its control over foreign exchange. In recent years, the government of mainland China has implemented measures emphasizing market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises. However, a significant portion of productive assets in mainland China is still owned by the government of mainland China. The government of mainland China continues to play a significant role in regulating industrial development. It also exercises significant control over mainland China’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policies, restricting the inflow and outflow of foreign capital and providing preferential treatment to particular industries or companies. The government of China also has significant authority to exert influence on the ability of a China-based company, such as our manufacturers, to conduct their business. Any adverse change in the economic conditions in mainland China, policies of the government or laws and regulations in mainland China could have a material adverse effect on the overall economic growth of China and, in turn, on the business of our major manufacturers in mainland China. As a result, we may lose our major manufacturers in mainland China, and we may not have other reliable alternatives or replacements for these manufacturers. A loss of any major manufacturer in mainland China would have an adverse effect on our business, financial condition and results of operations, and may cause Raytech Holding’s Ordinary Shares to significantly decline in value.
9
A substantial portion of our accounts receivable arose near the end of fiscal 2026 from our newly launched service businesses, and our operating cash flow for fiscal 2026 was negative; if we are unable to collect these receivables in a timely manner or to obtain external financing on acceptable terms, our liquidity and financial condition would be materially and adversely affected.
Our service businesses, conducted through Raytech Innovation and Worry free, commenced or were acquired during fiscal 2026 and expanded significantly toward the end of the year. As a result, our total accounts receivable increased to HKD67,775,993 (US$8,644,897) as of March 31, 2026 from HKD8,144,307 as of March 31, 2025, and we recorded net cash used in operating activities of HKD14,511,287 ( US$1,850,928) for the year ended March 31, 2026. We have to date relied in part on external financing to fund our working capital, including our June 2026 registered direct offering under our Form F-3 shelf registration statement, which raised net proceeds of approximately US$6.08 million. If our service customers fail to settle their balances within the agreed credit periods, if we are required to record allowances for credit losses, or if additional financing is not available on acceptable terms or at all, our liquidity, financial condition and results of operations could be materially and adversely affected, and our shareholders could experience dilution from future equity financings.
Inadequate or inaccurate external and internal information, including budget and planning data, could lead to inaccurate financial forecasts and inappropriate financial decisions.
Our financial forecasts are dependent on estimates and assumptions regarding budget and planning data, market growth, foreign exchange rates and our ability to generate sufficient cash flow to reinvest in the business, fund internal growth, and meet our debt obligations. Our financial projections are based on historical financial data and seasonal effect and on various other assumptions and foreseeable market trend that our management believes to be reasonable under the circumstances and at the time they are made. However, if our external and internal information is inadequate, our actual results may differ materially from our forecasts and cause us to make inappropriate financial decisions. Any material variation between our financial forecasts and our actual results may also adversely affect our future profitability, stock price and shareholder confidence.
We may not manage our growth effectively, and our profitability may suffer.
We experience fluctuation in growth rates and across our different product segments, including periods of rapid or declining growth. While we have experienced expansion overall in the past 10 years, this growth has not always been uniform across segments or consistent year-over-year. However, to manage growth successfully, we may need to add qualified managers and employees and periodically update our operating, financial and other systems, as well as our internal procedures and controls, We also must effectively motivate, train and manage our research and development staff, If we fail to add or retain qualified managers, employees and contractors when needed, estimate costs, or mange our growth effectively, our business, financial results and financial condition may suffer.
We cannot assure that we can successfully manage growth and maintain profitability as we grow. In periods of declining growth, underutilized employees and contractors may result in expenses and costs representing a greater percentage of revenues. In such situations, we will have to weigh the benefits of decreasing our workforce or limiting our service offerings and saving costs against the detriment that we could experience from losing valued professionals and their industry expertise customers.
Our reputation is crucial to our business. Any harm to our reputation or failure to enhance our brand recognition may materially and adversely affect our business, financial condition and results of operations.
Our reputation, which depends on earning and maintaining the trust and confidence of our current or potential customers, is critical to our business. Our reputation is vulnerable to many threats that can be difficult or impossible to control, and costly or impossible to remediate. Regulatory inquiries or investigations, lawsuits initiated by customers or other third parties, employee misconduct, perceptions of conflicts of interest and rumors, among other things, could substantially damage our reputation, even if they are baseless or satisfactorily addressed. Moreover, any negative media publicity about our industry in general or product or service quality problems of other firms in the industry, including our competitors, may also negatively impact our reputation and brand. If we are unable to maintain a good reputation or further enhance our brand recognition, our ability to attract and retain customers and key employees could be harmed and, as a result, our business and revenues would be materially and adversely affected.
We may not be able to continue to grow at our historical rate of growth, and if we fail to manage our growth effectively, our business may be materially and adversely affected.
We anticipate continuing growth in the foreseeable future. However, past results of operations achieved by us should not be taken as indicative of our future prospects and results of operations, and we cannot assure you that we will grow at the historical rate of growth. Our rapid growth has placed, and will continue to place, a significant strain on our management, personnel, systems and resources. To accommodate our growth, we will need to implement a variety of new and upgraded operational and systems procedures and controls, including the improvement of our accounting and other internal management systems. We also will need to recruit, train, manage and motivate employees and manage our relationships with an increasing number of customers. Moreover, as we introduce new products or enter into new markets, we may face unfamiliar market and operational risks and challenges which we may fail to successfully address. We may be unable to manage our growth effectively, which could have a material adverse effect on our business.
As a result, you should consider our future prospects in light of the risks and uncertainties experienced by early-stage companies in a rapidly evolving and increasingly competitive market in Hong Kong.
10
If we fail to prevent security breaches, improper access to or disclosure of our data or user data, or other hacking and attacks, we may lose users, and our business, reputation, financial condition and results of operations may be materially and adversely affected.
We plan to have privacy and data security policies in place that are designed to prevent security breaches and we are looking for resources to assist us to develop our security measures against breaches. Although we have not experienced any security breaches or cybersecurity issues, however, as newer technologies evolve, and the portfolio of the service providers with which the Company shares confidential information with growth, we could be exposed to increased risk of breaches in security and other illegal or fraudulent acts, including cyberattacks. The evolving nature of such threats, in light of new and sophisticated methods used by criminals and cyberterrorists, including computer viruses, malware, phishing, misrepresentation, social engineering and forgery, is making it increasingly challenging to anticipate and adequately mitigate these risks.
We are likely in the future to be subject to these types of attacks. If we are unable to avert these attacks and security breaches, we could be subject to significant legal and financial liabilities, our reputation would be harmed and we could sustain substantial revenue loss from lost sales and customer dissatisfaction. We may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks. Cyber-attacks may target us, our manufacturers, customers or other participants, or the internet infrastructure on which we depend. Actual or anticipated attacks and risks may cause us to incur significantly higher costs, including costs to deploy additional personnel and network protection technologies, train employees, and engage third-party experts and consultants. As we do not carry cybersecurity insurance, we will not be able to mitigate such risks to any third party. Cybersecurity breaches would not only harm our reputation and business but also could materially decrease our revenue and net income.
We cannot assure you that we could retain effective intellectual property rights.
We cannot make assurances that the steps we have taken or will take in the future to protect our intellectual property rights are or will be adequate to deter misappropriation of proprietary information or that we will be able to detect unauthorized use and take appropriate steps to enforce our intellectual property rights. As of the date of this Annual Report, neither we nor our subsidiaries own any registered trademarks in any jurisdiction. We intend to register Pure Beauty’s trademarks in Hong Kong to secure trademark protection after seeking professional advice. However, whilst registration will usually confirm ownership and subsistence of rights, some registrations can still be challenged due to prior existing rights. We cannot assure you that in the future our intellectual property rights registrations will be complete or invulnerable.
We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.
We cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate trademarks, copyrights, know-how or other intellectual property rights held by third parties. We may be subjected from time to time in the future to legal proceedings and claims relating to the intellectual property rights of others. In addition, there may be third-party trademarks, copyrights, know-how or other intellectual property rights that are infringed by our products, services or other aspects of our business without our awareness. Holders of such intellectual property rights may seek to enforce such rights against us in Hong Kong, the United States or other jurisdictions. If any third-party infringement claims are brought against us, we may be forced to divert some resources from our business and operations to defend against these claims, regardless of their merits.
Additionally, the application and interpretation of Hong Kong’s intellectual property rights laws and the procedures and standards for granting trademarks, copyrights, know-how or other intellectual property rights in Hong Kong are still evolving and are uncertain, and we cannot ensure that Hong Kong courts or regulatory authorities would agree with our analysis. If we were found to be in violation of the intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our own. As a result, our business and operating results may be materially and adversely affected.
As of the date of this Annual Report, we have been using certain trademarks on Pure Beauty’s daily business operations which are currently registered in Japan and owned by Mr. Ching (the “Japan Pure Beauty Trademarks”). On August 1, 2021, a trademark license agreement was entered into between us and Mr. Ching (the “Japan Trademark License Agreement”), pursuant to which Mr. Ching agreed to irrevocably and unconditionally grant us, our subsidiaries and branches an exclusive license to use the Japan Pure Beauty Trademarks on a royalty-free basis, for 10 years commencing from the date of the Japan Trademark License Agreement. There is no guarantee that we will be able to successfully renew the Japan Trademark License Agreement upon expiration of its current term and that the same will not be revoked or early terminated by Mr. Ching. In the absence of a valid Japan Trademark License Agreement, the use of the Japan Pure Beauty Trademarks by us or Pure Beauty in Japan may subject us or Pure Beauty to trademark infringement claims, and we may be forced to divert some resources from our business and operations to defend against these claims, regardless of their merits. As a result, our business and operating results may be materially and adversely affected.
11
Compromise of confidential or proprietary information could damage our reputation, harm our businesses and adversely impact our financial results.
Our own confidential and proprietary information and that of our customers could be compromised, whether intentionally or unintentionally, by our employees, consultants or manufacturers. A compromise of the security of our information technology systems leading to theft or misuse of our own or our customers’ proprietary or confidential information, or the public disclosure or use of such information by others, could result in losses, third-party claims against us and reputational harm, including the loss of customers. The theft or compromise of our or our customers’ information could negatively impact our reputation, financial results and prospects. In addition, if our reputation is damaged due to a data security breach, our ability to attract new engagements and customers may be impaired or we may be subjected to damages or penalties, which could negatively impact our businesses, financial results or financial condition.
Increases in labor costs in Hong Kong may adversely affect our business and results of operations.
The economy in Hong Kong has experienced increases in inflation and labor costs in recent years. As a result, average wages in Hong Kong are expected to continue to increase. In addition, we are required by Hong Kong laws and regulations to maintain various statutory employee benefits, including mandatory provident fund scheme and work-related injury insurance, to provide statutorily required paid sick leave, annual leave and maternity leave, and pay severance payments or long service payments. The relevant government agencies may examine whether an employer has complied with such requirements, and those employers who fail to comply commit a criminal offence and may be subject to fines and/or imprisonment. We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless we are able to control our labor costs or pass on these increased labor costs to our users by increasing the fees of our services, our financial condition and operating results may be adversely affected.
Two of our largest shareholders may continue to exert substantial influence over the Company following the Offering, and their interests may not be aligned with those of our other shareholders.
Following the closing of the offering of our Ordinary Shares pursuant to our registration statement on Form F-3 (File No. 333-290696), which was declared effective by the Securities and Exchange Commission on December 18, 2025, and the related prospectus supplement dated June 18, 2026, WK Frater Holdings Limited and Fortune Genesis Holdings Limited each beneficially own approximately 17.01% of our outstanding Ordinary Shares. As a result of their significant ownership positions, these shareholders may be able to exert substantial influence over matters requiring shareholder approval, including the election and removal of directors, amendments to our memorandum and articles of association, and the approval of significant corporate transactions such as mergers, business combinations or asset sales.
The concentration of ownership in these shareholders may also have the effect of delaying, deterring or preventing a change in control of the Company, and may discourage potential acquirers from making an offer for our securities. In addition, the interests of these shareholders may differ from those of our other shareholders. They may vote their shares in a manner that advances their own interests, which may not be aligned with the interests of the Company or our other shareholders. Any such actions could adversely affect our corporate governance, strategic direction, and the market price of our ordinary shares.
We face risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt our operations.
We are vulnerable to natural disasters and other calamities. Fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, wars, riots, terrorist attacks or similar events may give rise to supply chain disruptions, shipment delays, manufacturing breakdowns, and demand shifts, which could cause adversely affect our ability to provide products and services to our customers. In addition, our results of operations could be adversely affected to the extent that any health epidemic harms the Hong Kong economy in general. A prolonged outbreak of any illnesses or other adverse public health developments in Hong Kong or elsewhere in the world could have a material adverse effect on our business operations. Such outbreaks could severely disrupt our operations and adversely affect our business, financial condition and results of operations. Our headquarters are located in Hong Kong, where our management and employees currently reside. Consequently, if any natural disasters, health epidemics or other public safety concerns were to affect Hong Kong or cause travel restriction in or out of Hong Kong or its surrounding areas, our operation may experience material disruptions, which may materially and adversely affect our business, financial condition and results of operations. On February 24, 2022, the Russian Federation launched an invasion of Ukraine that has had an immediate impact on the global economy resulting in higher energy prices and higher prices for certain raw materials and goods and services which in turn is contributing to higher inflation in the United States and other countries across the globe with significant disruption to financial markets. We do not have any operation or business in Russia or Ukraine, however, we may potentially be indirectly adversely impacted any significant disruption it has caused and may continue to escalate. Any one or more of these events may impede our operation and delivery efforts and adversely affect our sales results, or even for a prolonged period of time, which could materially and adversely affect our business, financial condition, and results of operations.
12
Failure to comply with laws and regulations applicable to our business could subject us to fines and penalties and could also cause us to lose customers or otherwise harm our business.
Our business is subject to regulation by various governmental agencies in Hong Kong, including agencies responsible for monitoring and enforcing compliance with various legal obligations, such as intellectual property laws, employment and labor laws, workplace safety, governmental trade laws, import and export controls, anti-corruption and anti-bribery laws, and tax laws and regulations. In certain jurisdictions, these regulatory requirements may be more stringent than in Hong Kong. These laws and regulations impose added costs on our business. Noncompliance with applicable regulations or requirements could subject us to:
| ● | investigations, enforcement actions, and sanctions; |
| ● | mandatory changes to our network and products; |
| ● | disgorgement of profits, fines, and damages; |
| ● | civil and criminal penalties or injunctions; |
| ● | claims for damages by our customers or channel partners; |
| ● | termination of contracts; |
| ● | failure to obtain, maintain or renew certain licenses, approvals, permits, registrations or filings necessary to conduct our operations; and |
| ● | temporary or permanent debarment from sales to public service organizations. |
If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations, and financial condition could be adversely affected. In addition, responding to any action will likely result in a significant diversion of our management’s attention and resources and an increase in professional fees. Enforcement actions and sanctions could materially harm our business, results of operations, and financial condition.
Any reviews by regulatory agencies or legislatures may result in substantial regulatory fines, changes to our business practices, and other penalties, which could negatively affect our business and results of operations. Changes in social, political, and regulatory conditions or in laws and policies governing a wide range of topics may cause us to change our business practices. Further, our expansion into a variety of new fields also could raise a number of new regulatory issues. These factors could negatively affect our business and results of operations in material ways.
Moreover, we are exposed to the risk of misconduct, errors and failure to functions by our management, employees and parties with whom we collaborate, who may from time to time be subject to litigation and regulatory investigations and proceedings or otherwise face potential liability and penalties in relation to noncompliance with applicable laws and regulations, which could harm our reputation and business.
Members of our management team may in the future be involved in governmental investigations and civil litigations relating to the business affairs of companies with which they are, were or may in the future be affiliated with.
Members of our management team may in the future be involved in governmental investigations and civil litigations relating to the business affairs of companies with which they are, were or may in the future be affiliated with. Any such investigations or litigations may divert our management team’s attention and resources away from managing our business affairs and operations, may be detrimental to our reputation, and thus may negatively affect our business and financial performance.
13
If Raytech Holding becomes directly subject to the scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter, which could harm our business operations, stock price and reputation and could result in a loss of your investment in Raytech Holding’s stock, especially if such matter cannot be addressed and resolved favorably.
Recently, U.S. public companies that have substantially all of their operations in China, including Hong Kong, have been the subject of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has centered around financial and accounting irregularities and mistakes, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism and negative publicity, the publicly traded stock of many U.S. listed Chinese companies has sharply decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticism and negative publicity will have on Raytech Holding, its business and its stock price. Although substantially all of our operations are based in Hong Kong and none of our customers are based in mainland China, if Raytech Holding becomes the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend our company. This situation will be costly and time consuming and distract our management from growing our business.
If we fail to compete effectively, we may miss new business opportunities or lose existing customers, and our revenues and profitability may decline.
The market for some of our products and services is highly competitive. We do not compete against the same companies for all of our products and services or in all geographic regions. Instead, we compete with different companies depending on the particular types of requested products and services and the location of the customer or delivery of the products and services. Our operations are highly competitive.
Our competitors include large organizations, such as the international personal care electronic design and development organizations, which offer niche products and services that are the same or similar to products or services offered by us; and small firms and independent contractors that focus on specialized products and services. Some of our competitors have significantly more financial resources, a larger national or international presence, larger professional staff and greater brand recognition than we do. Some have lower overhead and other costs.
If we cannot compete effectively or if the costs of competing, including the costs of hiring and retaining professionals, become too expensive, our revenue growth and financial results could be negatively affected and may differ materially from our expectations.
If we are unable to rely on the services and connections of our key personnel, or retain the current key personnel, our business could be adversely affected.
Our growth has been heavily dependent on the services provided by our management team. They manage our business operation, develop and execute our business strategies and manage the relationship with our key product manufacturers and corporate customers. Therefore, our future success relies on our ability to retain the services of these key management personnel. If any of these key personnel are unable or unwilling to continue to provide services to us, and we are unable to find suitable replacements, we may not be able to continue our operations effectively and efficiently, and our business and financial conditions could be adversely affected.
Certain of our officers or directors may have actual or potential conflicts of interest because of their equity interests in or positions with Raytech Holdings Company Limited and Zhongshan Raytech.
Raytech Holding’s CEO and director, Mr. Ching, has ownership of Zhongshan Raytech and Raytech Holdings Company Limited, on which we rely for manufacturing collaboration, create, or may create the appearance of, conflicts of interest when these officers or directors are faced with decisions that could have different implications for Zhongshan Raytech and Raytech Holdings Company Limited than for us. These potential conflicts could arise, for example, over matters such as the desirability of changes in our business and operations, funding and capital matters, regulatory matters, and contractual arrangements.
14
Our employees may leave to form or join competitors, and we may not have, or may choose not to pursue, legal recourse against such professionals.
Our employees typically have close relationships with the customers they serve, based on their expertise and bonds of personal trust and confidence. Therefore, the barriers to our employees pursuing independent business opportunities or joining our competitors should be considered low. Although our customers generally contract for services with us as a company, and not with an individual employee, in the event that an employee leaves, such customers may decide that they prefer to continue working with a specific person rather than with us. In the event an employee departs and acts in a way that we believe violates his or her non-competition or non-solicitation agreement, we will consider any legal remedies we may have against such person on a case-by-case basis. We may decide that preserving cooperation and a professional relationship with a former employee or customer, or other concerns, outweighs the benefits of any possible legal recourse. We may also decide that the likelihood of success does not justify the costs of pursuing a legal remedy. Therefore, there may be times we may decide not to pursue legal action, even if it is available to us.
The business and sales of our subsidiary, Pure Beauty, are subject to the business strategies of the brand owners.
For the years ended March 31, 2026 and March 31, 2025, our revenue generated from Pure Beauty’s trading section was attributed to sales of branded products sourced from brand owners by our customers in Japan, U.S., Europe and Australia. Our business and sales are heavily dependent on the market receptiveness of, and demand for, the products being provided by various brand owners. The overall business strategies and product development plans adopted by these brand owners and their ability to maintain and develop the brands are therefore essential to our business.
As we have limited or no influence on the decisions made by the brand owners in relation to their business strategies, in particular, the production of their existing products and development of new products, we cannot assure that the brand owners will be able to maintain and further develop their brands and/or products, or that our customers will continue to show preferences to their brands and/or products. If the strategies of the brand owners turn out to be unsuccessful or due to any other reason the marketability of the brands falls substantially, the profitability of our business would be materially and adversely affected.
We cannot assure that our products can meet consumer preferences and needs, and will continue to gain market acceptance and secure market share.
We sell and distribute a variety of beauty device products to the general public through our customers’ sales network. The general acceptance by consumers of the brands and products designed and provided by us is of vital importance to our success and it hinges on a number of factors such as brand image, product quality and customer loyalty. Our success also depends, to a large extent, on our ability to offer a diversified portfolio of products that can meet the changing consumer preferences and needs. There is no assurance that the existing products designed and provided by us will be able to satisfy changes in consumer preferences and needs.
We may also fail to anticipate, identify or respond to the constant changes in relation to consumer preferences and needs on a timely basis, nor can we assure that we will be able to gain or increase market receptiveness and market share for our products.
Consumer preferences and needs for products and brands can change from time to time for various reasons, including negative publicity regarding our products, emergence of competitive products and brands, or a general decrease in demand for the beauty device products distributed and sold us. Any of these events could adversely affect our competitive advantage and market share, which in turn could materially and adversely affect our business, financial condition and results of operation.
We rely on external manufacturers for production of all of our personal care electrical appliances products.
We do not have any production facilities or production lines of our own. Our personal care electrical appliances products are sourced from related and independent external manufacturers in mainland China. Our control over these external manufacturers in respect of their production process and quality of products is limited. We cannot assure that (i) there will not be any unexpected interruption of supply of products by these external manufacturers due to any reason beyond our control or expectation, such as introduction of new regulatory requirements, import restrictions, revocation of business licenses, power interruptions, fires or other force majeure; or (ii) the products provided to us by these external manufacturers can meet our quality requirements. Any such problems in relation to the supply of our products by external manufacturers could have a material adverse impact on our business.
Our operating results may fluctuate due to seasonality and other factors.
Our sales of personal care electrical appliances are subject to a certain degree of seasonal fluctuations. Generally, demand for our beauty device products is relatively higher during spring season from March to June. Sales may also fluctuate during the course of a financial year for a number of other reasons, including the timing of launching new products and advertising and promotional campaigns. As a result, these seasonal consumption patterns may cause our operating results to fluctuate from period to period.
15
A severe or prolonged downturn in the Chinese or global economy could materially and adversely affect our business and financial condition.
Any prolonged slowdown in the Chinese or global economy may have a negative impact on our business, results of operations and financial condition. There is uncertainty over the global economic condition such as the trade war between the United States and China. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and China. There have also been concerns about the economic effect of the tensions in the relationship between China and surrounding Asian countries. Adverse economic conditions could also reduce the number of customers and interests in our services and products. Should any of these situations occur, our net revenues will decline, and our business and financial conditions will be negatively impacted. Additionally, continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs.
Changes in U.S. and international trade policies, particularly with regard to China, may adversely impact our business and operating results.
The U.S. government has recently made statements and taken certain actions that may lead to potential changes to U.S. and international trade policies. For example, on October 28, 2024, the U.S. Department of the Treasury issued a final rule on outbound investment to implement the executive order of August 9, 2023. The final rule became effective on January 2, 2025. The final rule imposes investment prohibition and notification requirements on U.S. persons for a wide range of investments in entities associated with China (including Hong Kong and Macau) that are engaged in activities relating to three sectors: (i) semiconductors and microelectronics, (ii) quantum information technologies, and (iii) artificial intelligence systems, collectively defined as Covered Foreign Persons. U.S. persons subject to the final rule are prohibited from making, or required to report, certain investments in Covered Foreign Persons, which are defined as Covered Transactions. If we were to be deemed a Covered Foreign Person due to changes in our business operations or amendments to relevant laws and regulations, our ability to raise capital would be significantly and negatively affected. In such case, the trading price of the Ordinary Shares may be materially and adversely affected.
In addition, the U.S. has imposed significant tariffs on a wide range of goods imported from China and could impose additional tariffs or increase existing ones. The U.S. government has also implemented export control restrictions affecting certain products and technologies related to China, imposed certain sanctions and restrictions, and indicated the potential for enhanced review of companies with significant China-based operations or restrictions on U.S. investment in certain companies operating in China. Furthermore, policies regarding low-value shipments entering the U.S. are under scrutiny, and changes could impact the cost-effectiveness of certain imports from China. The Chinese government has, from time to time, responded, and may continue to respond, by imposing its own tariffs, trade restrictions, or other regulations. Our business and financial performance are substantially dependent on the general conditions of the global economy and the level of international trade and commerce, particularly between the U.S. and China. The adoption and expansion of trade restrictions, tariffs, quotas, embargoes, sanctions, export controls, investment restrictions, the occurrence of a trade war, or other governmental actions related to tariffs or trade agreements or policies by the U.S., China, or other countries, has the potential to adversely impact trade flows, costs, our suppliers, our customers, and the world economy in general. Current and future trade tensions, geopolitical events, and international trade disputes could harm or disrupt international commerce and the global economy. These factors could have a material adverse effect on our business, results of operations, and financial condition.
Our results of operations may be adversely affected by significant share-based compensation expenses, and the issuance of shares under our equity incentive plans will dilute existing shareholders.
To attract, retain, and motivate highly skilled employees, directors, and consultants, which is critical in a competitive talent market, we utilize share-based awards. Consequently, on September 24, 2024, our Board of Directors adopted, and on October 23, 2024, our shareholders approved, the 2024 Equity Incentive Plan (the “2024 Plan”). The 2024 Plan, which has a ten-year term and authorizes the issuance of up to 2,500,000 of our Ordinary Shares, allows for the grant of various types of equity awards, including Incentive Share Options, Non-statutory Share Options, Restricted Shares, Restricted Share Units, Share Appreciation Rights, Performance Units, and Performance Shares. While these awards are intended to promote our long-term success and align interests with shareholder value, they require us to recognize share-based compensation expenses in our consolidated financial statements.
Significant share-based compensation expenses could materially and adversely affect our reported net income (or increase our net loss). Furthermore, any issuance of Ordinary Shares upon the exercise of options or the vesting of other equity awards granted under the 2024 Plan or any future equity incentive plans will result in the dilution of the ownership interests of our existing shareholders, which could also adversely affect the market price of our Ordinary Shares.
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Risks Related to Our Corporate Structure
Raytech Holding may rely on dividends and other distributions on equity paid by its subsidiaries to fund any cash and financing requirements it may have, and any limitation on the ability of Raytech Holding’s subsidiaries to make payments to it could have a material adverse effect on Raytech Holding’s ability to conduct its business.
Raytech Holding is a holding company incorporated in the British Virgin Islands, and it may rely on dividends and other distributions on equity paid by its subsidiaries for its cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to Raytech Holding’s shareholders and service any debt it may incur. If any of Raytech Holding’s subsidiaries incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to Raytech Holding.
Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by us. See “Item 10 – Additional Information – E. Taxation — Hong Kong Profits Taxation” on page 83 of this Annual Report. Any limitation on the ability of Raytech Holding’s Hong Kong subsidiaries to pay dividends or make other distributions to Raytech Holding could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to Raytech Holding’s business, pay dividends, or otherwise fund and conduct its business.
Raytech Holding’s lack of effective internal controls over financial reporting may affect its ability to accurately report its financial results or prevent fraud, which may affect the market for and price of Raytech Holding’s Ordinary Shares.
To implement Section 404 of the Sarbanes-Oxley Act of 2002, the SEC adopted rules requiring public companies to include a report of management on the company’s internal control over financial reporting. Prior to the IPO, Raytech Holding was a private company with limited accounting personnel and other resources for addressing Raytech Holding’s internal control over financial reporting. Raytech Holding’s management has not completed an assessment of the effectiveness of Raytech Holding’s internal control over financial reporting and its independent registered public accounting firm has not conducted an audit of Raytech Holding’s internal control over financial reporting. However, in connection with the audits of Raytech Holding’s consolidated financial statements as of March 31, 2026 and 2025, Raytech Holding and its independent registered public accounting firm identified material weaknesses in Raytech Holding’s internal control over financial reporting as well as other control deficiencies for the above-mentioned periods. As defined in the standards established by the PCAOB, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of Raytech Holding’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness identified related to i) inadequate segregation of duties for certain key functions due to limited staff and resources; and ii) a lack of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting requirements to formalize key controls over financial reporting and to prepare consolidated financial statements and related disclosures.
In connection with its IPO, Raytech Holding has appointed independent directors, established an audit committee and strengthened corporate governance. In addition, Raytech Holding is actively implementing other measures designed to improve its internal control over financial reporting to address the underlying causes of these material weaknesses, including i) hiring more qualified staff to fill up the key roles in the operations; and ii) setting up a financial and system control framework with formal documentation of policies and controls in place.
As a public company, Raytech Holding is subject to the requirement that it maintains internal controls and that management performs periodic evaluation of the effectiveness of the internal controls. Effective internal control over financial reporting is important to prevent fraud. As a result, Raytech Holding’s business, financial condition, results of operations and prospects, as well as the market for and trading price of Raytech Holding’s Ordinary Shares, may be materially and adversely affected if Raytech Holding does not have effective internal controls. The absence of internal controls over financial reporting may inhibit investors from purchasing Raytech Holding’s Ordinary Shares and may make it more difficult for Raytech Holding to raise funds in debt or equity financing.
Additional material weaknesses or significant deficiencies may be identified in the future. If Raytech Holding identifies such issues or if Raytech Holding is unable to produce accurate and timely financial statements, its stock price may decline, and it may be unable to maintain compliance with the Nasdaq Listing Rules.
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If Raytech Holding ceases to qualify as a foreign private issuer, it would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and it would incur significant additional legal, accounting and other expenses that it would not incur as a foreign private issuer.
As a foreign private issuer, Raytech Holding is exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and Raytech Holding’s officers, directors and principal shareholders is exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, Raytech Holding is not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States domestic issuers, and it will not be required to disclose in its periodic reports all of the information that United States domestic issuers are required to disclose. However, Raytech Holding may cease to qualify as a foreign private issuer in the future.
Raytech Holding is an “emerging growth company” within the meaning of the Securities Act, and if Raytech Holding takes advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make it more difficult to compare Raytech Holding’s performance with other public companies.
Raytech Holding is an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. Raytech Holding 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, Raytech Holding, 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 Raytech Holding’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible, because of the potential differences in accounting standards used. If some investors find Raytech Holding’s Ordinary Shares less attractive as a result, there may be a less active trading market for Raytech Holding’s Ordinary Shares and Raytech Holding’s share price may be more volatile.
Raytech Holding incurs increased costs as a result of being a public company which will increase after Raytech Holding ceases to qualify as an “emerging growth company.”
Raytech Holding incurs significant legal, accounting and other expenses as a public company that Raytech Holding did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC, impose various requirements on the corporate governance practices of public companies. Raytech Holding is an “emerging growth company,” as defined in the JOBS Act and will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the initial public offering of the Company, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of Raytech Holding’s Ordinary Shares that is held by non-affiliates exceeds $700 million as of the prior fiscal year end, and (2) the date on which Raytech Holding has issued more than $1.0 billion in non-convertible debt during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 in the assessment of the emerging growth company’s internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies.
Compliance with these rules and regulations increases Raytech Holding’s legal and financial compliance costs and makes some corporate activities more time-consuming and costly. After Raytech Holding is no longer an “emerging growth company,” or until five years following the completion of Raytech Holding’s initial public offering, whichever is earlier, Raytech Holding expects to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. For example, as a public company, Raytech Holding is required to have independent directors and adopt policies regarding internal controls and disclosure controls and procedures. Raytech Holding may incur additional costs in obtaining director and officer liability insurance. In addition, Raytech Holding incurs additional costs associated with its public company reporting requirements. Raytech Holding cannot predict or estimate with any degree of certainty the amount of additional costs it may incur as a public company or the timing of such costs.
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Risks Related to Doing Business in Hong Kong
All of our subsidiaries’ operations are in Hong Kong. However, due to the long arm provisions under the current laws and regulations of mainland China, the government of mainland China may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value of Raytech Holding’s Ordinary Shares. The government of mainland China may also intervene or impose restrictions on Raytech Holding’s ability to move money out of Hong Kong to distribute earnings and pay dividends or to reinvest in our business outside of Hong Kong. Changes in the policies, regulations, rules, and the enforcement of laws of the government of mainland China may also be quick with little advance notice and our assertions and beliefs of the risk imposed by the legal and regulatory system of mainland China cannot be certain.
We are not based in mainland China and do not have operations in mainland China except that our manufacturers are located in mainland China. We currently do not have or intend to set up any subsidiary in mainland China, or do not foresee the need to enter into any contractual arrangements with a VIE to establish a VIE structure in mainland China. For the fiscal years ended March 31, 2026 and 2025, we generated all our revenues from Hong Kong. We believe that, as of the date of this Annual Report, on the basis that (i) we currently do not have or intend to set up any subsidiary or VIE structure in mainland China, and we do not have any business operations in mainland China, except that we collaborate with manufacturers located in mainland China to manufacture our products, (iii) none of our and our subsidiaries’ clients are located in mainland China, and (iv) we and our subsidiaries possess personal information of less than 1 million individuals in the PRC (for the purpose of this subsection (iv), including the special administrative regions of Hong Kong and Macau and Taiwan), and do not possess any core data or important data of the PRC or any information which affects or may affect national security of the PRC, we do not expect to be materially affected by recent statements by the government of mainland China indicating an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in mainland China-based issuers. However, due to long arm provisions under the current laws and regulations of mainland China, there remains regulatory uncertainty with respect to the implementation and interpretation of laws and regulations in mainland China.
Pursuant to the Basic Law, which is a national law of the PRC and the constitutional document for Hong Kong, national laws of the PRC shall not be applied in Hong Kong except for those listed in Annex III of the Basic Law and applied locally by promulgation or local legislation. The Basic Law expressly provides that the national laws of the PRC which may be listed in Annex III of the Basic Law shall be confined to those relating to defense and foreign affairs as well as other matters outside the autonomy of Hong Kong. The basic policies of the PRC regarding Hong Kong as a special administrative region of the PRC are reflected in the Basic Law, providing Hong Kong with a high degree of autonomy and executive, legislative and independent judicial powers, including that of final adjudication under the principle of “one country, two systems”.
However, as the government of mainland China may choose to exercise significant oversight and discretion, and the policies, regulations, rules, and the enforcement of laws of the government of mainland China to which we are subject may change rapidly and with little advance notice to us or our shareholders. As a result, the application, interpretation, and enforcement of new and existing laws and regulations in mainland China are often uncertain. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and may be inconsistent with our current policies and practices. New laws, regulations, and other government directives in mainland China may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:
| ● | delay or impede our development; |
| ● | result in negative publicity or increase our operating costs; |
| ● | require significant management time and attention; and/or |
| ● | subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business practices. |
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We are aware that recently, the government of mainland China initiated a series of regulatory actions and statements to regulate business operations in certain areas in mainland China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over mainland China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. Since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our daily business operation, the ability to accept foreign investments and list on a U.S. or other foreign exchange.
The PRC government may intervene or influence our operations at any time or may exert control over offerings conducted overseas and foreign investment in Hong Kong-based issuers, which may result in a material change in our operations and/or the value of Raytech Holding’s Ordinary Shares. For example, there is currently no restriction or limitation under the laws of Hong Kong on the conversion of HK dollar into foreign currencies and the transfer of currencies out of Hong Kong and the laws and regulations of the PRC on currency conversion control do not currently have any material impact on the transfer of cash between Raytech Holding, the ultimate holding company, and our directly and indirectly subsidiaries in Hong Kong. However, the PRC government may, in the future, impose restrictions or limitations on our ability to move money out of Hong Kong to distribute earnings and pay dividends to and from the other entities within our organization or to reinvest in our business outside of Hong Kong. Such restrictions and limitations, if imposed in the future, may delay or hinder the expansion of our business outside of Hong Kong and may affect our ability to receive funds from our subsidiaries. The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case, that restrict or otherwise unfavorably impact the ability or way we conduct our business, could require us to change certain aspects of our business to ensure compliance, which could decrease demand for our products and services, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business, financial condition and results of operations could be adversely affected, and such measures could materially decrease the value of Raytech Holding’s Ordinary Shares, potentially rendering it worthless.
The enactment of Law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Hong Kong National Security Law”) could impact our Hong Kong subsidiaries.
On June 30, 2020, the Standing Committee of the PRC National People’s Congress adopted the Hong Kong National Security Law. This law defines the duties and government bodies of the Hong Kong National Security Law for safeguarding national security and four categories of offences — secession, subversion, terrorist activities, and collusion with a foreign or overseas force to endanger national security — and their corresponding penalties. On July 14, 2020, the former U.S. President Donald Trump signed the Hong Kong Autonomy Act (the “HKAA”), into law, authorizing the U.S. administration to impose blocking sanctions against individuals and entities who are determined to have materially contributed to the erosion of Hong Kong’s autonomy. On August 7, 2020, the U.S. government imposed HKAA-authorized sanctions on eleven individuals, including former and current HKSAR chief executives Carrie Lam and John Lee. On October 14, 2020, the U.S. State Department submitted to relevant committees of Congress the report required under HKAA, identifying persons materially contributing to “the failure of the Government of China to meet its obligations under the Joint Declaration or the Basic Law.” The HKAA further authorizes secondary sanctions, including the imposition of blocking sanctions, against foreign financial institutions that knowingly conduct a significant transaction with foreign persons sanctioned under this authority. The imposition of sanctions may directly affect the foreign financial institutions as well as any third parties or customers dealing with any foreign financial institution that is targeted. It is difficult to predict the full impact of the Hong Kong National Security Law and HKAA on Hong Kong and companies located in Hong Kong. If our Hong Kong subsidiaries are determined to be in violation of the Hong Kong National Security Law or the HKAA by competent authorities, our business operations, financial position and results of operations could be materially and adversely affected.
The PRC government may intervene or influence our operations at any time or may exert more control over offerings conducted overseas and foreign investment in China-based issuers, which may result in a material change in our operations and/or the value of Raytech Holding’s Ordinary Shares. Additionally, governmental and regulatory interference could significantly limit or completely hinder Raytech Holding’s ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.
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There are political risks associated with conducting business in Hong Kong.
All our operations are based in Hong Kong. Accordingly, our business operations and financial condition will be affected by the political and legal developments in Hong Kong. During the period covered by the financial information included in this Annual Report, we derive substantially all of our revenue from operations in Hong Kong. Any adverse economic, social and/or political conditions, material social unrest, strike, riot, civil disturbance or disobedience, as well as significant natural disasters, may adversely affect our business operations. Hong Kong is a special administrative region of the PRC and the basic policies of the PRC regarding Hong Kong are reflected in the Basic Law, namely, Hong Kong’s constitutional document, which provides Hong Kong with a high degree of autonomy and executive, legislative and independent judicial powers, including that of final adjudication under the principle of “one country, two systems”. However, there is no assurance that there will not be any changes in the economic, political and legal environment in Hong Kong in the future. Since a substantial part of our operations is based in Hong Kong, any change of such political arrangements may pose an immediate threat to the stability of the economy in Hong Kong, thereby directly and adversely affecting our results of operations and financial position.
If the PRC attempts to alter its agreement to allow Hong Kong to function autonomously, this could potentially impact Hong Kong’s common law legal system and may in turn bring about uncertainty in, for example, the enforcement of our contractual rights. This could, in turn, materially and adversely affect our business and operations. Additionally, intellectual property rights and confidentiality protections in Hong Kong may not be as effective as in the United States or other countries. Accordingly, we cannot predict the effect of future developments in the Hong Kong legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. These uncertainties could limit the legal protections available to us, including our ability to enforce our agreements with our customers.
Under the Basic Law of the Hong Kong Special Administrative Region of PRC, Hong Kong is exclusively in charge of its internal affairs and external relations, while the government of the PRC is responsible for its foreign affairs and defense. As a separate customs territory, Hong Kong maintains and develops relations with foreign states and regions. Based on certain recent developments including the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region issued by the Standing Committee of the PRC National People’s Congress in June 2020, the U.S. State Department has indicated that the United States no longer considers Hong Kong to have significant autonomy from China and President Trump signed an executive order and the HKAA to remove Hong Kong’s preferential trade status and to authorize the U.S. administration to impose blocking sanctions against individuals and entities who are determined to have materially contributed to the erosion of Hong Kong’s autonomy. The United States may impose the same tariffs and other trade restrictions on exports from Hong Kong that it places on goods from mainland China. These and other recent actions may represent an escalation in political and trade tensions involving the U.S, mainland China and Hong Kong, which could potentially harm our business.
Our revenue is susceptible to the ongoing incidents or factors which affect the stability of the social, economic and political conditions in Hong Kong. Any drastic events may adversely affect our business operations. Such adverse events may include changes in economic conditions and regulatory environment, social and/or political conditions, civil disturbance or disobedience, as well as significant natural disasters. Given the relatively small geographical size of Hong Kong, any of such incidents may have a widespread effect on our business operations, which could in turn adversely and materially affect our business, results of operations and financial condition. It is difficult to predict the full impact of the HKAA on Hong Kong and companies with operations in Hong Kong like us. Furthermore, legislative or administrative actions in respect of China-U.S. relations could cause investor uncertainty for affected issuers, including Raytech Holding, and the market price of Raytech Holding’s Ordinary Shares could be adversely affected.
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There remain some uncertainties as to whether we will be required to obtain approvals from mainland China and Hong Kong authorities to list additional securities on the U.S. Exchanges or offer securities in the future, and if required, we cannot assure you that Raytech Holding will be able to obtain such approval.
The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors (the “M&A Rules”), adopted by six regulatory agencies of mainland China in 2006 and amended in 2009, requires an overseas special purpose vehicle formed for listing purposes through acquisitions of mainland China-based companies and controlled by mainland China-based companies or individuals to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange.
We are also aware that recently, the government of mainland China initiated a series of regulatory actions and statements to regulate business operations in certain areas in mainland China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over mainland China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. For example, on July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over mainland China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws.
On December 28, 2021, the CAC and other PRC authorities promulgated the Cybersecurity Review Measures, which took effect on February 15, 2022. In addition, the Cybersecurity Law, which was adopted by the Standing Committee of the National People’s Congress on November 7, 2016 and came into force on June 1, 2017, and the Cybersecurity Review Measures, or the “Review Measures”, provide that personal information and important data collected and generated by a critical information infrastructure operator, or a “CIIO”, in the course of its operations in mainland China must be stored in mainland China, and if a CIIO purchases internet products and services that affect or may affect national security, it should be subject to national security review by the CAC together with competent departments of the State Council. On November 14, 2021, CAC published the Regulations on the Network Data Security Administration Draft, or the “Data Security Regulations Draft”, to solicit public opinion and comments. Under the Data Security Regulations Draft, an overseas initial public offering to be conducted by a data processor processing the personal information of more than one million individuals shall apply for a cybersecurity review. Data processor means an individual or organization that independently makes decisions on the purpose and manner of processing in data processing activities, and data processing activities refer to activities such as the collection, retention, use, processing, transmission, provision, disclosure, or deletion of data.
Currently we do not expect the Review Measures to have an impact on the business and operations of Raytech Holding’s Hong Kong subsidiaries, Pure Beauty, Raytech Innovation, Fluxen and Worry free, or any offering, because (i) Our Hong Kong subsidiaries are incorporated and operating in Hong Kong without any subsidiary or VIE structure in mainland China, and it is unclear whether the Review Measures shall be applied to a Hong Kong company; (ii) as of the date of this annual report, Pure Beauty has not collected and stored personal information of any individual customers of mainland China and possesses personal information of less than 1 million individuals in the PRC (for the purpose of this subsection (ii), including the special administrative regions of Hong Kong and Macau and Taiwan), and do not possess any core data or important data of the PRC or any information which affects or may affect national security of the PRC; and (iii) as of the date of this annual report, neither Pure Beauty nor Raytech Innovation has not been informed by any governmental authority of mainland China of any requirement that it file for a cybersecurity review for the offering. Based on the foregoing, we believe our Hong Kong subsidiaries are not required to pass the cybersecurity review of the CAC in order to list Raytech Holding’s Ordinary Shares in the U.S. Nonetheless, if the authorized PRC regulatory body subsequently determines that we are required to go through such cybersecurity review or if any other PRC government authorities promulgate any interpretation or implementation rules before Raytech Holding’s listing that would require us to go through a cybersecurity review for any offering, we may fail to complete such cybersecurity review procedures in a timely manner, or at all. Any failure or delay in the completion of the cybersecurity review procedures or any other non-compliance with the related laws and regulations may result in fines or other penalties, reputational damage as well as legal proceedings or actions against us, which may have a material adverse effect on our business, financial condition or results of operations.
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In addition, on December 24, 2021, the CSRC issued the Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (the “Draft Administrative Provisions”) and the Measures for the Overseas Issuance of Securities and Listing Record-Filings by Domestic Enterprises (Draft for Comments) (the “Draft Filing Measures”), collectively, the Draft Rules Regarding Overseas Listings. The Draft Rules Regarding Overseas Listing aim to lay out the filing regulation arrangement for both direct and indirect overseas listing by mainland China-based companies and clarify the determination criteria for indirect overseas listing in overseas markets. According to the Draft Rules Regarding Overseas Listings, among other things, after making initial applications with overseas stock markets for initial public offerings or listings, all mainland China-based companies shall file with the CSRC within three working days.
On February 17, 2023, the CSRC promulgated the Overseas Listing Trial Measures and relevant five guidelines, which became effective on March 31, 2023. The Overseas Listing Trial Measures comprehensively improve and reform the existing regulatory regime for overseas offering and listing of PRC domestic companies’ securities and will regulate both direct and indirect overseas offering and listing of mainland China-based companies’ securities by adopting a filing-based regulatory regime.
According to the Overseas Listing Trial Measures, mainland China-based companies that seek to offer and list securities in overseas markets, either in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information. The Overseas Listing Trial Measures provides that an overseas listing or offering is explicitly prohibited, if any of the following: (i) such securities offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (ii) the intended securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) the domestic company intending to make the securities offering and listing, or its controlling shareholder(s) and the actual controller, have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest three years; (iv) the domestic company intending to make the securities offering and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion has yet been made thereof; or (v) there are material ownership disputes over equity held by the domestic company’s controlling shareholder(s) or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller.
The Overseas Listing Trial Measures also provides that if the issuer both meets the following criteria, the overseas securities offering and listing conducted by such issuer will be deemed as indirect overseas offering by PRC domestic companies: (i) 50% or more of any of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in mainland China, or its main place(s) of business are located in mainland China, or the majority of senior management staff in charge of its business operations and management are PRC citizens or have their usual place(s) of residence located in mainland China. Where an issuer submits an application for initial public offering to competent overseas regulators, such issuer must file with the CSRC within three business days after such application is submitted. The Overseas Listing Trial Measures also requires subsequent reports to be filed with the CSRC on material events, such as change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings and listings.
Based on the facts that (i) we do not operate any entities in mainland China and the operating revenue, total profit, total assets or net assets as documented in Raytech Holding’s audited consolidated financial statements for the most recent fiscal year is accounted for by our Hong Kong subsidiary, Pure Beauty located outside mainland China; (ii) we do not have any equity interest in any manufacturer located in mainland China and vice versa; and (iii) we conduct a majority of our business and are headquartered in Hong Kong rather than in mainland China, and our senior management team are not PRC citizens or have their residence located outside mainland China, we believe that, we do not meet the criteria as set forth in Article 15 of the Overseas Listing Trial Measures, and are currently not required to complete the filing procedure with the CSRC or to obtain regulatory approval from the CSRC before Raytech Holding’s Ordinary Shares can be listed in the U.S. However, as the Overseas Listing Trial Measures were newly promulgated and there exists substantial uncertainty that the CSRC may take a view that is contrary to our understanding of the Overseas Listing Trial Measures because the Overseas Listing Trial Measures adopts the principle of “substance over form” regarding the determination of “indirect overseas offering and listing by a domestic company,” over which the CSRC may have substantial discretions. If we are required to complete the filing procedures with the CSRC in connection with any future of our securities, we cannot assure you that we will be able to complete such filings in a timely manner, or at all, in the future. Any failure by us to comply with such filing could impact our operations materially and adversely, subject us to order to rectify, warnings and fines, and significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.
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As of the date of this Annual Report, on the basis that (i) we currently do not have or intend to set up any subsidiary or VIE structure in mainland China, (ii) we do not have any business operations in mainland China, except that we collaborate with manufacturers located in mainland China to manufacture the products, (iii) none of our clients are located in mainland China, and (iv) we possess personal information of less than 1 million individuals in the PRC (for the purpose of this subsection (iv), including the special administrative regions of Hong Kong and Macau and Taiwan), and do not possess any core data or important data of the PRC or any information which affects or may affect national security of the PRC, we believe, we are currently not required to obtain any permission or approval from the CAC, or other governmental authorities of mainland China to operate our business or to list Raytech Holding’s securities on the U.S. exchanges and to issue securities to foreign investors, nor have we been denied of any permissions or approvals from the authorities of mainland China. Furthermore, we believe that, as of the date of this Annual Report, Raytech Holding is not required to obtain any permission or approval from the governmental authorities of Hong Kong to list on the U.S. exchanges and offer securities and we have obtained all necessary licenses, permissions or approvals including the business registration certificate from the governmental authorities of Hong Kong to operate our business and to the best of our knowledge, no license, permission or approval has been denied.
However, if we (i) do not receive or maintain such permission or approval, should the permission or approval be required in the future by the government of mainland China or Hong Kong, (ii) inadvertently conclude that such permission or approval is not required, or (iii) applicable laws, regulations, or interpretations change and we are required to obtain such permission or approval in the future, we may be unable to obtain such permissions or approvals in a timely manner, or at all, and may face regulatory actions or other sanctions from the CSRC, the CAC or other PRC or Hong Kong regulatory authorities if we fail to fully comply with any new regulatory requirements. Consequently, our operations and financial condition could be materially adversely affected, and Raytech Holding’s ability to offer securities to investors could be significantly limited or completely hindered and the securities currently being offered may substantially decline in value and become worthless.
We are aware that recently, the government of mainland China initiated a series of regulatory actions and statements to regulate business operations in certain areas in mainland China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over mainland China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. Nevertheless, since these statements and regulatory actions are new, it is highly uncertain how soon the legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any. It is also highly uncertain what potential impact such modified or new laws and regulations will have on Pure Beauty’s daily business operations, Raytech Holding’s ability to accept foreign investments and the listing of Raytech Holding’s Ordinary Shares on a U.S. or other foreign exchanges. If there is significant change to current political arrangements between mainland China and Hong Kong, the PRC government intervenes or influences operations of companies operated in Hong Kong like us, or exerts more control through change of laws and regulations over offerings conducted overseas and/or foreign investment in issuers like Raytech Holding, it may result in a material change in our operations and/or the value of the securities Raytech Holding is registering for sale or could significantly limit or completely hinder Raytech Holding’s ability to offer or continue to offer securities to investors and cause the value of Raytech Holding’s Ordinary Shares to significantly decline or become worthless.
Rules for cross-border provision and examination of auditing records and other materials in connection with overseas securities issuance and listing were released by the CSRC and became effective. The government of mainland China may impose more stringent requirement for domestic Chinese companies to share business and accounting records with foreign auditing firms and other securities service institutions, which could significantly limit or completely hinder Raytech Holding’s ability to offer or continue to offer its Ordinary Shares to investors and could cause the value of Raytech Holding’s Ordinary Shares to significantly decline or become worthless.
On April 2, 2022, the CSRC, in conjunction with the Ministry of Finance, the National Administration of State Secret Protection and the National Archives Administration, issued the Regulations on Enhancing Confidentiality and File Management in Relation to Overseas Securities Issuance and Listing by Domestic Enterprises (Draft for Comments, the “Draft Regulations”), an amendment to the original regulation of the same name published in 2009. The Draft Regulations extend the scope of application of the regulations to indirectly listed enterprises, and expand the definition of “domestic enterprises” to encompass domestic corporations directly listed on overseas exchanges as well as the domestic operating subsidiaries of indirectly listed companies. The Draft Regulations require that, before providing or publicly disclosing documents and materials involving state secrets or government work secrets to security brokers, security service providers, or overseas regulators, the domestic enterprises shall seek approval from the relevant government regulators, and make filings with the local secret protection regulators at the same government level.
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The Draft Regulations expand the scope of the regulations from “state secrets” to “state secrets and work secrets of government agencies”. However, the Draft Regulations do not define the scope of such secrets, but merely state that “in case where it is unclear or disputed as to whether state secrets are involved, the issue shall be submitted to the relevant secret protection regulator for determination; in case where it is unclear or disputed as to whether government work secrets are involved, the issue shall be submitted to the relevant government regulator for determination.”
The Draft Regulations mandates that domestic enterprises need to follow the prescribed procedures before furnishing “accounting records or copies of accounting records of significant state or societal storage value” to relevant security brokers, security service providers, and overseas regulators. If it is necessary to transmit such materials of significance out of mainland China, the relevant enterprises need to follow the prescribed procedures for advance approval. Similarly, if an overseas accounting firm intends to provide auditing work on a domestic enterprise seeking overseas listing, the accounting firm shall follow the prescribed procedures under the relevant state laws and regulations. A domestic enterprise shall not provide accounting records to an overseas accounting firm or network who has not satisfied the prescribed procedures.
On February 24, 2023, the CSRC, Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China promulgated the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, or the Archives Rules, which took effect on March 31, 2023. Pursuant to the Archives Rules, domestic companies that seek for overseas offering and listing shall strictly abide by applicable laws and regulations of the PRC and the Archives Rules, enhance legal awareness of keeping state secrets and strengthening archives administration, institute a sound confidentiality and archives administration system, and take necessary measures to fulfill confidentiality and archives administration obligations. Such domestic companies shall not leak any state secret and working secret of government agencies, or harm national security and public interest. Furthermore, a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any document and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level. Moreover, a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. The Archives Rules also stipulate that a domestic company that provides accounting archives or copies of accounting archives to any entities including securities companies, securities service providers and overseas regulators and individuals shall fulfill due procedures in compliance with applicable national regulations. As we are not domestic companies, and do not plan to leak any state secret and working secret of government agencies, or harm national security or public interest in connection with provision of documents, materials and accounting archives, we believe we may not be required to obtain relevant approval or file with the secrecy administrative department in accordance with the Archives Rules with respect to any future offering of our securities. However, as the Archives Rules were newly published, there are substantial uncertainties as to the implementation and interpretation, if we are required to perform additional procedures in connection with the provision of accounting archives or other documents, we cannot assure you that we will be able to fulfill such procedures in a timely manner, or even at all. Any failure by us to comply with the Archives Rules may materially adversely affected, our ability to offer securities to investors to become significantly limited or completely hindered.
On August 26, 2022, a Statement of Protocol was signed by the PCAOB, the CSRC and the Ministry of Finance of the PRC governing inspections and investigations of audit firms based in mainland China and Hong Kong. Pursuant to the Statement of Protocol, the PCAOB conducted inspections on select registered public accounting firms subject to the Determination Report in Hong Kong between September and November 2022. On December 15, 2022, the PCAOB board announced that it has completed the inspections, determined that it had complete access to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, and voted to vacate the Determination Report. On December 29, 2022, the CAA was signed into law by President Biden. The CAA contained, among other things, an identical provision to the AHFCAA, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two.
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We cannot guarantee that we will be able to obtain any approval or authorization from relevant secret protection regulators or other government authorities in a timely manner, or any such approval or authorization can be obtained at all and if we are required to obtain any approval or authorization. Failure to obtain the necessary approvals or complete the required filings in a timely manner may result in the failure to complete the listing or subject us to fines, penalties or other sanctions, which may have a significant adverse impact on our financial position and operations.
In addition, the Archives Rules take into account the international practice of cross-border audit regulatory co-operation and requires that “on-site inspections should be conducted mainly by CSRC and Chinese regulators, or rely on the inspection results of Chinese regulators” stated in the Regulations on Enhancing Confidentiality and File Management in Relation to Overseas Securities Issuance and Listing published in 2009. The Archives Rules make it clear that the CSRC or Chinese regulators shall provide necessary support through multilateral or bilateral cooperation mechanism for cross-border investigation and examination carried out by overseas securities administrative authorities and regulators on mainland China enterprises seeking overseas listings and security brokers or security service providers providing securities services for such domestic enterprises in respect of their activities relating to such overseas issuance and listings. However, there is no existing tried-and-proved mechanisms for cross-border regulatory cooperation, and it is difficult to carry out shareholder claims or regulatory investigations in mainland China similar to those in the United States, due to various legal and practical problems.
Although we do not believe that we are currently prohibited from providing its accounting records to our auditor or that we or our auditor would be required to go through any prescribed procedures for approval under current laws and regulations of mainland China, we may be subject to additional compliance requirements in the future. Since the Archive Rules are newly promulgated, and the interpretation and implementation are not very clear, we cannot assure you that we will be able to receive clearance of such regulatory requirements in a timely manner, or at all, in the future. If the CSRC, the state secret protection regulator or any other relevant government regulator requires that we obtain approval or complete relevant procedure prior to the completion of any future of our securities, such offering will be delayed until we have obtained such approval or completed such procedure. There is also the possibility that we may not be able to obtain or maintain such approval, complete such procedures or that we inadvertently concluded that such approval or procedure was not required. If prior approval or procedure was required while we inadvertently concluded that such approval or procedure was not required or if applicable laws and regulations or the interpretation of such were modified to require us to obtain such approval or procedure in the future, we may face regulatory actions or other sanctions from the CSRC or other regulatory authorities of mainland China. Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder Raytech Holding’s ability to offer or continue to offer the Ordinary Shares, cause significant disruption to our business operations, severely damage our reputation, materially and adversely affect our financial condition and results of operations, and cause the Ordinary Shares to significantly decline in value or become worthless.
It may be difficult for overseas shareholders and/or regulators to conduct investigations or collect evidence within mainland China.
Shareholder claims or regulatory investigations that are common in the United States generally are difficult to pursue as a matter of law or practicality in mainland China. For example, in mainland China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigation initiated outside mainland China. Although the authorities in mainland China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the Unities States may not be efficient in the absence of mutual and practical cooperation mechanisms. Furthermore, according to Article 177 of the PRC Securities Law of mainland China of the PRC, or Article 177, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the mainland China. While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within mainland China may further increase difficulties faced by you in protecting your interests.
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Our principal business operation is conducted in Hong Kong. In the event that the U.S. regulators carry out investigation on Raytech Holding and there is a need to conduct investigation or collect evidence within the territory of the mainland China, the U.S. regulators may not be able to carry out such investigation or evidence collection directly in mainland China under the laws and regulations of mainland China. The U.S. regulators may consider cross-border cooperation with securities regulatory authority of mainland China by way of judicial assistance, diplomatic channels or regulatory cooperation mechanism established with the securities regulatory authority of mainland China.
You may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing actions in Hong Kong against Raytech Holding or its management named in the Annual Report based on Hong Kong laws.
Currently, all of our operations are conducted outside the United States, and all of our assets are located outside the United States. All of Raytech Holding’s directors and officers are Hong Kong nationals or residents and a substantial portion of their assets are located in Hong Kong. You may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing actions in Hong Kong against Raytech Holding or its management named in the Annual Report, as judgments entered in the United States can be enforced in Hong Kong only at common law. If you want to enforce a judgment of the United States in Hong Kong, it must be a final judgment conclusive upon the merits of the claim, for a liquidated amount in a civil matter and not in respect of taxes, fines, penalties, or similar charges, the proceedings in which the judgment was obtained were not contrary to natural justice, and the enforcement of the judgment is not contrary to public policy of Hong Kong. Such a judgment must be for a fixed sum and must also come from a “competent” court as determined by the private international law rules applied by the Hong Kong courts.
We may be affected by the currency peg system in Hong Kong.
Since 1983, Hong Kong dollars have been pegged to the U.S. dollars at the rate of approximately HK$7.80 to US$1.00. We cannot assure you that this policy will not be changed in the future. If the pegging system collapses and Hong Kong dollars suffer devaluation, the Hong Kong dollar cost of our expenditures denominated in foreign currency may increase. This would in turn adversely affect the operations and profitability of our business.
Risks Related to Our Ordinary Shares
Although the audit report included in this Annual Report is prepared by U.S. auditors who are subject to PCAOB inspections on a regular basis, there is no guarantee that future audit reports will be prepared by auditors inspected by the PCAOB and, as such, in the future investors may be deprived of the benefits of such inspection. Furthermore, trading in Raytech Holding’s securities may be prohibited under the HFCA Act if the SEC subsequently determines Raytech Holding’s audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely, and as a result, U.S. national securities exchanges, such as the Nasdaq, may determine to delist Raytech Holding’s securities. Furthermore, on June 22, 2021, the U.S. Senate passed the AHFCAA, which would amend the HFCA Act and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the prohibition on trading.
As an auditor of companies that are registered with the SEC and publicly traded in the United States and a firm registered with the PCAOB, Raytech Holding’s auditor is required under the laws of the United States to undergo regular inspections by the PCAOB to assess their compliance with the laws of the United States and professional standards. The PCAOB is currently unable to conduct inspections without the approval of the PRC government authorities. Raytech Holding’s U.S. auditor is subject to PCAOB inspections on a regular basis, and we have no operations in mainland China. However, if there is significant change to current political arrangements between mainland China and Hong Kong, companies operated in Hong Kong like us may face similar regulatory risks as those operated in mainland China and we cannot assure you that Raytech Holding’s auditor’s work will continue to be able to be inspected by the PCAOB.
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As part of a continued regulatory focus in the United States on access to audit and other information currently protected by national law, in particular mainland China’s, in June 2019, a bipartisan group of lawmakers introduced bills in both houses of the U.S. Congress which, if passed, would require the SEC to maintain a list of issuers for which PCAOB is not able to inspect or investigate the audit work performed by a foreign public accounting firm completely. The proposed Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges (“EQUITABLE”) Act prescribes increased disclosure requirements for these issuers and, beginning in 2025, the delisting from U.S. national securities exchanges such as the Nasdaq of issuers included on the SEC’s list for three consecutive years, thus reducing the time period for triggering the prohibition on trading. It is unclear if this proposed legislation will be enacted. Furthermore, there have been recent deliberations within the U.S. government regarding potentially limiting or restricting China-based companies from accessing U.S. capital markets. On May 20, 2020, the U.S. Senate passed the HFCA Act, which includes requirements for the SEC to identify issuers whose audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely because of a restriction imposed by a non-U.S. authority in the auditor’s local jurisdiction. The U.S. House of Representatives passed the HFCA Act on December 2, 2020, and the HFCA Act was signed into law on December 18, 2020. Additionally, in July 2020, the U.S. President’s Working Group on Financial Markets issued recommendations for actions that can be taken by the executive branch, the SEC, the PCAOB or other federal agencies and department with respect to Chinese companies listed on U.S. stock exchanges and their audit firms, in an effort to protect investors in the United States. In response, on November 23, 2020, the SEC issued guidance highlighting certain risks (and their implications to U.S. investors) associated with investments in China-based issuers and summarizing enhanced disclosures the SEC recommends China-based issuers make regarding such risks. On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. Raytech Holding will be required to comply with these rules if the SEC identifies Raytech Holding as having a “non-inspection” year (as defined in the interim final rules) under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCA Act, including the listing and trading prohibition requirements described above. Under the HFCA Act, Raytech Holding’s securities may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if Raytech Holding’s auditor is not inspected by the PCAOB for three consecutive years, and this ultimately could result in Raytech Holding’s Ordinary Shares being delisted. Furthermore, on June 22, 2021, the U.S. Senate passed the AHFCAA, which would amend the HFCA Act and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the prohibition on trading. On September 22, 2021, the PCAOB adopted a final rule implementing the AHFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the AHFCAA, whether the Board is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On November 5, 2021, the SEC approved the PCAOB’s Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act. Rule 6100 provides a framework for the PCAOB to use when determining, as contemplated under the AHFCAA, whether it is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the AHFCAA. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions. On December 16, 2021, the SEC announced that the PCAOB designated mainland China and Hong Kong as the jurisdictions where the PCAOB is not allowed to conduct full and complete audit inspections as mandated under the HFCA Act. On August 26, 2022, a Statement of Protocol was signed by the PCAOB, the CSRC and the Ministry of Finance of the PRC governing inspections and investigations of audit firms based in mainland China and Hong Kong. Pursuant to the Statement of Protocol, the PCAOB conducted inspections on select registered public accounting firms subject to the Determination Report in Hong Kong between September and November 2022. On December 15, 2022, the PCAOB board announced that it has completed the inspections, determined that it had complete access to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, and voted to vacate the Determination Report. On December 29, 2022, the CAA was signed into law by President Biden. The CAA contained, among other things, an identical provision to the AHFCAA, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two. Raytech Holding’s auditor is based in the Singapore and therefore is not currently subject to the determinations announced by the PCAOB on December 16, 2021. Notwithstanding the foregoing, in the future, if there is any regulatory change or step taken by PRC regulators that does not permit Assentsure PAC to provide audit work papers located in mainland China or Hong Kong to the PCAOB for inspection or investigation, or the PCAOB re-evaluates its determination as a result of any obstruction with the implementation of the Statement of Protocol in the future, the trading in Raytech Holding’s securities may be prohibited under the HFCA Act, ultimately resulting in a determination by a securities exchange to delist our securities. Delisting of Raytech Holding’s Ordinary Shares would force holders of Raytech Holding’s Ordinary Shares to sell their Ordinary Shares. The market price of Raytech Holding’s Ordinary Shares could be adversely affected as a result of the anticipated negative impacts of these executive or legislative actions upon, regardless of whether these executive or legislative actions are implemented and regardless of our actual operating performance.
The SEC is assessing how to implement other requirements of the AHFCAA, including the listing and trading prohibition requirements described above. Future developments in respect of increasing U.S. regulatory access to audit information are uncertain, as the legislative developments are subject to the legislative process and the regulatory developments are subject to the rule-making process and other administrative procedures.
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Raytech Holding’s Ordinary Shares are thinly traded and you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.
Raytech Holding’s Ordinary Shares may be thinly traded, meaning that the number of persons interested in purchasing Raytech Holding’s Ordinary Shares at or near bid prices at any given time may be relatively small or non-existent. This situation may be attributable to a number of factors, including the fact that Raytech Holding is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if Raytech Holding came to the attention of such persons, they tend to be risk-averse and might be reluctant to follow an unproven company such as Raytech Holding or purchase or recommend the purchase of Raytech Holding’s shares until such time as Raytech Holding became more seasoned. As a consequence, there may be periods of several days or more when trading activity in Raytech Holding’s shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. A broad or active public trading market for Raytech Holding’s Ordinary Shares may not develop or be sustained.
The market price for our shares may be volatile.
The trading prices of our Ordinary Shares are likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, like the performance and fluctuation in the market prices or the underperformance or deteriorating financial results of internet or other companies based in Hong Kong or China that have listed their securities in the United States in recent years. The securities of some of these companies have experienced significant volatility since their initial public offerings, including, in some cases, a substantial decline in their trading prices. The trading performances of other Hong Kong or Chinese companies’ securities after their offerings may affect the attitudes of investors toward Hong Kong or Chinese companies listed in the United States, which consequently may impact the trading performance of our Ordinary Shares, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or other matters of other Hong Kong or Chinese companies may also negatively affect the attitudes of investors towards Hong Kong or Chinese companies in general, including us, regardless of whether we have conducted any inappropriate activities. In addition, securities markets may from time to time experience significant price and volume fluctuations that are not related to our operating performance, which may have a material adverse effect on the market price of our shares. In addition to the above factors, the price and trading volume of our Ordinary Shares may be highly volatile due to multiple factors, including the following:
| ● | regulatory developments affecting us, our customers, or our industry; |
| ● | announcements of studies and reports relating to our service offerings or those of our competitors; |
| ● | actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; |
| ● | changes in financial estimates by securities research analysts; |
| ● | announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures or capital commitments; |
| ● | additions to or departures of our senior management; |
| ● | detrimental negative publicity about us, our management or our industry; |
| ● | fluctuations of exchange rates between the Hong Kong dollar and the U.S. dollar; |
| ● | release or expiry of lock-up or other transfer restrictions on our outstanding Ordinary Shares; and |
| ● | sales or perceived potential sales of additional Ordinary Shares. |
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Substantial future sales of Raytech Holding’s Ordinary Shares or the anticipation of future sales of Raytech Holding’s Ordinary Shares in the public market could cause the price of Raytech Holding’s Ordinary Shares to decline.
Sales of substantial amounts of Raytech Holding’s Ordinary Shares in the public market or the perception that these sales could occur, could cause the market price of Raytech Holding’s Ordinary Shares to decline. Sales of these shares into the market could cause the market price of Raytech Holding’s Ordinary Shares to decline.
Raytech Holding does not intend to pay dividends for the foreseeable future.
Raytech Holding currently intends to retain all available funds and future earnings, if any, for the operation and expansion of our business and do not anticipate declaring or paying any dividends in the foreseeable future. Any future determination related to Raytech Holding’s dividend policy will be made at the discretion of Raytech Holding’s board of directors after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments.
As of the date of this Annual Report, we have not declared or paid any cash dividends on our capital shares. If Raytech Holding determines to pay dividends on any of Raytech Holding’s Ordinary Shares in the future, as a holding company, it will be dependent on receipt of funds from its Hong Kong subsidiaries, Pure Beauty, Raytech Innovation, Fluxen and Worry free. Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by Raytech Holding.
If securities or industry analysts do not publish research or reports about Raytech Holding’s business, or if they publish a negative report regarding Raytech Holding’s Ordinary Shares, the price of Raytech Holding’s Ordinary Shares and trading volume could decline.
The trading market for Raytech Holding’s Ordinary Shares may depend in part on the research and reports that industry or securities analysts publish about Raytech Holding or its business. We do not have any control over these analysts. If one or more of the analysts who cover Raytech Holding downgrade Raytech Holding, the price of Raytech Holding’s Ordinary Shares would likely decline. If one or more of these analysts cease coverage of Raytech Holding or fail to regularly publish reports on Raytech Holding, Raytech Holding could lose visibility in the financial markets, which could cause the price of Raytech Holding’s Ordinary Shares and the trading volume to decline.
Raytech Holding may experience extreme stock price volatility unrelated to its actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of Raytech Holding’s Ordinary Shares, and such volatility may subject Raytech Holding to securities litigation.
The market for Raytech Holding’s Ordinary Shares may have, when compared to seasoned issuers, significant price volatility and we expect that Raytech Holding’s share price may continue to be more volatile than that of a seasoned issuer for the indefinite future. Recently, there have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with a number of recent initial public offerings, especially among companies with relatively smaller public floats. As a relatively small-capitalization company with relatively small public float, Raytech Holding may experience greater stock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. In particular, Raytech Holding’s Ordinary Shares may be subject to rapid and substantial price volatility, low volumes of trades and large spreads in bid and ask prices. Such volatility, including any stock-run up, may be unrelated to Raytech Holding’s actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of Raytech Holding’s Ordinary Shares.
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In addition, if the trading volumes of Raytech Holding’s Ordinary Shares are low, persons buying or selling in relatively small quantities may easily influence prices of our Ordinary Shares. This low volume of trades could also cause the price of Raytech Holding’s Ordinary Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of Raytech Holding’s Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of Raytech Holding’s Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in Raytech Holding’s Ordinary Shares. A decline in the market price of Raytech Holding’s Ordinary Shares also could adversely affect its ability to issue additional shares of Ordinary Shares or other securities and Raytech Holding’s ability to obtain additional financing in the future. No assurance can be given that an active market in Raytech Holding’s Ordinary Shares will develop or be sustained. If an active market does not develop, holders of Raytech Holding’s Ordinary Shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all.
In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. Raytech Holding may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.
You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because Raytech Holding is incorporated under British Virgin Islands law.
Raytech Holding is a company incorporated under the laws of the British Virgin Islands. Raytech Holding’s corporate affairs are governed by its memorandum and articles of association, the BVI Act and the common law of the British Virgin Islands. The rights of shareholders to take action against Raytech Holding’s directors, actions by its minority shareholders and the fiduciary duties of Raytech Holding’s directors to it under the British Virgin Islands law are to a large extent governed by the common law of the British Virgin Islands. The common law of the British Virgin Islands is derived in part from comparatively limited judicial precedent in the British Virgin Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the British Virgin Islands. The rights of Raytech Holding’s shareholders and the fiduciary duties of its directors under the British Virgin Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the British Virgin Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the British Virgin Islands. In addition, British Virgin Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.
Certain corporate governance practices in the British Virgin Islands, where Raytech Holding was incorporated, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States. Raytech Holding is permitted to rely on home country practice with respect to its corporate governance. Raytech Holding has relied on home country practice with respect to certain corporate governance matters, including its reliance on the home country practice exemption in Nasdaq Listing Rule 5615(a)(3) in lieu of the shareholder approval requirements of Nasdaq Listing Rule 5635 in connection with its June 2026 registered direct offering, and may continue to rely on home country practice in the future. If Raytech Holding chooses to follow the British Virgin Islands’ practice in the future, its shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers. See “Risk Factors – Risks Related to Our Ordinary Shares – As a foreign private issuer, Raytech Holding is permitted to, and Raytech Holding will, rely on exemptions from certain Nasdaq Stock Exchange corporate governance standards applicable to domestic U.S. issuers. This may afford less protection to holders of Raytech Holding’s shares.” on page 32 of this Annual Report.
As a result of all of the above, public shareholders may have more difficulties in protecting their interests in the face of actions taken by Raytech Holding’s management, or members of its board of directors, than they would as public shareholders of a company incorporated in the United States.
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As a foreign private issuer, Raytech Holding is permitted to, and it will, rely on exemptions from certain Nasdaq Stock Exchange corporate governance standards applicable to domestic U.S. issuers. This may afford less protection for holders of our shares.
Raytech Holding is exempted from certain corporate governance requirements of the Nasdaq listing rules by virtue of being a foreign private issuer. Raytech Holding is required to provide a brief description of the significant differences between our corporate governance practices and the corporate governance practices required to be followed by domestic U.S. companies listed on the Nasdaq. The standards applicable to Raytech Holding are considerably different than the standards applied to domestic U.S. issuers. For instance, Raytech Holding is not required to:
| ● | have a majority of the board be consisted of independent directors (although all of the members of the audit committee must be independent under the Exchange Act); |
| ● | have a compensation committee or a nominating or corporate governance committee consisting entirely of independent directors; | |
| ● | have regularly scheduled executive sessions with only independent directors; or | |
| ● | have executive sessions of solely independent directors each year. |
Raytech Holding has relied on and intends to continue to rely on some of these exemptions. As a result, you may not be provided with the benefits of certain corporate governance requirements of Nasdaq.
If Raytech Holding cannot continue to satisfy the continuous listing requirements and other rules of the Nasdaq Capital Market, although Raytech Holding is exempt from certain corporate governance standards applicable to US issuers as a Foreign Private Issuer, our securities may be delisted, which could negatively impact the price of Raytech Holding’s securities and your ability to sell them.
Even though Raytech Holding’s securities are listed on the Nasdaq Capital Market, we cannot assure you that Raytech Holding’s securities will continue to be listed on the Nasdaq Capital Market. In order to maintain Raytech Holding’s listing on the Nasdaq Capital Market, Raytech Holding will be required to comply with certain rules of the Nasdaq Capital Market, including those regarding minimum shareholders’ equity, minimum share price and certain corporate governance requirements. Although Raytech Holding has initially met the listing requirements and other applicable rules of the Nasdaq Capital Market, it may not be able to continue to satisfy these requirements and applicable rules. If Raytech Holding is unable to satisfy the Nasdaq Capital Market criteria for maintaining our listing, its securities could be subject to delisting.
If the Nasdaq Capital Market delists Raytech Holding’s securities from trading, Raytech Holding could face significant consequences, including:
| ● | a limited availability for market quotations for Raytech Holding’s securities; | |
| ● | reduced liquidity with respect to Raytech Holding’s securities; | |
| ● | a determination that Raytech Holding’s Ordinary Shares are a “penny stock,” which will require brokers trading in Raytech Holding’s Ordinary Share to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for Raytech Holding’s Ordinary Shares; | |
| ● | limited amount of news and analyst coverage; and | |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
Because our business is conducted in Hong Kong dollars and the price of Raytech Holding’s Ordinary Shares is quoted in United States dollars, changes in currency conversion rates may affect the value of your investments.
Our business is conducted in Hong Kong, our books and records are maintained in Hong Kong dollars, which is the currency of Hong Kong, and the financial statements that Raytech Holding files with the SEC and provides to its shareholders are presented in Hong Kong dollars with convenience translations into United States dollars. Changes in the exchange rate between the Hong Kong dollar and U.S. dollar affect the value of our assets and the results of our operations in United States dollars. The value of the Hong Kong dollar against the United States dollar and other currencies may fluctuate and is affected by, among other things, changes in Hong Kong’s political and economic conditions and perceived changes in the economy of Hong Kong and the United States. Any significant revaluation of the Hong Kong dollar may materially and adversely affect our cash flows, revenue and financial condition. Further, although Raytech Holding’s Ordinary Shares are traded in United States dollars, Raytech Holding needs to convert into Hong Kong dollars the net proceeds it receives from capital raising activities, such as its June 2026 registered direct offering, in order to use the funds for our business. Changes in the conversion rate between the United States dollar and the Hong Kong dollar will affect the amount of proceeds Raytech Holding will have available for our business.
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There can be no assurance that Raytech Holding will not be a passive foreign investment company (“PFIC”), for U.S. federal income tax purposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of Raytech Holding’s Ordinary Shares.
A non-U.S. corporation will be a PFIC for any taxable year if either (1) at least 75% of its gross income for such year consists of certain types of “passive” income; or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income, or the asset test. Based on Raytech Holding’s current and expected income and assets (taking into account the cash proceeds and the market capitalization following the IPO), Raytech Holding does not presently expect to be a PFIC for the current taxable year or the foreseeable future. However, no assurance can be given in this regard because the determination of whether Raytech Holding is or will become a PFIC is a fact-intensive inquiry made on an annual basis that depends, in part, upon the composition of Raytech Holding’s income and assets. In addition, there can be no assurance that the Internal Revenue Service, or IRS, will agree with Raytech Holding’s conclusion or that the IRS would not successfully challenge Raytech Holding’s position. Fluctuations in the market price of Raytech Holding’s Ordinary Shares may cause Raytech Holding to become a PFIC for the current or subsequent taxable years because the value of Raytech Holding’s assets for the purpose of the asset test may be determined by reference to the market price of Raytech Holding’s Ordinary Shares. The composition of Raytech Holding’s income and assets may also be affected by how, and how quickly, it uses its liquid assets and the cash raised in the IPO. If Raytech Holding were to be or become a PFIC for any taxable year during which a U.S. Holder holds Raytech Holding’s Ordinary Shares, certain adverse U.S. federal income tax consequences could apply to such U.S. Holder and such U.S. Holder may be subject to additional reporting requirements and increased U.S. federal income tax liability. Our status as a PFIC is a fact-intensive determination made on an annual basis. Accordingly, our U.S. counsel expresses no opinion with respect to our PFIC status and also expresses no opinion with regard to our expectations regarding our PFIC status. For a more detailed discussion of the application of the PFIC rules to Raytech Holding and the consequences to U.S. taxpayers if Raytech Holding were or are determined to be a PFIC, see “Taxation— Passive Foreign Investment Company.” beginning on page 81 of this Annual Report.
The imposition of tariffs and escalating trade tensions have adversely affected, and may continue to adversely affect, our revenue and results of operations.
Substantially all of our products are manufactured by contract manufacturers located in mainland China and are sold to customers who market them internationally. The imposition of tariffs in early 2025 created instability in the global trading environment and contributed to a decrease in our revenue of 13.1% to HKD37,578,932 for the six months ended September 30, 2025 as compared to the same period in the prior year, although our revenue for the full fiscal year ended March 31, 2026 increased, driven by the commencement of our service businesses and increased sales of new product models. A continuation or escalation of tariffs, retaliatory measures or further deterioration in U.S.-China and global trade relations could reduce demand for our products, disrupt our supply chain, increase our costs and materially and adversely affect our business, financial condition and results of operations.
We received a deficiency notice from Nasdaq regarding the minimum bid price requirement, and we may be unable to maintain compliance with Nasdaq continued listing requirements in the future.
On October 14, 2025, we received a notice from the Nasdaq Listing Qualifications Department that the bid price of our Ordinary Shares had closed below US$1.00 per share for 30 consecutive business days and that we no longer satisfied the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2). To regain compliance, we effected a one-for-sixteen share consolidation that became effective on November 7, 2025. Although we regained compliance, there can be no assurance that we will continue to satisfy the minimum bid price requirement or the other continued listing requirements of Nasdaq in the future, and any delisting of our Ordinary Shares would materially and adversely affect their liquidity and market price.
In addition, on July 22, 2026, the SEC approved a Nasdaq rule change requiring the immediate suspension and delisting of any listed company whose market value of listed securities (“MVLS”) falls below $5 million for 30 consecutive business days, subject to limited review by a Nasdaq Hearings Panel. Under the approved rule, a timely request for a hearing will not stay the suspension of trading, and our securities would generally trade on the over-the-counter market during any appeal process. The Nasdaq Hearings Panel may grant a limited exception period (not to exceed 180 days) to demonstrate compliance with initial listing requirements, but there can be no assurance that such relief would be granted.
Our ability to maintain compliance with the $5 million MVLS requirement depends on a number of factors, including the market price of our Ordinary Shares and the number of our issued and outstanding shares. The market price of our Ordinary Shares may be volatile and could decline for reasons beyond our control, including:
| ● | general market conditions or downturns in the broader equity markets; |
| ● | sector-specific or industry-wide volatility; |
| ● | changes in interest rates or macroeconomic conditions; |
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| ● | geopolitical events; |
| ● | actual or perceived short selling activity or other trading dynamics; |
| ● | reduced liquidity or limited public float; and | |
| ● | investor perceptions regarding our business, prospects, or financial condition. |
If our MVLS were to fall below $5 million for 30 consecutive business days, Nasdaq would issue a staff delisting determination and immediately suspend trading of our Ordinary Shares on Nasdaq. Any suspension or delisting of our Ordinary Shares from Nasdaq could materially and adversely affect our business, financial condition, results of operations, and the value of our Ordinary Shares.
In the event that our Ordinary Shares is delisted from Nasdaq, as a result of our failure to comply with the Minimum Bid Price Requirement, or due to our failure to continue to comply with any other requirement for continued listing on Nasdaq, and is not eligible for listing on another exchange, trading in the shares of our Ordinary Shares could be conducted in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board. In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, our Ordinary Shares, and it would likely be more difficult to obtain coverage by securities analysts and the news media, which could cause the price of our Ordinary Shares to decline further. Also, it may be difficult for us to raise additional capital if we are not listed on a national exchange.
The share consolidation may not result in a sustained increase in the market price of our Ordinary Shares.
The one-for-sixteen share consolidation that became effective on November 7, 2025 reduced the number of our outstanding Ordinary Shares and increased the par value from US$0.00000625 to US$0.0001 per share. The market price of our Ordinary Shares following the share consolidation depends on our performance and other factors unrelated to the number of shares outstanding, and the share consolidation may not result in a sustained increase in the market price or improved liquidity of our Ordinary Shares.
Future issuances of our Ordinary Shares, including under our shelf registration statement, may cause substantial dilution and adversely affect the market price of our Ordinary Shares.
In July 2025 we completed a public offering of Ordinary Shares, and in June 2026 we completed a registered direct offering of 3,149,832 Ordinary Shares (on a post-consolidation basis) under our shelf registration statement on Form F-3 (Registration No. 333-290696), which permits us to offer up to US$500,000,000 of securities from time to time. If our existing shareholders sell, or indicate an intent to sell, substantial amounts of our Ordinary Shares in the public market, the trading price of our Ordinary Shares could decline significantly. Similarly, the perception in the public market that our shareholders might sell our Ordinary Shares could also depress the market price of our shares. A decline in the price of our Ordinary Shares might impede our ability to raise capital through the issuance of additional Ordinary Shares or other equity securities. In addition, the issuance and sale by us of additional ordinary shares, or securities convertible into or exercisable for our ordinary shares, or the perception that we will issue such securities, could reduce the trading price for our Ordinary Shares as well as make future sales of equity securities by us less attractive or not feasible. It could also dilute the voting power of our Ordinary Shares.
We have engaged in transactions with related parties and have relied on the home country practice exemption from Nasdaq shareholder-approval requirements.
In our June 2026 registered direct offering, two of the investors, Fortune Genesis Holdings Limited and WK Frater Holdings Limited, are affiliates of certain of our directors and of Mr. Liu Zhiwei, who was our largest shareholder at the time of the offering, and each purchased 999,014 Ordinary Shares on the same terms as the other investors. In connection with that offering, we relied on the home country practice exemption in Nasdaq Listing Rule 5615(a)(3) in lieu of the shareholder approval requirements of Nasdaq Listing Rule 5635. Our reliance on foreign private issuer and home country practice exemptions means our shareholders may not have the same protections afforded to shareholders of companies subject to all Nasdaq corporate governance requirements, and our related-party transactions may present conflicts of interest.
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Item 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
Pure Beauty was incorporated under the laws of Hong Kong with limited liability on April 15, 2013 and our Chief Executive Officer, Mr. Ching, is the founder. In order to prepare for the IPO of the Company, a series of restructuring actions have been taken. In June 2022, Raytech Holding was incorporated under the laws of the British Virgin Islands with the sole purpose being a holding company of Pure Beauty. Upon incorporation, Raytech Holding issued 100 ordinary shares, par value $1.00 per share, to its founders, including Mr. Ching (90 shares) and other minority shareholders (collectively 10 shares) at $1.00 per share. In August 2022, Mr. Ching, as the sole member of Pure Beauty, transferred all outstanding 10,000 shares of Pure Beauty held by him to Raytech Holding, in conjunction with which, Pure Beauty issued additional 790,000 shares to Raytech Holding; resulting in Raytech Holding being the parent company of Pure Beauty, holding a total of 800,000 shares in Pure Beauty. In September 2022, Mr. Ching subsequently transferred 5 shares of Raytech Holding to APTC Holdings Limited, a British Virgin Islands company, and 5 shares of Raytech Holding to Mr. Ling Chun Yin, a director of Raytech Holding and the Assistant to CEO of Pure Beauty at $1.00 per share.
On May 10, 2023, we filed our amended and restated memorandum and articles of association with the Registrar of Corporate Affairs to increase our authorized shares from 50,000 Ordinary Shares, par value of $1.00 per share, to 8,000,000,000 Ordinary Shares, par value of $0.00000625 per share and effectuated a forward split of all issued and outstanding shares at a ratio of 160,000-for-1.
In August 2023, Market Tycoon Investments Limited transferred 480,000 Ordinary Shares to Mr. WONG TAI CHI at $0.00000625 per share, and APTC Holdings Limited transferred 800,000 Ordinary Shares to Ms. LOOK Wai Yi at $0.00000625 per share. In October 2023, Value Classic Global Limited transferred 640,000 Ordinary Shares to Crystal Charm Investments Limited, a British Virgin Islands company, at $0.00000625 per share, Mr. WONG TAI CHI transferred 480,000 Ordinary Shares to Value Crystal Investment Limited, a British Virgin Islands company, at $0.00000625 per share, and Ms. LOOK Wai Yi transferred 800,000 Ordinary Shares to Ace Challenger Limited, a British Virgin Islands company, at $0.00000625 per share.
On May 17, 2024, we consummated the IPO of 1,500,000 Ordinary Shares (the “IPO Shares”). The Company completed the IPO on a firm commitment basis pursuant to the Company’s registration statement on Form F-1, as amended (File No. 333-275197) (the “F-1”), filed with the Securities and Exchange Commission (the “SEC”), which was declared effective by the SEC on May 13, 2024. The IPO Shares were priced at a price of $4.00 per share. The Company has also granted the underwriters a 45-day option to purchase up to an additional 225,000 Ordinary Shares to cover over-allotments, if any (the “Over-Allotment Option”). The Ordinary Shares were approved for listing on The Nasdaq Capital Market on May 13, 2024 and commenced trading under the symbol “RAY” on May 15, 2024.
On July 5, 2024, upon the underwriters’ partial exercise of the Over-Allotment Option, the Company sold 113,083 Ordinary Shares at a price of $4.00 per share accordingly. As a result, the Company has raised gross proceeds of $6,452,332 in the IPO, including the exercise of the Over-Allotment Option, before deducting underwriting discounts and offering expenses.
On May 6, 2025, the Company established a new, directly wholly-owned subsidiary, Raytech Innovation Limited (or “Raytech Innovation”), incorporated in Hong Kong.
The following are the principal capital markets, corporate and business developments during the fiscal year ended March 31, 2026 and through the date of this Annual Report:
On July 1, 2025, we closed a follow-on public offering of 25,985,000 ordinary shares (on a pre-Share Consolidation basis) at a public offering price of US$0.20 per share, for aggregate gross proceeds of approximately US$5.197 million, pursuant to our registration statement on Form F-1 (File No. 333-287842). Upon completion of that offering, we ceased to qualify as a “controlled company” under the Nasdaq listing rules.
On October 14, 2025, we received a notice from Nasdaq that we did not meet the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2). On November 7, 2025, we effected a 1-for-16 share consolidation, changing our authorized share capital from 8,000,000,000 ordinary shares of par value US$0.00000625 each to 500,000,000 ordinary shares of par value US$0.0001 each and reducing our issued and outstanding ordinary shares from 43,598,083 to approximately 2,724,880 shares, under a new CUSIP number (G7385S119); we subsequently regained compliance.
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On December 18, 2025, our shelf registration statement on Form F-3 (File No. 333-290696), registering the offer and sale of up to US$500,000,000 of our securities from time to time, was declared effective by the SEC.
On December 29, 2025, our wholly-owned subsidiary Raytech Innovation Limited completed the acquisition of 100% of the issued share capital of Worry free Group (Hong Kong) Limited (“Worry free”), a marketing solutions company, from Ms. Wang Yafeng, for aggregate consideration of US$6,099,000 (US$4,099,000 in cash and a US$2,000,000 promissory note bearing interest at 2% per annum and maturing on the second anniversary of issuance).
On January 2, 2026, the Board approved the appointment of Mr. Yuan Tianfu as a director and Dr. Wang Shibin as an independent director of the Company, effective on the same day, to fill the vacancies of the Board.
Beginning in the third quarter of the fiscal year, we commenced a strategic expansion into the provision of services in relation to personal health care electronics, including product design, development and consultation, led by Raytech Innovation Limited.
Subsequent Events
On April 15, 2026, Mr. Liu Haoyuan was appointed as a director and Chairman of the Board, and our founder Mr. Ching Tim Hoi continues to serve as an executive director and our Chief Executive Officer.
On June 12, 2026, the Company incorporated Fluxen Limited in Hong Kong with an initial issued share capital of 10,000 ordinary shares, and on July 8, 2026, Fluxen allotted an additional 6,666 ordinary shares to Yi Fortune Capital (HK) Limited, an independent third party, following which the Company holds 60% of the equity interest in Fluxen. Fluxen is currently dormant and is intended to support the Group’s future export trading business.
Subsequent to March 31, 2026, the amount due to a related party of HKD2,450,000 owed by Worry free to Yuan Chun Holding Co. was fully refunded, as to HKD1,000,000 on April 21, 2026 and as to HKD1,450,000 on May 5, 2026.
On June 29, 2026, we closed a registered direct offering of 3,149,832 Ordinary Shares (on a post-Share Consolidation basis) at a price of US$1.97 per share, for aggregate gross proceeds of approximately US$6.2 million, pursuant to the Form F-3 shelf registration statement. Two of the investors in that offering are affiliates of certain of our directors and of Mr. Liu Zhiwei, who was our largest shareholder at the time of the offering; we relied on the home country practice exemption under Nasdaq Listing Rule 5615(a)(3) in lieu of the shareholder approval requirements of Nasdaq Listing Rule 5635.
Our Corporate Structure
The following diagram illustrates our corporate structure as of the date of this Annual Report:
For details of each shareholder’s ownership, please refer to the beneficial ownership table in the section captioned “Item 7. Major Shareholders and Related Party Transactions — A. Major Shareholders.”
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Dividend Distributions or Assets Transfer among the Holding Company and Its Subsidiaries
Raytech Holding is permitted under the laws of British Virgin Islands to provide funding to its subsidiaries in Hong Kong through loans or capital contributions without restrictions on the amount of the funds. There are no restrictions or limitation on Raytech Holding’s ability to distribute earnings from its businesses, including subsidiaries, to the U.S. investors.
Our equity structure is a direct holding structure, that is, the overseas entity listed in the U.S., Raytech Holding, directly holds 100% of shares of Pure Beauty, Raytech Holding’s Hong Kong operating entity, 100% of shares of Raytech Innovation, and 60% of Fluxen. Raytech Innovation is holding 100% of shares of Worry free. Cash is transferred through our organization in the following manner: (i) funds may be transferred from Raytech Holding, the holding company incorporated in the British Virgin Islands to Pure Beauty, Raytech Innovation, Fluxen or Worry free in the form of capital contributions or shareholder loans, as the case may be; and (ii) dividends or other distributions may be paid by Pure Beauty, Raytech Innovation, Fluxen or Worry free to Raytech Holding. Each of Pure Beauty, Raytech Innovation, Fluxen or Worry free is permitted under the laws of Hong Kong to provide funding to Raytech Holding through dividend distribution without restrictions on the amount of the funds or restrictions on foreign exchange. If Raytech Holding intends to distribute dividends to its shareholders, it will depend on payment of dividends from Pure Beauty, Raytech Innovation, Fluxen or Worry free to Raytech Holding in accordance with the laws and regulations of Hong Kong, and the dividends will be distributed by Raytech Holding to all shareholders respectively in proportion to the shares they hold, regardless of whether the shareholders are U.S. investors or investors in other countries or regions. If Pure Beauty, Raytech Innovation, Fluxen or Worry free incurs debt on its own in the future, the instruments governing such debt may restrict Pure Beauty, Raytech Innovation, Fluxen or Worry free’s ability to pay dividends, make distribution or transfer funds to Raytech Holding. Subject to the BVI Act and our amended and restated memorandum and articles of association, Raytech Holding’s board of directors may authorize and declare a dividend to shareholders at such time and of such an amount as they think fit if they are satisfied, on reasonable grounds, that immediately following the dividend the value of Raytech Holding’s assets will exceed its liabilities and Raytech Holding will be able to pay its debts as they become due. There is no further BVI statutory restriction on the amount of funds which may be distributed by us by dividend.
As of the date of this Annual Report, no dividends or distributions have been made to any U.S. investors. Raytech Holding and each of its subsidiaries currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business and do not anticipate declaring or paying any dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of Raytech Holding’s board of directors after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments.
Within our direct holding structure, the cross-border transfer of funds within our corporate Company is legal and compliant with the laws and regulations of the British Virgin Islands and Hong Kong. In the future, cash proceeds from overseas financing activities can be directly transferred to each of the subsidiaries via capital contribution or shareholder loans.
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During the year ended March 31, 2026, (i) there is additional paid-in capital HKD14,179,000 provided by sole shareholder as capital injection, without allotting and issuing new shares to fund the development of its service businesses, including the cash consideration for the acquisition of Worry free, and (ii) Pure Beauty declared a dividend of HKD14,177,800 to its immediate holding company, which was eliminated on consolidation. Other than the foregoing, no cash or other asset transfers have occurred among the Company and its subsidiaries in the reporting periods presented in this Annual Report.
Currently, substantially all of our operations are in Hong Kong. We do not have or intend to set up any subsidiary or enter into any contractual arrangements to establish a VIE structure with any entity in mainland China. Since Hong Kong is a special administrative region of the PRC and the basic policies of the PRC regarding Hong Kong are reflected in the Basic Law, providing Hong Kong with a high degree of autonomy and executive, legislative and independent judicial powers, including that of final adjudication under the principle of “one country, two systems”. The laws and regulations of mainland China do not currently have any material impact on transfer of cash from Raytech Holding to any of its subsidiaries or from any of its subsidiaries to Raytech Holding and the investors in the U.S.
There are no restrictions or limitation under the laws of Hong Kong imposed on the conversion of HKD into foreign currencies and the remittance of currencies out of Hong Kong.
See “Dividend Policy” on page 75 and “Risk Factors – Risks Related to Our Corporate Structure – Raytech Holding may rely on dividends and other distributions on equity paid by its subsidiaries to fund any cash and financing requirements Raytech Holding may have, and any limitation on the ability of its subsidiaries to make payments to Raytech Holding could have a material adverse effect on Raytech Holding’s ability to conduct its business.” on page 17 for more information.
Emerging Growth Company Status
As a company with less than US$1.235 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include, but are not limited to:
| ● | being permitted to present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations in our SEC filings; |
| ● | 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 periodic reports, proxy statements and registration 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. |
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The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. We have elected to use the extended transition period under the JOBS Act. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.
We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.235 billion; (b) the last day of our fiscal year following the fifth anniversary of our IPO; (c) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur as of the end of our fiscal year if the market value of our Ordinary Shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.
Foreign Private Issuer Status
We are incorporated in the British Virgin Islands, and more than 50% of our issued and outstanding voting securities are not directly or indirectly held by residents of the United States. Therefore, we are a “foreign private issuer,” as defined in Rule 405 under the Securities Act and Rule 3b-4I under the Exchange Act. As a result, we are not subject to the same reporting requirements as U.S. domestic issuers. Under the Exchange Act, we are subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies. For example:
| ● | we are not required to provide as many Exchange Act reports or provide periodic and current reports as frequently, as a domestic public company; |
| ● | for interim reporting, we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that apply to domestic public companies; |
| ● | we are not required to provide the same level of disclosure on certain issues, such as executive compensation; |
| ● | we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; |
| ● | we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and |
| ● | we are not required to comply with Section 16 (b) of the Exchange Act requiring insiders to file trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction. |
Corporate Information
Raytech Holding’s principal executive offices are located at Unit 609, 6/F, Nan Fung Commercial Centre, No.19 Lam Lok Street, Kowloon Bay, Hong Kong, and its telephone number is +852 2117 0236. Raytech Holding’s registered office in the British Virgin Islands is at Aegis Chambers, 1st Floor, Ellen Skelton Building, 3076 Sir Francis Drake’s Highway, Road Town, Tortola, VG1110, British Virgin Islands. Raytech Holding maintains a website at www.raytech.com.hk. The information contained in, or accessible from, Raytech Holding’s website or any other website does not constitute a part of this Annual Report.
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B. Business Overview
Business Overview
Leveraging our expertise in the personal care electrical appliance industry, we aim to promote consumer lifestyles and drive the awareness of personal grooming. Through Raytech Holding’s wholly-owned subsidiaries in Hong Kong, we principally engage in the sourcing and wholesaling of personal care electrical appliances for international brand owners. We also provide product design, development and consultations collaboration as a value-added service for our customers. Our current customers focus on marketing their personal care electrical appliances products mainly in Japan. Commencing our operation in 2013, we have accumulated over 10 years of experience in the industry.
The Company previously has decided to expand its strategic focus toward the personal health care electronics sector, with contemplated services in product design, development, and consultation to address growing demand for wellness technology. As of the date of this annual report, the Company has commenced substantive operations and generated material revenues in this line of business.
Currently, the Company has three reportable segments: (i) sourcing and wholesaling of personal care electrical appliances, mainly conducted through Pure Beauty; (ii) product design, development and advisory services, mainly conducted through Raytech Innovation; and (iii) marketing solutions services, mainly conducted through Worry free. For the year ended March 31, 2024 and 2025, our total revenue was HK$66,972,301 and HK$78,739,564, respectively, which was all generated from sourcing and wholesaling of personal care electrical appliances. For the year ended March 31, 2026, our total revenue was HK$142,629,085 (US$18,192,485), among which, HK$98,434,849 (US$12,555,465) was from sourcing and wholesaling of personal care electrical appliances, accounted for 69.01% of our total revenue; HK$21,943,236 (US$2,798,882) was from product design, development and advisory services, accounted for 15.38% of our total revenue; and HK$22,251,000 (US$2,838,138) was from marketing solutions services, accounted for 15.60% of our total revenue.
(i) Sourcing and Wholesaling of Personal Care Electrical Appliances
Our Products
Over years of operation, we have sourced and wholesaled a wide range of personal care electrical appliances, which can be broadly classified into five major categories: (i) hair styling series, including hair dryer, hair straightener and curling iron; (ii) trimmer series, including facial shaver, nose trimmer and eyebrow trimmer; (iii) eyelash curler; (iv) nail care series; (v) other personal care appliances such as body and facial brush, reset brush, callus remover, sonic peeling, and others. We also generate revenue from the sales of tooling. In particular, along with product design and development collaboration, we specialize in sourcing and wholesaling hair dryers within our hair styling series which primarily include salon-type hair protection and styling functions or compact design for travel.
Hair styling series:
Our sales of hair styling series constituted 48%, 48% and 63% of the revenue of our sourcing and wholesaling of personal care electrical appliances business for the years ended March 31, 2024, 2025 and 2026, respectively. Approximately 37%, 25% and 15% of our sale of hair styling series for the years ended March 31, 2024, 2025 and 2026, respectively, was derived from the sale of hair dryers.
Major features of the salon-styled hair dryers that we have designed include:
| Negative ion technology | Help eliminate frizzy hair |
| Scirocco fan | Allows to thoroughly dry hair from the roots |
| Removable filter | Washable for easy daily cleaning and detachable for preventing dust and hair from blocking the blades |
| Compact size and lightweight | Handy for travel and home use |
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Our sales of hair straighteners represented 43%, 41% and 31% of our sales of hair styling series for the years ended March 31, 2024, 2025 and 2026, respectively. We have focused on designing hair straighteners in compact size with quick USB charging for travel and home use.
Trimmer series:
Designed with compact size and equipped with 2-way head and face shaver and nose hair trimmer on each side, washable components, the 2-in-1 face shaver and nose trimmer sets are more popular than the face shaver and nose trimmer as two separate products.
For the years ended March 31, 2024, 2025 and 2026, 34%, 43% and 28% of our revenue related to the sale of the trimmer series. Approximately 15%, 12% and 17% of our trimmer series sold in the years ended March 31, 2024, 2025 and 2026, respectively, were 2-in-1 face shaver and nose trimmer sets.
During the year ended March 31, 2024, we launched men shaver, women’s epilator shaver and foil shaver. Men shaver is USB and alternating current (AC) rechargeable, features with handy and waterproof design and can be used in bath. Women’s epilator shaver is battery operated facial care kit for epilation, cleansing, trimming and revitalization. This facial care set is waterproof designed and can be used for wet and dry use. Foil shaver offers advanced 3-stage cutting system, quiet and less vibration motor, close contact around the chin, jaw and neck and waterproof design.
During the year ended March 31, 2024, the sale of men shaver, women’s epilator shaver and foil shaver contributed 11%, 13% and 27%, respectively, to the total revenue of trimmer series. During the year ended March 31, 2025, the sale of men shaver, women’s epilator shaver and foil shaver contributed 7%, 6% and 47%, respectively, to the total revenue of trimmer series.
During the year ended March 31, 2026, the sale of men shaver, women’s epilator shaver and foil shaver contributed 37%, 5%and18%, respectively, to the total revenue of trimmer series.
Eyelash curler series:
Our eyelash curler is designed with 2-way comb either to increase the eyelash volume or to enhance panoramic appearance. The professionally-designed curved comb brush head fits the curve of upper and lower eyelashes to create natural curls. We generated approximately 1%, 1% and 1% of our revenue from this series for the years ended March 31, 2024, 2025 and 2026, respectively.
Nail care series:
Our nail care series consists of an electrical nail polisher. This series contributed 2%, 2% and 2%, respectively, to our total revenue for the years ended March 31, 2024, 2025 and 2026.
Other personal care appliance series:
Our other personal care appliance series comprises reset brush, callus removers, body and facial brush, sonic peeling, handy fan and others.
We generated approximately 5%, 3% and 3% of our total revenue from this series for the years ended March 31, 2024, 2025 and 2026, respectively. The reset brush represented 65%, 27% and 0% of the sales of our other personal care appliance series for the years ended March 31, 2024, 2025 and 2026, respectively.
Product Sourcing and Wholesaling
We are experienced in design and development in the personal care electrical appliance industry. Our research and development team consists of 2 full-time employees with at least 16 years of industry experience in electrical appliances engineering and supply chain management, in the aggregate. We serve our customers through sourcing or arranging the production process of personal care electrical appliance products to the manufacturers. Besides leveraging our strong design and development capabilities and our experience in anticipating consumer preference, we are able to provide technical recommendations and solutions to or assist our customers in the design and development of the personal care electrical appliance products that meet the needs of our customers. Riding on our extensive experience and product development capability, we continue to expand and strengthen our market position.
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Our product sourcing service is summarized as follows: our sales and marketing team first receives an order from a customer who requests our expertise to examine and advise on the design and manufacturing feasibility of a product sample or design prototype of a product prepared by the customer. We forward the sample or design prototype to a manufacturer who performs a feasibility assessment of the design, specification, materials required, type of engineering and required technology and packaging of the product sample or design prototype provided by the customer. As an auxiliary service, we may suggest modifications to the design, specification, materials to be used, technology and packaging to the customer, or as requested by our customer, may jointly design and develop the products with our customer based on the requirement, standard and narrative of our customer. Upon the completion of the assessment and receipt of acceptance of the modifications from the customer, our marketing and operation team provides a price quotation to the customer. Once the quotation is accepted by the customer, we forward the finalized design, specification and customer’s requests to the manufacturer and arrange a manufacturing schedule for producing a sample at the manufacturer’s facility. The manufacturer performs an initial evaluation and quality testing on the sample of the finished product. We then provide the tested sample of the finished product to our customer. Upon the acceptance of the sample of the finished product by the customer’s quality control team, we will arrange a manufacturing schedule with the manufacturer for mass production. After the mass production is completed, our shipping team confirms the shipping destination with our customer, arranges the shipping documents and forwards the instructions to the manufacturer who fulfills the shipment of the finished product to the customer’s destination as instructed.
We bear the costs and risks of forwarding the sample or design prototype to a manufacturer, providing suggestions for modifications of product design and specification, sending the tested sample of the finished product to our customer and shipping delay that is otherwise caused by other parties rather than the manufacturer. In the event of manufacturing defaults such as refining the product samples, manufacturing failure or delay, or delay of shipping caused by the manufacturing facility, our collaborating manufacturer bears the relative costs and risks.
We sell our personal care electrical appliances products wholesale to our customers. As the design, prototype, specification of the personal care electrical appliances and the respective packaging, are developed under the narratives, requirements and standards of our customers, the patents of such design and product prototype are owned by our customers.
(ii) Product Design, Development and Advisory Services
Raytech Innovation Limited, our wholly-owned subsidiary incorporated in Hong Kong on May 6, 2025 with initial share capital of HKD10,000, commenced business operation on October 1, 2025. The entity provides product design and development services and project advisory services in relation to personal health care electronics. On September 1, 2025, the sole shareholder contributed additional capital of HKD14,179,000. No new shares were allotted or issued in connection with this capital injection. Accordingly, the issued capital of Raytech Innovation Limited remained at HKD10,000, represented by 10,000 ordinary shares outstanding, and the HKD14,179,000 contribution was recorded as additional paid-in capital.
Our product design and development services principally involve engineering and design work carried out for our customers, in each case in relation to personal health care electronics. Our project advisory services principally involve advisory services provided to customers in relation to their product and production projects in the same sector of personal health care electronics. We provide comprising discrete analytical workstreams (e.g., market sizing, product landscape) that culminate in a consolidated final report as work product.
We are engaged on a project-by-project basis. As of the date of this annual report, Raytech Innovation had not entered into any long-term service contract with a customer, and the fees for each engagement are agreed separately. Revenue from these services is recognized over time on a cost-to-cost basis, and we act as principal in providing them, each contract comprising a single performance obligation. See Note 2 to our consolidated financial statements.
For the year ended March 31, 2026, Raytech Innovation generated service income of HKD21,943,236 (US$2,798,882), comprising HKD13,960,185 (US$1,780,636) from product design and development services and HKD7,983,051 (US$1,018,246) from project advisory services, representing 15.38% of our total revenue. Because Raytech Innovation commenced business operation on October 1, 2025, that amount reflects six months of operation only. Raytech Innovation served five customers during the year, none of which accounted for more than 3.6% of our total revenue.
We deliver a substantial part of each engagement through subcontractors rather than through in-house capacity. For the year ended March 31, 2026, service costs of Raytech Innovation amounted to HKD14,800,000, representing approximately 67.4% of its service income and comprising engineering and design costs, all of which were payable to three subcontractors.
We engage subcontractors to align our delivery capacity with the engagements we secure, allowing us to scale resources as needed without incurring fixed salary and overhead costs associated with maintaining full-time engineering and technical staff. This approach enables us to manage costs efficiently while preserving access to the capabilities required to support our projects. Raytech Innovation had four employees as of March 31, 2026, and five as of the date of this annual report and accordingly relies on subcontractors for a substantial part of the work performed under each engagement.
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Subcontractors are engaged on a project basis. We agree with the scope of work, the deliverables and the fee for each engagement with the subcontractor separately, and we have not entered any long-term or exclusive arrangement with any of them. We retain the relationship with, and contract directly with, our customer; we specify the customer's requirements to the subcontractor, supervise the work and accept the deliverables before they are delivered to the customer. We act as principal in providing our services and are accordingly responsible to our customers for their performance.
Our subcontractors are independent service providers and are not our employees. We do not enroll their personnel in a mandatory provident fund scheme under the Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong), and we do not maintain employees’ compensation insurance in respect of them under the Employees’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong), each of which applies in respect of employees. Each subcontractor is responsible for its own personnel, including their statutory contributions and insurance.
Because we contract with our customers as principal, we remain responsible for the services delivered, including where the work is performed by a subcontractor, and failure or delay by a subcontractor may expose us to claims, cost overruns or loss of customers. We are generally not vicariously liable for the acts of an independent contractor, although under section 24 of the Employees’ Compensation Ordinance a principal may be liable to pay compensation to an employee of its contractor injured in the execution of work undertaken by the principal.
(iii) Marketing Solutions Services
This revenue stream is conducted by our indirect wholly-owned subsidiary, Worry free Group (Hong Kong) Limited, which was incorporated in Hong Kong on April 8, 2024 and was acquired by Raytech Innovation on December 29, 2025. Worry free is a provider of digital marketing services, including advertising design, technical guidance, platform recommendations and campaign execution. Its services cover a range of products, including health and personal care appliances. Worry free maintains a network of advertising suppliers, purchase and control traffic and online services, execute self-developed media plans, oversee advertising outcomes, and report results to customers on a regular basis.
In providing these services, Worry free purchases and controls the online traffic and other online services required to deliver a campaign for its customers, bears sole responsibility for fulfillment of the services and the related cost risks, and has discretion in establishing the prices charged to its customers. Accordingly, revenue from these services is recognized on a gross basis. See Note 2 to our consolidated financial statements. Worry free is engaged on a campaign-by-campaign basis and, as of the date of this annual report, had not entered into any long-term service contract with a customer
For the period from December 29, 2025, being the date of acquisition, to March 31, 2026, Worry free generated service income of HKD22,251,000 (US$2,838,138), representing 15.60% of our total revenue. Because Worry free was acquired on December 29, 2025, that amount reflects approximately three months of operation only, and its results for periods before the acquisition are not consolidated.
Our Customers
Our customers are brand owners of personal care electrical appliances including our largest customer, being one of the top 10 sellers in terms of retail volume in the personal care electrical appliance market in Japan as stated in “Personal Care Appliances in Japan” by Euromonitor International in December 2023. For the years ended March 31, 2024, 2025 and 2026, we generated 74.1%, 64.0% and 62.5% of our total revenue, respectively, from our largest customer. We maintain long-term business relationships with our customers. Leveraging our experience and expertise in the personal care electrical appliances industry, we believe we are well positioned to maintain our relationships with our current customers, explore our market share in the U.S., Europe and Asia in the near future, and further development our new business lines built upon our extensive industry experience.
Collaborating Manufacturers
We have forged long-term relationships with manufacturers specializing in producing personal care electrical appliances for international brand owners who market their personal care electrical appliances globally. When selecting and evaluating manufacturers, we consider a number of business factors such as cost, quality and on-time delivery. Our collaborating manufacturers implemented applicable systems which meets the international or local standards requiring high levels of quality and safety requirements.
Our major collaborating manufacturer is Zhongshan Raytech Electrical Appliances Manufacturing Co. Ltd. (“Zhongshan Raytech”), a mainland China-based corporation controlled by our founder and CEO, Mr. Ching Tim Hoi.
For the year ended March 31, 2024, Zhongshan Raytech accounted for 88.5% of the total purchases of the Company.
For the year ended March 31, 2025, Zhongshan Raytech accounted for 88.2% of the total purchases of the Company.
For the year ended March 31, 2026, Zhongshan Raytech accounted for 62.1% of the total purchases of the Company.
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The factories operated by our major collaborating manufacturers are located in Zhongshan, Guangdong Province, PRC. The manufacturers have run a well-established supply chain process, particularly the procurement of materials and components and manufacturer selection.
Zhongshan Raytech obtained certifications for its quality management system, environmental management system and occupational safety system under the standards of China Quality Certification Center (“CQC”), which is based in Beijing, PRC and is under control of the China Certification& Inspection Group, which is approved by the State General Administration for Quality Supervision and Inspection and Quarantine and the Certification and Accreditation Administration of the mainland China of the PRC. CQC is a member of IQNet Association, an international certification entity in Switzerland formed by more than 30 certification entities in major countries and those members implemented domestic standards which mirror equivalent standards established by International Organization for Standardization (“ISO”). Zhongshan Raytech obtained the following certifications issued by CQC as of March 31, 2026.
| CQC Standard and equivalent ISO standard | Type of standard * |
Date of issuance, renewal and expiration | Certificate number | ISO criteria that an organization is required to meet * | ||||
GB/T 19001-2016
(ISO9001:2015)
|
Quality management system | Date of initial issuance:
Date of renewal: December 20, 2024
Date of expiration: December 23, 2027 |
00124Q311007R2M/4400 | An organization needs to demonstrate it had:
the ability to consistently provide products and services that meet customer and applicable statutory and regulatory requirements;
● facilitating opportunities to enhance customer satisfaction;
● addressing risks and opportunities associated with its context and objectives;
● the ability to demonstrate conformity to specified quality management system requirements. | ||||
GB/T 24001-2016
(ISO14001:2015) |
Environmental management system | Date of initial issuance: March 1, 2019
Date of renewal: December 20, 2024
Date of expiration: February 28, 2028 |
00124E35214R2M/4400 | An organization established, maintained and improved an environmental management system and assured itself of conformity with its stated environmental policy. It is required to demonstrate it had:
● enhancement of environmental performance;
● fulfilment of compliance obligations;
● achievement of environmental objectives. | ||||
GB/T 45001-2020
(ISO45001:2018)
|
Occupational health and safety (“OH&S”) management system | Date of initial issuance: January 2, 2019
Date of renewal: December 20, 2024
Date of expiration: January 1, 2028 |
00124S34130R2M/4400 | An organization established, implemented and maintained an OH&S management system to improve occupational, health and safety, eliminate hazards and minimize OH&S risks. An organization is required to demonstrate it had:
● continued to improve OH&S performance
● fulfilled legal and other requirements
● achieved OH&S objectives |
| * | Description of the applicable ISO standard type and requirement is presented according to the International Organization for Standardization. |
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Competitive Strengths
We possess certain attributes that differentiate us as a personal care electronic appliance provider from Hong Kong. Our key competitive strengths include:
(i) Sourcing and Wholesaling of Personal Care Electrical Appliances
We have a strong presence in the personal care electrical appliances industry with a 13-year operating history and emphasis on hair styling products
We believe that we have built up a strong reputation in the personal care electrical appliances industry as a result of our approximately 13-year operating history and our establishment in the industry. For example, in October 2017 and in April 2019, our founder, Mr. Ching, was featured twice by the HKEAIA Express Magazine, an official publication of the Hong Kong Electrical Appliance Industries Association, for his decades of experience in the electrical appliance industries. We believe our reputation has attracted various renowned brand owners which became our major customers.
Our research and development expertise has allowed us to further develop a new variety of personal care electronic products for our customers and establish strong relationships with our customers.
Led by a management team with an aggregate of 30 years of research, development and operation experience in the industry, our Company’s business growth has been driven by our research and development efforts in satisfying various needs of our customers.
We work closely with our customers in product design and development. We believe that by engaging meetings with our customers and obtaining feedbacks from our customers, we are able to gain a deeper understanding of our customers’ requirements and develop desirable products that satisfy our customers’ needs. As such, we have established strong relationship with our customers. We believe that our Company is positioned to secure more orders from our existing customers and attract new customers to expand our customer base, due in part to our close working relationships with them.
We have a quality control system, which allows us to deliver high quality products and maintain market reputation
We place great emphasis on high quality products and hence, we have implemented a stringent quality control system. Our quality control measures are to make sure our collaborated manufacturers in compliance with the quality standard required by our customers and ensure that our products are delivered with consistent, reliable, safe and high-quality standards such as those established by International Organization for Standardization (“ISO”). We also place great emphasis on the safety of our products. Our products meet the safety requirements from our customers and all applicable international safety standards of destinations where our products are shipped to, such as the JET Certification Scheme provided by the Japan Electrical Safety and Environment Technology Laboratories. Our customers are international renowned brand owners of hair styling products and personal care electronic appliance products which have stringent requirements for our products to meet various quality and safety standards. Given that we have a long business relationship with these customers, we believe that our products are of high quality and capable of being sold in the high-end market and able to continue to strengthen our position as a design office for international brand owners in the long run.
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We have a strong and experienced management team with strong commitment to deliver high quality products.
Our success and growth are substantially attributable to the strong commitment of our executive Directors and senior management team to deliver high quality products to our customers. Our founder, Mr. Ching Tim Hoi, executive Director and Shareholder has over 30 years of experience in the personal care and lifestyle electrical appliances industry. Mr. Ching is primarily responsible for formulating the overall sales and marketing strategies, business development and making major decisions of our Company. Since the establishment of Pure Beauty, Mr. Ching has contributed to our Company consistently and continuously with his insight in product design, his dedication on quality control of our products and his skills in departmental management. For the senior management of our Company, most of them have worked in our Company for over 10 years and have extensive experience in the personal care and lifestyle electrical appliances industry. Leveraging the foresight and in-depth industry knowledge of our directors and senior management team, our Company has been able to formulate sound business strategies, assess and manage risks, anticipate changes in consumer preferences, and capture market opportunities. For details of our executive Directors and senior management, please refer to “Item 6. Directors, Senior Management and Employees” of this Annual Report.
We believe that the vision, experience, market awareness, in-depth knowledge in the personal care and lifestyle electrical appliances industry of our Directors and senior management team have been pivotal to the success of our business and our ability to continue to explore new business opportunities and strengthen our position in the market.
(ii) Our services businesses
In respect of our product design, development and advisory services business conducted through Raytech Innovation and our marketing solutions services business conducted through Worry free, we believe our key competitive strengths are as follows:
We are able to apply the product design and development experience of our appliances business to services provided to the personal health care electronics sector
Raytech Innovation commenced business operation on October 1, 2025 and provides product design and development services and project advisory services in relation to personal health care electronics. In providing these services, Raytech Innovation draws on the design and development experience that we have accumulated through Pure Beauty, which has operated in the personal care electrical appliances industry since 2013 and which has provided product design and development collaboration to international brand owners as a value-added service. We believe that this experience, and our familiarity with the requirements of brand owners and with the manufacturing supply chain for personal care electrical appliances, assist Raytech Innovation in understanding the technical and commercial requirements of its service customers.
Our group is able to offer product design and development, project advisory and marketing solutions capabilities
Following the acquisition of Worry free on December 29, 2025, our group provides product design and development services and project advisory services through Raytech Innovation, and digital marketing services, including advertising design, technical guidance, platform recommendations and campaign execution, through Worry free. We believe the availability of these capabilities within the same group allows us to discuss a broader range of requirements with prospective customers than we could offer through either business individually. Worry free and Raytech Innovation each continue to contract with their own customers, and no assurance can be given that customers of one business will engage the other.
We have strengthened our board to lead the development of our services businesses
On April 15, 2026, we appointed Mr. Liu Haoyuan as Chairman of the Board in reaction to our strategic expansion to the provision of services in relation to personal health care electronics, including product design, development and consultations led by Raytech Innovation Limited. This leadership change aligns our governance structure with our strategic priorities and is intended to enhance board-level focus on the growth, integration and risk oversight of our services businesses, including Raytech Innovation and our marketing solutions subsidiary, Worry free. In parallel, Mr. Ching Tim Hoi continues to serve as an executive Director. We will continue leveraging his years of experience in sourcing and wholesaling of personal care electrical appliances to deepen customer and supplier relationships in our core sector, inform product roadmaps and manufacturability considerations for our design and development engagements, and support cross-selling opportunities across our services offerings. We believe this combination of strategic leadership and sector continuity strengthens execution discipline, improves resource allocation and oversight for project- and campaign-based revenues, and positions us to capture opportunities arising from the increasing demand for design, development and advisory services and related marketing solutions in personal health care electronics. For details of our executive Directors and senior management, please refer to “Item 6. Directors, Senior Management and Employees” of this Annual Report.
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Growth Strategy
(i) Sourcing and Wholesaling of Personal Care Electrical Appliances
Our goal is to become a leading product design and development office in personal care and lifestyle electrical appliances industry in Asia. To achieve this goal, we plan to adopt the following plans and strategies:
| ● | explore new product lines; |
| ● | continue to expand our men’s personal care and hair care and styling product lines. For instance, shavers and electric hair brush |
| ● | broaden sales through providing technical expertise to the potential and new customers in personal care electrical appliance market; and |
| ● | approach customers who sell and market their personal care electrical appliances in Europe, the US and other Asia markets. |
Expansion of market
We seek to expand our customer base, geographic presence and improve our local connection with them. We intend to expand our business from Hong Kong to the U.S., UK, Europe, Australia and other Asian markets. We have conducted limited market studies of these other markets and have begun engaging with new customers with a view to expanding our sales in these markets.
We plan to increase our investments in sales and marketing function, in particular the U.S., Europe and Asia market to cope with our business expansion plan, our Company’s sales and marketing activities mainly included handling purchase orders received from our customers, coordinating with our manufacturers which have their production teams for execution of purchase orders, communicating with our customers on their requests and feedbacks exploring with them the potential business opportunities. We believe that one of our keys to success is to achieve customer satisfaction by, among others, demonstrating to our customers that their purchase orders are closely monitored and their requests and feedbacks are timely handled through our delegated sales and marketing team. This helps us to retain our customers and gain more orders from them. Our management identified a need to allocate resources to actively promote our aforesaid strengths with a view to attracting potential customers to approach us for our products and services.
Recruit, Retain and Develop Employees
We will continue hiring highly qualified and experienced staff in the field. In order to expand and grow our business, we must continuously recruit and attract talented employees not only in the sales and marketing side to acquire new customers, but also the operational staff to manage the interface with the production, manufacturing, and services side. We believe that our status as a publicly traded company enhances our reputation and helps us attract talented people.
(ii) Our services businesses
In respect of our services businesses, our strategy is to develop Raytech Innovation into an established provider of design, development and consultation services for the personal health care electronics sector, and to continue to operate Worry free as our marketing solutions business, while Pure Beauty continues to operate its sourcing and wholesaling business in the ordinary course. To pursue this strategy, we intend to:
| ● | broaden the range of design, development and project advisory engagements undertaken by Raytech Innovation in relation to personal health care electronics; |
| ● | expand the customer base of each of Raytech Innovation and Worry free and seek to secure repeat engagements from existing service customers, neither business having entered into long-term customer contracts as of the date of this annual report; |
| ● | continue to develop the digital marketing capabilities of Worry free and make those capabilities available in support of the services provided by Raytech Innovation; and |
| ● | recruit and retain technical, design and project management personnel for Raytech Innovation, the number of employees of which increased from five as of March 31, 2026 to eight as of the date of this annual report. |
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Competition
(i) Sourcing and Wholesaling of Personal Care Electrical Appliances
The personal care electrical appliance market is relatively fragmented subject to macro-economic cycles and the entry of new competitors. We are directly competing with other design and development offices in the industry and also with manufacturers who are located in South Asia.
The majority of our revenue was derived from sales to the Japanese consumer market. We anticipate that customer demand for our Company’s personal care electrical appliances going forward will be primarily affected by the demand and performance of Japan. However, our targeted customer markets are expected to maintain a stable growth.
We mainly compete on product quality and research and development capabilities. We believe that we can compete effectively by virtue of our well-established relationship with our customers which are international brand owners, strong presence in the personal care electrical appliances industry, strong and established product design and development capabilities, quality assurance system and our experienced and dedicated management team.
(ii) Our services businesses
Raytech Innovation competes for product design, development and project advisory engagements in relation to personal health care electronics. We believe that its competitors include independent design and engineering consultancies, contract design and manufacturing organizations and the in-house design and development teams of brand owners and manufacturers, and that competition is principally on the basis of technical capability, the ability to deliver to a customer’s specification and timetable, and price.
Worry free competes in the provision of digital marketing services. We believe that the market for these services in Hong Kong is fragmented, that barriers to entry are comparatively low, and that Worry free competes with independent digital marketing agencies, full-service advertising agencies and the in-house marketing functions of customers, principally on the basis of execution capability, campaign results and price.
Neither of our services businesses has entered into long-term customer contracts, and services are provided on an engagement-by-engagement basis. As a result, our services businesses must compete for each new engagement, and there is no assurance that customers will engage either business again following the completion of an engagement. In addition, because our services businesses commenced or were acquired during the year ended March 31, 2026, they have a limited operating history within our group against which their competitive position can be assessed.
Intellectual Property
Other than the domain name www.raytech.com.hk, which was registered by Pure Beauty, we currently do not own any registered trademarks, copyrights, patents, know-how, proprietary technologies, or similar intellectual property. Regardless of the type of services, as the design, prototype, specification of the personal care electrical appliances and the respective packaging are developed under the narratives, requirements and standards of our customers, the patents of such design and product prototype are owned by our customers.
The design, development and advisory services provided by Raytech Innovation are performed to the requirements and specifications of its customers, and we do not retain the intellectual property rights in the deliverables produced under those engagements.
In providing its services, Worry free uses third-party advertising and media platforms and standard commercially available software, in each case on the terms made available by the relevant provider. It does not own the platforms or software on which those services depend.
As of the date of this annual report, we have been using certain trademarks in Pure Beauty’s daily business operations which are currently registered in Japan and owned by Mr. Ching (the “Japan Pure Beauty Trademarks”). On August 1, 2021, a trademark license agreement was entered into between us and Mr. Ching (the “Japan Trademark License Agreement”), pursuant to which Mr. Ching agreed to irrevocably and unconditionally grant us, our subsidiaries and branches an exclusive license to use the Japan Pure Beauty Trademarks on a royalty-free basis, for 10 years commencing from the date of the Japan Trademark License Agreement. See “Risk Factors – Risks Related to Our Business – We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations” on page 11 of this annual report for more information.
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Patent
We do not retain the patent of the finished products we sourced to manufacturers and designed or developed with our customers. Such patents belong to our customers who hired us for the design and development of such products.
Domain
Pure Beauty Manufacturing Company Limited registered the domain name of “www.raytech.com.hk”.
Employees
As of March 31, 2026, we have 15 employees (including the employees of our subsidiaries). No employees are represented by a labor union, and we believe that we have good relations with our employees.
Facilities and Property
Our principal executive office is 1,343 square feet leased property located at Unit 609, 6/F, Nan Fung Commercial Centre, 19 Lam Lok Street, Kowloon Bay, Hong Kong. Pursuant to the Lease Agreement, the lease term is one year, from April 1, 2025 to March 31, 2026 and the monthly rent is HKD25,000 (US$3,189). The landlord is Raytech Holdings Company Limited, an entity controlled by Mr. Ching and a related party of the Company. For details, see Item 7.B of this Annual Report and Note 10 to our consolidated financial statements. Another tenancy agreement was entered into by Worry free. The lease property is located at Office Unit 6, 10/F, Wing Tuck Commercial Centre, 177-183 Wing Lok Street, Hong Kong. The lease term is two years, from April 5, 2026 to April 4, 2028 and the monthly rent is HKD10,000.
The operating lease expenses amounted to HKD300,000 for the year ended March 31, 2025 and HKD300,000 for the year ended March 31, 2026.
Legal Proceedings
We and our subsidiaries are currently not a party to any material legal or administrative proceedings. We may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management’s time and attention.
Governmental Regulations
Our operations are subject to numerous laws of Hong Kong and regulations in a number of areas including, but not limited to, areas of labor and employment, immigration, advertising, e-commerce, tax, import and export requirements, data privacy requirements, anti-competition, and environmental, health, and safety. We believe that, as of the date of this annual report, we have obtained all necessary licenses, permissions or approvals including the business registration certificate from the governmental authorities of Hong Kong to operate our business and to the best of our knowledge, no license, permission or approval has been denied.
The following table provides details on the licenses, permissions or approvals held by Raytech Holding’s Hong Kong subsidiaries.
| Entities | License/permit/approval | Issuing authority | Commencement date | Expiry date | ||||
| Pure Beauty | Business Registration Certificate | Inland Revenue Department | April 15, 2026 | April 14, 2027 | ||||
| Raytech Innovation | Business Registration Certificate | Inland Revenue Department | May 6, 2026 | May 5, 2027 | ||||
| Worry free Group (Hong Kong) Limited | Business Registration Certificate | Inland Revenue Department | April 8, 2024 | April 7, 2027 | ||||
| Fluxen Limited | Business Registration Certificate | Inland Revenue Department | June 12, 2026 | June 11, 2027 |
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Regulations Related to our Business Operations in Hong Kong
We conduct our operations in Hong Kong through three subsidiaries aligned to our reportable segments: (i) sourcing and wholesaling of personal care electrical appliances, conducted by Pure Beauty; (ii) product design, development and advisory services, conducted by Raytech Innovation; and (iii) marketing solutions services, conducted by Worry free. As of the date of this Annual Report, none of these businesses is subject to a sector-specific statutory licensing or qualification regime in Hong Kong solely by virtue of engaging in product design/development services, sourcing/wholesaling of personal care electrical appliances, or provision of marketing solutions services.
Below sets out a summary of certain aspects of the Hong Kong laws and regulations which are relevant to our operation and business.
Business Registration Ordinance (Chapter 310 of the Laws of Hong Kong)
The Business Registration Ordinance requires every person carrying on any business to make an application to the Commissioner of Inland Revenue in the prescribed manner for the registration of that business within one month after the commencement of business. The Commissioner of Inland Revenue must register each business for which a business registration application is made and as soon as practicable after the prescribed business registration fee and levy are paid and issue a business registration certificate or branch registration certificate for the relevant business or the relevant branch, as the case may be. Any person who fails to apply for business registration shall be guilty of an offence and shall be liable to a fine of HK$5,000 and to imprisonment for 1 year.
Personal Data (Privacy) Ordinance (Cap. 486) of Hong Kong), or the PDPO
The PDPO imposes a statutory duty on data users to comply with the requirements of the six data protection principles (the “Data Protection Principles”) contained in Schedule 1 to the PDPO. The PDPO provides that a data user shall not do an act, or engage in a practice, that contravenes a Data Protection Principle unless the act or practice, as the case may be, is required or permitted under the PDPO. The six Data Protection Principles are:
| ● | Principle 1—purpose and manner of collection of personal data; |
| ● | Principle 2—accuracy and duration of retention of personal data; |
| ● | Principle 3—use of personal data; |
| ● | Principle 4—security of personal data; |
| ● | Principle 5—information to be generally available; and |
| ● | Principle 6—access to personal data. |
Non-compliance with a Data Protection Principle may lead to a complaint to the Privacy Commissioner for Personal Data (the “Privacy Commissioner”). The Privacy Commissioner may serve an enforcement notice to direct the data user to remedy the contravention and/ or instigate prosecution actions. A data user who contravenes an enforcement notice commits an offense which may lead to a fine and imprisonment.
The PDPO also gives data subjects certain rights, inter alia:
| ● | the right to be informed by a data user whether the data user holds personal data of which the individual is the data subject; |
| ● | if the data user holds such data, to be supplied with a copy of such data; and |
| ● | the right to request corrections of any data they consider to be inaccurate. |
The PDPO criminalizes certain violations, including but not limited to, the misuse or inappropriate use of personal data in direct marketing activities, non-compliance with a data access request and the unauthorized disclosure of personal data obtained without the relevant data user’s consent. An individual who suffers damage, including injured feelings, because of a contravention of the PDPO in relation to his or her personal data, may seek compensation from the data user concerned.
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Employment Ordinance (Chapter 57 of the Laws of Hong Kong), or the EO
The Employment Ordinance (Chapter 57 of the Laws of Hong Kong) is an ordinance enacted for, amongst other things, the protection of the wages of employees and the regulation of the general conditions of employment and employment agencies. Under the EO, an employee is generally entitled to, amongst other things, notice of termination of his or her employment contract; payment in lieu of notice; maternity protection in the case of a pregnant employee; not less than one rest day in every period of seven days; severance payments or long service payments; sickness allowance; statutory holidays or alternative holidays; and paid annual leave of up to 14 days depending on the period of employment.
Employees’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong), or the ECO
The Employees’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong) is an ordinance enacted for the purpose of providing for the payment of compensation to employees injured in the course of employment.
The ECO establishes a no-fault and non-contributory employee compensation system for work injuries and lays down the rights and obligations of employers and employees in respect of injuries or death caused by accidents arising out of and in the course of employment, or by prescribed occupational diseases.
As stipulated by the ECO, no employer shall employ any employee in any employment unless there is in force in relation to such an employee a policy of insurance issued by an insurer for an amount not less than the applicable amount specified in the Fourth Schedule of the ECO in respect of the liability of the employer. According to the Fourth Schedule of the ECO, the insured amount shall be not less than HKD100,000,000 (approximately $12,900,000) per event if a company has no more than 200 employees. Any employer who contravenes this requirement commits a criminal offence and is liable on conviction to a fine and imprisonment. An employer who has taken out an insurance policy under the ECO is required to display a prescribed notice of insurance in a conspicuous place on each of its premises where any employee is employed.
Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong), or the MPFSO
The Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong) is an ordinance enacted for the purposes of providing for the establishment of non-governmental mandatory provident fund schemes, or the MPF Schemes. The MPFSO requires every employer of an employee of 18 years of age or above but under 65 years of age to take all practical steps to ensure the employee becomes a member of a registered MPF Scheme within the first 60 days of employment. Subject to the minimum and maximum relevant income levels, it is mandatory for both employers and their employees to contribute 5% of the employee’s relevant income to the MPF Scheme. Any employer who contravenes the requirement of enrolling eligible employees in a registered MPF Scheme or the requirement of paying mandatory contributions to the MPF Schemes commits a criminal offence and is liable on conviction to a fine and imprisonment.
Minimum Wage Ordinance (Chapter 608 of the Laws of Hong Kong), or the MWO
The Minimum Wage Ordinance (Chapter 608 of the Laws of Hong Kong) provides for a prescribed minimum hourly wage rate (currently at HK$42.1 per hour) during the wage period for every employee engaged under a contract of employment under the EO. Any provision of the employment contract which purports to extinguish or reduce the right, benefit or protection conferred on the employee by the MWO is void.
Failure to pay minimum wage amounts to a breach of the wage provisions under EO. An employer who willfully and without reasonable excuse fails to pay wages to an employee when it becomes due commits a criminal offence and is liable on conviction to a fine and imprisonment.
Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong)
Under the Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong), where an employer commences to employ in Hong Kong an individual who is or is likely to be chargeable to tax, or any married person, the employer shall give a written notice to the Commissioner of Inland Revenue not later than three months after the date of commencement of such employment. Where an employer ceases or is about to cease to employ in Hong Kong an individual who is or is likely to be chargeable to tax, or any married person, the employer shall give a written notice to the Commissioner of Inland Revenue not later than one month before such individual ceases to be employed in Hong Kong.
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Consumer Goods Safety Ordinance (Chapter 456 of the Laws of Hong Kong), or the CGSO
The Consumer Goods Safety Ordinance (Chapter 456 of the Laws of Hong Kong) imposes a duty on manufacturers, importers and manufacturers of certain consumer goods to ensure that the consumer goods they supply are safe and for incidental purposes.
The Company’s products are regulated by the CGSO and the Consumer Goods Safety Regulation (Cap. 456A, Laws of Hong Kong) (the “Consumer Goods Safety Regulation”).
Section 4(1) of the CGSO requires consumer goods to be reasonably safe having regard to all of the circumstances including the manner in which, and the purpose for which the products are presented, promoted or marketed, the use of any mark in relation to the products, instructions and warnings given for the keeping or use of the products, reasonable safety standards published by a standards institute or other similar bodies and the existence of any reasonable means to make the products safer.
According to section 2(1) of the Consumer Goods Safety Regulation, where consumer goods on their packages are marked with, or where any labels affixed to or any documents enclosed in their packages contain, any warning or caution regarding the safe keeping, use, consumption or disposal, such warning or caution shall be in both the English and the Chinese languages. Such warnings and cautions, as required by section 2(2) of Consumer Goods Safety Regulation, shall be legible and be placed in a conspicuous position on (a) the consumer goods; (b) any package of the consumer goods; (c) a label security affixed to the package; or (d) a document enclosed in the package.
Electrical Products (Safety) Regulation (Chapter 405G of the Laws of Hong Kong)
It is a requirement under the Electrical Products (Safety) Regulation (Chapter. 405G of the Laws of Hong Kong) that electrical products which are designed for household use and supplied in Hong Kong shall comply with certain safety requirements and obtain recognized certificates of safety compliance.
Occupational Safety and Health Ordinance (Chapter 509 of the Laws of Hong Kong), or the OSHO
The Occupational Safety and Health Ordinance (Chapter 509 of the Laws of Hong Kong) aims to ensure the safety and health of employees when they are at work. Under the OSHO, an employer must ensure the safety and health of his workplace by (i) providing and maintaining plant and work systems that are safe and without risks to health, (ii) making arrangement for ensuring safety and health in connection with the use, handling, storage or transport of plant or substances, (iii) providing all necessary information, instruction, training and supervision for ensuring safety and health, (iv) providing and maintaining safe access to and egress from the workplace, and (v) providing and maintaining a safe and healthy work environment. An employer who fails to comply with the above may be liable on conviction to a fine and imprisonment, if he did so intentionally, knowingly or recklessly.
Occupational Safety and Health Regulation (Chapter 509A of the Laws of Hong Kong)
The Occupational Safety and Health Regulation (Chapter 509A of the Laws of Hong Kong) further sets out basic requirements for accident prevention, fire precaution, workplace environment control, hygiene at workplaces, first aid, as well as what employers and employees are expected to do in manual handling operations.
Tortious Duty Under Common Law
Apart from contractual liability, under common law, manufacturers, distributors and retailers of products also owe a duty of care to consumers and may be liable for damage resulting from defects in goods caused by their negligent acts or for any fraudulent misrepresentation made in the distributing and selling of goods. Where a manufacturer, distributor or retailer knows or reasonably believes that the products may be defective, he may have to cease to supply such goods and to give warning and instructions to persons to whom the products are supplied. Any person who undertakes to design, import or supply a product, and who negligently performs his work and causes damage to another person or property, will also attract civil liability.
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Trade Description Ordinance (Chapter 362 of the Laws of Hong Kong), or the TDO
The Trade Descriptions Ordinance (Chapter 362 of the Laws of Hong Kong) prohibits false trade descriptions, false, misleading or incomplete information, false statements, etc., in respect of goods offered in the course of trade. Therefore, all of the products sold by the Company are required to comply with the relevant provisions therein. Section 2 of the TDO provides, inter alia, that “trade description” in relation to goods means an indication, direct or indirect, and by whatever means given, of certain matters (including quantity, method of manufacture, composition, fitness for purpose, availability, compliance with a standard specified or recognized by any person, price, their being of the same kind as goods supplied to a person, price, place or date of manufacture, production, processing or reconditioning, person by whom manufactured, produced, processed or reconditioned, etc.), with respect to any goods or parts of the goods; and in relation to services means an indication, direct or indirect, and by whatever means given, of certain matters (including nature, scope, quantity, fitness for purpose, method and procedures, availability, the person by whom the service is supplied, after-sale service assistance, price etc.).
Section 7 of the TDO provides that no person shall in the course of trade or business apply a false trade description to any goods or sell or offer for sale any goods with false trade descriptions applied thereto. Section 7A of the TDO provides that a trader who applies a false trade description to a service supplied or offered to be supplied to a consumer, or supplies or offers to supply to a consumer a service to which a false trade description is applied, commits an offence.
Sections 13E, 13F, 13G, 13H and 13I of the TDO provide that a trader who engages in relation to a consumer in a commercial practice that (a) is a misleading omission; or (b) is aggressive; (c) constitutes bait advertising; (d) constitutes a bait and switch; or (e) constitutes wrongly accepting payment for a product, commits an offence.
A person who commits an offence under sections 7, 7A, 13E, 13F, 13G, 13H or 13I shall be subject, on conviction on indictment, to a fine of HK$500,000 and to imprisonment for 5 years, and on summary conviction, to a fine at HK$100,000 and to imprisonment for 2 years.
Trade Marks Ordinance (Chapter 559 of the Laws of Hong Kong), or the TMO
The Trade Marks Ordinance (Chapter 559 of the Laws of Hong Kong) provides for the registration of trademarks, the use of registered trademarks and connected matters. Hong Kong provides territorial protection for trademarks. Therefore, trademarks registered in other countries or regions are not automatically entitled to protection in Hong Kong. In order to enjoy protection by the laws of Hong Kong, trademarks must be registered with the Trade Marks Registry of the Intellectual Property Department under the Trade Marks Ordinance and the Trade Marks Rules (Chapter 559A of the Laws of Hong Kong) (the “Trade Marks Rules”).
According to section 10 of the TMO, a registered trademark is a property right acquired through due registration under such ordinance. The owner of a registered trademark is entitled to the rights provided by the ordinance.
By virtue of section 14 of the TMO, the owner of a registered trademark is conferred exclusive rights in the trademark. The rights of the owner in respect of the registered trademark come into existence from the date of the registration of the trademark. According to section 48 of such ordinance, the registration date is the filing date of the application for registration.
Subject to the exceptions in section 19 to section 21 of the TMO, any use of the trademark by third parties without the consent of the owner is an infringement of the trademark. Conducts which amount to infringement of the registered trademark are further specified in section 18 of the same ordinance.
Sale of Goods Ordinance (Chapter 26 of the Laws of Hong Kong)
The Sale of Goods Ordinance (Chapter 26 of the Laws of Hong Kong) provides, inter alia, that where a seller sells goods in the course of a business, there is an implied condition that (a) where the goods are purchased by description, the goods must correspond with the description; (b) the goods supplied are of merchantable quality; and (c) the goods must be fit for the purpose for which they are purchased. Otherwise, a buyer has the right to reject defective goods unless he or she has a reasonable opportunity to examine the goods.
C. Organizational Structure
See “Item 4. Information on the Company – A. History and Development of the Company.”
D. Plant and Equipment
See “Item 4. Information on the Company – B. Business Overview – Facilities and Property.”
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Item 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion and analysis should be read in conjunction with our consolidated financial statements, which have been prepared in accordance with U.S. GAAP, included elsewhere in this Annual Report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly in “Risk Factors” and elsewhere in this Annual Report.
Overview
We are a Hong Kong-based group operating three businesses through our operating subsidiaries: the provision of product design and development services and project advisory services in relation to personal health care electronics, conducted by Raytech Innovation Limited (“Raytech Innovation”); the provision of marketing solutions services, conducted by Worry free Group (Hong Kong) Limited (“Worry free”); and the sourcing and wholesaling of personal care electrical appliances for international brand owners, conducted by Pure Beauty Manufacturing Company Limited (“Pure Beauty”). During the year ended March 31, 2026, we expanded from a single-subsidiary trading business into a group of three operating subsidiaries in Hong Kong, and service income contributed HKD44,194,236 (US$5,637,020), or 31.0%, of our total revenue for the year. Because Raytech Innovation commenced business operation on October 1, 2025 and Worry free was acquired on December 29, 2025, our service businesses contributed to our results of operations for part of the year only.
Raytech Innovation, our wholly-owned subsidiary incorporated in Hong Kong, with initial share capital of HKD10,000, commenced business operation on October 1, 2025 and focuses on the provision of product design and development services and project advisory services in relation to personal health care electronics, drawing on the expertise in personal care electrical appliances that we have accumulated through Pure Beauty. On September 1, 2025, there was an additional paid-in capital HKD14,179,000 provided by sole shareholder as capital injection, without allotting and issuing new shares. Accordingly, the issued capital of Raytech Innovation Limited remained at HKD10,000, represented by 10,000 ordinary shares outstanding, and the HKD14,179,000 contribution was recorded as additional paid-in capital. On December 29, 2025, Raytech Innovation completed the acquisition of 100% of the issued share capital in Worry free, a marketing solutions company incorporated in Hong Kong, from Ms. Wang Yafeng at a total consideration of US$6,099,000, which was settled as to US$4,099,000 in cash and as to US$2,000,000 by way of a promissory note bearing interest at 2% per annum and maturing in two years. The results of Worry free have been consolidated from December 29, 2025. See Note 13 to our consolidated financial statements. In April 2026, we announced a strategic expansion of our business focus toward the provision of services in relation to personal health care electronics, including product design, development and consultations, led by Raytech Innovation, and the appointment of Mr. Liu Haoyuan as Chairman of the Board and Executive Director with effect from April 15, 2026.
Pure Beauty remains our established operating business and our largest reportable segment, accounting for 69.0% of our total revenue for the year ended March 31, 2026. Through Pure Beauty, which commenced operation in 2013 and has accumulated over 10 years of experience in the industry, we principally engage in the sourcing and wholesaling of personal care electrical appliances for international brand owners, and we provide product design and development collaboration as a value-added service for our customers. Our customers of this business are brand owners of personal care electrical appliances who market and sell their products to end consumers. We expect Pure Beauty to continue to operate in an ordinary-course capacity alongside the development of our service businesses.
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Over years of operation, Pure Beauty has sourced and wholesaled a wide range of personal care electrical appliances, which can be broadly classified into five major categories: (i) hair styling series, including hair dryer, hair straightener and curling iron; (ii) trimmer series, including facial shaver, nose trimmer and eyebrow trimmers; (iii) eyelash curler; (iv) nail care series; and (v) other personal care series, including facial brushes, electric cosmetic brush cleaners, callus removers, sonic peeling and others. We also generate revenue from the sales of tooling. In particular, along with product design and development collaboration, we are specialized in sourcing and wholesaling hair dryers within our hair styling series which primarily include salon-type hair protection and styling functions or compact design for travel.
Pure Beauty’s customers are brand owners of personal care electrical appliances including Koizumi Seiki Corp., one of the top 10 sellers in terms of retail volume in the personal care electrical appliance market in Japan as stated in “Personal Care Appliances in Japan” by Euromonitor International in December 2023. We maintain long-term business relationships with our customers, and we have engaged with new customers with a view to expanding our sales in the U.S., UK, Europe, Australia and other Asian markets.
Worry free Group (Hong Kong) Limited conducted its business in providing professional marketing solutions, including marketing services, advertising design, technical guidance, platform recommendations and campaign execution. Worry free provides customer-tailored solutions to facilitate companies in establishing and executing their mobile advertising plans. Worry free maintains a network of advertising suppliers, purchase and control traffic and online services, execute self-developed media plans, oversee advertising outcomes, and report results to customers on a regular basis.
Our revenue increased by 81.1% from HKD78,739,564 for the year ended March 31, 2025 to HKD142,629,085 (US$18,192,485) for the year ended March 31, 2026, principally reflecting new service income of HKD44,194,236 (US$5,637,020) from Raytech Innovation and Worry free and an increase of 26.2% in sales of products by Pure Beauty. Our net income increased by 101.9% from HKD8,268,367 for the year ended March 31, 2025 to HKD16,690,576 (US$2,128,900) for the year ended March 31, 2026.
On July 1, 2025, we completed a follow-on offering of 1,624,062 Ordinary Shares (on a post-consolidation basis), raising aggregate net proceeds of US$4,682,910, issued at a public offering price of US$0.20 per share (equivalent to US$3.20 per Ordinary Share on a post-consolidation basis), for gross proceeds of US$5,197,000.
On October 17, 2025, our Board of Directors approved a share consolidation pursuant to which every sixteen (16) ordinary shares with a par value of US$0.00000625 each were consolidated into one (1) Ordinary Share with a par value of US$0.0001 each, effective on the Nasdaq Capital Market on November 7, 2025, in order to regain compliance with the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2). Unless otherwise stated, all share and per share data in this discussion have been retroactively restated to reflect the share consolidation.
On June 12, 2026, we incorporated a subsidiary, Fluxen Limited, with an initial issued share capital of 10,000 ordinary shares, and on July 8, 2026, Fluxen allotted an additional 6,666 ordinary shares to Yi Fortune Capital (HK) Limited, an independent third party, following which we hold 60% of the equity interest and Yi Fortune Capital (HK) Limited holds the remaining 40% with no business relationship with the Group as of the date of this report. The subsidiary is currently dormant and has not yet commenced operations, but it is intended to support the Group’s future export trading business.
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A. Results of Operations
For the year ended March 31, 2024 compared to year ended March 31, 2025
The following table sets forth a summary of the consolidated results of operations of us for the periods indicated, both in absolute amount and as a percentage of its total revenues.
| For the years ended March 31, | ||||||||||||||||
| 2024 | 2025 | |||||||||||||||
| HKD | % of revenue | HKD | % of revenue | |||||||||||||
| Revenue | 66,972,301 | 100.0 | % | 78,739,564 | 100.0 | % | ||||||||||
| Operating Expenses | ||||||||||||||||
| Merchandise costs | (52,067,436 | ) | (77.7 | )% | (60,931,870 | ) | (77.4 | )% | ||||||||
| Selling, general and administrative expenses | (3,545,369 | ) | (5.3 | )% | (10,158,945 | ) | (12.9 | )% | ||||||||
| Total operating expenses | (55,612,805 | ) | (83.0 | )% | (71,090,815 | ) | (90.3 | )% | ||||||||
| Income from operations | 11,359,496 | 17.0 | % | 7,648,749 | 9.7 | % | ||||||||||
| Interest income | 1,416,354 | 2.1 | % | 3,158,654 | 4.0 | % | ||||||||||
| Interest expense | (2,028 | ) | * | - | * | |||||||||||
| Loss from foreign currency exchange | (20,846 | ) | * | (328,471 | ) | (0.4 | )% | |||||||||
| Other income, net | 818 | * | 45,922 | * | ||||||||||||
| Total other income, net | 1,394,298 | 2.1 | % | 2,876,105 | 3.7 | % | ||||||||||
| Income before income taxes | 12,753,794 | 19.0 | % | 10,524,854 | 13.4 | % | ||||||||||
| Income tax expense | (2,817,000 | ) | (4.2 | )% | (2,256,487 | ) | (2.9 | )% | ||||||||
| Net income | 9,936,794 | 14.8 | % | 8,268,367 | 10.5 | % | ||||||||||
| * | Less than 0.1% |
For the year ended March 31, 2025 compared to year ended March 31, 2026
The following table sets forth a summary of the consolidated results of operations of us for the periods indicated, both in absolute amount and as a percentage of its total revenues.
| For the years ended March 31, | ||||||||||||||||||||
| 2025 | 2026 | |||||||||||||||||||
| HKD | % of revenue | HKD | US$ | % of revenue | ||||||||||||||||
| Revenue | 78,739,564 | 100.0 | % | 142,629,085 | 18,192,485 | 100.0 | % | |||||||||||||
| Operating Expenses | ||||||||||||||||||||
| Merchandise costs | (60,931,870 | ) | (77.4 | )% | (73,587,672 | ) | (9,386,183 | ) | (51.6 | )% | ||||||||||
| Service costs | - | - | (29,423,000 | ) | (3,752,934 | ) | (20.6 | )% | ||||||||||||
| Selling, general and administrative expenses | (10,158,945 | ) | (12.9 | )% | (21,587,387 | ) | (2,753,493 | ) | (15.1 | )% | ||||||||||
| Total operating expenses | (71,090,815 | ) | (90.3 | )% | (124,598,059 | ) | (15,892,610 | ) | (87.4 | )% | ||||||||||
| Income from operations | 7,648,749 | 9.7 | % | 18,031,026 | 2,299,875 | 12.6 | % | |||||||||||||
| Interest income | 3,158,654 | 4.0 | % | 2,259,221 | 288,166 | 1.6 | % | |||||||||||||
| Interest expense | - | * | (243,432 | ) | (31,050 | ) | (0.2 | )% | ||||||||||||
| (Loss) gain from foreign currency exchange | (328,471 | ) | (0.4 | )% | 183,001 | 23,342 | 0.1 | % | ||||||||||||
| Government grants | - | - | 109,863 | 14,013 | 0.1 | % | ||||||||||||||
| Other income, net | 45,922 | * | 6,432 | 821 | * | % | ||||||||||||||
| Total other income, net | 2,876,105 | 3.7 | % | 2,315,085 | 295,292 | 1.6 | % | |||||||||||||
| Income before income taxes | 10,524,854 | 13.4 | % | 20,346,111 | 2,595,167 | 14.3 | % | |||||||||||||
| Income tax expense | (2,256,487 | ) | (2.9 | )% | (3,655,536 | ) | (466,267 | ) | (2.6 | )% | ||||||||||
| Net income | 8,268,367 | 10.5 | % | 16,690,575 | 2,128,900 | 11.7 | % | |||||||||||||
| * | Less than 0.1% |
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Revenue
| For the years ended March 31, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| HKD | HKD | HKD | US$ | |||||||||||||
| Sales of products | ||||||||||||||||
| Hair styling series | 31,833,932 | 37,638,290 | 62,314,053 | 7,948,221 | ||||||||||||
| Trimmer series | 22,684,148 | 33,613,971 | 27,774,532 | 3,542,670 | ||||||||||||
| Eyelash curler | 804,863 | 453,378 | 512,582 | 65,380 | ||||||||||||
| Nail care series | 1,413,106 | 1,524,503 | 1,726,654 | 220,236 | ||||||||||||
| Other personal care appliances | 3,230,238 | 2,539,484 | 3,263,678 | 416,286 | ||||||||||||
| 59,966,287 | 75,769,626 | 95,591,499 | 12,192,793 | |||||||||||||
| Sales of tooling | 7,006,014 | 2,969,938 | 2,843,350 | 362,672 | ||||||||||||
| Service income | ||||||||||||||||
| Product design and development | – | – | 13,960,185 | 1,780,636 | ||||||||||||
| Project advisory | – | – | 7,983,051 | 1,018,246 | ||||||||||||
| Marketing solutions | – | – | 22,251,000 | 2,838,138 | ||||||||||||
| – | – | 44,194,236 | 5,637,020 | |||||||||||||
| Total | 66,972,301 | 78,739,564 | 142,629,085 | 18,192,485 | ||||||||||||
For the years ended March 31, 2024, 2025 and 2026, we generated our revenue primarily through sales of personal care products. For the year ended March 31, 2026, we also generated service income from the provision of product design and development services and project advisory services by Raytech Innovation and the provision of marketing solutions services by Worry free following its acquisition on December 29, 2025.
Our revenue increased by 17.6% to HKD78,739,564 for the year ended March 31, 2025 from HKD66,972,301 for the year ended March 31, 2024. The increase was principally driven by an increase in sales in our trimmer series, which are mostly driven by engaging new models from customers.
Our revenue increased by 81.1% to HKD142,629,085 (US$18,192,485) for the year ended March 31, 2026 from HKD78,739,564 for the year ended March 31, 2025. The increase was principally driven by (i) new service income of HKD44,194,236, comprising product design and development service income of HKD13,960,185 and project advisory service income of HKD7,983,051 of Raytech Innovation, which commenced business operation on October 1, 2025, and marketing solutions service income of HKD22,251,000 of Worry free for the period from December 29, 2025 to March 31, 2026; and (ii) an increase of 26.2% in sales of products to HKD95,591,499 for the year ended March 31, 2026 from HKD75,769,626 for the year ended March 31, 2025, primarily attributable to an increase in sales of our hair styling series arising from new models engaged from customers. Sales of tooling decreased by 4.3% to HKD2,843,350 for the year ended March 31, 2026 from HKD2,969,938 for the year ended March 31, 2025, as fewer new tooling programs were engaged during the year.
For the years ended March 31, 2024, 2025 and 2026, we generated significant sales from our key customer. This key customer is a Japanese corporate with established global brands across a myriad of sectors, including but not limited to, beauty, audio and electric cooking and home appliances.
Merchandise costs
The following table shows disaggregated merchandise costs by major cost items for the years ended March 31, 2024, 2025 and 2026, respectively:
| For the years ended March 31, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| HKD | HKD | HKD | US$ | |||||||||||||
| Purchases | 44,859,554 | 56,361,916 | 67,974,005 | 8,670,154 | ||||||||||||
| Tooling cost | 4,907,700 | 2,227,940 | 2,414,900 | 308,023 | ||||||||||||
| Commissions | 2,123,786 | 2,216,759 | 3,020,141 | 385,222 | ||||||||||||
| Freight, transport, and testing and inspection | 176,396 | 125,255 | 178,626 | 22,784 | ||||||||||||
| Total | 52,067,436 | 60,931,870 | 73,587,672 | 9,386,183 | ||||||||||||
Our merchandise costs increased by 17.0% to HKD60,931,870 for the year ended March 31, 2025 from HKD52,067,436 for the year ended March 31, 2024. The increase was in line with the increase in our revenue.
Our merchandise costs increased by 20.8% to HKD73,587,672 (US$9,386,183) for the year ended March 31, 2026 from HKD60,931,870 for the year ended March 31, 2025. The increase was in line with the increase in our sales of products.
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Service costs
Our service costs are directly related to our service income and primarily consist of engineering and design costs and outsourced automation technology costs of Raytech Innovation and digital production, information technology engineering, design and content and marketing and branding costs of Worry free. For the year ended March 31, 2026, our service costs amounted to HKD29,423,000 (US$3,752,934), comprising HKD10,100,000 in respect of product design and development services and HKD4,700,000 in respect of project advisory services incurred by Raytech Innovation, and HKD14,623,000 in respect of marketing solutions services incurred by Worry free for the period from December 29, 2025 to March 31, 2026. We did not incur any service costs for the years ended March 31, 2024 and 2025.
Selling, general and administrative expenses
For the years ended March 31, 2024, 2025 and 2026, our selling, general and administrative expenses consisted of staff costs, rental expenses, transport and travelling, selling and marketing, depreciation, legal and professional fees and auditor’s remuneration. The following table sets forth a breakdown of our general and administrative expenses for the years ended March 31, 2024, 2025 and 2026:
| For the years ended March 31, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| HKD | HKD | HKD | US$ | |||||||||||||
| Staff costs | 717,506 | 3,229,758 | 3,534,974 | 450,889 | ||||||||||||
| Independent directors’ remuneration | - | 295,819 | 336,528 | 42,924 | ||||||||||||
Short-term rental expenses | 300,000 | 300,000 | 300,000 | 38,265 | ||||||||||||
| Transport and travelling | 428,962 | 450,437 | 197,210 | 25,155 | ||||||||||||
| Selling and marketing | 123,820 | 33,314 | 3,624,681 | 462,332 | ||||||||||||
| Amortization of intangible assets | - | - | 235,251 | 30,007 | ||||||||||||
| Depreciation | 90,345 | - | - | - | ||||||||||||
| Legal and professional fees | 72,003 | 2,620,680 | 8,260,772 | 1,053,670 | ||||||||||||
| Auditor’s remuneration | 1,665,093 | 3,053,433 | 3,320,043 | 423,475 | ||||||||||||
| Others | 147,640 | 175,504 | 1,777,928 | 226,776 | ||||||||||||
| Total | 3,545,369 | 10,158,945 | 21,587,387 | 2,753,493 | ||||||||||||
Staff costs and Independent directors’ remuneration
Our staff costs increased by 350.1% to HKD3,229,758 for the year ended March 31, 2025 from HKD717,506 for the year ended March 31, 2024 mainly due to an increase in salaries. Our staff costs increased by 9.4% to HKD3,534,974 (US$450,889) for the year ended March 31, 2026 from HKD3,229,758 for the year ended March 31, 2025, mainly due to the recruitment of staff for Raytech Innovation, which commenced business operation on October 1, 2025, and the inclusion of the staff costs of Worry free from December 29, 2025.
Our independent directors’ remuneration increased by 13.7% to HKD336,528 for the year ended March 2026 from HKD295,819 for the year ended March 31, 2025, mainly due to our listing effective on May 2024, and we started to involve this remuneration since listed. Therefore, there is no this remuneration for the year ended March 31, 2024.
Short-term rental expenses
Our short-term rental expenses mainly represented rental expenses for our Hong Kong office. Our rental expenses remained unchanged at HKD300,000 (US$38,265) for the years ended March 31, 2024, 2025 and 2026.
Transport and travelling
Our transport and travelling consisted of motor vehicles running cost, travel and communication expenses and other travel related expenses. For the years ended March 31, 2024 and 2025, our transport and travelling expenses increased by 5.0%, primarily due to an increase in business travel. For the years ended March 31, 2025 and 2026, our transport and travelling expenses decreased by 56.2% from HKD450,437 to HKD197,210 (US$25,155), primarily due to a decrease in business travel.
Selling and marketing
For the years ended March 31, 2024 and 2025, our selling and marketing expenses decreased by 73.1% from HKD123,820 to HKD33,314. The decrease was principally driven by lower marketing expenses. For the years ended March 31, 2025 and 2026, our selling and marketing expenses increased significantly from HKD33,314 to HKD3,624,681 (US$462,332), primarily attributable to marketing and promotional expenses of HKD3,606,119 incurred by Pure Beauty, Raytech Innovation and Worry free.
Amortization of intangible assets
Amortization of intangible assets of HKD235,251 (US$30,007) was recognized for the year ended March 31, 2026 in respect of the customer relationship intangible asset arising from the acquisition of Worry free, which is amortized on a straight-line basis over its estimated useful life of three years. No such amortization was recorded for the years ended March 31, 2024 and 2025.
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Legal and professional fees
Our Legal and professional fees increased by 3539.7% to HKD2,620,680 for the year ended March 31, 2025 from HKD72,003 for the year ended March 31, 2024, primarily due to incurred routine expenses for lawyer fees, Nasdaq annual fee, investor relation fees as well as transfer agent maintenance fees after public listing. Our Legal and professional fees increased by 315.2% to HKD8,260,772 for the year ended March 31, 2025 from HKD2,620,680 for the year ended March 31, 2025, primarily due to newly incurred business consultancy fee regarding exploration to Middle East Market.
Auditor’s remuneration
Our auditor’s remuneration increased by 83.4% to HKD3,053,433 for the year ended March 31, 2025 from HKD1,665,093 for the year ended March 31, 2024, primarily due to the under provision for auditor’s remuneration for 2024 and reflected in 2025. Our auditor’s remuneration increased by 8.7% to HKD3,320,043 for the year ended March 31, 2026 from HKD3,053,433 for the year ended March 31, 2025, primarily due to increase in auditor’s remuneration.
Depreciation
Our depreciation mainly represented depreciation for our plant and equipment. Our depreciation for our plant and equipment decreased from HKD90,345 for the year ended March 31, 2024 to nil for the year ended March 31, 2025 as our plant and equipment were fully depreciated. No depreciation was recorded for the year ended March 31, 2026.
Others
Our other general and administrative expenses mainly consisted of bank charges, cleaning charges, courier and postage, insurance, printing and stationery, development expenses and other miscellaneous expenses. Our other general and administrative expenses increased to HKD1,777,928 (US$226,776) for the year ended March 31, 2026 from HKD175,504 for the year ended March 31, 2025, primarily due to development expenses for product technology of HKD1,480,684.
Income from operations
Our income from operations decreased by 32.7% to HKD7,648,749 for the year ended March 31, 2025 from HKD11,359,496 for the year ended March 31, 2024, principally due to the increase in selling, general and administrative expenses in connection with our initial public offering. Our income from operations increased by 135.7% to HKD18,031,026 (US$2,299,875) for the year ended March 31, 2026 from HKD7,648,749 for the year ended March 31, 2025. The increase was principally driven by the commencement of our product design and development, project advisory and marketing solutions services businesses and the increase in sales of products, partially offset by the increase in selling, general and administrative expenses.
Provision for income tax expense
We are subject only to the Hong Kong profits tax regime. Hong Kong’s profits tax rate is 16.5% for taxable income earned in Hong Kong. Our income tax expenses amounted to HKD3,655,536 (US$466,267) for the year ended March 31, 2026, HKD2,256,487 for the year ended March 31, 2025 and HKD2,817,000 for the year ended March 31, 2024. The increase for the year ended March 31, 2026 was in line with the increase in our assessable profits.
Net income
Our net income decreased by 16.8% to HKD8,268,367 for the year ended March 31, 2025 as compared to HKD9,936,794 for the year ended March 31, 2024, predominantly due to the increase in selling, general and administrative expenses in connection with our initial public offering. Our net income increased by 101.9% to HKD16,690,575 (US$2,128,900) for the year ended March 31, 2026 as compared to HKD8,268,367 for the year ended March 31, 2025. The increase in net income was predominantly attributable to the contribution of our new service businesses and the increase in sales of products.
Foreign currency risk
We are exposed to foreign currency risk primarily through sales that are denominated in a currency other than the functional currency of the operations to which they relate. The currencies giving rise to this risk are primarily US$. As HKD is currently pegged to US$, our exposure to foreign exchange fluctuations is minimal.
Segment results
Following the commencement of the product design, development and advisory services business of Raytech Innovation on October 1, 2025 and the acquisition of the marketing solutions business of Worry free on December 29, 2025, we manage our business as three reportable segments: (i) sourcing and wholesaling of personal care electrical appliances, conducted by Pure Beauty (the “appliances segment”); (ii) product design, development and advisory services, conducted by Raytech Innovation; and (iii) marketing solutions services, conducted by Worry free. Corporate and unallocated comprises the holding company’s central costs, principally audit, legal and directors’ fees, together with interest income.
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For the year ended March 31, 2026, the appliances segment generated external revenue of HKD98,434,849 and segment net income of HKD13,292,513; the product design, development and advisory services segment generated external revenue of HKD21,943,236 and segment net income of HKD3,437,137; and the marketing solutions segment generated external revenue of HKD22,251,000 and segment net income of HKD5,770,245. Corporate and unallocated recorded a net loss of HKD5,809,319, principally reflecting the central costs of the Nasdaq-listed holding company. The comparative periods comprised the appliances segment only. See Note 15 to our consolidated financial statements.
B. Liquidity And Capital Resources
The following table sets forth a breakdown of our current assets and liabilities as of the dates indicated.
As of March 31, 2026, we had cash and cash equivalents of HKD78,032,891 (US$9,953,175) and net current assets of HKD97,073,067 (US$12,381,769). We believe that our current levels of cash and cash flows from operations will be sufficient to meet our anticipated cash needs, including our working capital needs and the repayment of the promissory note, for at least the next 12 months. This assessment is underpinned by the Group’s cash and cash equivalents of HKD78,032,891 (US$9,953,175) as of March 31, 2026, which management considers sufficient to meet the Group’s working capital requirements and to fund any capital injection into its operating subsidiaries as and when required. Although operating activities used net cash of HKD14,511,287 during the year ended March 31, 2026, this principally reflected the build-up of accounts receivables of the newly commenced and acquired service businesses towards the year end, which management expects to unwind as those receivables are settled. Subsequent to March 31, 2026, in June 2026 the Company raised further net proceeds of approximately US$6.08 million through a takedown under its Form F-3 shelf registration statement, further strengthening its liquidity position.
| As of March 31, | ||||||||||||
| 2025 | 2026 | 2026 | ||||||||||
| HKD | HKD | US$ | ||||||||||
| CURRENT ASSETS | ||||||||||||
| Cash and cash equivalents | 84,850,995 | 78,032,891 | 9,953,175 | |||||||||
| Accounts receivables, net | 8,144,307 | 67,775,993 | 8,644,897 | |||||||||
| Merchandise inventories | 1,879,435 | – | – | |||||||||
| Deposits and prepayments | – | 22,777,913 | 2,905,346 | |||||||||
| Total current assets | 94,874,737 | 168,586,797 | 21,503,418 | |||||||||
| CURRENT LIABILITIES | ||||||||||||
| Accounts payables | 466,327 | 41,946,701 | 5,350,344 | |||||||||
| Accounts payables - related parties | 14,984,393 | 19,972,442 | 2,547,505 | |||||||||
| Contract liabilities | 501,804 | 789,927 | 100,756 | |||||||||
| Accruals | 1,786,314 | 2,763,756 | 352,520 | |||||||||
| Tax payables | 190,082 | 1,420,277 | 181,158 | |||||||||
| Amount due to a related party | – | 2,450,000 | 312,500 | |||||||||
| Amounts due to directors | – | 2,170,627 | 276,866 | |||||||||
| Total current liabilities | 17,928,920 | 71,513,730 | 9,121,649 | |||||||||
| Net current assets | 76,945,817 | 97,073,067 | 12,381,769 | |||||||||
Accounts receivables, net
Accounts receivables represented receivables from our customers arising from our sales and services. We generally grant our customers a credit period ranging from 30 to 120 days, depending on their reputation, transaction history and the products or services purchased. Our accounts receivables increased significantly to HKD67,775,993 (US$8,644,897) as of March 31, 2026 from HKD8,144,307 as of March 31, 2025, primarily attributable to (i) accounts receivables of HKD21,943,236 of Raytech Innovation arising from its product design and development and project advisory services; (ii) accounts receivables of HKD33,436,250 of Worry free; and (iii) an increase in accounts receivables of Pure Beauty to HKD12,396,507, in line with the increase in sales. As of the date of this Annual Report, the accounts receivables of the Company’s outstanding as of March 31, 2026 had been fully settled.
During the period from April 1, 2024 to March 31, 2026, we have not recorded any provision for credit losses accounts as our customers have always settled full payments within the credit periods or short extended credit periods.
Our management regularly reviews outstanding accounts and provides an allowance for credit losses accounts. When collection of the original invoice amounts is no longer probable, we will either partially or fully write-off the balance against the allowance for credit losses accounts. In establishing the required allowance for credit losses accounts, management considers historical collection experience, aging of the receivables, the economic environment, industry trend analysis, and the credit history and financial conditions of the customers. Our management reviews its receivables on a regular basis to determine if the bad debt allowance is adequate and adjusts the allowance when necessary. Delinquent account balances are written-off against allowance for credit losses accounts after all means of collection have been exhausted and the likelihood of collection is not probable.
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Merchandise inventories, net
Our inventories represented products that we sourced and sold to our customers. Our inventories decreased to nil as of March 31, 2026 from HKD1,879,435 as of March 31, 2025, as all goods in transit as of the prior year end were delivered during the year and no goods were in transit as of March 31, 2026. We record goods in transit based on freight on board.
Taxes receivables and taxes payables
Our taxes payables were HKD1,420,277 (US$181,158) as of March 31, 2026, compared to taxes payables of HKD190,082 as of March 31, 2025. The increase was in line with the increase in our assessable profits.
Deposits and Prepayments
Our deposits and prepayments were HKD22,777,913 (US$2,905,346) as of March 31, 2026, compared to nil as of March 31, 2025. The variance arose from business activities initiated during the current fiscal year. The balance as of March 31, 2026 was primarily attributable to (i) a deposit of HKD20,540,800 (US$2,620,000) placed with two suppliers by Pure Beauty; and (ii) deposits and prepayments of Raytech Innovation and Worry free of HKD554,858 and HKD1,682,255, respectively.
Accounts payable and account payable – related parties
Our total accounts payable are mainly related to the purchase of products from our collaborating manufacturers/vendors and related parties. Our collaborating manufacturers/vendors usually granted us a credit period of 120 days.
Our total accounts payable, including accounts payable to related parties, increased by 300.8% to HKD61,919,143 (US$7,897,849) as of March 31, 2026 from HKD15,450,720 as of March 31, 2025, principally due to (i) accounts payable of HKD26,162,500 of Worry free in respect of its service costs and marketing solutions business; (ii) accounts payable of HKD14,800,000 of Raytech Innovation in respect of its service costs; and (iii) accounts payable of Pure Beauty of HKD20,956,643, of which HKD19,972,442 was due to related-party manufacturer, Zhongshan Raytech.
Accruals
Our accruals increased to HKD2,763,756 (US$352,520) as of March 31, 2026 from HKD1,786,314 as of March 31, 2025, principally due to increases in accrued audit and professional fees and accrued commission.
Amount due to related parties
For information regarding the amount due to related parties, see “Item 7.B. Related Party Transactions” and Note 10 to our consolidated financial statements.
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Cash Flows
Our use of cash is primarily related to operating activities and deferred initial public offering costs. We have historically financed our operations primarily through the cash flow generated from our operations.
The following table sets forth a summary of our cash flows information for the years indicated:
| For the years ended March 31, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| HKD | HKD | HKD | US$ | |||||||||||||
| Cash and cash equivalents at the beginning of the period | 21,362,580 | 35,885,666 | 84,850,995 | 10,906,438 | ||||||||||||
| Net cash generated from (used in) operating activities | 15,748,279 | 6,220,534 | (14,511,287 | ) | (1,850,928 | ) | ||||||||||
| Net cash generated from (used in) investing activities | 846,860 | 145,166 | (27,682,717 | ) | (3,530,959 | ) | ||||||||||
| Net cash (used in) generated from financing activities | (2,075,897 | ) | 42,871,117 | 34,805,809 | 4,439,517 | |||||||||||
| Effect of foreign exchange on cash, cash equivalents and restricted cash | 3,844 | (271,488 | ) | 570,091 | (10,893 | ) | ||||||||||
| Cash and cash equivalent at the end of the period | 35,885,666 | 84,850,995 | 78,032,891 | 9,953,175 | ||||||||||||
Cash generated from (used in) operating activities
Our cash inflow from operating activities was principally from receipt of sales. Our cash outflow used in operating activities was principally for payment of purchases of manufactured goods, staff costs and other operating expenses.
For the year ended March 31, 2024, net cash generated from operating activities of HKD15,748,279 primarily resulted from our net income of HKD9,936,794, as adjusted for non-cash items and change in operating activities. Adjustments for non-cash items consisted of depreciation of plant and equipment and amortization of right-of-use assets of HKD90,345 and unrealized FX gain of HKD61,043. Changes in operating assets and liabilities mainly included: (i) a net increase in total accounts payable of HKD15,548,943 due to larger stock purchases; and (ii) an increase in accrued liabilities and other payables of HKD402,540 due to increase in deposits for trades; and (iii) an increase in taxes payable of HKD119,002; and partially offset by (i) an increase in accounts receivables of HKD7,755,205 due to increase in sales; (ii) an increase in merchandise inventories of HKD1,855,686; (iii) a decrease in operating lease obligation of HKD87,972 due to principal repayment.
For the year ended March 31, 2025, net cash generated from operating activities of HKD6,220,534 primarily resulted from our net income of HKD8,268,367, as adjusted for non-cash items and change in operating activities. Adjustments for non-cash items consisted of unrealized FX loss of HKD214,994. Changes in operating assets and liabilities mainly included: (i) a decrease in accounts receivables of HKD6,335,863 due to faster payment from customers; (ii) a decrease in prepayments of HKD5,000; (iii) an increase in accrued liabilities and other payables of HKD768,541 due to increase in provision for commission; and (iv) an increase in taxes payable of HKD585,087; and partially offset by (i) a decrease in total accounts payables of HKD9,425,169 due to faster payment to vendors; (ii) an increase in merchandise inventories of HKD26,189; and (iii) a decrease in contract liabilities of HKD505,960.
For the year ended March 31, 2026, net cash used in operating activities of HKD14,511,287 (US$ 1,850,928) primarily resulted from our net income of HKD16,690,575, as adjusted for non-cash items, principally amortization of the customer relationship intangible asset of HKD235,251, accretion of the promissory note of HKD243,432, deferred income tax of HKD38,816 and unrealized FX gain of HK$487,202 Changes in operating assets and liabilities mainly included: (i) a decrease in merchandised inventories of HKD1,881,875; (ii) a decrease in long-term deposits of HKD10,000; (iii) an increases in accounts payable (including accounts payable to related parties) of HKD23,348,213; (iv) an increases in contract liabilities of HKD2,737,434; (v) an increases in accruals HKD861,195; (vi) an increase in amounts due to directors of HKD333,519 and (vii) an increase in taxes payables of HKD1,197,123, partially offset by (i) an increase in accounts receivables of HKD40,806,804 (excluding the accounts receivables assumed in the acquisition of Worry Free), reflecting the significant expansion of our service businesses towards the end of the year; and (ii) an increase in deposits and prepayments of HKD20,717,082. The changes in operating assets and liabilities are derived from balance-sheet movements excluding the balances assumed in the business combination, based on the purchase price allocation report prepared by Greater China Appraisal Limited. Although net income increased significantly, operating activities used net cash for the year, primarily due to the build-up of accounts receivables of the service businesses.
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Cash flows generated from (used in) investing activities
For the year ended March 31, 2024, net cash generated from investing activities was HKD846,860, which was driven by repayment by a director.
For the year ended March 31, 2025, net cash generated from investing activities was HKD145,166, which was driven by repayment by a director.
For the year ended March 31, 2026, net cash used in investing activities was HKD27,682,717 (US$3,530,959), representing the cash consideration paid for the acquisition of Worry free of HKD31,889,810 (US$4,099,000), net of cash and cash equivalents acquired of HKD4,207,093, per the acquisition-date balance sheet of Worry free in the purchase price allocation report.
Net cash (used in) generated from financing activities
For the year ended March 31, 2024, net cash used in financing activities was HKD2,075,897, which was primarily related to the deferred IPO costs.
For the year ended March 31, 2025, net cash generated from financing activities was HKD42,871,117, which primarily comprised proceeds from our initial public offering of shares.
For the year ended March 31, 2026, net cash generated from financing activities was HKD34,805,809 (US$4,439,517), which primarily comprised net proceeds of US$4,682,910 from the follow-on offering of 1,624,062 Ordinary Shares (on a post-consolidation basis) completed on July 1, 2025, for which R.F. Lafferty & Co., Inc. acted as sole placement agent, at a public offering price of US$0.20 per share (equivalent to US$3.20 per Ordinary Share on a post-consolidation basis) for gross proceeds of US$5,197,000, partially offset by the payment of deferred offering costs of HKD1,094,969 in connection with the Form F-3 registration statement. The issuance of the promissory note, recognized at its acquisition-date fair value of US$1,825,000 (HKD14,188,098), as part of the consideration for the acquisition of Worry free was a non-cash financing activity.
Capital Expenditures
We did not incur any capital expenditures for the years ended March 31, 2024, 2025 and 2026, other than the acquisition of Worry free as described above.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements, including arrangements that would affect our liquidity, capital resources, market risk support, and credit risk support or other benefits.
C. Research and Development, Patents and Licenses, etc.
Please see Item 4. “Information on the Company—Intellectual Property” above.
D. Trend Information
The principal known trends and uncertainties affecting our business are: (i) the continued expansion of our service businesses, which commenced during fiscal 2026 and contributed service income of HKD44,194,236, or 31.0% of our total revenue, for the year ended March 31, 2026; (ii) the build-up of accounts receivable of the service businesses toward the end of fiscal 2026, with total accounts receivable increasing to HKD67,775,993 (US$8,644,897) as of March 31, 2026 from HKD8,144,307 as of March 31, 2025, which contributed to net cash used in operating activities of HKD14,511,287 ( US$1,850,928) for fiscal 2026 and increases our exposure to the timing of customer settlements; (iii) our resulting reliance on external financing, including the June 2026 registered direct offering under our Form F-3 shelf registration statement, which raised net proceeds of approximately US$6.08 million; and (iv) tariff-related uncertainty affecting demand for products manufactured in mainland China, as described in Item 3.D.
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E. Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with U.S. GAAP. These accounting principles require us to make judgments, estimates and assumptions on the reported amounts of assets and liabilities at the end of each reporting period, and the reported amounts of revenues and expenses during each reporting period. We continually evaluate these judgments and estimates based on available information, which together from our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.
Allowance for credit losses on accounts receivable and security deposits.
We estimate expected credit losses on financial assets measured at amortized cost in accordance with ASC 326. For accounts receivable, which were HKD67,775,993 (US$8,644,897) as of March 31, 2026, compared with HKD8,144,307 as of March 31, 2025, we consider historical loss experience, the age of receivable balances, customer credit quality, current economic conditions and reasonable and supportable forecasts. We also evaluated refundable security deposits of USD2,620,000 placed with independent suppliers. Because the deposits are refundable upon termination of the underlying agreements and do not have fixed maturity dates, we measured lifetime expected credit losses using a probability-weighted method rather than an aging-based approach, which resulted in an allowance of USD151,960, or approximately 5.8% of the balance. This estimate requires significant judgment regarding collectability and recovery timing, and actual credit losses could differ from our assumptions.
Goodwill (initial recognition and impairment testing).
Goodwill is recognized as the excess of the consideration transferred over the fair value of identifiable net assets acquired in a business combination and is tested for impairment at least annually under ASC 350. In connection with the acquisition of Worry Free Group Hong Kong Limited, we recognized goodwill of HKD43,789,000, based on our purchase price allocation. We performed a quantitative impairment assessment of the Worry Free reporting unit using a discounted cash flow method and concluded that the estimated fair value of HKD68,682,001 exceeded the carrying amount of HKD51,629,054 as of March 31, 2026; accordingly, no impairment was indicated. The assessment involved significant assumptions, including the discount rate, projected revenue growth, operating margin and terminal growth rate, which are subject to change based on future operating results and market conditions. This analysis requires significant judgment, and changes in assumptions or future operating results could materially affect the outcome of future impairment tests.
Subsequent events
On April 15, 2026, Mr. Liu Haoyuan was appointed as a director and Chairman of the Board, and our founder Mr. Ching Tim Hoi continues to serve as an executive director and our Chief Executive Officer.
On June 12, 2026, the Company incorporated Fluxen Limited in Hong Kong with an initial issued share capital of 10,000 ordinary shares, and on July 8, 2026 Fluxen allotted an additional 6,666 ordinary shares to Yi Fortune Capital (HK) Limited, an independent third party, following which the Company holds 60% of the equity interest in Fluxen; Fluxen is currently dormant and is intended to support the Group’s future export trading business.
Subsequent to March 31, 2026, the amount due to a related party of HKD2,450,000 owed by Worry free to Yuan Chun Holding Co. was fully refunded, as to HKD1,000,000 on April 21, 2026 and as to HKD1,450,000 on May 5, 2026.
On June 29, 2026, we closed a registered direct offering of 3,149,832 Ordinary Shares (on a post-Share Consolidation basis) at a price of US$1.97 per share, for aggregate gross proceeds of approximately US$6.2 million, pursuant to the Form F-3 shelf registration statement. Two of the investors in that offering are affiliates of certain of our directors and of Mr. Liu Zhiwei, who was our largest shareholder at the time of the offering; we relied on the home country practice exemption under Nasdaq Listing Rule 5615(a)(3) in lieu of the shareholder approval requirements of Nasdaq Listing Rule 5635.
Safe Harbor Statement
Certain statements in this Annual Report are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the SEC, which are available for review at www.sec.gov.
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Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
Below is a list of our directors, senior management and any employees upon whose work we are dependent as of the date of this Annual Report, and a brief account of the business experience of each of them. The business address for our directors and officers is Unit 609, 6/F, Nan Fung Commercial Centre, No.19 Lam Lok Street, Kowloon Bay, Hong Kong.
| Name | Age | Position(s) | ||
| CHING Tim Hoi | 69 | Chief Executive Officer and Executive Director | ||
| WAN Yee Hing | 42 | Chief Financial officer | ||
| YUAN Tianfu | 38 | Director | ||
| LIU Haoyuan | 32 | Chairman and Executive Director | ||
| FOK Pak Kin Charles | 50 | Independent Director | ||
| LI Shihua | 36 | Independent Director | ||
| WANG Shibin | 49 | Independent Director |
The following is a brief biography of each of the Company’s executive officers and directors:
The composition of our board of directors and senior management changed during, and subsequent to, the fiscal year ended March 31, 2026. Mr. Yiu Wing Hei resigned as a director on May 19, 2025 and Mr. Li Shihua was appointed on the same day. On January 2, 2026, Mr. Ling Chun Yin and Ms. Li Wan Venus each resigned as directors, and Mr. Yuan Tianfu and Dr. Wang Shibin were appointed as a director and an independent director, respectively. Accordingly, Mr. Yiu, Mr. Ling and Ms. Li were no longer in office as of March 31, 2026. Subsequent to the fiscal year-end, on April 15, 2026, Mr. Liu Haoyuan was appointed as a director and Chairman of the Board, and Mr. Ching ceased to serve as Chairman while continuing as Chief Executive Officer and an Executive Director. The table above presents our directors and senior management as of the date of this Annual Report; the compensation of directors who served during the fiscal year is reflected under “B. Compensation.”
CHING Tim Hoi, Chief Executive Officer and Director. Mr. Ching is the founder of the Company and he currently serves as the Chief Executive Officer and Director of the Board of the Company since our inception. Mr. Ching has also served as Chief Executive Officer and Director of Pure Beauty Manufacturing Company Limited, a Hong Kong company and wholly-owned subsidiary of the Company, since April 2013. Mr. Ching has over 30 years of experience in the electrical appliances industry especially in hair and beauty products. Since September 2010, Mr. Ching has served in various positions at Raytech Holdings Company Limited (where he currently serves as Director), a Hong Kong electrical appliance manufacturing company and the parent of one of the Company’s collaborating manufacturers, Zhongshan Raytech Electrical Appliances Manufacturing Co. Ltd (where he currently serves as Executive Director). Mr. Ching has extensive experience in sales, marketing, business development and project management. He has been elected and conferred a fellowship by the Social Enterprise Research Academy in July 2019. He has also served as the Vice President of the Hong Kong Electrical Appliance Industries Association since 2022.
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WAN Yee Hing, Chief Financial Officer. Ms. Wan has over 15 years of experience in professional auditing, corporate accounting and financial management. She has served as our Chief Financial Officer since May 2024. She current serves as the financial controller of the operating entity, Pure Beauty Manufacturing Company Limited, a Hong Kong company and wholly-owned subsidiary of the Company, a role she assumed in June 2020, and supervises the accounting and finance function of the company. From 2014 through 2017, she worked at G4S (Holding) Limited, a global security company, with her last position as Finance Manager. Before that, Ms. Wan was the accounting manager of UGC Technology Limited, an information technology company, from 2010 through 2014. Ms. Wan worked at BDO Limited from 2005 through 2010, with her last position being senior associate assurance. Ms. Wan obtained her Bachelor of Arts degree with a major in accountancy from the Hong Kong Polytechnic University in 2005. She has been a member of the Hong Kong Institute of Certified Public Accountants (“HKICPA”) since January 2009.
YUAN Tianfu, Director. Mr. Yuan has served as our director of the Board since January 2, 2026. He joined in GoFintech Quantum Innovation Limited (0290.HK) (“GoFintech”), a financial technology investment platform, in January 2022 and was further appointed as Co-Chief Executive Officer since February 2024. Prior to that, from January 2020 to December 2021, Mr. Yuan served as Vice President of Kunwu Jiuding Investment Management Co., Ltd, a company engages in private equity investment management. Mr. Yuan obtained his Bachelor’s degree in Electronic Science and Technology from Tsinghua University, his Master of Business Administration from Renmin University of China in 2016, and is pursuing his Doctorate of Business Administration in the Hong Kong University of Science and Technology. Mr. Yuan has nearly 16 years of experience in the financial industry and is familiar with the market environment, regulations, and operations of the Chinese mainland, Hong Kong, and international capital markets.
LIU Haoyuan, Director. Mr. Liu has served as our Chairman of the Board since April 15, 2026. He joined GoFintech, a financial technology investment platform, in August 2022 as Director and was further appointed as Chief Operating Officer in September 2023. Since February 2021, Mr. Liu has concurrently served as Director of Trenda Investment Pte. Ltd., a Singapore-based single family office. Prior to these roles, from February 2020 to February 2021, Mr. Liu served as Project Manager at iFDC Inc., a U.S. hedge fund. Mr. Liu obtained his Bachelor of Arts in Mathematics and Computer Science, summa cum laude, from Boston University in May 2018 and his Master of Science in Computer Science (Data Science) from the University of Southern California in December 2019. Mr. Liu has extensive experience in fintech operations, corporate governance, family office establishment and investment management, hedge fund project coordination, and technological innovation research. He is familiar with capital market operations and regulatory compliance across Hong Kong, Singapore, and the United States.
FOK Pak Kin Charles, Independent Director. Mr. Fok has served as our director since May 2024. Mr. Fok has two decades of experience in sales and marketing. Mr. Fok joined Draco International Jewelry in 2015 and currently serves as Sales Manager, with principal responsibility in marketing development and jewelry product design for overseas markets. Before that, he was a Director at Ninobaby HK Company. Mr. Fok first joined Ninobaby in 2009, where he was responsible for overseeing manufacturing management and product design and development such as footwear, clothing and accessories. He also explored new markets for Ninobaby HK Company in the US and Taiwan. Mr. Fok started his career in Marketing at Boulevard Advertising in Canada in 2002. He then continued his sales and marketing career in Hong Kong. He joined King Sing Jewelry Ltd. from 2003 through 2006 and Max Ent Ltd from 2006 through 2009 where he promoted the jewelry and electronic products to overseas customers. Mr. Fok obtained his Bachelor of Art degree with major in economic from University of Saskatchewan in Canada in 2003.
LI Shihua, Independent Director. Mr. Li has served as our director since May 2025. Mr. Li has extensive experience in investment. Since September 2024, Mr. Li has served as a director of WellCell Holdings Co., Ltd. (2477.HK), a telecommunication network solutions provider (“WellCell”) listed on the Hong Kong stock exchange. Since May 2024, he has been acting as a director of the Strategic Development Department of WellCell Tech (HK) Co., Limited, a wholly owned subsidiary of WellCell, and is mainly responsible for the strategic planning, investment, mergers and acquisitions and overseas business expansion of this company. From July 2023 to March 2024, Mr. Li served as the investment vice president of Silkroad Goldenbridge Capital Management Limited. From May 2017 to June 2023, Mr. Li served as the investment director of Shenzhen Qianhai Hongzhao Fund Management Co., Ltd. Mr. Li obtained a bachelor’s degree in environmental engineering from Sun Yat-sen University in June 2012 and a master’s degree in applied finance from the Australian National University in March 2017.
WANG Shibin, Independent Director. Dr. Wang has served as our director of the Board since January 2, 2026. He also serves as a director of several companies, including: HK.AI Capital Limited (1140.HK) (“HK.AI Capital”), a provider of roadshow platforms and digital Investor Relations Management solutions, since November 2021 and Chenghe Acquisition Co. (Nasdaq: CHEAU), a company focuses on merger and acquisition of potential business, since July 2021. Dr. Wang was the Chief Business officer and director of Hong Kong Digital Asset Ex Limited, a company engages in digital asset investment and trading from April 2019 to March 2025. Dr. Wang obtained his Bachelor’s degree in International Economics and Trade from Dongbei University of Finance and Economics and his Master’s degree in International Finance and Doctorate in Finance from PBC School of Finance of Tsinghua University. Dr. Wang has nearly 20 years of experience in international capital markets and investment banking.
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In addition, none of the events listed in Item 401(f) of Regulation S-K has occurred during the past ten years that is material to the evaluation of the ability or integrity of any of our directors, director nominees or executive officers.
B. Compensation
Compensation of Executive Officers
For the year ended March 31, 2026, we paid an aggregate of HKD2,445,547 (US$311,932) in cash to the Company’s executive officers and directors. The said payment was made by Pure Beauty, our wholly-owned subsidiary, pursuant to the employment agreement entered into by and between Pure Beauty and each of Mr. Ching Tim Hoi, Mr. Ling Chun Yin and Ms. Wan Yee Hing on April 1, 2023 (each, an “Operative Employment Agreement”), among which Mr. Ching was paid HKD1,170,000 (US$149,235) as Pure Beauty’s director, Mr. Ling was paid HKD402,082 (US$51,286) as Pure Beauty’s Assistant to CEO and Ms. Wan was paid HKD873,462 (US$111,411) as Pure Beauty’s Financial Controller. Each Operative Employment Agreement provides the salary, remuneration and benefits of the executive officers or directors. The Directors of Raytech Innovation Limited and Worry free Group (Hong Kong) Limited are not salaried.
We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to the Company’s directors and executive officers. During the year ended March 31, 2026, we did not grant any options or other equity awards to our directors or executive officers. None of our directors has entered into a service contract with the Company or any of its subsidiaries that provides for benefits upon termination of employment.
On July 5, 2023, we entered into an executive employment agreement with Mr. Ching Tim Hoi as CEO which is filed as Exhibit 4.1 to this Annual Report. Pursuant to the employment agreement, the term of employment shall commence on July 5, 2023 and shall be an indefinite term, unless terminated pursuant to the terms of the employment agreement or as mutually agreed by the parties. The executive’s salary, remuneration and benefits shall be determined by the Company and shall be specified in the Operative Employment Agreement or any other agreement between the Company or any of its subsidiaries on one hand and the executive on the other hand. The executive’s salary, remuneration and benefits shall be reviewed by the board (or its designated compensation committee) and/or the management of the Company in accordance with the relevant policies adopted by the Company from time to time. We may terminate the employment for cause, at any time, by summary notice in writing with immediate effect without payment in lieu of notice, for certain acts of the executive, including but not limited to: (i) commission of any act of fraud or gross negligence by in the course of his employment; (ii) willful material misrepresentation at any time by the executive to the board; (iii) the willful failure or refusal to comply with any of the executive’s material obligations or to comply with a reasonable and lawful instruction of the board; or (iv) engagement by the executive in any misconduct or the commission by the executive of any act that is materially injurious or detrimental to the substantial interest of the Company and/or its subsidiaries and affiliated entities, as determined by the board. The executive has agreed, throughout the term of the employment and at all times thereafter, that the executive shall keep strict confidence and not to use all non-public information relating to the technology, business, financial condition and other aspects of the Company. In addition, the executive has agreed to be bound by non-competition and non-solicitation restrictions during the term of his employment and for twelve (12) months following termination of the employment.
On May 13, 2024, we entered into an executive employment agreement with Ms. Wan Yee Hing as CFO which is filed as Exhibit 4.2 to this Annual Report. Pursuant to the employment agreement, the term of the employment shall commence on May 13, 2024 and shall be an indefinite term, unless terminated pursuant to the terms of the employment agreement or as mutually agreed by the parties. The executive’s salary, remuneration and benefits shall be determined by the Company and shall be specified in the Operative Employment Agreement or any other agreement between the Company or any of its subsidiaries on one hand and the executive on the other hand. The executive’s salary, remuneration and benefits shall be reviewed by the board (or its designated compensation committee) and/or the management of the Company in accordance with the relevant policies adopted by the Company from time to time. We may terminate the employment for cause, at any time, by summary notice in writing with immediate effect without payment in lieu of notice, for certain acts of the executive, including but not limited to: (i) commission of any act of fraud or gross negligence by in the course of his employment; (ii) willful material misrepresentation at any time by the executive to the board; (iii) the willful failure or refusal to comply with any of the executive’s material obligations or to comply with a reasonable and lawful instruction of the board; or (iv) engagement by the executive in any misconduct or the commission by the executive of any act that is materially injurious or detrimental to the substantial interest of the Company and/or its subsidiaries and affiliated entities, as determined by the board. The executive has agreed, throughout the term of the employment and at all times thereafter, that the executive shall keep strict confidence and not to use all non-public information relating to the technology, business, financial condition and other aspects of the Company. In addition, the executive has agreed to be bound by non-competition and non-solicitation restrictions during the term of his employment and for twelve (12) months following termination of the employment.
Compensation of Independent Directors
For the fiscal year ended March 31, 2026, we paid HKD336,528 to the Company’s independent directors.
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C. Board Practices
Board of Directors
The Company’s board of directors consists of six directors. The Company’s board of directors has determined that the Company’s three independent directors, Mr. Fok Pak Kin Charles, Mr. Li Shihua and Dr. Wang Shibin satisfy the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq Stock Market and Rule 10A-3 under the Exchange Act.
Duties of Directors
Under British Virgin Islands law, the Company’s directors owe fiduciary duties both at common law and under statute, including a statutory duty to act honestly, in good faith and with a view to the Company’s best interests. When exercising powers or performing duties as a director, the Company’s directors also have a duty to exercise the care, diligence and skills that a reasonable director would exercise in comparable circumstances, taking into account without limitation the nature of the company, the nature of the decision and the position of the director and the nature of the responsibilities undertaken by him. In exercising the powers of a director, the directors must exercise their powers for a proper purpose and shall not act or agree to the company acting in a manner that contravenes the Company’s amended and restated memorandum and articles of association or the BVI Act. In fulfilling their duty of care to the Company, the Company’s directors must ensure compliance with the Company’s amended and restated memorandum and articles of association. The Company has the right to seek damages if the duty owed by the Company’s directors is breached.
The functions and powers of the Company’s board of directors include, among others:
| ● | appointing officers and determining the term of office of the officers; |
| ● | authorizing the payment of donations to religious, charitable, public or other bodies, clubs, funds or associations as deemed advisable; |
| ● | exercising the borrowing powers of the company and mortgaging the property of the company; |
| ● | executing checks, promissory notes and other negotiable instruments on behalf of the company; and |
| ● | maintaining or registering a register of relevant charges of the company. |
Terms of Directors and Executive Officers
Each of the Company’s directors holds office until a successor has been duly elected and qualified unless the director is appointed by the board of directors, in which case such director holds office until the next following annual meeting of shareholders at which time such director is eligible for reelection. All of the Company’s executive officers are appointed by and serve at the discretion of the Company’s board of directors.
Qualification
There is currently no shareholding qualification for directors, although a shareholding qualification for directors may be fixed by the Company’s shareholders by ordinary resolution.
Insider Participation Concerning Executive Compensation
The Company’s Board of Directors, which consists of six members, is making all determinations regarding executive officer compensation from the time the Company first entered into employment agreements with executive officers up until the time where the three independent directors will be installed.
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Committees of the Board of Directors
The Company has established three committees under the board of directors: An audit committee, a compensation committee and a nominating and corporate governance committee. Even though the Company is exempted from corporate governance standards because it is a foreign private issuer, the Company has voluntarily adopted a charter for each of the three committees. Each committee’s members and functions are described below.
Audit Committee. The Company’s audit committee consists of Dr. Wang Shibin, Mr. Fok Pak Kin Charles, and Mr. Li Shihua. Mr. Li is the chairman of the Company’s audit committee. The Company has determined that Dr. Wang, Mr. Fok and Mr. Li satisfy the “independence” requirements of Section 5605(a)(2) of the Nasdaq Listing Rules and Rule 10A-3 under the Exchange Act. The Company’s board also has determined that Mr. Li qualifies as an audit committee financial expert as defined in Item 16A(b) of Form 20-F and possesses the financial sophistication required under the Nasdaq Listing Rules. The audit committee oversees the Company’s accounting and financial reporting processes and the audits of the financial statements of the Company.
The audit committee is responsible for, among other things:
| ● | appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; |
| ● | reviewing with the independent auditors any audit problems or difficulties and management’s response; |
| ● | discussing the annual audited financial statements with management and the independent auditors; |
| ● | reviewing the adequacy and effectiveness of the Company’s accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; |
| ● | reviewing and approving all proposed related party transactions; |
| ● | meeting separately and periodically with management and the independent auditors; and |
| ● | monitoring compliance with the Company’s code of business conduct and ethics, including reviewing the adequacy and effectiveness of the Company’s procedures to ensure proper compliance. |
Compensation Committee. The Company’s compensation committee consists of Dr. Wang Shibin, Mr. Fok Pak Kin Charles, and Mr. Li Shihua. Mr. Fok is the chairman of the Company’s compensation committee. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to the Company’s directors and executive officers. The Company’s chief executive officer may not be present at any committee meeting during which his compensation is deliberated.
The compensation committee is responsible for, among other things:
| ● | reviewing and approving to the board with respect to the total compensation package for the Company’s most senior executive officers; |
| ● | approving reviewing and recommending to the board with respect to the compensation of the Company’s directors; and overseeing the total compensation package for the Company’s executives other than the most senior executive officers; |
| ● | reviewing periodically and approving any long-term incentive compensation or equity plans; |
| ● | selecting compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to that person’s independence from management; and |
| ● | programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans. |
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Nominating and Corporate Governance Committee. The Company’s nominating and corporate governance committee consists of Dr. Wang Shibin, Mr. Fok Pak Kin Charles, and Mr. Li Shihua. Dr. Wang is the chairperson of the Company’s nominating and corporate governance committee. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become the Company’s directors and in determining the composition of the board and its committee.
The nominating and corporate governance committee is responsible for, among other things:
| ● | identifying and recommending nominees for election or re-election to the Company’s board of directors or for appointment to fill any vacancy; |
| ● | reviewing annually with the Company’s board of directors its current composition in light of the characteristics of independence, age, skills, experience and availability of service to the Company; |
| ● | identifying and recommending to the Company’s board the directors to serve as members of committees; |
| ● | advising the board periodically with respect to significant developments in the law and practice of corporate governance as well as the Company’s compliance with applicable laws and regulations, and making recommendations to the Company’s board of directors on all matters of corporate governance and on any corrective action to be taken; and |
| ● | monitoring compliance with the Company’s code of business conduct and ethics, including reviewing the adequacy and effectiveness of the Company’s procedures to ensure proper compliance. |
Corporate Governance
The business and affairs of the company are managed under the direction of the Company’s Board. The Company has conducted Board meetings regularly since inception. Each of the Company’s directors has attended all meetings either in person, via telephone conference, or through written consent for special meetings. In addition to the contact information in this Annual Report, the Board has adopted procedures for communication with the officers and directors as the date hereof. Each shareholder will be given specific information on how he/she can direct communications to the officers and directors of the Company at the Company’s annual shareholders’ meetings. All communications from shareholders are relayed to the members of the Board.
Following the completion of our follow-on public offering in July 2025, we ceased to be a “controlled company” within the meaning of the Nasdaq listing rules, and we no longer rely on the exemptions from certain Nasdaq corporate governance requirements that are available to controlled companies.
As a foreign private issuer, we are permitted to follow certain home country corporate governance practices in lieu of the requirements of the Nasdaq listing rules. In connection with our June 2026 registered direct offering, we relied on the home country practice exemption set forth in Nasdaq Listing Rule 5615(a)(3) in lieu of the shareholder approval requirements of Nasdaq Listing Rule 5635.
Code of Business Conduct and Ethics
Our board has adopted a code of business conduct and ethics that applies to our directors, officers and employees. A copy of this code was filed as Exhibit 14.1 to the F-1 filed in connection with our IPO, which is incorporate by reference to this Annual Report.
Clawback Policy
We have adopted a Clawback Policy (the “Clawback Policy”) providing that in connection with an accounting restatement of our previously issued financial statements, we have the discretion to recover from current and former executive officers of the Company of certain incentive-based compensation that otherwise would not have been paid had it been determined based on the restated financial statements. A copy of the Clawback Policy was filed as Exhibit 99.10 to the F-1 filed in connection with our IPO, which is incorporated by reference to this Annual Report.
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D. Employees
As of the date of this Annual Report, we have a total of 18 full-time employees (including the employees of our subsidiaries).
Our success depends on our ability to attract, motivate, train and retain qualified personnel. We believe we offer our employees competitive compensation packages and an environment that encourages self-development and, as a result, have generally been able to attract and retain qualified personnel and maintain a stable core management team.
Hong Kong Employment Ordinance (“The Ordinance”) requires an employee employed under a continuous employment contract is entitled to sickness allowance if (1) the sick leave taken is not less than four consecutive days; (2) the sick leave taken is supported by an appropriate medical certificate; and (3) the employee has accumulated sufficient number of paid sickness days. The daily rate of sickness allowance is a sum equivalent to four-fifths of the average daily wages earned by an employee in the 12-month period preceding the first sickness day.
The Ordinance also requires an employee is entitled to 14 statutory holidays regardless of his or her length of services. Holiday pay should be paid the employee whose continuous employment contract is not less than three months immediately preceding a statutory holiday is entitled to the holiday pay.
An employee is entitled to a paid annual leave after having been employed under a continuous employment contract for every 12 months. An employee’s paid annual leave increases progressively from 7 days to a maximum of 14 days in accordance with his or her length of employment.
Under Hong Kong Mandatory Provident Fund Schemes Ordinance, an employer shall enroll their regular employees in Mandatory Provident Fund Schemes. Regular employees are those who are between 18 and 65 years of age and have been employed for consecutive 60 days or more. An employer is required to make regular mandatory contributions at least 5% of the employee’s monthly income between HKD7,000 and HKD30,000 and HKD1,500 of the employee’s monthly income over HKD30,000.
We believe we maintain a good working relationship with our employees, and we have not experienced any material labor disputes. None of our employees is represented by a labor union.
E. Share Ownership
See Item 7.A below.
F. Disclosure of a registrant’s action to recover erroneously awarded compensation
Not applicable.
Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of the Company’s Ordinary Shares as of the date of this Annual Report for:
| ● | each of the Company’s directors, and executive officers who beneficially own the Company’s Ordinary Shares; and |
| ● | each person known to the Company to own beneficially more than 5.0% of the Company’s Ordinary Shares. |
Beneficial ownership includes voting or investment power with respect to the securities. Except as indicated below, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all Ordinary Shares shown as beneficially owned by them. The percentage of beneficial ownership of each listed person of the Company is based on 5,874,743 Ordinary Shares outstanding as of the date of this Annual Report.
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Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of 5% or more of the Company’s Ordinary Shares. Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power with respect to securities. In computing the number of Ordinary Shares beneficially owned by a person listed below and the percentage ownership of such person, Ordinary Shares underlying options, warrants or convertible securities held by each such person that are exercisable or convertible within 60 days of the date of this Annual Report are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person.
| Ordinary Shares Beneficially Owned | ||||||||
| Number | Percent | |||||||
| Directors and Executive Officers(1): | ||||||||
| Ching Tim Hoi | 61,660 | 1.05 | % | |||||
| Wan Yee Hing | - | - | ||||||
| Yuan Tianfu | - | - | ||||||
| Liu Haoyuan | - | - | ||||||
| Fok Pak Kin Charles | - | - | ||||||
| Li Shihua | - | - | ||||||
Wang Shibin | - | - | ||||||
| All directors and executive officers as a group | 61,660 | 1.05 | % | |||||
| 5% Principal Shareholders: | ||||||||
| Liu Zhiwei(2) | 488,376 | 8.31 | % | |||||
| Fortune Genesis Holdings Limited (3) | 999,014 | 17.01 | % | |||||
| WK Frater Holdings Limited (4) | 999,014 | 17.01 | % | |||||
| (1) | Unless otherwise indicated, the business address of each of the individuals is Unit 609, 6/F, Nan Fung Commercial Centre, No.19 Lam Lok Street, Kowloon Bay, Hong Kong. |
| (2) | The 488,376 Ordinary Shares beneficially owned by Mr. Liu consist of (i) 243,137 Ordinary Shares held directly by Mr. Liu, (ii) 245,239 Ordinary Shares held by Chunda International Capital Management Co., Ltd, a British Virgin Islands business company that is wholly-owned by Mr. Liu. |
| (3) | Fortune Genesis Holdings Limited is a wholly owned subsidiary of GoFintech, a company listed in the Stock Exchange of Hong Kong (0290.HK). Mr. Liu beneficially owns 26.02% shares in GoFintech. However, he is not a controlling shareholder and has no ability to appoint directors, exercise significant influence, or control decisions over Fortune Genesis Holdings Limited through GoFintech. |
| (4) | WK Frater Holdings Limited is a wholly owned subsidiary of HK.AI Capital, a company listed in the Stock Exchange of Hong Kong (1140.HK). GoFintech beneficially owns 26.29% in HK.AI Capital Limited. However, GoFintech is not a controlling shareholder of HK.AI Capital, thus Mr. Liu has no ability to appoint directors, exercise significant influence, or control decisions over WK Frater Holdings Limited through GoFintech. |
The Company is not aware of any arrangement that may, at a subsequent date, result in a change of control of the Company.
As of the date of this Annual Report, there were 9 holders of record entered in our ordinary share register. The number of individual holders of record is based exclusively upon our share register and does not address whether a share or shares may be held by the holder of record on behalf of more than one person or institution who may be deemed to be the beneficial owner of a share or shares in our company.
During the fiscal year ended March 31, 2026, our ownership structure changed materially, as a result of the issuances of Ordinary Shares (including the July 2025 public offering and the June 2026 registered direct offering, and secondary transactions reported on Schedule 13D and Schedule 13G during the fiscal year, our founder Mr. Ching’s beneficial ownership was substantially reduced and he ceased to be our largest shareholder.
To our knowledge, no other shareholder beneficially owns more than 5% of our shares. Our company is not owned or controlled directly or indirectly by any government or by any corporation or by any other natural or legal person severally or jointly. Our major shareholders do not have any special voting rights.
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B. Related Party Transactions
Related Party Transactions
Affiliate investor participation in 2026 registered offering
In June 2026, we completed a registered offering of our Ordinary Shares under our Form F-3 shelf registration statement (Registration No. 333-290696) in which two affiliate investors participated. Fortune Genesis Holdings Limited, a wholly owned subsidiary of GoFintech Quantum Innovation Limited (HKEX: 0290), and WK Frater Holdings Limited, a wholly owned subsidiary of HK.AI Capital Limited (HKEX: 1140), purchased our offered Ordinary Shares. Mr. Liu Zhiwei, one of our shareholders, was the single largest shareholder of GoFintech (approximately 25.48%). Mr. Yuan Tianfu, a member of our Board, serves as a director of Fortune Genesis Holdings Limited and as Chief Executive Officer (and formerly Co-Chief Executive Officer) of GoFintech. Our Chairman, Mr. Liu Haoyuan, served as an executive director of GoFintech from August 2022 to September 19, 2023 and has served as its Chief Operating Officer since September 2023; he is a direct relative of Mr. Liu Zhiwei. Dr. Wang Shibin, a member of our Board, is a non-executive director of HK.AI Capital Limited.
Our Board authorized the offering in accordance with the BVI Business Companies Act, with each interested director (Mr. Yuan Tianfu, Dr. Wang Shibin and Mr. Liu Haoyuan) disclosing his interest and recusing himself from the Board’s deliberations and vote. As a foreign private issuer, we relied on the home country practice exemption and did not seek shareholder approval that might otherwise be required by Nasdaq Listing Rule 5635.
Employment Agreements
See “Item 6. Directors, Senior Management and Employees — B. Compensation — Employment Agreement.”
Other Related Party Transactions
Names and relationship of related parties:
| Related Party Name | Relationship to the Company | |
| Mr. Ching Tim Hoi (“Mr. Ching”) | Chief Executive Officer and a director of the Company, Director of Pure Beauty, Director of Raytech Holdings Company Limited, and Executive Director of Zhongshan Raytech. Mr. Ching ceased to be the controlling shareholder of the Company during the year ended March 31, 2026 following disposals of shares in August 2025 and February 2026 (beneficial ownership of approximately 2.26% per his Schedule 13D/A, approximately 1.05% following the June 2026 registered direct offering), and ceased to be Chairman of the Board on April 15, 2026. | |
| Zhongshan Raytech Electric Appliances Manufacturing Company Limited (“Zhongshan Raytech”) | An entity controlled by Mr. Ching | |
| Raytech Holdings Company Limited | An entity controlled by Mr. Ching, from which the Company leases its principal executive office. | |
| Mr. Ling Chun Yin (“Mr. Ling”) | Director of the Company (resigned on January 2, 2026) | |
| Ms. Wang Yafeng | Vendor of Worry free and holder of the promissory note issued by Raytech Innovation | |
| Yuan Chun Holding Co. | A substantial shareholder of the Company (approximately 9.6% of the Ordinary Shares), controlled by Mr. Wang Tao | |
| Mr. Liu Zhiwei/Chunda International Capital Management Limited | Beneficial owner of approximately 17.9% of the Ordinary Shares since February 2026 per Schedule 13D (approximately 8.31% of the enlarged share capital following the June 2026 registered direct offering). | |
| Mr. Peng Yi | Director of Raytech Innovation Limited |
| a. | Accounts payables - related parties |
Due to related parties consisted of the following:
| As of March 31, | ||||||||||||
| 2025 | 2026 | 2026 | ||||||||||
| HKD | HKD | US$ | ||||||||||
| Name of related parties | ||||||||||||
| Zhongshan Raytech | 12,759,342 | 19,972,442 | 2,547,505 | |||||||||
| Raytech Holdings Company Limited | 2,225,051 | – | – | |||||||||
| Total | 14,984,393 | 19,972,442 | 2,547,505 | |||||||||
These accounts payables to related parties were related to products we purchased from these related parties. See “—Purchase products from related parties” for more information.
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Related party transactions
| b. | Purchase products from related parties |
| For the years ended March 31, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| HKD | HKD | HKD | US$ | |||||||||||||
| Name of a related party | ||||||||||||||||
| Zhongshan Raytech | 47,704,656 | 53,756,425 | 62,846,481 | 8,016,133 | ||||||||||||
| Raytech Holdings Company Limited | – | 2,225,051 | 2,430,400 | 310,000 | ||||||||||||
| Total | 47,704,656 | 55,981,476 | 65,276,881 | 8,326,133 | ||||||||||||
Due to related parties and directors consisted of the following:
As of March 31, 2026, the amount due to a related party of HKD2,450,000 (US$312,500) represented an amount due by Worry free to Yuan Chun Holding Co., a substantial shareholder of the Company holding approximately 9.6% of the Ordinary Shares (as reported on the Schedule 13D filed by Mr. Wang Tao with the SEC on March 25, 2026), controlled by Mr. Wang Tao, and accordingly a related party of the Group. The amount was unsecured, interest-free and repayable on demand, and was fully refunded subsequent to March 31, 2026 (see Note 14).
As of March 31, 2026, amounts due to directors of HKD2,170,627 (US$276,867) comprised HKD139,269 due by Raytech Innovation and HKD2,031,358 due by Worry free, being amounts due to Mr. Peng Yi and Ms. Wang Yafeng, directors of the relevant subsidiaries. The amounts were unsecured, interest-free and repayable on demand. Directors of the Company during the year were Mr. Ching Tim Hoi, and Mr. Ling Chun Yin and Ms. Li Wan Venus (the latter two having resigned on January 2, 2026), together with Mr. Yuan Tianfu and Dr. Wang Shibin (both appointed on January 2, 2026).
In connection with the acquisition of Worry free (see Note 13), Raytech Innovation issued a promissory note in the principal amount of US$2,000,000 to Ms. Wang Yafeng, the vendor, bearing interest at 2% per annum and maturing two years from the date of issue (that is, on December 29, 2027). The promissory note was recognized at its acquisition-date fair value of US$1,825,000 (HKD14,188,098), determined using a discounted cash flow approach at a market discount rate of 6.75%, and is subsequently measured at amortized cost using the effective interest method. Interest expense of HKD243,432 was recognized on the promissory note for the year ended March 31, 2026, which was added to the carrying amount of the note. As of March 31, 2026, the carrying amount of the promissory note was HKD14,551,432 (US$1,856,050). The promissory note is presented as a non-current liability as it matures on December 29, 2027, more than 12 months after March 31, 2026.
| c. | Office leasing from a related party |
| For the years ended March 31, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| HKD | HKD | HKD | US$ | |||||||||||||
| Name of a related party | ||||||||||||||||
| Raytech Holdings Company Limited | – | 300,000 | 300,000 | 38,265 | ||||||||||||
| Total | – | 300,000 | 300,000 | 38,265 | ||||||||||||
| d. | Commission from a related party |
| For the years ended March 31, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| HKD | HKD | HKD | US$ | |||||||||||||
| Name of a related party | ||||||||||||||||
| Mr. Ling | – | 487,216 | 139,686 | 17,817 | ||||||||||||
| Total | – | 487,216 | 139,686 | 17,817 | ||||||||||||
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Policies and Procedures for Related Party Transactions
Our board of directors has established an audit committee which is tasked with review and approval of all related party transactions.
C. Interests of Experts and Counsel
Not applicable.
Item 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
See Item 18 for our audited consolidated financial statements.
Legal Proceedings
Except as disclosed above, from time to time, we are subject to legal proceedings, investigations and claims incidental to the conduct of our business. We are not currently a party to any legal proceeding or investigation which, in the opinion of our management, is likely to have a material adverse effect on our business, financial condition or results of operations.
Dividend Policy
The holders of our Ordinary Shares are entitled to dividends out of funds legally available when and as declared by our board of directors. Raytech Holding Limited has never declared a dividend to its shareholders and does not anticipate declaring a dividend in the foreseeable future. During the year ended March 31, 2026, Pure Beauty declared a dividend of HKD14,177,800 to its immediate holding company, which was eliminated on consolidation (see Note 11 to our consolidated financial statements). Should we decide in the future to pay dividends, as a holding company, our ability to do so and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiaries and other holdings and investments. In addition, our operating subsidiaries may, from time to time, be subject to restrictions on their ability to make distributions to us, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions. In the event of our liquidation, dissolution or winding up, holders of our Ordinary Shares are entitled to receive, ratably, the net assets available to shareholders after payment of all creditors.
B. Significant Changes
Subsequent to March 31, 2026, the following significant events occurred:
On April 15, 2026, Mr. Liu Haoyuan was appointed as a director and Chairman of the Board and Mr. Ching Tim Hoi continues to serve as an Executive Director and Chief Executive Officer.
On June 12, 2026, the Company incorporated Fluxen Limited in Hong Kong with an initial issued share capital of 10,000 ordinary shares, all of which were held by the Company. On July 8, 2026, Fluxen allotted an additional 6,666 ordinary shares to Yi Fortune Capital (HK) Limited, an independent third party, following which the Company holds 10,000 shares (60%) and Yi Fortune Capital (HK) Limited holds 6,666 shares (40%). Fluxen is currently dormant and is intended to support the Group’s future export trading business.
On June 29, 2026, we closed a registered direct offering of 3,149,832 Ordinary Shares (on a post-Share-Consolidation basis) at US$1.97 per share for aggregate gross proceeds of approximately US$6.2 million pursuant to our Form F-3 shelf registration statement, in which two investors were affiliates of certain of our directors and of our largest shareholder and we relied on the home country practice exemption under Nasdaq Listing Rule 5615(a)(3).
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Item 9. THE OFFER AND LISTING
A. Offering and Listing Details.
Our Ordinary Shares are currently listed on Nasdaq Capital Market under the symbol “RAY” since May 15, 2024.
On June 30, 2025, the Company’s registration statement on Form F-1 (SEC File No. 333-287842) relating to a follow-on offering (the “Follow-On Offering”) of up to 25,985,000 Ordinary Shares was declared effective by the SEC. On July 1, 2025, the Follow-On Offering was closed with 25,985,000 Ordinary Shares issued at a public offering price of $0.20 per ordinary share.
On October 14, 2025, we received a notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) that the minimum bid price of our ordinary shares had been below US$1.00 for 30 consecutive business days and that we did not meet the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2), and that we had a compliance period until April 13, 2026 to regain compliance.
On November 7, 2025, we effected a 1-for-16 consolidation of our authorized, issued and outstanding ordinary shares. Fractional shares created as a result of the share consolidation were rounded up to the nearest whole share. As a result, our authorized share capital was changed from 8,000,000,000 ordinary shares of par value US$0.00000625 each to 500,000,000 ordinary shares of par value US$0.0001 each, our issued and outstanding ordinary shares were reduced from 43,598,083 to approximately 2,724,911 Ordinary shares (including 31 Ordinary Shares issued in respect of fractional entitlements), and our ordinary shares began trading on a split-adjusted basis under the same symbol “RAY” and under a new CUSIP number, G7385S119. We subsequently regained compliance with the minimum bid price requirement.
On June 29, 2026, we closed a registered direct offering of 3,149,832 ordinary shares (on a post-Share Consolidation basis) at a price of US$1.97 per share, for aggregate gross proceeds of approximately US$6.2 million, pursuant to our shelf registration statement on Form F-3 (SEC File No. 333-290696) that was declared effective on December 18, 2025.
B. Plan of Distribution
Not applicable.
C. Markets
Our Ordinary Shares are currently listed on Nasdaq Capital Market under the symbol “RAY.”
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
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Item 10. ADDITIONAL INFORMATION
A. Share Capital
Not applicable.
B. Amended and Restated Memorandum and Articles of Association
The information required by Item 10.B of Form 20-F is included in the section titled “Description of Share Capital” in our F-1 (File No. 333-275197), which section is incorporated herein by reference.
On November 7, 2025, in connection with a 1-for-16 share consolidation, our Amended and Restated Memorandum and Articles of Association were amended to change our authorized share capital from 8,000,000,000 ordinary shares of par value US$0.00000625 each to 500,000,000 ordinary shares of par value US$0.0001 each. Our Amended and Restated Memorandum and Articles of Association have been filed as Exhibit 1.1 to this Annual Report.
C. Material Contracts
The information required by Item 10.C of Form 20-F is included in the sections titled “Our Business,” “Directors and Executive Officers,” “Related Party Transactions,” and “Underwriting” in our F-1 (File No. 333-275197) in connection with the IPO, which sections are incorporated herein by reference.
In addition, during and subsequent to the fiscal year ended March 31, 2026, we entered into the following material contracts: (i) a Securities Purchase Agreement and a Placement Agency Agreement, each dated June 30, 2025, relating to our July 2025 public offering; (ii) a Securities Purchase Agreement and a Placement Agency Agreement, each dated June 18, 2026, relating to our June 2026 registered direct offering; (iii) the Agreement for Sale and Purchase of 100% of the issued share capital in Worry free Group (Hong Kong) Limited, dated December 23, 2025, and the related US$2,000,000 promissory note; and (iv) the 2024 Equity Incentive Plan. See “Item 19. Exhibits.”
D. Exchange Controls
Under the British Virgin Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to nonresident holders of our Ordinary Shares.
E. Taxation
Material U.S. Federal Income Tax Consequences Applicable to U.S. Holders of Raytech Holding’s Ordinary Shares
The following sets forth the material U.S. federal income tax consequences related to an investment in Raytech Holding’s Ordinary Shares. It is directed to U.S. Holders (as defined below) of Raytech Holding’s Ordinary Shares and is based upon laws and relevant interpretations thereof in effect as of the date of the annual report, all of which are subject to change. This description does not deal with all possible tax consequences relating to an investment in Raytech Holding’s Ordinary Shares or U.S. tax laws, other than the U.S. federal income tax laws, such as the tax consequences under non-U.S. tax laws, state, local and other tax laws.
The following brief description applies only to U.S. Holders (defined below) that hold Ordinary Shares as capital assets and that have the U.S. dollar as their functional currency. This brief description is based on the federal income tax laws of the United States in effect as of the date of the annual report and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the date of the annual report, as well as judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which change could apply retroactively and could affect the tax consequences described below.
The brief description below of the U.S. federal income tax consequences to “U.S. Holders” will apply to you if you are a beneficial owner of Ordinary Shares and you are, for U.S. federal income tax purposes:
| ● | an individual who is a citizen or resident of the United States; |
| ● | a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state thereof or the District of Columbia; |
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| ● | an estate whose income is subject to U.S. federal income taxation regardless of its source; or |
| ● | a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. |
If a partnership (or other entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of Raytech Holding’s Ordinary Shares, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partnerships and partners of a partnership holding Raytech Holding’s Ordinary Shares are urged to consult their tax advisors regarding an investment in Raytech Holding’s Ordinary Shares.
RAYTECH HOLDING URGES POTENTIAL PURCHASERS OF RAYTECH HOLDING’S ORDINARY SHARES TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF RAYTECH HOLDING’S ORDINARY SHARES.
The following does not address the tax consequences to any particular investor or to persons in special tax situations such as:
| ● | banks; |
| ● | financial institutions; |
| ● | insurance companies; |
| ● | pension plans; |
| ● | cooperatives; |
| ● | regulated investment companies; |
| ● | real estate investment trusts; |
| ● | broker-dealers; |
| ● | traders that elect to use a mark-to-market method of accounting; |
| ● | U.S. expatriates; |
| ● | certain former U.S. citizens or long-term residents; |
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| ● | tax-exempt entities (including private foundations); |
| ● | persons liable for alternative minimum tax; |
| ● | persons holding Raytech Holding’s Ordinary Shares as part of a straddle, hedging, conversion or integrated transaction; |
| ● | persons that actually or constructively own 10% (by vote or value) or more of Raytech Holding’s voting shares (including by reason of owning Raytech Holding’s Ordinary Shares); |
| ● | persons who acquired Raytech Holding’s Ordinary Shares pursuant to the exercise of any employee share option or otherwise as compensation; |
| ● | persons holding Raytech Holding’s Ordinary Shares through partnerships or other pass-through entities; |
| ● | events, hip-hop, and marketing industries investment trusts; |
| ● | governments or agencies or instrumentalities thereof; |
| ● | beneficiaries of a Trust holding Raytech Holding’s Ordinary Shares; or |
| ● | persons holding Raytech Holding’s Ordinary Shares through a trust. |
All of whom may be subject to tax rules that differ significantly from those discussed below.
The discussion set forth below is addressed only to U.S. Holders that purchase Ordinary Shares of the Company. Prospective purchasers are urged to consult their own tax advisors about the application of the U.S. federal income tax rules to their particular circumstances as well as the state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of Raytech Holding’s Ordinary Shares.
Taxation of Dividends and Other Distributions on Raytech Holding’s Ordinary Shares
Subject to the passive foreign investment company rules discussed below, the gross amount of distributions made by the Company to you with respect to the Ordinary Shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend income on the date of receipt by you, but only to the extent that the distribution is paid out of Raytech Holding’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.
With respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable to qualified dividend income, provided that (1) the Ordinary Shares are readily tradable on an established securities market in the United States, or Raytech Holding is eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange of information program, (2) Raytech Holding is not a PFIC for either Raytech Holding’s taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. Because there is no income tax treaty between the United States and the BVI, clause (1) above can be satisfied only if the Ordinary Shares are readily tradable on an established securities market in the United States. Under U.S. Internal Revenue Service authority, Ordinary Shares are considered for purpose of clause (1) above to be readily tradable on an established securities market in the United States, provided they are listed on the Nasdaq Capital Market. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to Raytech Holding’s Ordinary Shares, including the effects of any change in law after the date of annual report.
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Dividends will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will be limited to the gross amount of the dividend, multiplied by the reduced rate divided by the highest rate of tax normally applicable to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by the Company with respect to Raytech Holding’s Ordinary Shares will constitute “passive category income” but could, in the case of certain U.S. Holders, constitute “general category income.”
To the extent that the amount of the distribution exceeds Raytech Holding’s current and accumulated earnings and profits (as determined under U.S. federal income tax principles), it will be treated first as a tax-free return of your tax basis in your Ordinary Shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. Raytech Holding does not intend to calculate Raytech Holding’s earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.
Taxation of Dispositions of Ordinary Shares
Subject to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and your tax basis (in U.S. dollars) in the Ordinary Shares. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the Ordinary Shares for more than one year, you will be eligible for reduced tax rates. The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize will generally be treated as United States source income or loss for foreign tax credit limitation purposes.
Information Reporting and Backup Withholding
Dividend payments with respect to Raytech Holding’s Ordinary Shares and proceeds from the sale, exchange or redemption of Raytech Holding’s Ordinary Shares may be subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding at a current rate of 24%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on U.S. Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the U.S. Internal Revenue Service and furnishing any required information. Raytech Holding does not intend to withhold taxes for individual shareholders. However, transactions effected through certain brokers or other intermediaries may be subject to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such taxes.
Under the Hiring Incentives to Restore Employment Act of 2010, certain U.S. Holders are required to report information relating to Raytech Holding’s Ordinary Shares, subject to certain exceptions (including an exception for Ordinary Shares held in accounts maintained by certain financial institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold Ordinary Shares. Failure to report the information could result in substantial penalties. You should consult your own tax advisor regarding your obligation to file Form 8938.
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Passive Foreign Investment Company (“PFIC”)
In general, Raytech Holding will be a PFIC for any taxable year in which:
| ● | at least 75% of Raytech Holding’s gross income is passive income, or |
| ● | at least 50% of the value (based on a quarterly average) of Raytech Holding’s assets is attributable to assets that produce or are held for the production of passive income. |
For this purpose, passive income generally includes dividends, interest, royalties and rents (other than royalties and rents derived in the active conduct of a trade or business and not derived from a related person), as well as gains from the sale of assets (such as stock) that produce passive income, foreign currency gains, and certain other categories of income. If Raytech Holding owns at least 25% (by value) of the stock of another corporation, Raytech Holding will be treated, for purposes of determining whether it is a PFIC, as owning its proportionate share of the other corporation’s assets and receiving its proportionate share of the other corporation’s income.
Based on the manner in which Raytech Holding currently operate its business, the current and expected composition of its income and assets and the expected value of its assets (including the value of its goodwill, which is based on the price of its Ordinary Shares), Raytech Holding does not believe that it was a PFIC for its taxable year ended March 31, 2025. However, PFIC status is determined annually based on the Company’s income, assets and activities for the entire taxable year, thus it is not possible to determine whether Raytech Holding will be characterized as a PFIC any taxable year until after the close of that year. Because Raytech Holding holds a substantial amount of cash, it may be or become a PFIC if its market capitalization declines. Accordingly, there can be no assurance that Raytech Holding will not be a PFIC for its current taxable year ending March 31, 2026 or any future taxable year.
If Raytech Holding is a PFIC for any taxable year during which you hold Raytech Holding’s Ordinary Shares and you do not make a timely mark-to-market election, as described below, you will be subject to special tax rules with respect to any “excess distribution” received and any gain realized from a sale or other disposition, including a pledge, of Raytech Holding’s Ordinary Shares. Distributions received in a taxable year that are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable years or your holding period for Raytech Holding’s Ordinary Shares will be treated as excess distributions. Under these special tax rules:
| ● | the excess distribution or gain will be allocated ratably over your holding period for Raytech Holding’s Ordinary Shares, |
| ● | the amount allocated to the current taxable year, and any amount allocated to any taxable year in your holding period prior to the first taxable year in which Raytech Holding is a PFIC, will be treated as ordinary income, and |
| ● | the amount allocated to each other year will be subject to tax at the highest income tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. |
Although the determination of whether Raytech Holding is a PFIC is made annually, if it is a PFIC for any taxable year in which you hold Raytech Holding’s Ordinary Shares, you will generally be subject to the special tax rules described above for that year and for each subsequent year in which you hold Raytech Holding’s Ordinary Shares (even if it does not qualify as a PFIC in any subsequent years). However, if Raytech Holding ceases to be a PFIC, you can avoid the continuing impact of the PFIC rules by making a special election to recognize gain as if your Ordinary Shares had been sold on the last day of the last taxable year during which it was a PFIC. You are urged to consult your tax advisor about this election.
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In certain circumstances, in lieu of being subject to the special tax rules discussed above, you may make a mark-to-market election with respect to Raytech Holding’s Ordinary Shares provided such Ordinary Shares are treated as “marketable stock.” Raytech Holding’s Ordinary Shares generally will be treated as marketable stock if the Ordinary Shares are “regularly traded” on a “qualified exchange or other market” (within the meaning of the applicable Treasury regulations). Under current law, the mark-to-market election may be available to shareholders if Raytech Holding’s Ordinary Shares are quoted on the Nasdaq, which constitutes a qualified exchange, although there can be no assurance that Raytech Holding’s Ordinary Shares will be “regularly traded” for purposes of the mark-to-market election. If you make an effective mark-to-market election, for each taxable year that Raytech Holding is a PFIC, you will include as ordinary income the excess of the fair market value of your Ordinary Shares at the end of the year over your adjusted basis in the Ordinary Shares. You will be entitled to deduct as an ordinary loss in each such year the excess of your adjusted basis in the Ordinary Shares over their fair market value at the end of the year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. If you make an effective mark-to-market election, any gain you recognize upon the sale or other disposition of Raytech Holding’s Ordinary Shares in a year that Raytech Holding is a PFIC will be treated as ordinary income and any loss will be treated as ordinary loss, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. Your adjusted basis in the Ordinary Shares will be increased by the amount of any income inclusion and decreased by the amount of any deductions, in each case, to the extent provided for under the mark-to-market rules. If you make a mark-to-market election it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the Ordinary Shares are no longer regularly traded on a qualified exchange or other market, or the IRS consents to the revocation of the election. You are urged to consult your tax advisor about the availability of the mark-to-market election, and whether making the election would be advisable in your particular circumstances.
A different election, known as the “qualified electing fund” or “QEF” election is generally available to holders of PFIC stock (but not warrants), but requires that the corporation provide the holders with a “PFIC Annual Information Statement” containing certain information necessary for the election, including the holder’s pro rata share of the corporation’s earnings and profits and net capital gains for each taxable year, computed according to United States federal income tax principles. Raytech Holding does not intend, however, to determine its earnings and profits or net capital gain under United States federal income tax principles, nor does it intend to provide United States Holders with a PFIC Annual Information Statement. Therefore, you should not expect to be eligible to make this election.
If you do not make a timely “mark-to-market” election (as described above), and if Raytech Holding was a PFIC at any time during the period you hold the Ordinary Shares, then such Ordinary Shares will continue to be treated as stock of a PFIC with respect to you even if Raytech Holding ceases to be a PFIC in a future year, unless you make a “purging election” for the year it ceases to be a PFIC (no such election is available to warrants). A “purging election” creates a deemed sale of Raytech Holding’s Ordinary Shares at their fair market value on the last day of the last year in which it is treated as a PFIC. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, you will have a new basis (equal to the fair market value of the Ordinary Shares on the last day of the last year in which Raytech Holding is treated as a PFIC) and holding period (which new holding period will begin the day after such last day) in Raytech Holding’s Ordinary Shares for tax purposes.
If Raytech Holding is a PFIC for any taxable year during which you hold Raytech Holding’s Ordinary Shares and any of Raytech Holding’s non-United States subsidiaries is also a PFIC, you will be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. Because a mark-to-market election cannot be made for any lower-tier PFICs that a PFIC may own, if you make a mark-to-market election with respect to Raytech Holding’s Ordinary Shares, you may continue to be subject to the general PFIC rules with respect to your indirect interest in any of Raytech Holding’s non-United States subsidiaries that is classified as a PFIC. You are urged to consult your tax advisors about the application of the PFIC rules to any of Raytech Holding’s subsidiaries.
If you hold Raytech Holding’s Ordinary Shares in any year in which it is classified as a PFIC, you will generally be required to file IRS Form 8621 and to provide certain annual information regarding such Ordinary Shares, including regarding distributions received on the Ordinary Shares and any gain realized on the disposition of the Ordinary Shares. The failure to file IRS Form 8621 could result in the imposition of penalties and the extension of the statute of limitations with respect to U.S. federal income tax. You are urged to consult your tax advisors concerning the United States federal income tax consequences of holding Raytech Holding’s Ordinary Shares if it is considered a PFIC in any taxable year and the availability, manner and advisability of making any elections.
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Hong Kong Profits Taxation
Raytech Holding’s subsidiaries are Hong Kong entities subject to the two-tier profit tax rates system according to Hong Kong tax rules and regulations.
The two-tier profits tax rates system was introduced under the Inland Revenue (Amendment)(No.3) Ordinance 2018 (the “Ordinance”) of Hong Kong became effective for the assessment year 2018/2019. Under the two-tier profit tax rates regime, the profits tax rate for the first HKD 2 million (US$255,102) of assessable profits of a corporation will be subject to the lowered tax rate, 8.25% while the remaining assessable profits will be subject to the legacy tax rate, 16.5%. The Ordinance only allows one entity within a group of “connected entities” is eligible for the two-tier tax rate benefit. An entity is a connected entity of another entity if (1) one of them has control over the other; (2) both of them are under the control (more than 50% of the issued share capital) of the same entity; (3) in the case of the first entity being a natural person carrying on a sole proprietorship business-the other entity is the same person carrying on another sole proprietorship business. Under the Ordinance, it is an entity’s election to nominate an entity that will be subject to the two-tier profits tax rate on its Profits Tax Return. The election is irrevocable.
All of Raytech Holding’s subsidiaries elected the two-tier profits tax rate for its tax years of 2023/2024, 2024/2025 and 2025/2026.
British Virgin Islands Taxation
The disclosure relating to tax consequences under British Virgin Islands law is the opinion of Forbes Hare, Raytech Holding’s counsel as to BVI law.
The Government of the British Virgin Islands does not, under existing legislation, impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax upon the Company or its shareholders who are not tax resident in the British Virgin Islands.
The Company and all distributions, interest and other amounts paid by the Company to persons who are not tax resident in the British Virgin Islands will not be subject to any income, withholding or capital gains taxes in the British Virgin Islands, with respect to the Ordinary Shares in the Company owned by them and dividends received on such shares, nor will they be subject to any estate or inheritance taxes in the British Virgin Islands.
No estate, inheritance, succession or gift tax, rate, duty, levy or other charge is payable by persons who are not tax resident in the British Virgin Islands with respect to any shares, debt obligations or other securities of the Company.
Except to the extent that Raytech Holding has any interest in real property in the British Virgin Islands, all instruments relating to transactions in respect of the shares, debt obligations or other securities of the Company and all instruments relating to other transactions relating to the business of the Company are exempt from the payment of stamp duty in the British Virgin Islands.
There are currently no withholding taxes or exchange control regulations in the British Virgin Islands applicable to the Company or its shareholders.
There is no income tax treaty or convention currently in effect between the United States and the British Virgin Islands or between Hong Kong and the British Virgin Islands.
British Virgin Islands Economic Substance Legislation
The British Virgin Islands, together with several other non-European Union jurisdictions, has introduced legislation aimed at addressing concerns raised by the Council of the European Union (the “EU”) as to offshore structures engaged in certain activities which attract profits without real economic activity. With effect from January 1, 2019, the Economic Substance (Companies and Limited Partnerships) Act, 2018 (the “ES Act”) came into force in the British Virgin Islands introducing certain economic substance requirements for in-scope British Virgin Islands entities which are engaged in certain “relevant activities”.
Although it is presently anticipated that the ES Act will have little material impact on the Company or its operations, as the legislation is relatively new and remains subject to further clarification and interpretation, it is not currently possible to ascertain the precise impact of these legislative changes on the Company.
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F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
We have previously filed the F-1 and the Final Prospectus in connection with our IPO and the Resale Prospectus with the SEC.
We are subject to the periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Under the Exchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F within four months after the end of each fiscal year. The SEC also maintains a web site at www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system. As a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and our principal shareholders are exempt from the reporting provision and our executive officers, directors and principal shareholders are exempt from the short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.
I. Subsidiaries Information
For a listing of our subsidiaries, see “Item 4. Information on the Company — A. History and Development of the Company.”
J. Annual Report to Security Holders
Not applicable.
Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not use financial instruments for speculative trading purposes, and do not hold any derivative financial instruments that could expose us to significant market risk. Our primary market risk exposures are changes in interest rates and foreign currency fluctuations.
Credit Risk
Our assets that are potentially subject to a significant concentration of credit risk primarily consist of cash and cash equivalents, security deposits and accounts receivables.
We believe that there is no significant credit risk associated with cash in Hong Kong, which were held by reputable financial institutions. As of March 31, 2026, cash balance of HKD78,032,891 (approximately US$9,953,175) was maintained at financial institutions in Hong Kong across six major reputable banks.
We have designed credit policies with an objective to minimize their exposure to credit risk. Our accounts receivables are short term in nature and the associated risk is minimal. We conduct credit evaluations on our customers and generally do not require collateral or other security from such customers. We periodically evaluate the creditworthiness of the existing customers in determining an allowance for credit losses accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers.
We are also exposed to risk from accounts receivables. These assets are subject to credit evaluations. An allowance, where applicable, would make up for estimated unrecoverable amounts which have been determined by reference to past default experience and the current economic environment.
Customers Concentration Risk
As of March 31, 2025, two customers, who are distributors that represent and sell brands of well-known manufactures from Japan, the U.S., UK, Europe and Australia accounted for 50.9 % and 49.1% of the Company’s total accounts receivables respectively.
As of March 31, 2026, two customers accounted for 14.3% and 11.2% of the Company’s total accounts receivables, respectively.
For the year ended March 31, 2024, two major customers, who are distributors that represent and sell brands of well-known manufactures from Japan, the U.S. and Europe, accounted for 74.1% and 16.5% of the Company’s total revenues respectively.
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For the year ended March 31, 2025, two major customers, who are distributors that represent and sell brands of well-known manufactures from Japan, the U.S., Europe and Australia, accounted for 64.0% and 29.5% of the Company’s total revenues respectively.
For the year ended March 31, 2026, one major customer accounted for 62.5% of the Company’s total revenues.
Suppliers Concentration Risk
As of March 31, 2025, two suppliers accounted for 82.6% and 14.4% of the total balance of accounts payable. These two manufacturers are related parties, Zhongshan Raytech and Raytech Holdings Company Limited.
As of March 31, 2026, two suppliers accounted for 32.3% and 25.7% of the total balance of accounts payable, respectively. One of the supplier is a related party, Zhongshan Raytech.
For the year ended March 31, 2024, Zhongshan Raytech accounted for 88.5% of our total purchases.
For the year ended March 31, 2025, Zhongshan Raytech accounted for 88.2% of our total purchases.
For the year ended March 31, 2026, Zhongshan Raytech accounted for 62.1% of our total purchases.
Interest Rate Risk
Our exposure on cash flow interest rate risk mainly arises from our deposits with banks.
In respect of the exposure to cash flow interest rate risk arising from floating rate non-derivative financial instruments held by us, such as cash deposits and bank borrowings, at the end of the reporting period, we are not exposed to significant interest rate risk as the interest rates are not expected to change significantly.
As of March 31, 2026, our indebtedness comprised the promissory note in the principal amount of US$2,000,000 issued in connection with acquisition of Worry Free, which bears interest at a fixed rate of 2% per annum. Accordingly, we do not consider ourselves exposed to significant cash flow interest rate in respect of the promissory note.
Foreign Currency Risk
We are exposed to foreign currency risk primarily through sales that are denominated in a currency other than the functional currency of the operations to which they relate. The currencies giving rise to this risk are primarily US$. As HKD is currently pegged to US$, our exposure to foreign exchange fluctuations is minimal.
Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Apart from Items 12.D.3 and 12.D.4, this Item 12 is not applicable for annual reports on Form 20-F. As to Items 12.D.3 and 12.D.4, this Item 12 is not applicable, as the Company does not have any American Depositary Shares.
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Part II
Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
See “Item 10. Additional Information” for a description of the rights of securities holders. Effective November 7, 2025, we effected a one-for-sixteen consolidation of our issued and outstanding Ordinary Shares and, in connection therewith, our authorized share capital was changed from 8,000,000,000 Ordinary Shares of par value US$0.00000625 each to 500,000,000 Ordinary Shares of par value US$0.0001 each. Other than as a result of the share consolidation, the rights of the holders of our Ordinary Shares remain unchanged.
Use of Proceeds
IPO
The Ordinary Shares were sold at an offering price of US$4.00 per share. We received aggregate gross proceeds of US$6.0 million from the IPO of 1,500,000 Ordinary Shares at an offering price of $4.00 per share, before deducting underwriting discounts and other related expenses.
We have earmarked and have been using the proceeds of the IPO as follows: 25% on brand promotion and marketing; 25% on recruitment of talented personnel; 25% on strategic investments and acquisitions; and 25% on general working capital.
Follow-On Offering
We have received net proceeds from the Follow-On Offering of approximately US$4,504,439, after the sale of 25,985,000 Ordinary Shares in the Follow-On Offering, after deducting the placement agent’s fees, the non-accountable expense allowance, and estimated offering expenses payable by us.
Raytech Holding plans to use the net proceeds we receive from the Follow-On Offering for the following purposes:
| Use of Proceeds | Percentage of the net proceeds | |||
| Potential Acquisitions and Investments | 30 | % | ||
| Trading Business Expansion Plans | 30 | % | ||
| Marketing, Sales and Product Development | 20 | % | ||
| General Working Capital | 20 | % | ||
As of this annual report, we have no specific acquisition or investment targets, agreements, or commitments. We intend to seek complementary businesses, technologies, or assets that expand our market reach or offer other strategic benefits, primarily focusing on targets within the personal care industry.
The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of the Follow-On Offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of the Follow-On Offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of the Follow-On Offering differently than as described in this annual report. To the extent that the net proceeds Raytech Holding receives from the Follow-On Offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.
On July 1, 2025, the Follow-On Offering was closed with 25,985,000 Ordinary Shares issued at a public offering price of $0.20 per ordinary share.
June 2026 Registered Direct Offering
On June 29, 2026, we closed a registered direct offering of 3,149,832 Ordinary Shares (on a post-consolidation basis) at a price of US$1.97 per share, for aggregate gross proceeds of approximately US$6.2 million, pursuant to our shelf registration statement on Form F-3 (File No. 333-290696). Two of the investors in that offering are affiliates of certain of our directors and of our largest shareholder, and we relied on the home country practice exemption under Nasdaq Listing Rule 5615(a)(3) in lieu of the shareholder approval requirements of Nasdaq Listing Rule 5635. We intend to use the net proceeds for general corporate and working capital purposes, to support our strategic expansion into the personal health care electronics category, and for integration costs and post-closing working capital relating to the acquisition of Worry free Group (Hong Kong) Limited.
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Item 15. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, we carried out an evaluation of the effectiveness of our disclosure controls and procedures, which is defined in Rules 13a-15(e) of the Exchange Act, as of March 31, 2026. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures as of March 31, 2026 were not effective at the reasonable assurance level due to the material weakness described below.
Internal Control over Financial Reporting
In connection with the audit of our financial statements for the years ended March 31, 2026 and 2025, we identified two material weakness in our internal control over financial reporting, as defined in the standards established by the Public Company Accounting Oversight Board of the United States, as of March 31, 2026. The material weakness identified relates to (i) inadequate segregation of duties for certain key functions due to limited staff and resources; and (ii) a lack of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting requirements to formalize key controls over financial reporting and to prepare consolidated financial statements and related disclosures.
In response to the material weaknesses identified, we are in the process of implementing a number of measures to address the material weakness identified, including but not limited to (i) hiring more qualified staff to fill up the key roles in the operations; ii) setting up a financial and system control framework with formal documentation of policies and controls in place. See “Item 3. Key Information — D. Risk Factors— Raytech Holding’s lack of effective internal controls over financial reporting may affect its ability to accurately report its financial results or prevent fraud, which may affect the market for and price of Raytech Holding’s Ordinary Shares.”
Notwithstanding the material weaknesses identified as described above, we believe that our consolidated financial statements contained in this Annual Report on Form 20-F fairly present our financial position, results of operations and cash flows for the years covered thereby in all material respects.
Attestation Report of the Registered Public Accounting Firm
We did not include an attestation report of the company’s registered public accounting firm in this Annual Report on Form 20-F due to rules of the SEC where domestic and foreign registrants that are non-accelerated filers, which we are, and “emerging growth companies” which we also are, are not required to provide the auditor attestation report.
Changes in Internal Control over Financial Reporting
Other than those disclosed above, there were no changes in our internal controls over financial reporting that occurred during the period covered by this Annual Report on Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Item 16. RESERVED
Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Board of Directors has determined that Mr. Li Shihua is an audit committee financial expert as that term is defined in Item 16A(b) of Form 20-F, and “independent” as that term is defined in the Nasdaq listing standards.
Item 16B. CODE OF ETHICS
Our Board has adopted a code of business conduct and ethics that applies to our directors, officers and employees. A copy of this code was filed as Exhibit 14.1 to the registration statement filed in connection with our IPO, which is incorporate by reference to this Annual Report.
Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
On April 9, 2025, the audit committee of our Board of Directors approved the dismissal of WWC, P.C. (“WWC”), our former independent registered public accounting firm, and on the same day, approved the appointment of Assentsure PAC (“Assentsure”) as our independent registered public accounting firm for the fiscal year ended March 31, 2025, effective the same day. Subsequently, on May 15, 2025, our Board of Directors (the “Board”) approved and ratified the dismissal of WWC, the engagement of Assentsure, and the entry into an engagement letter with Assentsure. For details, see our current report on Form 6-K with the SEC on May 21, 2025.
Audit fees have been incurred, on an as-accrued basis, by Assentsure for the year ended March 31, 2025 and 2026 with the following table, respectively:
| March 31, 2025 | March 31, 2026 | |||||||
| USD$ | USD$ | |||||||
| Audit Fees* | 180,000 | 205,000 | ||||||
| * | Audit Fees – This category includes the audit of our annual financial statements, review of interim financial statements and services that are normally provided by the independent registered public accounting firm in connection with engagements for those years and services that are normally provided by our independent registered public accounting firm in connection with statutory audits and SEC regulatory filings or engagements. |
The policy of our audit committee is to pre-approve all audit and non-audit services provided by our independent auditor, including audit services, audit-related services, tax services and other services.
Our Audit Committee evaluated and approved in advance the scope and cost of the engagement of an auditor before the auditor rendered its audit and non-audit services.
Item 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
Item 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not applicable.
Item 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
The change in our independent registered public accounting firm from WWC, P.C. to Assentsure PAC was previously reported in our Annual Report on Form 20-F for the fiscal year ended March 31, 2025 and in our report on Form 6-K furnished May 21, 2025. Accordingly, and as permitted by Instruction 1 to Item 304 of Regulation S-K, the disclosure otherwise called for by this Item is not repeated herein.
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Item 16G. CORPORATE GOVERNANCE
See “Item 6. Directors, Senior Management and Employees” for more information.
Item 16H. MINE SAFETY DISCLOSURE
Not applicable.
Item 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Our independent registered public accounting firm, Assentsure PAC, is headquartered in Singapore and is subject to inspection by the Public Company Accounting Oversight Board (the “PCAOB”).
The PCAOB is not currently prevented from inspecting or investigating our auditor completely, and we have not been identified by the SEC as a “Commission-Identified Issuer” under the Holding Foreign Companies Accountable Act. Although our operating subsidiaries are located in Hong Kong and our products are manufactured by contract manufacturers in mainland China, our auditor is not located in a jurisdiction that the PCAOB has determined it is unable to inspect or investigate completely. Accordingly, the additional disclosures required by Item 16I are not otherwise applicable to us.
Item 16J. INSIDER TRADING POLICIES
We have
The policy provides a periodic blackout period where in the event that only semi-annual and annual financial results of the Company are filed or furnished with the SEC or publicly available to its shareholders through other distribution channel, trading in the Company’s securities is prohibited during the period beginning at the close of the market on the seventh (7th) calendar day preceding the end of a semi-annual period or fiscal year and ending at the close of the market on the second (2nd) business day after the Company’s financial results are publicly released or disclosed.
Item 16K. CYBERSECURITY
Risk Management and Strategy
We recognize the importance of developing, implementing, and maintaining appropriate and adequate administrative and technical measures to safeguard our information management security systems and protect the confidentiality,
We have implemented protocols to protect against cybersecurity threats and prevent unauthorized access to sensitive data. We conduct regular assessment of the Company’s cybersecurity risks and vulnerabilities, by identifying potential threats, assessing the likelihood and potential impact of cyberattacks. We also conduct ongoing evaluation of the industry trends and regulatory environments to ensure we are in full compliance with applicable cybersecurity laws and regulations in all jurisdictions where we operate. We have set in place an efficient risk mitigation and control and incident response protocols to identify potential risks, detect, effectively respond to, and recover from cybersecurity breaches. We also provide regular training programs to our employees to enhance their awareness about cybersecurity risks and better understand their roles and responsibilities in safeguarding company assets and data.
Overall, we believe that we have established a robust framework to protect against cybersecurity threats, mitigate risks, preserve customer trust and reputation, and support the sustainable growth of our Company.
Governance
Our cybersecurity program is managed by our Chief Financial Officer, Wan Yee Hing, for implementing company-wide cybersecurity policies, protocols, and procedures. Our Audit Committee is responsible for overseeing our cybersecurity program. The Chief Financial Officer reports to our board of directors and our Chief Executive Officer.
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Part III
Item 17. FINANCIAL STATEMENTS
We have elected to provide financial statements pursuant to Item 18.
Item 18. FINANCIAL STATEMENTS
The consolidated financial statements of Raytech Holding Limited and its subsidiaries are included at the end of this Annual Report.
Item 19. EXHIBITS
EXHIBIT INDEX
| * | Incorporated by reference to the identically named exhibit filed with Registration Statement on Form F-1 (File No. 333-275197). |
| ** | Incorporated by reference to the identically named exhibit filed with Registration Statement on Form F-1 (File No. 333-287842). |
| *** | Incorporated by reference to the identically named exhibit filed with the Annual Report on Form 20-F for the year ended March 31, 2024, filed by the Company with SEC on July 30, 2024). |
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
| Raytech Holding Limited | ||
| By: | /s/ Ching Tim Hoi | |
| Name: | Ching Tim Hoi | |
| Title: | Chief
Executive Officer (Principal Executive Officer) | |
| Dated: | July 31, 2026 | |
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RAYTECH HOLDING LIMITED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
| Assentsure PAC | |
| UEN – 201816648N | |
| 180B Bencoolen Street #03-01 | |
| The Bencoolen Singapore 189648 | |
| http://www.assentsure.com.sg |
To: The Board of Directors and Shareholders of Raytech Holding Limited
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Raytech Holding Limited and its subsidiaries (collectively the “Company”) as of March 31, 2025 and 2026, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for the years ended March 31, 2025 and 2026, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2025 and 2026, and the results of its operations and its cash flows for the years ended March 31, 2025 and 2026, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB and in accordance with the auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of our internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/
July 31, 2026
PCAOB ID Number
We have served as the Company’s auditor since 2025.
F-2
RAYTECH
HOLDING LIMITED
CONSOLIDATED BALANCE SHEETS
| As of March 31, | ||||||||||||
| 2025 | 2026 | 2026 | ||||||||||
| HKD | HKD | US$ | ||||||||||
| ASSETS | ||||||||||||
| CURRENT ASSETS | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Accounts receivables, net | ||||||||||||
| Merchandise inventories, net | ||||||||||||
| Deposits and prepayments | ||||||||||||
| TOTAL CURRENT ASSETS | ||||||||||||
| NON-CURRENT ASSETS | ||||||||||||
| Plant and equipment, net | ||||||||||||
| Goodwill | ||||||||||||
| Intangible asset, net | ||||||||||||
| Deferred offering costs | ||||||||||||
| Long-term deposits | ||||||||||||
| TOTAL NON-CURRENT ASSETS | ||||||||||||
| TOTAL ASSETS | ||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| CURRENT LIABILITIES | ||||||||||||
| Accounts payables | ||||||||||||
| Accounts payables - related parties | ||||||||||||
| Accruals | ||||||||||||
| Contract liabilities | ||||||||||||
| Tax payables | ||||||||||||
| Amount due to a related party | ||||||||||||
| Amounts due to directors | ||||||||||||
| TOTAL CURRENT LIABILITIES | ||||||||||||
| NON-CURRENT LIABILITIES | ||||||||||||
| Promissory note payable, non-current | ||||||||||||
| Deferred tax liability | ||||||||||||
| TOTAL NON-CURRENT LIABILITIES | ||||||||||||
| TOTAL LIABILITIES | ||||||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||
| Ordinary Shares, US$ | ||||||||||||
| Additional paid-in capital | ||||||||||||
| Retained earnings | ||||||||||||
| TOTAL SHAREHOLDERS’ EQUITY | ||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| (1) |
The accompanying notes are an integral part of these consolidated financial statements.
F-3
RAYTECH
HOLDING LIMITED
CONSOLIDATED STATEMENTS OF INCOME
| For the Years ended March 31, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| HKD | HKD | HKD | US$ | |||||||||||||
| REVENUE | ||||||||||||||||
| Sales of products | ||||||||||||||||
| Sales of tooling | ||||||||||||||||
| Service income | ||||||||||||||||
| Total revenue | ||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Merchandise costs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Service costs | ( | ) | ( | ) | ||||||||||||
| Selling, general and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| INCOME FROM OPERATIONS | ||||||||||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Gain (loss) from foreign currency exchange | ( | ) | ( | ) | ||||||||||||
| Government grants | ||||||||||||||||
| Other income, net | ||||||||||||||||
| Total other income, net | ||||||||||||||||
| INCOME BEFORE INCOME TAX PROVISION | ||||||||||||||||
| PROVISION FOR INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| NET INCOME | ||||||||||||||||
| WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES | ||||||||||||||||
| Basic and diluted (1) (2) | ||||||||||||||||
| EARNINGS PER SHARE | ||||||||||||||||
| Basic and diluted (2) | ||||||||||||||||
| (1) | On a retroactively restated basis, 93,750 ordinary shares were issued on May 15, 2024, 7,068 ordinary shares were issued on July 5, 2024, and 1,624,062 ordinary shares were issued on July 1, 2025. (2) All share and per share data have been retroactively restated to reflect the sixteen (16)-for-one (1) share consolidation of the Company’s ordinary shares effective on November 7, 2025. |
The accompanying notes are an integral part of these consolidated financial statements.
F-4
RAYTECH
HOLDING LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
| Ordinary shares | Additional | Total | ||||||||||||||||||
| No.
of Shares (1) |
Par Value |
Paid-in Capital |
Retained Earnings |
Shareholders’ Equity |
||||||||||||||||
| HKD | HKD | HKD | HKD | |||||||||||||||||
| BALANCE, April 1, 2023 | ||||||||||||||||||||
| Net income | – | |||||||||||||||||||
| BALANCE, March 31, 2024 | ||||||||||||||||||||
| Initial Public Offering of shares | ||||||||||||||||||||
| Net income | – | |||||||||||||||||||
| BALANCE, March 31, 2025 | ||||||||||||||||||||
| Follow-on offering of shares (1) | ||||||||||||||||||||
| Shares issued in lieu of fractional shares upon share consolidation (2) | ||||||||||||||||||||
| Net income | – | |||||||||||||||||||
| BALANCE, March 31, 2026 | ||||||||||||||||||||
| BALANCE, March 31, 2026 (US$) | ||||||||||||||||||||
| (1) | On a retroactively restated basis, |
The accompanying notes are an integral part of these consolidated financial statements.
F-5
RAYTECH HOLDING LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Years ended March 31, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| HKD | HKD | HKD | US$ | |||||||||||||
| Cash flows from operating activities | ||||||||||||||||
| Net income | ||||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||||||||
| Depreciation of plant and equipment | ||||||||||||||||
| Amortization of right-of-use asset | ||||||||||||||||
| Amortization of intangible asset | ||||||||||||||||
| Accretion of promissory note | ||||||||||||||||
| Deferred income tax | ( | ) | ( | ) | ||||||||||||
| Unrealized foreign currency translation | ( | ) | ( | ) | ( | ) | ||||||||||
| Changes in operating assets and liabilities | ||||||||||||||||
| Accounts receivables, net | ( | ) | ( | ) | ( | ) | ||||||||||
| Merchandise inventories, net | ( | ) | ( | ) | ||||||||||||
| Deposits and prepayments | ( | ) | ( | ) | ||||||||||||
| Long-term deposits | ||||||||||||||||
| Accounts payable | ( | ) | ( | ) | ||||||||||||
| Accounts payable - related party | ( | ) | ||||||||||||||
| Accruals and other payables | ||||||||||||||||
| Contract liabilities | ( | ) | ( | ) | ||||||||||||
| Amounts due to directors | ||||||||||||||||
| Operating lease obligation | ( | ) | ||||||||||||||
| Taxes payables | ||||||||||||||||
| Net cash provided by (used in) operating activities | ( | ) | ( | ) | ||||||||||||
| Cash flows from investing activities | ||||||||||||||||
| Repayment by the director | ||||||||||||||||
| Acquisition of a business, net of cash acquired | ( | ) | ( | ) | ||||||||||||
| Net cash provided by (used in) investing activities | ( | ) | ( | ) | ||||||||||||
| Cash flows from financing activities | ||||||||||||||||
| Deferred offering costs | ( | ) | ( | ) | ( | ) | ||||||||||
| Proceed from Initial Public Offering of shares | ||||||||||||||||
| Proceeds from Follow-On Offering of shares | ||||||||||||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||||||||||
| Change in cash | ( | ) | ( | ) | ||||||||||||
| Effect of foreign exchange on cash | ( | ) | ( | ) | ||||||||||||
| Cash at the beginning of the year | ||||||||||||||||
| Cash at the end of the year | ||||||||||||||||
| Supplementary cash flow information | ||||||||||||||||
| Cash paid for income tax | ||||||||||||||||
| Non-cash financing activity: promissory note issued at fair value as consideration for a business combination | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — NATURE OF BUSINESS AND ORGANIZATION
Raytech Holding Limited (the “Company” or “Raytech”) is a holding company incorporated on
In August 2022, the Company completed a reorganization of Pure Beauty under common control of its then existing shareholders, who collectively owned all of the equity interests of Raytech prior to the reorganization. Raytech and Pure Beauty are under common control which results in the consolidation of Pure Beauty at carrying value. The consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first period presented in the accompanying consolidated financial statements of Raytech.
The consolidated financial statements reflect the activities of each of the following entities:
| Name | Background | Ownership | Principal activities | |||
| Raytech Holding Limited (“Raytech”) | ● Incorporated on June 24, 2022 | |||||
| Pure Beauty Manufacturing Company Limited (“Pure Beauty”) | ● Incorporated on April 15, 2013 | |||||
| Raytech Innovation Limited (“Raytech Innovation”) | ● Incorporated on May 6, 2025 | |||||
| Worry free Group (Hong Kong) Limited (“Worry free”) | ● Incorporated on April 8, 2024 ● Acquired on December 29, 2025 |
Raytech Innovation Limited (“Raytech Innovation”) was incorporated in Hong Kong on May 6, 2025 as a wholly-owned subsidiary of the Company with initial share capital of HKD
On December 29, 2025, Raytech Innovation completed the acquisition of
F-7
RAYTECH
HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of Significant Accounting Policies and Practices
Basis of presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”).
Principles of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries. All inter-company transactions have been eliminated upon consolidation.
Use of estimates and assumptions
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant estimates required to be made by management include, but are not limited to, the fair value estimates applied in the business combination accounting for the acquisition, annual goodwill impairment assessments, the valuation of accounts receivables, and security deposits. Actual results could differ from those estimates.
Risks and uncertainties
Economic and political risks
The Company’s operations are mainly conducted in Hong Kong. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by changes in the political, economic, and legal environments in Hong Kong.
The Company’s operations in Hong Kong are subject to special considerations and significant risks not typically associated with companies in Asia, North America and Western Europe. These include risks associated with, among others, the political, economic, and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in Hong Kong, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.
F-8
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of Significant Accounting Policies and Practices (cont.)
Risks and uncertainties (cont.)
Inflation Risk
Management monitors changes in price levels. Historically inflation has not materially impacted the Company’s audited consolidated financial statements; however, significant increases in the price of raw materials and labor that cannot be passed to the Company’s customers could adversely impact Company’s results of operations.
World unrest due to wars and terrorist attacks have led to further economic disruptions. Mounting inflationary cost pressures and recessionary fears have negatively impacted the global economy. Since mid-2022, the U.S. Federal Reserve has addressed elevated inflation by increasing interest rates, as inflation remains elevated. Given current market conditions, the Company may be unable to access the capital markets, and additional capital may only be available to the Company on terms that could be significantly detrimental to the Company’s existing stockholders and to the Company’s business.
Foreign currency translation
The Company uses Hong Kong dollars (“HKD”) as its reporting currency. The functional currency of the Company and its subsidiaries which are incorporated in Hong Kong is HKD, which is its respective local currency based on the criteria of ASC 830, “Foreign Currency Matters”.
Convenience translation
Translations of amounts in the consolidated balance sheets, consolidated statements of income and consolidated statements of cash flows from HKD into US$ as of and for the year ended March 31, 2026 are solely for the convenience of the reader and were calculated at the noon buying rate of US$
In the consolidated financial statements of the Company, transactions in currencies other than the functional currency are measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. At the balance sheet date, monetary assets and liabilities that are denominated in currencies other than the functional currency are translated into the functional currency using the exchange rate at the balance sheet date. All gains and losses arising from foreign currency transactions are recorded in the consolidated statements of income during the year in which they occur.
Cash and cash equivalents
Cash and cash equivalents mainly represent cash at bank and demand deposits which have original maturities less than three months and are unrestricted as to withdrawal or use. As of March 31, 2025 and 2026, the Company had HKD
Accounts receivables, net
Accounts receivables are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts.
The Company makes estimates of expected credit and collectability trends for the allowance for credit losses and allowance for unbilled receivables based upon our assessment of various factors, including historical experience, the age of the accounts receivables balances, credit quality of our customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect our ability to collect from customers. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent accounts receivables are written off against the allowance for credit losses accounts after management has determined that the likelihood of collection is not probable.
Provision for credit losses accounts was and as of March 31, 2025 and 2026, respectively.
F-9
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of Significant Accounting Policies and Practices (cont.)
Merchandise inventories, net
Merchandise inventories are stated at the lower of cost or net realizable value, on a weighted average basis. Costs include mainly the cost of merchandise inventories. Any excess of the cost over the net realizable value of each item of merchandise inventories is recognized as a provision for diminution in the value of merchandise inventories. Net realizable value is the estimated selling price in the normal course of business less any costs to sell products. The Company periodically evaluates merchandise inventories for their net realizable value adjustments and reduces the carrying value of those merchandise inventories that are obsolete or in excess of the forecasted usage to their estimated net realizable value based on various factors including aging and expiration dates, as applicable, taking into consideration historical and expected future product sales. For the years ended March 31, 2025 and 2026, no merchandise inventory reserve was recorded because no slow-moving, obsolete, or damaged merchandise inventory was identified.
Deposits and Prepayments
Deposits primarily consist of deposits paid in daily operation. Prepayments primarily consist of prepaid expenses. These amounts are refundable and bear no interest. Management reviews its prepayments on a regular basis to determine if the allowance is adequate and adjusts the allowance when necessary. As of March 31, 2025 and 2026, allowance was deemed necessary.
Deferred offering costs
Pursuant to ASC 340-10-S99-1, offering costs directly attributable to an offering of equity securities are deferred and would be charged against the gross proceeds of the offering as a reduction of additional paid-in capital. These costs include legal fees related to the registration drafting and counsel, consulting fees related to the registration preparation, the SEC filing and print related costs. During the year ended March 31, 2025, the Company recorded a charge of related to the IPO. As of March 31, 2024 and 2025, the accumulated deferred offering costs were HKD
As of March 31, 2026, deferred offering costs of HKD
Long-term deposits
Long-term deposits are mainly for rents, utilities and monies deposited with certain manufacturers. These amounts are refundable and bear no interest. The long-term deposits are refunded from manufacturers when the terms and conditions set forth in the agreements have been satisfied.
Plant and equipment, net
Plant and equipment are stated at cost less accumulated depreciation and impairment if applicable. Depreciation is computed using the straight-line method after consideration of the estimated useful lives.
| Useful Life | ||
| Office equipment | ||
| Office furniture and fixtures | ||
| Leasehold improvements |
The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statements of operations. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals and betterment, which are expected to extend the useful life of assets, are capitalized. The Company also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives.
F-10
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of Significant Accounting Policies and Practices (cont.)
Impairment for long-lived assets
Long-lived assets, including plant and equipment and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company will reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. As of March 31, 2025 and 2026, impairment of long-lived assets was recognized.
Intangible assets
Intangible assets with finite useful lives, comprising the customer relationship intangible asset arising from the acquisition of Worry free (see Note 13), are amortized on a straight-line basis over their estimated useful lives of three years and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.
Business combinations
The Company accounts for business combinations using the acquisition method in accordance with ASC 805, Business Combinations. The consideration transferred is measured at fair value at the acquisition date, and the identifiable assets acquired and liabilities assumed are recognized at their acquisition-date fair values. The excess of the consideration transferred over the fair value of the identifiable net assets acquired is recorded as goodwill. Acquisition-related costs are expensed as incurred.
Goodwill
Goodwill represents the excess of the consideration transferred over the fair value of the identifiable net assets acquired in a business combination. Goodwill is not amortized but is tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that it may be impaired, in accordance with ASC 350, Intangibles — Goodwill and Other. Management performed a quantitative impairment assessment of the Worry free reporting unit as of March 31, 2026 under the income approach (discounted cash flow), using key assumptions including a discount rate (WACC) of
F-11
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of Significant Accounting Policies and Practices (cont.)
Fair value measurement
The accounting standard regarding fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by the Company.
The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures. The three levels are defined as follow:
| ● | Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. |
| ● | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. |
Financial instruments included in current assets and current liabilities are reported in the consolidated balance sheets at face value or cost, which approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest.
Leases
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities, and operating lease liabilities non-current in the Company’s consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option, if any. As the Company’s leases do not provide an implicit rate, the Company used an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company has elected to adopt the following lease policies in conjunction with the adoption of ASU 2016-02: (i) for leases that have lease terms of 12 months or less and does not include a purchase option that is reasonably certain to exercise, the Company elected not to apply ASC 842 recognition requirements; and (ii) the Company elected to apply the package of practical expedients for existing arrangements entered into prior to April 1, 2020 to not reassess (a) whether an arrangement is or contains a lease, (b) the lease classification applied to existing leases, and(c) initial direct costs.
Contract Balances
The timing of revenue recognition may differ from the timing of invoicing to customers. For certain services, customers are required to pay before the services are delivered. The Company recognizes a contract asset or a contract liability in the consolidated balance sheets, depending on the relationship between the Company’s performance and the customer’s payment.
The Company classifies its right to consideration in exchange for services transferred to a customer as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional as compared to a contract asset which is a right to consideration that is conditional upon factors other than the passage of time. The Company recognizes accounts receivables in its consolidated balance sheets when it performs a service in advance of receiving consideration and if it has the unconditional right to receive consideration. The Company did not have any capitalized contract costs as of March 31, 2025 and 2026.
Contract liabilities are recognized if the Company receives consideration in advance of performance. The Company expects to recognize a significant majority of this balance as revenue over the next 12 months, and the remainder thereafter. As of March 31, 2025 and 2026, the contract liabilities of the Company amounted to HKD
F-12
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of Significant Accounting Policies and Practices (cont.)
Revenue Recognition
Revenue from contracts with customers is recognized using the five-step model defined by ASC Topic 606, which requires the Company to (1) identify its contracts with customers, (2) identify its performance obligations under those contracts, (3) determine the transaction prices of those contracts, (4) allocate the transaction prices to its performance obligations in those contracts and (5) recognize revenue when each performance obligation under those contracts is satisfied. Revenue is recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services.
Under ASC 606, revenue is recognized when control of promised goods or services is transferred to the Company’s customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services. Control is the ability to direct the use of and obtain substantially all of the remaining benefits from the specified goods and services.
The Company generates its revenue through (i) sourcing and wholesaling beauty products as well as personal care products and other products; (ii) provision of product design and development services and project advisory services in relation to personal health care electronics; and (iii) provision of marketing solutions services.
Income from sales of products is earned from selling beauty and personal care products through sourcing and wholesale customers. The Company sells goods under Free On Board (“FOB”) shipping point term, and revenue is recognized when product is loaded on the ships and control is deemed as transferred. Typical payment terms set forth in the invoice are within
Income from sales of tooling is earned from manufacturing multiple tools, molds and assembly equipment as part of a tooling program for a customer. Given that the Company is providing a significant service of producing highly interdependent component parts of the tooling program, each component does not generate standalone values. It must be a completed mold so the customer can benefit from the purchase. Based on the arrangement with the customer, the Company recognizes revenue at a point in time. In such cases, the Company recognizes revenue at the evidence transfer of control.
The Company is the principal for the majority of its transactions and recognizes revenue on a gross basis. The Company is the principal when it has control of the merchandise before it is transferred to customers, which generally is established when the Company is primarily responsible for merchandising decisions, maintains the relationship with customer, and has pricing discretion.
Service income — product design and development services and project advisory services. Raytech Innovation, which commenced business operation on October 1, 2025, provides product design and development services and project advisory services in relation to personal health care electronics. Revenue is recognized over time on a cost-to-cost basis, with the Company as principal, single performance obligation per contract.
Service income — marketing solutions services. Worry free provides marketing solutions and execution services to its customers. The Company is considered the principal in these arrangements because it purchases and controls the traffic and other online services required to provide the services to its clients, bears sole responsibility for fulfillment and the related cost risks, and has full discretion in establishing prices. Accordingly, revenue is recognized on a gross basis. The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Customer contracts generally specify distinct project phases, the related deliverables, and the transaction price allocated to each phase. Each project phase is considered a separate performance obligation. Revenue is recognized at a point in time when the performance obligation for a project phase is satisfied, which occurs upon completion and delivery of the agreed deliverables and customer acceptance, when applicable. At that time, the customer obtains control of the deliverables, and the Company has an enforceable right to payment for the completed performance. Accordingly, revenue is recognized upon completion of each contractual milestone.
Cost of revenue
Merchandise costs of beauty products, personal care products and other products, which are directly related to revenue-generating transactions, primarily consist of cost of purchasing of products.
Service costs, which are directly related to service income, primarily consist of engineering and design costs and outsourced automation technology costs of Raytech Innovation and digital production, information technology engineering, design and content and marketing and branding costs of Worry free.
Selling, general and administrative expenses
Selling, general and administrative expenses consist primarily of motor vehicle running expenses, travelling and entertainment and general administrative expenses such as of staff costs, rental expenses, depreciation, legal and professional fees and other miscellaneous administrative expenses.
F-13
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of Significant Accounting Policies and Practices (cont.)
Employee Benefit
Hong Kong Employment Ordinance (“The Ordinance”) requires an employee employed under a continuous employment contract is entitled to sickness allowance if (1) the sick leave taken is not less than four consecutive days; (2) the sick leave taken is supported by an appropriate medical certificate; and (3) the employee has accumulated sufficient number of paid sickness days. The daily rate of sickness allowance is a sum equivalent to four-fifths of the average daily wages earned by an employee in the 12-month period preceding the first sickness day.
The Ordinance also requires an employee is entitled to 14 statutory holidays regardless of his or her length of services. Holiday pay should be paid to the employee whose continuous employment contract is not less than three months immediately preceding a statutory holiday is entitled to the holiday pay.
An employee is entitled to a paid annual leave after having been employed under a continuous employment contract for every 12 months. An employee’s paid annual leave increases progressively from 7 days to a maximum of 14 days in accordance with his or her length of employment.
Under Hong Kong Mandatory Provident Fund Schemes Ordinance, an employer shall enroll their regular employees in Mandatory Provident Fund Schemes. Regular employees are those who are at between 18 and 65 years of age and have been employed for consecutive 60 days or more. An employer is required to make regular mandatory contributions of at least
Income taxes
Raytech is not subject to tax on income or capital gains under the current laws of the British Virgin Islands. In addition, upon payments of dividends by Raytech and the Company’s subsidiaries in Hong Kong to the Company’s shareholders, no British Virgin Islands withholding tax will be imposed.
Pure Beauty, Raytech Innovation and Worry free are incorporated in and carry on trade and business in Hong Kong and are subject to Hong Kong profits tax under the Inland Revenue Ordinance. Pure Beauty; Raytech Innovation and Worry free are taxed at the standard profits tax rate of
The charge for taxation is based on actual results for the year as adjusted for items that are non-assessable or disallowed; and it is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. The Company is not currently subject to tax in the British Virgin Islands.
Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than
F-14
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of Significant Accounting Policies and Practices (cont.)
Related parties
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence, such as a family member or relative, shareholder, or a related corporation.
Commitments and Contingencies
In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such a contingency if it determines it is probable that a loss has occurred, and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter.
Earnings per share
The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average ordinary share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the years ended March 31, 2024, 2025 and 2026, there were dilutive shares.
All share and per share data presented in these consolidated financial statements have been retroactively restated to reflect the sixteen (16)-for-one (1) share consolidation of the Company’s ordinary shares effective on November 7, 2025 (see Note 11).
Concentration of Risks
Concentration of credit risk
Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, security deposits and accounts receivables. The Company places its cash with financial institutions with high credit ratings and quality.
Accounts receivables primarily comprise amounts receivables from the service customers. To reduce credit risk, the Company performs ongoing credit evaluations of the financial condition of these service customers. The Company establishes a provision for credit losses accounts based upon estimates, factors surrounding the credit risk of specific service customers and other information.
Concentration of customers
As of March 31, 2025, two customers accounted for
For the year ended March 31, 2024, two major customers accounted for
Concentration of suppliers
As of March 31, 2025, two suppliers accounted for
For the year ended March 31, 2024, one supplier accounted for
F-15
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of Significant Accounting Policies and Practices (cont.)
Segment reporting
ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in consolidated financial statements for detailing the Company’s business segments. Based on the criteria established by ASC 280, the Company’s chief operating decision maker (“CODM”) has been identified as the Chief Executive Officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company. Following the commencement of the product design, development and advisory services business of Raytech Innovation on October 1, 2025 and the acquisition of the marketing solutions business of Worry free on December 29, 2025, the chief operating decision maker reviews the discrete results of three operating businesses. Accordingly, the Company has three reportable segments: (i) sourcing and wholesaling of personal care electrical appliances (Pure Beauty); (ii) product design, development and advisory services (Raytech Innovation); and (iii) marketing solutions services (Worry free). Segment information is presented in Note 15. As the Company’s long-lived assets are substantially located in Hong Kong, no geographical segments are presented.
The chief operating decision maker, the Chief Executive Officer, reviews the revenue and net income of each of these three businesses in allocating resources and assessing performance. The comparative periods comprised the appliances business only. Detailed segment information is set out in Note 15.
Recently issued accounting pronouncements
In December 2025, the FASB issued ASU 2025-11, which is intended to improve the navigability of the guidance in ASC 270 and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP. The ASU also addresses the form and content of such financial statements, adds lists to ASC 270 of the interim disclosures required by all other Codification topics, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. As the Board stated in the proposed guidance and reiterates in the ASU, the amendments are not intended to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. For public business entities, the amendments in ASU 2025-11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. For entities other than public business entities, for interim reporting periods within annual reporting periods beginning after December 15, 2028. Early adoption is permitted for all entities.
In July 2025, the FASB issued ASU 2025-05, which amends ASC 326-20 to provide a practical expedient for all entities which elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset in developing reasonable and supportable forecasts as part of estimating expected credit losses, and an accounting policy election for all entities, other than a public business entity, that elect the practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. Under ASU 2025-05, an entity is required to disclose whether it has elected to use the practical expedient and, if so, whether it has also applied the accounting policy election. An entity that makes the accounting policy election is required to disclose the date through which subsequent cash collections are evaluated. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. Entities should apply the new guidance prospectively. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
In January 2025, the FASB issued ASU 2025-01, “Income Statement – Comprehensive Income – Expense Disaggregation Disclosure (Subtopic 220-40): Clarifying the Effective Date.” This pronouncement revises the effective date of ASU 2024-03 and clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Entities within the ASU’s scope are permitted to early adopt the accounting standard update. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This pronouncement introduces new disclosure requirements aimed at enhancing transparency in financial reporting by requiring disaggregation of specific income statement expense captions. Under the new guidance, entities are required to disclose a breakdown of certain expense categories, such as: employee compensation; depreciation; amortization, and other material components. The disaggregated information can be presented either on the face of the income statement or in the notes to the financial statements, often using a tabular format. The ASU is effective for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact. In January 2025, the FASB issued ASU 2025-01, which revises the effective date of ASU 2024-03 (on disclosures about disaggregation of income statement expenses) “to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.” Entities within the ASU’s scope are permitted to early adopt the ASU. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
F-16
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3 — Revenue
Effective April 1, 2020, the Company adopted ASC Topic 606, Revenue from Contracts with Customers, which replaced ASC Topic 605, using the modified retrospective method of adoption. Results for reporting periods beginning after April 1, 2020 are presented under ASC Topic 606 while prior period amounts are not adjusted and continue to be presented under the Company’s historic accounting under ASC Topic 605. The Company’s accounting for revenues remains substantially unchanged. There were no cumulative effect adjustments made to the contracts in place prior to July 1, 2019. The effect from the adoption of ASC Topic 606 was not material to the Company’s consolidated financial statements.
Revenue is recognized when control of promised goods or services is transferred to the Company’s customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services. Control is the ability to direct the use of and obtain substantially all of the remaining benefits from the specified goods and services.
The following table presents the Company’s revenue disaggregated by product categories for the years ended March 31, 2024, 2025 and 2026, respectively:
| For the years ended March 31, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| HKD | HKD | HKD | US$ | |||||||||||||
| Sales of products | ||||||||||||||||
| Hair styling series | ||||||||||||||||
| Trimmer series | ||||||||||||||||
| Eyelash curler | ||||||||||||||||
| Nail care series | ||||||||||||||||
| Other personal care appliances | ||||||||||||||||
| Sales of tooling | ||||||||||||||||
| Service income | ||||||||||||||||
| Product design and development | ||||||||||||||||
| Project advisory | ||||||||||||||||
| Marketing solutions | ||||||||||||||||
| Total | ||||||||||||||||
Note 4 — ACCOUNTS RECEIVABLES, NET
Accounts receivables, net consisted of the following:
| As of March 31, | ||||||||||||
| 2025 | 2026 | 2026 | ||||||||||
| HKD | HKD | US$ | ||||||||||
| Accounts receivables | ||||||||||||
| Less: allowance for credit losses accounts | ||||||||||||
| Accounts receivables, net | ||||||||||||
F-17
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4 — ACCOUNTS RECEIVABLES, NET (cont.)
As of the end of each of the financial year, the aging analysis of accounts receivables, net of allowance for credit losses accounts, based on the invoice date is as follows:
| As of March 31, | ||||||||||||
| 2025 | 2026 | 2026 | ||||||||||
| HKD | HKD | US$ | ||||||||||
| Within 30 days | ||||||||||||
| Within 31 to 60 days | ||||||||||||
| Within 61 to 90 days | ||||||||||||
| Over 90 days | ||||||||||||
| Total accounts receivables, net | ||||||||||||
There was provision of credit losses debts for the years ended March 31, 2025 and 2026, respectively.
Note 5 — MERCHANDISE INVENTORIES, NET
Merchandise inventories, net, consisted of the following:
| As of March 31, | ||||||||||||
| 2025 | 2026 | 2026 | ||||||||||
| HKD | HKD | US$ | ||||||||||
| Hair styling series | ||||||||||||
| Trimmer series | ||||||||||||
| Other personal care appliances | ||||||||||||
| Less: inventory allowances | ||||||||||||
| Merchandise inventories, net | ||||||||||||
There was inventory impairment for the years ended March 31, 2025 and 2026, respectively.
F-18
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6 — PLANT AND EQUIPMENT, NET
Plant and equipment, net, consisted of the following:
| As of March 31, | ||||||||||||
| 2025 | 2026 | 2026 | ||||||||||
| HKD | HKD | US$ | ||||||||||
| Office equipment | ||||||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ( | ) | ||||||
| Plant and equipment, net | ||||||||||||
Depreciation expenses recognized for the years ended March 31, 2025 and 2026 amounted to and , respectively, as the plant and equipment were fully depreciated since 2023.
impairment loss had been recognized during the years ended March 31, 2025 and 2026, respectively.
Note 7 — ACCRUALS
Accruals consisted of the following:
| As of March 31, | ||||||||||||
| 2025 | 2026 | 2026 | ||||||||||
| HKD | HKD | US$ | ||||||||||
| Professional fee | ||||||||||||
| Employee payroll and other benefits | ||||||||||||
| Commission | ||||||||||||
| Total accruals | ||||||||||||
Note 8 — CONTRACT LIABILITIES
Movement in contract liabilities, consisted of the following:
| As of March 31, | ||||||||||||
| 2025 | 2026 | 2026 | ||||||||||
| HKD | HKD | US$ | ||||||||||
| At the beginning | ||||||||||||
| Receipt from the clients | ||||||||||||
| Revenue recognized during the year | ( | ) | ( | ) | ( | ) | ||||||
| Exchange alignment | ( | ) | ||||||||||
| At the end | ||||||||||||
Contract liabilities represent consideration received from customers prior to satisfying related performance obligations under ASC 606. The Company’s primary performance obligations consist of product design and development services and project advisory services. Revenue is recognized over time using an input method to measure progress based on contract costs incurred.
As of March 31, 2026, the full balance of contract liabilities is expected to be recognized as revenue within twelve months after the reporting date as the Company fulfils these service obligations under the underlying customer contracts.
F-19
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9 — TAXES
Income tax
British Virgin Islands
The Company is incorporated in the BVI and is not subject to tax on income or capital gains under current BVI law. In addition, upon payments of dividends by these entities to their shareholders, no BVI withholding tax will be imposed.
Hong Kong
Pure Beauty, Raytech Innovation and Worry free are incorporated in Hong Kong and are subject to Hong Kong profits tax at a rate of
Taxation in the statement of income represents:
| For the years ended March 31, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| HKD | HKD | HKD | US$ | |||||||||||||
| Hong Kong profits tax provision for the year: | ||||||||||||||||
| Current | ||||||||||||||||
| Deferred | ( | ) | ( | ) | ||||||||||||
The following table reconciles Hong Kong statutory rates to the Company’s effective tax rate:
| For the years ended March 31, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| HKD | HKD | HKD | US$ | |||||||||||||
| Income before tax | ||||||||||||||||
| Hong Kong statutory income tax rate | % | % | % | % | ||||||||||||
| Income tax expense computed at statutory rate | ||||||||||||||||
| Reconciling items: | ||||||||||||||||
| Non-deductible items in Hong Kong | ||||||||||||||||
| Non-taxable items in Hong Kong | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Two-tiered profits tax rates benefit | ) | ( | ) | |||||||||||||
| Tax Effect of amortization of intangible assets acquired in business combination | ( | ) | ( | ) | ||||||||||||
| Under provision for prior year | ||||||||||||||||
| Tax credit | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Effective income tax expenses | ||||||||||||||||
Uncertain tax positions
The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of March 31, 2024, 2025 and 2026, the Company did not have any unrecognized tax benefits. For the years ended March 31, 2024, 2025 and 2026, the Company had unrecognized tax benefits.
F-20
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10 — Related party balances and transactions
The Company’s relationships with related parties who had transactions with the Company are summarized as follows:
| Related Party Name | Relationship to the Company | |
| Mr. Ching Tim Hoi (“Mr. Ching”) | ||
| Zhongshan Raytech Electric Appliances Manufacturing Company Limited (“Zhongshan Raytech”) | ||
| Raytech Holdings Company Limited | ||
| Mr. Ling Chun Yin (“Mr. Ling”) | ||
| Ms. Wang Yafeng | ||
| Yuan Chun Holding Co. | ||
| Mr. Liu Zhiwei / Chunda International Capital Management Limited | ||
| Mr. Peng Yi |
| a. | Accounts payables - related parties |
Due to related parties consisted of the following:
| As of March 31, | ||||||||||||
| 2025 | 2026 | 2026 | ||||||||||
| HKD | HKD | US$ | ||||||||||
| Name of related parties | ||||||||||||
| Zhongshan Raytech | ||||||||||||
| Raytech Holdings Company Limited | ||||||||||||
| Total | ||||||||||||
These accounts payables to related parties were related to products we purchased from these related parties. See “—Purchase from a Related Party” for more information.
F-21
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10 — Related party balances and transactions (Cont.)
Related party transactions
| b. | Purchase products from related parties |
| For the years ended March 31, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| HKD | HKD | HKD | US$ | |||||||||||||
| Name of related parties | ||||||||||||||||
| Zhongshan Raytech | ||||||||||||||||
| Raytech Holdings Company Limited | ||||||||||||||||
| Total | ||||||||||||||||
Due to related parties and directors consisted of the following:
As of March 31, 2026, the amount due to a related party of HKD
As of March 31, 2026, amounts due to directors of HKD
In connection with the acquisition of Worry free (see Note 13), Raytech Innovation issued a promissory note in the principal amount of US$
| c. | Office leasing from a related party |
| For the years ended March 31, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| HKD | HKD | HKD | US$ | |||||||||||||
| Name of a related party | ||||||||||||||||
| Raytech Holdings Company Limited | ||||||||||||||||
| Total | ||||||||||||||||
| d. | Commission from a related party |
| For the years ended March 31, | ||||||||||||||||
| 2024 | 2025 | 2026 | 2026 | |||||||||||||
| HKD | HKD | HKD | US$ | |||||||||||||
| Name of a related party | ||||||||||||||||
| Mr. Ling | ||||||||||||||||
| Total | ||||||||||||||||
F-22
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11 — EQUITY
Ordinary shares
On August 2, 2022,
On May 10, 2023, the Company effected a share split of all issued and outstanding shares of
In April 2024, the Company completed its initial public offering, in which
On July 1, 2025, the Company completed a follow-on offering and issued
On October 17, 2025, the Board of Directors approved a share consolidation pursuant to which every sixteen (
Dividend
During the years ended March 31, 2025 and 2026, the Company has not declared any dividend to its shareholders. During the year ended March 31, 2026, Pure Beauty declared a dividend of HKD
Note 12 — COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company determines if a contract contains a lease at inception. US GAAP requires that the Company’s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option which results in an economic penalty.
The Company has one property lease agreement with a lease term of
F-23
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13 — BUSINESS COMBINATION AND GOODWILL
On December 23, 2025, Raytech Innovation entered into an agreement for the sale and purchase of
The acquisition has been accounted for as a business combination using the acquisition method under ASC 805. During the year ended March 31, 2026, the Company finalized the purchase price allocation with the assistance of an independent valuation specialist, Greater China Appraisal Limited (valuation date December 29, 2025). The consideration transferred was measured at its acquisition-date fair value of US$
Total consideration transferred: HKD
For the period from December 29, 2025 to March 31, 2026, Worry free contributed revenue of HKD
The carrying amount of goodwill as of March 31, 2026 was HKD
Note 14 — SUBSEQUENT EVENTS
The Company evaluated all events and transactions that occurred from March 31, 2026 up through July 31, 2026, which is the date that these consolidated financial statements were available to be issued. Other than as disclosed below, there were no other material subsequent events that require disclosure in these consolidated financial statements.
On April 15, 2026, the Company appointed Mr. Liu Haoyuan as Chairman of the Board of Directors and Executive Director, and announced a strategic expansion of its business focus toward the provision of services in relation to personal health care electronics, including product design, development and consultations, led by Raytech Innovation.
On June 12, 2026, the Company incorporated Fluxen Limited in Hong Kong with an initial issued share capital of
Subsequent to March 31, 2026, the amount due to a related party of HKD
In June 2026, the Company completed a takedown under its shelf registration statement on Form F-3 (File No. 333-290696), issuing
F-24
RAYTECH HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 15 — SEGMENT INFORMATION
Following the commencement of the product design, development and advisory services business of Raytech Innovation on October 1, 2025 and the acquisition of the marketing solutions business of Worry free on December 29, 2025,
The chief operating decision maker assesses segment performance based on segment net income. The significant segment expenses regularly provided to the chief operating decision maker are merchandise costs (Appliances) and service costs (the two services segments); “other segment items, net” comprises selling, general and administrative expenses, other income and expense (including interest) and income tax.
| For the year ended March 31, 2026 (HKD) | Appliances | Design, development & advisory | Marketing solutions | Corporate / unallocated | Total | |||||||||||||||
| Revenue from external customers | ||||||||||||||||||||
| Merchandise costs | ( | ) | ( | ) | ||||||||||||||||
| Service costs | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Depreciation and amortisation | ( | ) | ) | |||||||||||||||||
| Other segment items, net | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Segment profit/(loss) (net income) | ( | ) | ||||||||||||||||||
| Goodwill | ||||||||||||||||||||
| Intangible asset, net | ||||||||||||||||||||
F-25