ZDAI 20-F
DirectBooking Technology Co., Ltd. (ZDAI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
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) |
| Not applicable |
| (Translation of Registrant’s name into English) |
| (Jurisdiction of incorporation or organization) |
Chief Executive Officer |
| (Address of principal executive offices) |
+852 3997 3682 |
| (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) |
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The
|
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 common stock as of the close of the period covered by the annual report.
As of March 31, 2026, there were Class A Ordinary Shares, par value US$ per share, outstanding and 0 Class B Ordinary Shares, par value US$ per share, outstanding.
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 ☒
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.
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
(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 Sections 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 or the context otherwise requires, all references in this annual report to:
“Articles” or “Articles of Association” are to the third amended and restated articles of association of our Company as adopted by a special resolution of our Company passed on and effective as of March 25, 2026, and as amended, supplemented and/or otherwise modified from time to time;
“biodiesel” are to B5 biodiesel, a type of biodiesel blend consisting of 95% pure motor vehicle diesel and 5% motor vehicle biodiesel;
“BVI” are to the British Virgin Islands;
“C&D materials” are to construction and demolition materials, being any substance, matter or thing which is generated as a result of construction work and abandoned whether or not it has been processed or stockpiled before abandoned. It is a mixture of surplus materials arising from site clearance, excavation, construction, refurbishment, renovation, demolition and road works;
“Celestial Power” are to CELESTIAL POWER GROUP LIMITED, a BVI business company limited by shares incorporated in the BVI, a direct wholly owned subsidiary of ZDAI;
“Class A Ordinary Shares” are to our Class A ordinary shares, par value US$0.0008 per share;
“Class B Ordinary Shares” are to our Class B ordinary shares, par value US$0.0008 per share;
“Companies Act” are to the Companies Act (Revised) of the Cayman Islands, as amended, supplemented or otherwise modified from time to time;
“Company,” “we,” “us,” “our” or “ZDAI” are to DirectBooking Technology Co., Ltd. (formerly Primega Group Holdings Limited), an exempted company incorporated in the Cayman Islands with limited liability on April 14, 2022, that issued the Ordinary Shares being offered;
“construction waste” are to any substance, matter or thing that is generated from construction work and abandoned, whether or not it has been processed or stockpiled before being abandoned;
“COVID-19” are to the Coronavirus Disease 2019;
“ELS” are to excavation and lateral support;
“EPD” are to the Environmental Protection Department of the government of Hong Kong;
“Exchange Act” are to the U.S. Securities Exchange Act of 1934, as amended;
“former name” are to Primega Group Holdings Limited;
“HKD” or “HK$” are to Hong Kong dollar(s), the lawful currency of Hong Kong;
“Hong Kong” are to Hong Kong Special Administrative Region of the People’s Republic of China;
“Independent Third Party” are to a person or company who or which is independent of and is not a 5% owner of, does not control and is not controlled by or under common control with any 5% owner and is not the spouse or descendant (by birth or adoption) of any 5% owner of the Company;
“IPO” are to an initial public offering of securities;
| ii |
“Macau” are to the Macau Special Administrative Region of the People’s Republic of China;
“Memorandum” or “Memorandum of Association” are to the amended and restated memorandum of association of our Company as adopted by a special resolution of our Company passed on July 18, 2024 and effective on July 24, 2024, and as amended, supplemented and/or otherwise modified from time to time;
“Nasdaq” are to Nasdaq Stock Market LLC;
“Ordinary Shares” or “Shares” are to our Class A Ordinary Shares and Class B Ordinary Shares, collectively, unless the context otherwise requires;
“PCAOB” are to Public Company Accounting Oversight Board;
“PRC” or “China” are to the People’s Republic of China including Hong Kong and Macau and, excluding, for the purpose of this annual report, Taiwan;
“pre-IPO shareholders” are to Dusk Moon International Limited, Moss Mist Investment Limited, Primewin Corporate Development Limited and Shun Kai Investment Development Limited;
“Primega Construction” are to Primega Construction Engineering Co. Limited, a company incorporated under the laws of Hong Kong with limited liability, an indirect wholly owned subsidiary of ZDAI and our operating subsidiary conducting business operations in Hong Kong;
“public fill” are to the recyclable or reusable inert materials of C&D materials, comprising rock, concrete, asphalt, bricks, stones, and soil which can be used as fill materials in reclamation and other earth filling projects;
“SEC” or “Securities and Exchange Commission” are the United States Securities and Exchange Commission;
“Securities Act” are to the U.S. Securities Act of 1933, as amended; and
“U.S. dollars” or “$” or “USD” or “dollars” are to United States dollar(s), the lawful currency of the United States
We have made rounding adjustments to some of the figures included in this annual report. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.
ZDAI is a holding company with operations conducted in Hong Kong through its operating subsidiary in Hong Kong, Primega Construction. Primega Construction’s reporting currency is Hong Kong dollars. This annual report contains translations of Hong Kong dollars into U.S. dollars solely for the convenience of the reader. Unless otherwise noted, all translations from Hong Kong dollars to U.S. dollars and from U.S. dollars to Hong Kong dollars in this annual report were calculated at the noon buying rate of US$1 = HK$7.8, representing the noon buying rate in The City of New York for cable transfers of HK$ as certified for customs purposes by the Federal Reserve Bank of New York. We make no representation that the HKD or U.S. dollar amounts referred to in this annual report could have been or could be converted into U.S. dollars or HKD, as the case may be, at any particular rate or at all. ZDAI’s fiscal year ends on March 31.
| iii |
FORWARD-LOOKING INFORMATION
This annual contains forward-looking statements that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by the words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “goal,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. The forward-looking statements and opinions contained in this annual report are based upon information available to us as of the date of this annual report and, while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Forward-looking statements include statements about:
| ● | timing of the development of future business; | |
| ● | capabilities of our business operations; | |
| ● | expected future economic performance; | |
| ● | competition in our market; | |
| ● | continued market acceptance of our services and products; | |
| ● | changes in the laws that affect our operations; | |
| ● | inflation and fluctuations in foreign currency exchange rates; | |
| ● | continued development of a public trading market for our securities; | |
| ● | the cost of complying with current and future governmental regulations and the impact of any changes in the regulations on our operations; | |
| ● | managing our growth effectively; | |
| ● | projections of revenue, earnings, capital structure and other financial items; | |
| ● | fluctuations in operating results; | |
| ● | dependence on our senior management and key employees; and | |
| ● | other factors set forth under “Item 3. Key Information – D. Risk Factors.” |
You should refer to the section titled “Item 3. Key Information – D. Risk Factors” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this annual report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
| iv |
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. Selected Financial Data
The following table presents the selected consolidated financial information for our Company. Our historical results do not necessarily indicate results expected for any future periods. The selected consolidated financial data should be read in conjunction with, and are qualified in their entirety by reference to, our audited consolidated financial statements and related notes and “Item 5. Operating and Financial Review and Prospects” below. Our audited consolidated financial statements are prepared and presented in accordance with U.S. GAAP.
The summary consolidated statements of operations and cash flow
| For the Year Ended March 31, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| REVENUE | 13,464,430 | 19,275,673 | 8,935,021 | |||||||||
| Direct cost of revenues | (10,695,826 | ) | (17,596,008 | ) | (10,856,424 | ) | ||||||
| Gross profit (loss) | 2,768,604 | 1,679,665 | (1,921,403 | ) | ||||||||
| Operating expenses | ||||||||||||
| General and administrative expenses | (1,336,394 | ) | (8,845,949 | ) | (11,808,274 | ) | ||||||
| Income (loss) from operation | 1,432,210 | (7,166,284 | ) | (13,729,677 | ) | |||||||
| Interest expense | (210,713 | ) | (224,412 | ) | (183,361 | ) | ||||||
| Other income, net | 116,397 | 290,337 | 354,097 | |||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | 1,337,894 | (7,100,359 | ) | (13,558,941 | ) | |||||||
| Income tax (expenses) recovery | (246,609 | ) | 119,291 | 267,774 | ||||||||
| NET INCOME (LOSS) | 1,091,285 | (6,981,068 | ) | (13,291,167 | ) | |||||||
| For the Year Ended March 31, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Net cash provided by (used in) operating activities | 2,394,212 | (2,819,237 | ) | (1,292,762 | ) | |||||||
| Net cash provided by (used in) investing activities | 21,276 | 747 | (12,235,420 | ) | ||||||||
| Net cash (used in) provided by financing activities | (2,166,272 | ) | 2,785,008 | 13,216,423 | ||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 249,216 | (33,482 | ) | (311,759 | ) | |||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 240,219 | 489,435 | 455,953 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | - | - | (14,010 | ) | ||||||||
| CASH AND CASH EQUIVALENTS AT END OF YEAR | 489,435 | 455,953 | 130,184 | |||||||||
| 1 |
The summary consolidated balance sheet as at March 31, 2025 and 2026
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | 455,953 | 130,184 | ||||||
| Accounts receivable, net– third parties, net of credit loss allowance of USD873,327 and USD2,832,774 | 6,793,145 | 2,876,417 | ||||||
| Accounts receivable, net – related parties, net of credit loss allowance of USDNil and USDNil | 445,573 | 339,395 | ||||||
| Retention receivable, net of credit loss allowance of USD384,647 as of March 31, 2026 | - | - | ||||||
| Prepayment, deposits and other receivable | 3,182,185 | 13,580,633 | ||||||
| Total current assets | 10,876,856 | 16,926,629 | ||||||
| Property, plant and equipment, net | 166,604 | 35,862 | ||||||
| Right-of-use assets – Finance lease | 4,137,919 | 2,412,073 | ||||||
| Right-of-use assets – Operating lease | 56,836 | 11,175 | ||||||
| Retention receivable, net of credit loss allowance of USD29,077 as of March 31, 2025 | 464,070 | - | ||||||
| Total non-current assets | 4,825,429 | 2,459,110 | ||||||
| TOTAL ASSETS | 15,702,285 | 19,385,739 | ||||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Bank loans - current | 110,766 | 102,011 | ||||||
| Finance lease liabilities – current | 945,564 | 804,467 | ||||||
| Finance lease liabilities – current – related parties | 337,361 | 200,765 | ||||||
| Operating lease liabilities – current | 41,828 | 10,446 | ||||||
| Accounts payable, accruals, and other current liabilities | 1,602,094 | 1,348,126 | ||||||
| Amount due to related parties | 686,326 | 1,708,019 | ||||||
| Income taxes payable | 378,439 | 161,500 | ||||||
| Total current liabilities | 4,102,378 | 4,335,334 | ||||||
| Non-current liabilities | ||||||||
| Bank loans – non-current | 839,848 | 749,993 | ||||||
| Finance lease liabilities - non-current | 1,262,612 | 451,800 | ||||||
| Finance lease liabilities – non-current – related parties | 478,011 | 299,074 | ||||||
| Operating lease – non-current | 10,446 | - | ||||||
| Deferred tax liabilities | 267,774 | - | ||||||
| Total non-current liabilities | 2,858,691 | 1,500,867 | ||||||
| TOTAL LIABILITIES | 6,961,069 | 5,836,201 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity | ||||||||
| Ordinary shares (par value of US$ 0.0008; 1,000,000,000 shares authorized; 1,650,000 shares issued and outstanding as of March 31 2025) *# | 1,320 | - | ||||||
| Class A ordinary shares (par value of US$0.0008 per share; 4,900,000,000 Class A ordinary shares authorized, 8,388,473 Class A ordinary shares issued and outstanding as of March 31, 2026) *# | - | 6,711 | ||||||
| Class B ordinary shares (par value of US$0.0008 per share; 100,000,000 Class B ordinary shares authorized, Nil Class B ordinary shares issued and outstanding as of March 31, 2026) *# | - | - | ||||||
| Additional paid in capital | 11,433,575 | 29,400,926 | ||||||
| Accumulated other comprehensive income | - | 126,747 | ||||||
| Accumulated deficits | (2,693,679 | ) | (15,984,846 | ) | ||||
| Total shareholders’ equity | 8,741,216 | 13,549,538 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 15,702,285 | 19,385,739 | ||||||
| * | The shares and per share data are presented on a prospective basis to reflect the share reclassification on December 14, 2025. |
| # | The shares and per share data are presented on a retroactive basis to reflect the share consolidation (reverse share split) on February 17, 2026. |
Our management believes that the assumptions underlying our financial statements and the above allocations are reasonable. Our financial statements, however, may not necessarily reflect our results of operations, financial position and cashflows as if we had operated as a separate, stand-alone company during the periods presented. You should not view our historical results as an indicator of our future performance.
B. Capitalization and indebtedness.
Not applicable.
C. Reasons for the offer and use of proceeds.
Not applicable.
| 2 |
D. Risk factors
An investment in our Class A Ordinary Shares involves a high degree of risk. You should carefully consider the following information about these risks, together with the other information appearing elsewhere in this annual report, before deciding to invest in our Class A Ordinary Shares. The occurrence of any of the following risks could have a material adverse effect on our business, financial condition, results of operations and future growth prospects. In these circumstances, the market price of our Class A Ordinary Shares could decline, and you may lose all or part of your investment.
Risks Related to Doing Business in Jurisdictions We Operate
Our operations are in Hong Kong, a special administrative region of the PRC. According to the long-arm provisions under the current PRC laws and regulations, the PRC government 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 our Class A Ordinary Shares. The PRC government may 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 PRC government may also be quick with little advance notice and our assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain.
ZDAI is a holding company and we conduct our operations in Hong Kong through Primega Construction. Hong Kong is a special administrative region of the PRC. As of the date of this annual report, we are not materially affected by recent statements by the PRC government indicating an intention to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. However, due to certain long-arm provisions in the current PRC laws and regulations, there remains regulatory uncertainty with respect to the implementation and interpretation of laws in China as they may affect Hong Kong. The PRC government may choose to exercise additional oversight and discretion over Hong Kong, and the policies, regulations, rules, and the enforcement of laws of the PRC government 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 the PRC and our assertions and beliefs of the risk imposed by the PRC legal and regulatory system are by their very nature uncertain.
In addition, these PRC laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, which may result in inconsistency with our current policies and practices. New laws, regulations, and other government directives in the PRC may also be costly to comply with, and such compliance, 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 | |
| ● | 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. |
We are aware that recently the PRC government initiated a series of regulatory actions and statements to regulate business operations in certain areas in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using a VIE 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 the PRC legislative or administrative regulation making bodies will respond or what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, or what the potential impact that any such modified or new laws and regulations would 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 and may exert more control over offerings conducted overseas and foreign investment in Hong Kong-based issuers, which may result in a material change in our operations and/or the value of our Class A Ordinary Shares. For example, there is currently no restriction or limitation under the laws of Hong Kong on the conversion of Hong Kong 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 the ultimate holding company and the operating subsidiary 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 to outside of Hong Kong and may affect our ability to receive funds from our operating subsidiary in Hong Kong. The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case, that restrict or otherwise unfavorably impact our ability to conduct our business could require us to change certain aspects of our business to ensure compliance; decrease demand for our services; reduce revenues; increase costs; require us to obtain more licenses, permits, approvals, or certificates; or subject us to additional liabilities. To the extent any new or more stringent measures are implemented, our business, financial condition, and results of operations could be adversely affected and the value of our Class A Ordinary Shares could decrease or become worthless.
| 3 |
There are uncertainties regarding the interpretation and enforcement of PRC and Hong Kong laws, rules, and regulations.
A substantial majority of our operations are conducted in Hong Kong, and are mainly governed by Hong Kong laws, rules, and regulations. The legal system in Hong Kong is a common law system, based on a combination of English common law, local cases and local legislation. However, our Hong Kong operating subsidiary Primega Construction may become subject to laws, rules, and regulations applicable to foreign investment in China. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value. These laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement could be unpredictable with little advance notice, which could result in a material change in our operations and/or the value of our Class A Ordinary Shares.
In 1979, the PRC government began to promulgate a comprehensive system of laws, rules, and regulations governing economic matters in general. The overall effect of legislation over the past four decades has significantly enhanced the protections afforded to various forms of foreign investment in China. However, China has not developed a fully integrated legal system, and recently enacted laws, rules, and regulations may not sufficiently cover all aspects of economic activities in China or may be subject to significant degrees of interpretation by PRC regulatory agencies. In particular, because these laws, rules, and regulations are relatively new, and because of the limited number of published decisions and the non-binding nature of such decisions, and because the laws, rules, and regulations often give the relevant regulator significant discretion in how to enforce them, the interpretation and enforcement of these laws, rules, and regulations involve uncertainties and can be inconsistent and unpredictable. In addition, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, and which may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until after the occurrence of the violation.
Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems.
If the PRC government chooses to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China based issuers, such action may significantly limit or completely hinder our ability to offer or continue to offer Class A Ordinary Shares to investors and cause the value of our Class A Ordinary Shares to significantly decline or be worthless.
Recent statements by the PRC government have indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in China based issuers. On July 10, 2021, for comments from the public, the CAC issued the Measures for Cybersecurity Review (the “Revised Draft”), which required that, among others, in addition to “operator of critical information infrastructure” any “data processor” controlling personal information of no less than one million users which seeks to list in a foreign stock exchange should also be subject to cybersecurity review. Pursuant to Article 6 of the Revised Draft, companies holding data or more than one million users must apply for cybersecurity approval when seeking overseas listings because of the risk that such data and personal information could be “affected, controlled, and maliciously exploited by foreign governments.” On December 28, 2021, the CAC published the revised Cybersecurity Review Measures (“CRM”), which further restates and expands the applicable scope of the cybersecurity review. The revised CRM took effect on February 15, 2022, and replaced the Revised Draft issued on July 10, 2021. Pursuant to the revised CRM, if a network platform operator holding personal information of over one million users seeks for “foreign” listing, it must apply for the cybersecurity review. Our business belongs to the construction industry, which does not involve the collection of user data, implicate cybersecurity, or involve any other type of restricted industry. As a result, the likelihood of us being subject to the review of the CAC is remote. On October 28, 2025, the Standing Committee of the National People’s Congress amended the Cybersecurity Law, effective on January 1, 2026, which strengthens enforcement measures and significantly increased penalties for violations of the law.
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On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, which came into effect on March 31, 2023. On the same date of the issuance of the Trial Measures, the CSRC circulated No.1 to No.5 Supporting Guidance Rules, the Notes on the Trial Measures, the Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and the relevant CSRC Answers to Reporter Questions on the official website of the CSRC, or collectively, the Guidance Rules and Notice. The Trial Measures, together with the Guidance Rules and Notice, reiterate the basic supervision principles as reflected in the Draft Overseas Listing Regulations by providing substantially the same requirements for filings of overseas offering and listing by domestic companies, yet made the following updates compared to the Draft Overseas Listing Regulations: (a) further clarification of the circumstances prohibiting overseas issuance and listing; (b) further clarification of the standard of indirect overseas listing under the principle of substance over form, and (c) adding more details of filing procedures and requirements by setting different filing requirements for different types of overseas offering and listing. Pursuant to the Trial Measures, the Guidance Rules and Notice, domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure and report relevant information to the CSRC within three working days following its submission of initial public offerings or listing application.
As of the date of this annual report, our registered public offering in the United States is not subject to the review or prior approval of the CAC nor the CSRC. We do not intend to seek approval of this offering from the CAC or the CSRC. Uncertainties still exist, however, due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future. It is uncertain whether the PRC government will adopt additional requirements or extend the existing requirements to apply to our operating subsidiary located in Hong Kong. Any future action by the PRC government expanding the categories of industries and companies whose foreign securities offerings are subject to review by the CSRC or the CAC could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless.
In the event that (i) the PRC government expands the categories of industries and companies whose foreign securities offerings are subject to review by the CSRC or the CAC such that we are required to obtain such permissions or approvals; or (ii) we inadvertently concluded that relevant permissions or approvals were not required or that we did not receive or maintain relevant permissions or approvals required, any action taken by the PRC government could significantly limit or completely hinder our operations, significantly limit or completely hinder our ability to offer our Class A Ordinary Shares to investors, and cause the value of such Shares to significantly decline or become worthless.
Adverse regulatory developments in China may subject us to additional regulatory review, and additional disclosure requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in China may impose additional compliance requirements for companies like us with Hong Kong-based operations, all of which could increase our compliance costs and subject us to additional disclosure requirements.
Currently, Hong Kong has a separate legal system from mainland China, and it has its legislative framework and judiciary independent of that of the PRC government. Nonetheless, the recent regulatory developments in China, in particular with respect to restrictions on China-based companies raising capital offshore, may lead to additional regulatory review in China over our financing and capital raising activities in the United States. In addition, we may be subject to industry-wide regulations that may be adopted by the relevant PRC authorities, which may have the effect of limiting our service offerings, restricting the scope of our operations in Hong Kong, or causing the suspension or termination of our business operations in Hong Kong entirely. We may have to adjust, modify, or completely change our business operations in response to adverse regulatory changes or policy developments, and we cannot assure you that any remedial action adopted by us can be completed in a timely, cost efficient, or liability-free manner or at all.
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On July 30, 2021, in response to the recent regulatory developments in China and actions adopted by the PRC government, the Chairman of the SEC issued a statement asking the SEC staff to seek additional disclosures from offshore issuers associated with China-based operating companies (including Hong Kong) before their registration statements will be declared effective. On August 1, 2021, the CSRC issued a statement saying that it had taken note of the new disclosure requirements announced by the SEC regarding the listings of Chinese companies and the recent regulatory development in China, and that both countries should strengthen communications on regulating China-related issuers. Since we operate in Hong Kong, we cannot guarantee that we will not be subject to tightened regulatory review and we could be exposed to government interference from China.
We may become subject to a variety of PRC laws and other obligations regarding data security offerings that are conducted overseas and/or foreign investment in China-based issuers, and any failure to comply with applicable laws and obligations could have a material and adverse effect on our business, financial condition, and results of operations and may hinder our ability to offer or continue to offer Class A Ordinary Shares to investors and cause the value of our Class A Ordinary Shares to significantly decline or be worthless.
On June 10, 2021, the Standing Committee of the National People’s Congress enacted the PRC Data Security Law, which took effect on September 1, 2021. The law requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection system for data security.
On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws.
On August 20, 2021, the 30th meeting of the Standing Committee of the 13th National People’s Congress voted and passed the “Personal Information Protection Law of the People’s Republic of China” (“PRC Personal Information Protection Law”), which became effective on November 1, 2021. The PRC Personal Information Protection Law applies to the processing of personal information of natural persons within the territory of China that is carried out outside of China where (1) such processing is for the purpose of providing products or services for natural persons within China, (2) such processing is to analyze or evaluate the behavior of natural persons within China, or (3) there are any other circumstances stipulated by related laws and administrative regulations.
On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, which came into effect on March 31, 2023. On the same date of the issuance of the Trial Measures, the CSRC circulated No.1 to No.5 Supporting Guidance Rules, the Notes on the Trial Measures, the Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and the relevant CSRC Answers to Reporter Questions on the official website of the CSRC, or collectively, the Guidance Rules and Notice. The Trial Measures, together with the Guidance Rules and Notice, reiterate the basic supervision principles as reflected in the Draft Overseas Listing Regulations by providing substantially the same requirements for filings of overseas offering and listing by domestic companies, yet made the following updates compared to the Draft Overseas Listing Regulations: (a) further clarification of the circumstances prohibiting overseas issuance and listing; (b) further clarification of the standard of indirect overseas listing under the principle of substance over form, and (c) adding more details of filing procedures and requirements by setting different filing requirements for different types of overseas offering and listing. Pursuant to the Trial Measures, the Guidance Rules and Notice, domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure and report relevant information to the CSRC within three working days following its submission of initial public offerings or listing application.
On December 28, 2021, the CAC jointly with the relevant authorities formally published Measures for Cybersecurity Review (2021) which took effect on February 15, 2022, and replaced the former Measures for Cybersecurity Review (2020) issued on July 10, 2021. Measures for Cybersecurity Review (2021) stipulates that operators of critical information infrastructure purchasing network products and services, and online platform operators (together with the operators of critical information infrastructure, the “Operators”) carrying out data processing activities that affect or may affect national security, shall conduct a cybersecurity review, and any online platform operator who controls more than one million users’ personal information must go through a cybersecurity review by the cybersecurity review office if it seeks to be listed in a foreign country.
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Given that (1) our operating subsidiary is incorporated in Hong Kong or the BVI and are located in Hong Kong; (2) we have no VIE structure; and (3) 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 (which is confined to laws relating to defense and foreign affairs, as well as other matters outside the autonomy of Hong Kong), we do not currently expect the Measures for Cybersecurity Review (2021), the PRC Personal Information Protection Law, the Draft Overseas Listing Regulations, the Trial Measures, the Guidance Rules and Notice, have an impact on our business, operations, or this offering. Our belief is grounded on the following: (1) we do not believe that our operating subsidiary falls within the definition of an “Operator” that is required to file for cybersecurity review before listing in the United States, because (2) our operating subsidiary is incorporated in Hong Kong and operates in Hong Kong and each of the Measures for Cybersecurity Review (2021), the PRC Personal Information Protection Law, and the Draft Overseas Listing Regulations, the Trial Measures, the Guidance Rules and Notice remains unclear whether it shall be applied to a company based in Hong Kong; (3) all of the data our operating subsidiary has collected is stored in servers located in Hong Kong; and (4) as of the date of this annual report, our Operating Subsidiary has not been informed by any PRC governmental authority of any requirement that it file for a cybersecurity review or a CSRC review.
However, 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 the potential impact such modified or new laws and regulations will have on the daily business operations of our operating subsidiary, their respective abilities to accept foreign investments and the listing of our Class A Ordinary Shares on a U.S. or other foreign exchanges. There remains significant uncertainty in the interpretation and enforcement of relevant PRC cybersecurity laws and regulations. If the Draft Overseas Listing Regulations are adopted into law in the future and becomes applicable to our operating subsidiary, if our operating subsidiary is deemed an “Operator” that is required to file for cybersecurity review before listing in the United States, or if the Measures for Cybersecurity Review (2021) or the PRC Personal Information Protection Law becomes applicable to our operating subsidiary, the business operation of our operating subsidiary and the listing of our Class A Ordinary Shares in the United States could be subject to the CAC’s cybersecurity review or CSRC Overseas Issuance and Listing review in the future. If our operating subsidiary becomes subject to the CAC or CSRC review, we cannot assure you that our operating subsidiary will be able to comply with the regulatory requirements in all respects, and the current practice of collecting and processing personal information may be ordered to be rectified or terminated by regulatory authorities. In the event of a failure to comply, our operating subsidiary may become subject to fines and other penalties that may have a material adverse effect on our business, operations, and financial condition and may hinder our ability to offer or continue to offer Class A Ordinary Shares to investors and cause the value of our Class A Ordinary Shares to significantly decline or be worthless.
Although the audit report included in this annual report is prepared by U.S. auditors who are currently inspected by the PCAOB, there is no guarantee that future audit reports will be issued 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 our securities may be prohibited under the HFCA Act if the SEC subsequently determines our 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 our securities. Furthermore, on December 23, 2022 the Accelerating Holding Foreign Companies Accountable Act was enacted, which amended the HFCA Act by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, and thus, reduced the time before the securities may be prohibited from trading or delisted.
The audit report included in this annual report was issued by ZH CPA, LLC, a U.S.-based accounting firm that is registered with the PCAOB and can be inspected by the PCAOB. We have no intention of dismissing ZH CPA, LLC in the future or of engaging any auditor not based in the U.S. and not subject to regular inspection by the PCAOB. There is no guarantee, however, that any future auditor engaged by the Company would remain subject to full PCAOB inspection during the entire term of our engagement. The PCAOB is currently unable to conduct inspections without the approval of the PRC authorities. Currently, our U.S. auditor’s audit work for us can be inspected by the PCAOB. 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 PRC, and we cannot assure you that our auditor’s audit work for us will continue to be able to be inspected by the PCAOB. If it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors may be deprived of the benefits of such inspection. Any audit reports not issued by auditors that are completely inspected by the PCAOB could result in a lack of assurance that our financial statements and disclosures are adequate and accurate.
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Inspections of other auditors conducted by the PCAOB outside mainland China have at times identified deficiencies in those auditors’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The lack of PCAOB inspections of audit work undertaken in mainland China prevents the PCAOB from regularly evaluating auditors’ audits and their quality control procedures. As a result, if any component of our auditor’s work papers become located in mainland China in the future, such work papers will not be subject to inspection by the PCAOB. As a result, investors would be deprived of such PCAOB inspections, which could result in limitations or restrictions to our access of the U.S. capital markets.
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 that, 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 for such issuers completely. The proposed Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges 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. 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 in the HFCA Act. On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to public companies whose stock is registered with the SEC and are identified by the SEC 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 whose audit work that the PCAOB is unable to inspect or investigate. We will be required to comply with these rules if the SEC identifies us as having a “non-inspection” year under a process to be subsequently established by the SEC. The final amendments require any identified registrant to submit documentation to the SEC establishing that the registrant is not owned or controlled by a government entity in the public accounting firm’s foreign jurisdiction, and they also require, among other things, disclosure in the registrant’s annual report regarding the audit arrangements of, and government influence on, such registrants. Pursuant to the HFCA act, our securities may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor cannot be inspected by the PCAOB for three consecutive years, and this ultimately could result in our Class A Ordinary Shares being delisted.
On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, 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 audit work cannot be inspected when its auditor is subject to PCAOB inspections for two consecutive years instead of three and, thus, would reduce the time before our Class A Ordinary Shares may be prohibited from trading or delisted.
On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction in connection with their audit works because of a position taken by one or more authorities in that jurisdiction.
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On November 5, 2021, the SEC approved the PCAOB’s Rule 6100, Board Determinations Under the HFCA Act. Rule 6100 provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, 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 16, 2021, the PCAOB issued a report on its determinations that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions. In addition, the PCAOB’s report identified the specific registered public accounting firms which are subject to these determinations.
On August 26, 2022, CSRC, the MOF, and the PCAOB signed the Protocol, governing inspections and investigations of audit firms based in China and Hong Kong. The Protocol remains unpublished and is subject to further explanation and implementation. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. There can be no assurance that we will be able to comply with requirements imposed by U.S. regulators if there is significant change to current political arrangements between mainland China and Hong Kong or if any component of our auditor’s work papers become located in mainland China in the future. Delisting of our Class A Ordinary Shares would force holders of our Class A Ordinary Shares to sell their Class A Ordinary Shares. The market price of our Class A Ordinary Shares could be adversely affected as a result of anticipated negative impacts of these executive or legislative actions, regardless of whether these executive or legislative actions are implemented and regardless of our actual operating performance. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination. On December 23, 2022, the Accelerating HFCA Act, was signed into law, which amended the HFCA Act by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three. On December 29, 2022, the Consolidated Appropriations Act was signed into law by President Biden. The Consolidated Appropriations Act contained, among other things, an identical provision to Accelerating HFCA Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two.
Our registered public accounting firm, ZH CPA, LLC, is not headquartered in mainland China or Hong Kong, and was not identified in this report as a firm subject to the PCAOB’s determination.
The SEC is assessing how to implement other requirements of the HFCA Act, including the listing and trading prohibition requirements described above. Future developments in respect to 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.
The recent joint statement by the SEC, proposed rule changes submitted by Nasdaq, and an act passed by the U.S. Senate and the U.S. House of Representatives all call for additional and more stringent criteria to be applied to emerging market companies. These developments could add uncertainties to our offering, business operations, share price, and reputation.
U.S. public companies with substantially all of their operations in China (including in 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 on 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.
On December 7, 2018, the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U.S. regulators in their oversight of financial statement audits of U.S.-listed companies with significant operations in China. On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China, reiterating past SEC and PCAOB statements on matters including the difficulty associated with inspecting accounting firms and audit work papers in China and higher risks of fraud in emerging markets and the difficulty of bringing and enforcing SEC, Department of Justice and other U.S. regulatory actions, including in instances of fraud, in emerging markets generally.
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On May 20, 2020, the U.S. Senate passed the HFCA Act requiring a foreign company to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company’s auditors for three consecutive years, the issuer’s securities are prohibited to trade on a national exchange. On December 2, 2020, the U.S. House of Representatives approved the HFCA Act.
On May 21, 2021, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily operating in a “Restrictive Market”; (ii) prohibit Restrictive Market companies from directly listing on Nasdaq Capital Market, and only permit them to list on Nasdaq Global Select or Nasdaq Global Market in connection with a direct listing; and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s auditors.
As a result of this scrutiny, criticism, and negative publicity, the traded stock of many U.S.-listed Chinese companies 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 us, our offerings, business, and our share price. If we become 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 developing our growth. If such allegations are not proven to be groundless, we and our business operations will be severely affected and you could sustain a significant decline in the value of our share.
The enactment of the Law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Hong Kong National Security Law”) could impact our Hong Kong operating subsidiary.
On June 30, 2020, the Standing Committee of the PRC National People’s Congress adopted the Hong Kong National Security Law. This law defines the duties and government bodies of the Hong Kong National Security Law for safeguarding national security and four categories of offenses — secession, subversion, terrorist activities, and collusion with a foreign country or external elements to endanger national security — and their corresponding penalties. On July 14, 2020, former U.S. President Donald Trump signed the Hong Kong Autonomy Act (“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 11 individuals, including the then HKSAR chief executive, Carrie Lam, and, John Lee, who succeeded to HKSAR chief executive on July 1, 2022. 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.” In July 2021, President Joe Biden warned investors about the risks of doing business in Hong Kong, issuing an advisory saying China’s push to exert more control over Hong Kong threatens the rule of law and endangers employees and data. 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 are 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 subsidiaries are determined to be in violation of the Hong Kong National Security Law or the HKAA by competent authorities, our business operations could be materially and adversely affected.
On March 23, 2024, the Hong Kong government has enacted the Safeguarding National Security Ordinance (“SNSO”), which is a domestic security legislation under Article 23 of the Basic Law, to prohibit four types of offenses, including secession, subversion, terrorist activities and collusion with a foreign country or with external elements to endanger national security, as well as other offences relating to the endangering of national security, which has been considered as having further significantly undermined the autonomy of Hong Kong. It is difficult for us to predict the degree of adverse impact of the legislation of the SNSO on Hong Kong or our business in Hong Kong. However, in any event, since all of our operations are based in Hong Kong, any change of the political arrangements between Hong Kong and the PRC may pose an adverse impact to the stability of the economy in Hong Kong, thereby directly and adversely affecting our results of operations and financial positions. 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 pre-emption 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.
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If we become subject to the recent scrutiny, criticism, and negative publicity involving U.S.-listed China-based companies, we may have to expend significant resources to investigate and/or defend the matter, which could harm our business operations, this offering, and our reputation and could result in a loss of your investment in our Class A Ordinary Shares, in particular if such matter cannot be addressed and resolved favorably.
During the last several years, U.S.-listed companies that have substantially all of their operations in China have been the subject of intense scrutiny by investors, financial commentators, and regulatory agencies. Much of the scrutiny has centered on financial and accounting irregularities and mistakes, lack of effective internal controls over financial reporting, and, in many cases, allegations of fraud. As a result of the scrutiny, the publicly traded stock of many U.S.-listed Chinese companies that have been the subject of such scrutiny has sharply decreased in value. Many of these companies are now subject to shareholder lawsuits and/or SEC enforcement actions that are conducting internal and/or external investigations into the allegations.
If we become the subject of any such scrutiny, whether any allegations are true or not, we may have to expend significant resources to investigate such allegations and/or defend the Company. Such investigations or allegations would be costly and time consuming and likely would distract our management from our normal business and could result in our reputation being harmed. Our stock price could decline because of such allegations, even if the allegations are false.
A downturn in the Hong Kong, China, or the global economy, or a change in economic and political policies of China, could materially and adversely affect our business and financial condition.
Our business may be influenced to a significant degree by political, economic, and social conditions in Hong Kong and China generally. The Chinese economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange, and allocation of resources. While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but they may have a negative effect on us.
Economic conditions in Hong Kong and China are sensitive to global economic conditions. Any prolonged slowdown in the global or Chinese economy may affect potential clients’ confidence in financial market as a whole and have a negative impact on our business, results of operations, and financial condition. Additionally, continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs.
Because our business is conducted in Hong Kong dollars and the price of our Class A Ordinary Shares is quoted in U.S. dollars, changes in currency conversion rates may affect the value of your investments.
Our business is conducted in Hong Kong through our operating subsidiary; our books and records are maintained in Hong Kong dollars, which is the currency of Hong Kong; and the financial statements that we file with the SEC and provide to our shareholders are presented in U.S. 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 U.S. dollars. The value of the Hong Kong dollar against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the Hong Kong’s political and economic conditions and perceived changes in the economy of Hong Kong and the United States. Any significant revaluation of the Hong Kong dollar may materially and adversely affect our cash flows, revenue, and financial condition.
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.
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There are political risks associated with conducting business in Hong Kong.
Any adverse economic, social, and/or political conditions, material social unrest, strike, riot, civil disturbance, or disobedience, as well as significant natural disasters, may affect the market and the business operations of the Company. 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 our operation is based in Hong Kong, any change of such political arrangements may pose immediate threat to the stability of the economy in Hong Kong, thereby directly and adversely affecting our results of operations and financial positions.
Under the Basic Law, 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 development, including the Hong Kong National Security Law 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, at the time, President Trump signed an executive order and 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 United States, China, and Hong Kong, which could potentially harm our business.
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 to China-U.S. relations could cause investor uncertainty for affected issuers, including us, and the market price of our Class A Ordinary Shares could be adversely affected.
The Hong Kong legal system embodies uncertainties that could limit the availability of legal protections.
Hong Kong is a Special Administrative Region of the PRC. Following British colonial rule from 1842 to 1997, China assumed sovereignty under the “one country, two systems” principle. The Hong Kong Special Administrative Region’s constitutional document, the Basic Law, ensures that the current political situation will remain in effect for 50 years. The laws previously in force in Hong Kong, that is, the common law, rules of equity, ordinances, subordinate legislation and customary law are maintained. Hong Kong has enjoyed the freedom to function with a high degree of autonomy for its affairs, including currencies, immigration and customs operations, and its independent judiciary system and parliamentary system. On July 14, 2020, the United States signed an executive order to end the special status enjoyed by Hong Kong post-1997. As the autonomy currently enjoyed may be compromised, it 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 pre-emption 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 clients.
Changes in international trade policies, trade disputes, barriers to trade, or the emergence of a trade war may dampen growth in Hong Kong, where our customers reside.
Political events, international trade disputes, and other business interruptions could harm or disrupt international commerce and the global economy, and they could have a material adverse effect on us and our customers, our service providers, and our other partners. International trade disputes could result in tariffs and other protectionist measures that may materially and adversely affect our business.
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Tariffs could increase the cost of the services and products, which could affect customers’ investment decisions. In addition, political uncertainty surrounding international trade disputes and the potential of their escalation to trade war and global recession could have a negative effect on customer confidence, which could materially and adversely affect our business. We also may have access to fewer business opportunities, and our operations may be negatively impacted as a result. In addition, the current and future actions or escalations by either the United States or China that affect trade relations may cause global economic turmoil and potentially have a negative impact on our markets, our business, or our results of operations, as well as the financial condition of our clients, and we cannot provide any assurances as to whether such actions will occur or the form that they may take.
Risks Related to Our Corporate Structure
We rely on dividends and other distributions on equity paid by our subsidiaries to fund our cash and financing requirements, and any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.
ZDAI is a holding company, and we rely on dividends and other distributions on equity paid by our subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and to service any debt we may incur. We do not expect to pay cash dividends in the foreseeable future. We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. If any of our 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 us.
ZDAI is permitted under the laws of Cayman Islands to provide funding to our subsidiaries through loan or capital contributions without restrictions on the amount of the funds, provided such funding is in the best interests of ZDAI. Our board of directors has complete discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from the operating entities, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors.
According to the BVI Business Companies Act 2004 (as amended), a BVI company may make dividends distribution to the extent that immediately after the distribution, the value of the company’s assets exceeds its liabilities and that such company is able to pay its debts as they fall due. According to the Companies Ordinance of Hong Kong, a Hong Kong company may only make a distribution out of profits available for distribution. Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect to dividends paid by us. Any limitation on the ability of our Hong Kong subsidiary to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.
Any limitation on the ability of our subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.
Our internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation.
We are subject to the reporting requirements of the Securities Act, the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of Nasdaq. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place significant strain on our personnel, systems and resources.
The applicable provisions of the Sarbanes-Oxley Act require, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls, internal control over financial reporting and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
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Our current controls and any new controls that we develop may become inadequate because of changes in the conditions in our business. Further, weaknesses in our internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could adversely affect our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and, after we are no longer an “emerging growth company” as defined in the JOBS Act, the annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in the reports we file with the SEC under Section 404 of the Sarbanes-Oxley Act. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information.
In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs, and provide significant management oversight. Any failure to maintain the adequacy of our internal controls, or a consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially and adversely affect our ability to operate our business. In the event that our internal controls are perceived as inadequate, or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and the trading price of our Class A Ordinary Shares could decline. In addition, if we are unable to continue to meet these requirements, we may not be able to maintain our listing on Nasdaq.
Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting for so long as we are an emerging growth company. At such time as we cease to be an emerging growth company, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating. Any failure to maintain effective disclosure controls and procedures and internal control over financial reporting could have a material and adverse effect on our business and operating results.
Cayman Islands economic substance requirements may have an effect on our business and operations.
The Cayman Islands enacted the International Tax Co-operation (Economic Substance) Act (as revised) of the Cayman Islands (the “ES Act”) together with the Guidance Notes published by the Cayman Islands Tax Information Authority from time to time. Under the ES Act, if a company is considered to be a “relevant entity” and is conducting one or more of the nine “relevant activities”, then such company is required to comply with the economic substance requirements in relation to the relevant activity from July 1, 2019. All companies whether a relevant entity or not is required to file an annual report with the Registrar of Companies of the Cayman Islands confirming whether or not it is carrying on any relevant activities and if it is, it would be required to satisfy an economic substance test.
Our dual class share structure with different voting rights may adversely affect the value and liquidity of our Class A Ordinary Shares.
We cannot predict whether our dual class share structure with different voting rights will result in a lower or more volatile market price of our Class A Ordinary Shares, in adverse publicity, or other adverse consequences. Certain index providers have announced restrictions on including companies with multiple class share structures in certain of their indices. Because of our dual class structure, we will likely be excluded from these indices and other stock indices that take similar actions. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices would likely preclude investment by many of these funds and could make our Class A Ordinary Shares less attractive to investors. In addition, several shareholder advisory firms have announced their opposition to the use of a multiple class structure and our dual class structure may cause shareholder advisory firms to publish negative commentary about our corporate governance, in which case, the market price and liquidity of our Class A Ordinary Shares could be adversely affected.
Risks Related to Our Business and Industry
We have a concentrated customer base and any decrease in the number of projects with our major customers would adversely affect our operations and financial results.
For the years ended March 31, 2026 and 2025, a significant portion of our revenue was derived from a small number of customers. Our largest customers, which each contributed more than 10% of our revenue, accounted for approximately 80.73% and 84.57% of our total revenue for the years ended March 31, 2026 and 2025, respectively.
Chi Yip Eng. & (Trans.) Company Limited (“Chi Yip”), a related party, was one of our customers for the year ended March 31, 2026. Income from soil and rock transportation services rendered to Chi Yip amounted to approximately US$443,314 of our revenue, accounting for approximately 4.96% of our total revenues for the period. Primega Construction also provided site management services to Chi Yip, which contributed approximately US$Nil and US$33,030 for the years ended March 31, 2026 and 2025, respectively. Such income from site management services is recorded under other income.
The soil and rock transportation projects of our operating subsidiary are on a project-by-project basis, and we do not enter into any long-term service agreements with customers. There is no assurance that Primega Construction will be able to retain its customers upon expiry of the contract period or that they will maintain their current level of business with us in the future. If there is a significant decrease in the number of projects or size of projects in terms of contract sums awarded by major customers for whatever reason, and if we are unable to obtain suitable projects of a comparable size and quantity as replacement, our financial conditions and operating results would be materially and adversely affected. In addition, if any of the major customers of Primega Construction experiences any liquidity problem, it may result in delay or default in settling progress payments to us, which in turn will have an adverse impact on our cash flow and financial condition. We cannot guarantee that Primega Construction will be able to diversify its customer base by obtaining a significant number of new projects from our existing and potential customers.
Our business is subject to the risk of non-payment or delayed payment by our customers, which could adversely affect our financial condition and results of operations.
We have significant accounts receivable due from major customers. As of March 31, 2026 and 2025, our largest customers, each having contributed more than 10% of our revenue, accounted for an aggregate of approximately 51.73% and 87.83% of our accounts receivables, respectively.
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The ability of these parties, including our related parties, to pay their obligations may be adversely affected by changes in their financial condition or other factors. We may experience difficulty collecting accounts receivable due to disputes or financial difficulties of these customers, which could result in write-offs or bad debt expense, which may have a material adverse effect on our financial condition, and results of operations.
Our revenue mainly relies on successful tenders or acceptance of quotations for soil and rock transportation projects that are non-recurring in nature, and any failure in securing projects from our existing customers and/or new customers in the future would affect our business operation and financial results.
Primega Construction secures its soil and rock transportation projects mainly through a competitive tender or quotation process and was awarded each contract on a non-recurring basis. Primega Construction does not have any long-term commitment with its customers, and the customers have no obligation to award any new projects to us. As such, we cannot assure that existing customers or potential customers will invite Primega Construction to participate in their tendering processes or submit quotations, or that Primega Construction will be able to secure projects from them in the future. Upon completion of our contracts on hand, in the event that we are unable to receive new tender or quotation invitations or be awarded new contracts, our business in general and our results of operations and financial performance may be adversely and materially affected.
Our operating results are difficult to predict.
Revenue from our operating segments have varied significantly in the past and may continue to do so in the future. Factors that cause our operating results to be unpredictable include other factors described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Factors that Affect Results of Operations” of this annual report. Any of the foregoing factors, or any other factors discussed elsewhere herein, could have a material adverse effect on our business, financial condition and results of operations that could adversely affect our share price.
Fluctuations in the price or availability of biodiesel oil may adversely affect our financial results.
Biodiesel oil represents a significant portion of our operational costs. An increase in fuel prices would directly increase the cost of operating our sizeable fleet of tipper trucks, as well as the cost of engaging other subcontractors to provide transportation. If Primega Construction is unable to increase the tender prices for its soil and rock transportation projects to cover the increased fuel costs, our profitability may be adversely affected. Fuel costs can fluctuate significantly and is subject to many economic and political factors that are beyond our control, including political instability in oil-producing regions and the global geopolitical landscape. In the event of a significant rise in fuel prices, our related costs may increase and our gross profit may decrease if we are unable to adopt any effective cost control measures or pass on the rising costs to our customers.
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Primega Construction’s capacity to provide soil and rock transportation services is limited by availability of machinery and equipment.
Primega Construction requires tipper trucks and drivers to carry out its soil and rock transportation services. As of the date of this annual report, Primega Construction has 31 tipper trucks available for our projects. Our directors estimate the average utilization rates for tipper trucks for the years ended March 31, 2026 and 2025 was approximately 95%. Excluding down time for repair and maintenance, the utilization rate is estimated to be close to 100%. The high utilization rate required Primega Construction to rent trucks from third parties and engage subcontractors to provide transportation from time to time, and re-schedule the delivery requests made by its project teams for the use of the trucks.
There is no certainty that we will be able to successfully rent trucks from third parties or engage subcontractors to provide transportation, to do so at a competitive rate, or successfully re-schedule requests from our project sites without affecting the fulfillment of our projects. Furthermore, Primega Construction’s expansion and growth in the earthworks sector is limited by the number of its tipper trucks and excavation machines. The inability of Primega Construction to increase our fleet of tipper trucks and machinery would expose us to associated risks in areas of our business expansion, our contract fulfillment and impact our costs and profitability.
Primega Construction depends on third parties for machinery and equipment and supplies essential to operate its business.
Primega Construction relies on suppliers and subcontractors to lease machinery and equipment to us and provide transportation services for its customers to support its operations. We cannot assure you that our favorable working relationships with our suppliers and subcontractors will continue in the future. As Primega Construction does not sign any long term contracts with its suppliers and subcontractors, there is no assurance that they will be able to continue to provide equipment and services at acceptable prices or that it can maintain our relationship with them in the future. In the event that any of the major suppliers and subcontractors are unable to provide the required equipment and services and we are unable to engage alternative providers on similar terms, or the costs for such equipment and services increase substantially, our business and profitability could be materially and adversely affected.
Any failure, damage or loss of Primega Construction’s machinery and equipment may adversely affect our operations and financial performance.
Primega Construction’s soil and rock transportation services rely on machinery and equipment. If Primega Construction fails to remain attentive to and invest in suitable site equipment to cope with any latest development in such market trends or demands and to cater to different needs and requirements of different customers, overall competitiveness of our operating subsidiary and thus our financial performance and operation results may be adversely affected.
In addition, there is no assurance that Primega Construction’s machinery and equipment will not be damaged or lost as a result of, among others, improper operation, accidents, fire, adverse weather conditions, theft or robbery. Machinery and equipment may also break down or fail to function normally due to wear and tear or mechanical or other issues. If any failed, damaged or lost site equipment cannot be repaired and/or replaced in a timely manner, our operations and financial performance could be adversely affected.
The construction services industry is highly schedule driven, and failure to meet the schedule requirements of contracts could adversely affect our reputation and/or expose us to financial liability.
In some instances, including in the case of many of fixed unit price contracts, of Primega Construction, it guarantees that it will complete a project by a certain date. Any failure to meet contractual schedule or completion requirements set forth in the contracts could subject us to responsibility for costs resulting from the delay, generally in the form of contractually agreed-upon liquidated damages, liability for Primega Construction’s customer’s actual costs arising out of its delay, reduced profits or a loss on that project, damage to our reputation, and a material adverse impact to our financial position.
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Failure to maintain safe work sites could result in significant losses, which could materially affect our business and reputation.
Because employees of Primega Construction and other parties on site are often in close proximity with mechanized equipment, moving vehicles, chemical substances, and dangerous manufacturing processes, our construction and maintenance sites are potentially dangerous workplaces. Therefore, safety is a primary focus of our business and is critical to our reputation and performance. Many of the clients require that Primega Construction meet certain safety criteria to be eligible to bid on contracts, and some of the contract fees or profits are subject to satisfying safety criteria. Unsafe work conditions also can increase employee turnover, which increases project costs and, therefore, our overall operating costs. If Primega Construction fails to implement safety procedures or implement ineffective safety procedures, employees could be injured, and we or Primega Construction could be exposed to investigations and possible litigation. Primega Construction and our failure to maintain adequate safety standards through safety programs could also result in reduced profitability or the loss of projects or clients.
We may not be able to receive the full amount due from customers for contract work, and our revenue may fluctuate due to variation orders.
Our revenue from construction contracts is recognized when our construction work is performed. Should any of our customers delay or fail to release our progress payments according to the agreed payment terms, our cash flow and working capital positions may be materially and adversely affected. If it is unable to do so, our results of operation, liquidity, and financial position may be adversely affected.
Furthermore, the aggregate amount of revenue that Primega Construction is able to derive from a project may deviate from the original contract sum specified in the relevant contract for the project due to variations (including addition, modification, or cancellation of certain contract work) instructed by its customers from time to time during the course of project execution. As such, there is no assurance that the amount of revenue derived from the projects will not be substantially different from the original contract sum as specified in the relevant contracts, and our financial condition may be adversely affected by any decrease in our revenue as a result of variation orders.
Primega Construction relies on its subcontractors and suppliers to help complete our projects and to supply the machinery required.
In line with the usual practice of the construction industry in Hong Kong, Primega Construction engages third-party subcontractors to perform a portion of the work instead of retaining a large pool of labor with different skill sets to maximize our cost efficiency and flexibility. As is customary in the industry, subcontractors are informally engaged, with services rendered invoiced and settled periodically. Primega Construction also relies on its subcontractors for supply of machinery required for carrying out its operations. Our total subcontracting charges accounted for a significant portion of our cost of sales for the years ended March 31, 2026 and 2025.
Apart from the effect of any significant increase in the subcontracting costs that may impact our profitability, we or our operating subsidiary may also be exposed to other legal liabilities if we are not able to monitor the performance of our subcontractors, or if our subcontractors violate any laws, rules, or regulations in relation to health and safety matters. We are further exposed to risks associated with any non-performance, delayed performance, or sub-standard performance by our subcontractors or their respective employees and may incur additional costs or be subject to liability due to delay in schedule or defect in the work of the subcontractors or if there is any accident-causing personal injuries or death to the subcontractors’ employees. These events may adversely impact our profitability, financial performance, and reputation, as well as result in litigation or damages claims.
In addition, Primega Construction’s subcontractors may not always be readily available when its needs for subcontracting arise, and there is no assurance that we would be able to maintain good working relationships with our subcontractors in the future. Since we have not entered into any long-term service agreement with the subcontractors, they are not obliged to work for us in future projects on similar terms and conditions. There is no assurance that we would be able to find suitable alternative subcontractors that meet our project needs and requirements to complete the projects, which would in turn adversely affect our performance capacity and financial results.
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Further, pursuant to the Employment Ordinance under Hong Kong law, a main contractor, or a main contractor and every superior subcontractor, is jointly and severally liable to pay any wages that become due to an employee who is employed by a subcontractor on any work that the subcontractor has contracted to perform, if such wages are not paid within the period specified in the Employment Ordinance. Our operations and, hence, our financial position may be adversely affected if any of our subcontractors violates its obligations to pay its employees.
As Primega Construction from time to time engage subcontractors in its work, it may bear responsibilities for any non-performance, delayed performance, sub-standard performance, or non-compliance of our subcontractors.
Primega Construction subcontracts certain portions of its projects, such as piling construction, reinforcement fixing, concreting work, to its subcontractors who are independent third parties. Subcontracting may expose us to risks associated with non-performance, delayed performance, or sub-standard performance by our subcontractors. As a result, Primega Construction may experience deterioration in the quality or delivery of its work, incur additional costs due to the delays, suffer a higher price in sourcing the services, equipment or supplies in default, or be subject to liability under the relevant projects. Such events could impact upon our profitability, financial performance, and reputation, or result in litigation or damage claims.
There is no assurance that Primega Construction would be able to monitor the performance of its subcontractors as directly and efficiently as with our own staff. If the subcontractors fail to meet requirements, Primega Construction may experience delay in project completion, quality issues concerning the work done, or non-performance by subcontractors. Consequently, significant time and costs may be incurred to carry out remedial actions, which would in turn adversely affect the profitability and reputation of our business and result in litigation or damage claims against us or our operating subsidiary. If the subcontractors violate any laws, rules, or regulations, Primega Construction may also be held liable for their violations and be subject to claims for losses and damages if such violations result in any personal injuries and/or property damages.
In addition, subcontractors of Primega Construction may not always be readily available whenever needed, and there is no assurance that Primega Construction would be able to maintain good working relationships with its sub-contractors in the future. As of the date of this annual report, Primega Construction has not entered into any long-term service agreement with its subcontractors. Further, there is no assurance that Primega Construction would be able to find suitable alternative subcontractors that meet its project needs and requirements to complete the projects, which would in turn adversely affect our operations and financial results.
An increase in waste disposal fees may lead to changes in the industry and intensified competition.
Effective from April 1, 2024, the waste disposal charges applicable to disposal of construction waste at public fill reception facilities, sorting facilities and landfills will substantially increase. For details, please refer to the section titled “Regulations - Regulations Related to Environmental Protection - Waste Disposal Ordinance (Chapter 354 of the Laws of Hong Kong)”. Although our customers are directly responsible for the waste disposal charges, the implementation of increasingly higher disposal fees may indirectly affect the industry in which we operate. Customers that engage directly in foundation and site formation works that possess the relevant expertise may seek to control costs by handling waste disposal in-house. Those customers continuing to outsource waste disposal services may actively seek more cost-effective options to mitigate the impact of the increased fees. This may include exploring and evaluating additional service providers or negotiating for lower rates. Other subcontractors offering competing services may undercut our tenders and quotations to secure more projects, which could affect the success rate of our tenders as well as our project margins. The increase in such fees may also lead to customers seeking alternative waste management solutions to mitigate the impact of the increased government charges. The adoption of alternative waste management solutions may divert customers away from utilizing our services, leading to a decrease in Primega Construction’s customer base and results of operations.
There is no guarantee that safety measures and procedures implemented at construction sites could prevent the occurrence of industrial accidents of all kinds, which in turn might lead to claims in respect to employees’ compensation, personal injuries, fatal accidents, and/or property damages against us.
Primega Construction has adopted certain work safety measures and procedures for its staff and the subcontractors’ staff. Primega Construction relies on its staff to oversee the implementation of safety measures and procedures, and we cannot guarantee that all of the safety measures and procedures are strictly adhered to at any time, nor can we assure you that the safety measures and procedures are sufficient to prevent the occurrence of industrial accidents of all kinds. If the safety measures and procedures implemented at the construction sites are insufficient or not strictly adhered to, it may result in industrial accidents that would in turn lead to claims in respect to employees’ compensation, personal injuries, fatal accidents, and/or property damage against us.
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Primega Construction determines the price of its quotation or tender based on the estimated time and costs to be involved in a project and the actual time and costs incurred may deviate from our estimate due to unexpected circumstances, thereby leading to cost overruns and adversely affecting our operations and financial results.
Primega Construction determines the price of its quotation or tender based on estimated cost plus a certain mark-up margin. The actual time and costs incurred, however, may be adversely affected by various factors, including (i) the specifications, underground conditions, and difficulties of the project; (ii) the duration of the project; (iii) the site locations and the conditions and risk of adjacent building structures; (iv) unfavorable weather conditions; and (v) the resources availability. Significant changes in any of these or other relevant factors may lead to delay in completion or costs overrun by us, and there is no assurance that the actual time and costs incurred would match our initial estimate. As the contracts between Primega Construction and its customers were generally fixed-price contracts or re-measurement contracts for which our unit prices stated in the bill of quantities are fixed and without any price adjustment clause, once it agrees on the quotation or tender price with the customer, it will generally have to bear any additional costs incurred. Such delays, cost overruns, or mismatch of actual time and costs with the estimates may cause our profitability to be lower than what we expected or may expose Primega Construction to litigation or claims from customers in case of delays, thereby adversely affecting our operations and financial results.
Furthermore, the contracts Primega Construction entered into normally contain specific completion schedule requirements and liquidated damages provisions (i.e., Primega Construction may have to pay its customers liquidated damages if Primega Construction or its subcontractors do not meet the schedules). Liquidated damages are typically levied at an agreed rate for each day of delay that is owing to the default. Primega Construction may need to pay liquidated damages resulting from any failure to meet the completion schedule requirements of its contracts, to the extent that its customers do not grant it a time extension. This may reduce or diminish our expected profit and cash inflow from the relevant contracts.
Cash inflows and outflows in connection with construction projects may be irregular and, thus, may affect our net cash flow position.
In a construction project, cash outflows for payment of certain operating expenditures may not align with progress payments to be received during the relevant periods. In general, Primega Construction does not receive any prepayment from its customers. Nevertheless, during the commencement of a project, Primega Construction may incur various costs, including: (i) purchase costs of construction materials and supplies, (ii) rental costs for machinery, and (iii) settlement of our workers’ salaries and our subcontractors’ fees, while progress payments will be paid after our construction work commences and is certified by the customers and/or architects or consultants engaged by the customers. Accordingly, the cash inflows and outflows for a particular project may fluctuate as the construction work progresses. If, during any particular period of time, there exists too many projects that require substantial cash outflow while we have significantly less cash inflows during that period, our cash flow position may be adversely affected.
Further, Primega Construction is subject to credit risks of its customers and its liquidity is dependent on its customers making prompt progress payments due to Primega Construction. Primega Construction relies on cash inflow from customers to meet its payment obligation to its suppliers and subcontractors, which is dependent on prompt settlement of progress payment by its customers. As such, we may record a significant cash outflow in the event that Primega Construction takes up too many capital-intensive projects during a particular period of time.
We cannot assure you that Primega Construction will be able to recover all or any part of the amounts due from its customers or Primega Construction will be able to collect all or any part of the trade receivables from its customers within the agreed credit terms or at all. Further, in the event that disputes arise between Primega Construction and the main contractor or customer in relation to variation orders, there is a possibility that it may take a longer time than the credit period offered to collect payments. Any failure by the customers to make payments on time and in full may lead to mismatch in cash flows, which will negatively affect our cash flow position and affect (i) the ability to repay suppliers and subcontractors; and (ii) tendering decisions, as Primega Construction may not be in a position to take up any more new projects with a high upfront costs. This will negatively affect our business operation and financial performance.
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Claims in connection with employees’ compensation or personal injuries may arise and affect its reputation and operations.
Injuries to workers and casualties at construction sites are a common inherent risk in the construction industry. Claims of such nature expose Primega Construction to the risk of bearing higher insurance premiums in the future and may damage our operating subsidiary’s reputation as a main contractor if they turn into high-profile cases and become widely reported in the media or within the industry. Such incidents may negatively affect our business prospects, reputation, and results of operations.
Any deterioration in the prevailing market conditions in the construction industry may adversely affect our performance and financial condition.
All our business operations are located in Hong Kong via Primega Construction. The direct customers of Primega Construction are primarily property developers and main contractors of various types of property development and civil engineering projects in Hong Kong. The number of projects awarded to Primega Construction depend highly on the prevailing market conditions in the construction industry, including shortage of skilled labor, economic fluctuations in Hong Kong, availability of new projects in the private sector; and general conditions and development of Hong Kong economy. If there is any significant deterioration in any of these factors, our operating results and financial conditions could be adversely affected.
Primega Construction is dependent on its key executives, management team, and professional staff.
Primega Construction’s success and growth depend on the knowledge, experience, and expertise of its management team who is responsible for overseeing the financial condition and performance, construction projects, and formulating business strategies. For example, Mr. Man Siu Ming, our former director and current general manager, has over 10 years of experience in the construction industry.
As Primega Construction’s work focuses on various work scopes, including the overall management of the projects, planning, and devising of detailed work programs, design, and technical submissions, it is important for Primega Construction to retain our management staff and technical personnel with appropriate and necessary industry expertise. Primega Construction has entered into a service agreement with each of the directors and employment contracts with our senior management and technical personnel. These service agreements and employment contracts can be terminated by either Primega Construction, the directors or the employees. There could be an adverse impact on our operations should a significant number of the directors, senior management, or other key personnel with relevant expertise terminate his or her employment with Primega Construction and appropriate persons could not be found to replace them in a timely manner. There is no assurance that Primega Construction will be able to attract and retain capable staff members or that they will not resign in the future.
Primega Construction may be unable to obtain sufficient funding on terms acceptable, or at all.
The future expansion of Primega Construction’s business may require it to incur additional borrowings and diversify sources of funding. Whether we are able to raise additional capital at costs acceptable depends on the financial success of the current business of our operating subsidiary and the successful implementation of key strategic initiatives. This may be affected by various financial, economic, and market conditions and other factors, some of which are beyond our or our operating subsidiary’s control. If we or Primega Construction is unable to obtain sufficient banking facilities on acceptable terms to meet its operational and expansion demands, this may put strains on our cash flow and our ability to successfully implement our expansion plans.
The insurance coverage of Primega Construction may be inadequate to protect it from potential losses.
Primega Construction maintains insurance coverage against, among others, (i) liability for third party bodily injury at our office premises, (ii) employees’ compensation insurance for our employees, (iii) third-party liability in relation to the use of our machinery such as tipper trucks, excavators, diesel tank wagon, and other plant and machinery and vehicles.
Nonetheless, there is no assurance that all potential losses and expenses incurred from damages or liabilities in relation to business can be fully covered by the insurance taken out by Primega Construction. Certain types of risks, such as the risks are not covered by insurance because they are either uninsurable or it is not cost justifiable to insure against such risks. To the extent that the insurance does not cover such losses, damage, or liabilities, or held liable for insured losses exceeding insurance coverage, the resulting payment to cover such losses, damage, or liabilities may have a material adversely effect on Primega Construction’s business.
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We may be subject to litigation, arbitration, or other legal proceeding risks.
We may be subject to arbitration claims and lawsuits in the ordinary course of our business. As of the date of this annual report, the Company, Celestial Power, and Primega Construction are not a party to, and are not aware of any threat of, any legal proceeding that, in the opinion of our management, is likely to have a material adverse effect on our business, financial condition, or operations. Actions brought against us may result in settlements, awards, injunctions, fines, penalties, and other results adverse to us. A substantial judgment, settlement, fine, or penalty could be material to our operating results or cash flows for a particular period, depending on our results for that period, or could cause us significant reputational harm, which could harm our business prospects.
Primega Construction relies on its customers and subcontractors for the provision of machinery and equipment at construction sites.
The construction projects of Primega Construction are generally machinery-intensive work. As such, its ability to handle existing projects or compete for new projects highly depends on the number of machinery and equipment available for deployment at construction sites. As of the date of this annual report, the number of machinery and equipment owned by Primega Construction are limited, and it relies on its subcontractors to procure the machinery. For example, the excavators of Primega Construction are small sized excavators. While these excavators provide maneuverability, and are generally suitable for small-scale construction works, they are unable to be used for excavation works, which require larger excavators. As such, Primega Construction may be unable to procure and/or handle further projects should Primega Construction fail to identify suitable machinery and equipment.
Nevertheless, there can be no assurance that Primega Construction would be able to rent a sufficient number of machinery or equipment at reasonable costs and in a timely manner, nor we can guarantee that they would function properly at all material times and they would not become obsolete as a result of technological developments in the construction industry. We can also not guarantee that the customers and subcontractors can arrange immediate repair and/or replacement for impaired machinery and equipment for our projects in a timely and cost-effective manner.
As a result, Primega Construction may not be able to expand its capacity cater the increasing demands expected from future projects. If Primega Construction fails to do so, our ability to handle existing projects or compete for new projects may be significantly impaired.
Primega Construction relies on a stable workforce to carry out its construction projects. If Primega Construction or its subcontractors experience any shortage of labor, industrial actions, strikes, or material increase in labor costs, our operations and financial results would be adversely affected.
Primega Construction relies on a stable workforce, either directly employed by Primega Construction or its subcontractors, to carry out its construction projects. In particular, a large number of construction workers and machinery operators with various skills and expertise are required for each construction project.
In view of the current situation in the labor market, there is no assurance that the supply of labor and average labor costs will be stable. All labor-intensive projects are more susceptible to labor shortage, and our subcontracting costs include the labor costs of our subcontractors. If there is a significant increase in the costs of labor and Primega Construction has to retain more labor (or subcontractors retaining their labor) by increasing their wages, the staff cost and/or subcontracting cost will increase and thus lower our profitability. On the other hand, if Primega Construction or its subcontractors fail to retain our existing labor and/or recruit sufficient labor in a timely manner to cope with our existing or future projects, Primega Construction may not be able to complete its projects on schedule and may be subject to liquidated damages and/or incur a loss.
We may be unable to successfully implement our future business plans and objectives.
Our future business plans may be hindered by factors beyond our control, such as competition within the industry we operate; our ability to cope with high exposure to financial risk, operational risk, market risk, and credit risk as our business and customer base expands; and our ability to provide, maintain, and improve the level of human and other resources in servicing customers. As such, we cannot assure that our future business plans will materialize, that our objectives will be accomplished fully or partially, or that our business strategies will generate the intended benefits to us as initially contemplated. If we fail to implement our business development strategies successfully, our business performance could be materially and adversely affected.
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We may in the future pursue acquisitions and joint ventures as part of our growth strategy. Any future acquisition or joint venture may result in exposure to potential liabilities of the acquired companies and significant transaction costs, and it may also present new risks associated with entering additional markets or offering new products or services and integrating the acquired companies or newly established joint ventures. Moreover, we may not have sufficient management, financial, and other resources to integrate companies we acquire or to successfully operate joint ventures, and we may be unable to profitably operate our expanded company structure. Additionally, any new business that we may acquire or joint ventures we may form, once integrated with our existing operations, may not produce expected or intended results.
A severe or prolonged downturn in the global economy, whether caused by economic or political instability, could materially and adversely affect our business and results of operations.
The recent global market and economic crisis stemming from COVID-19 resulted in recessions occurring in most major economies. According to World Economic Outlook report published by the International Monetary Fund (“IMF”) in October 2023, the IMF forecasts global gross domestic product to fall from an estimated 3.5% in 2022 to 3.0% in 2023 and further decline to 2.9% in 2024. The rise in central bank interest rates to combat inflation and Russia’s war in Ukraine have contributed to the diminished expectations for economic growth around the world. While, growth in emerging markets and developing economies in Asia is projected to moderately grow, from 4.5% in 2022 to 5.2% and 4.8% in 2023 and 2024, China’s growth in terms of real GDP is forecasted to be lower than the rest of the region at 5.0% and 4.2% in 2023 and 2024, mainly due to lower investment as a result of the real estate crisis and weakening confidence of investors. Any prolonged slowdown in the global, Chinese and/or the Hong Kong economy may have a negative impact on our business, results of operations, and financial condition, and continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs.
Our business is conducted solely in Hong Kong through our operating subsidiary and is therefore heavily dependent on the economy of Hong Kong. Economic conditions in Hong Kong are highly sensitive to global cycle and money flows. If there is any significant decline in the Hong Kong economy and we are unable to generate business in other geographic locations, our profitability and business prospects will be materially affected. Also, major market disruptions and adverse changes in market conditions and uncertainty in the regulatory climate worldwide may adversely affect our business and industry or impair our ability to borrow or make any future financial arrangements.
Russia’s invasion of Ukraine has destabilized the global economy. Russia’s military interventions in Ukraine have led to, and may lead to, additional sanctions being levied by the United States, European Union, and other countries against Russia. This has led to a severe energy crisis in Europe with widespread effect, including increasing cost of living in the region, bringing with it tightening monetary conditions and appreciation of the US dollar against most other currencies. Although we do not have any direct exposure to Russia or the adjoining geographic regions the knockdown effects on the global economy and the ramifications from the war could affect our business. Any such disruptions caused by Russian military action or resulting sanctions may also magnify the impact of other risks described in this section. We cannot predict the progress or outcome of the situation in Ukraine, as the conflict and governmental reactions are rapidly developing and beyond their control. Prolonged unrest, intensified military activities, or more extensive sanctions impacting the region could have a material adverse effect on the global economy, and such effect could in turn have a material adverse effect on the business outlook of our business.
Risks Related to Our Class A Ordinary Shares
An active trading market for our Class A Ordinary Shares may not be sustained.
An active public market for our Class A Ordinary Shares, however, may not develop or be sustained after this Offering, in which case the market price and liquidity of our Class A Ordinary Shares will be materially and adversely affected. In recent years, the stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of certain publicly traded companies. Broad market and industry factors may significantly affect the market price of our Class A Ordinary Shares, regardless of our actual operating performance.
In addition, in the past, class action litigation has often been instituted against companies whose securities have experienced periods of volatility in market price. Securities litigation brought against us following any volatility in the price of our Class A Ordinary Shares, regardless of the merit or ultimate results of such litigation, could result in substantial costs, which would hurt our financial condition and operating results and divert management’s attention and resources from our business.
The trading price of our Class A Ordinary Shares could be subject to rapid and substantial volatility, which could make it difficult for prospective investors to assess the rapidly changing value of our Class A Ordinary Shares and result in substantial losses to the investors.
There have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with recent initial public offerings, especially among those with relatively smaller public floats. As a relatively small-capitalization company with relatively small public float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. In particular, our Class A Ordinary Shares may be subject to rapid and substantial price volatility, low volumes of trades and large spreads in bid and ask prices. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Class A Ordinary Shares.
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The trading prices volatility and wide fluctuations could be due to factors beyond our control. This may happen due to broad market and industry factors, such as performance and fluctuation in the market prices or underperformance or deteriorating financial results of other listed companies based in Hong Kong and China. For example, if the trading volumes of our Class A Ordinary Shares are low, persons buying or selling in relatively small quantities may easily influence prices of our Class A Ordinary Shares. This low volume of trades could also cause the price of our Class A Ordinary Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Class A Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. The trading performances of other Hong Kong and Chinese companies’ securities after their offerings may affect the attitudes of investors toward Hong Kong-based, U.S.-listed companies, which consequently may affect the trading performance of our Class A Ordinary Shares, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure, or matters of other Hong Kong and Chinese companies may also negatively affect the attitudes of investors toward Hong Kong and Chinese companies in general, including us, regardless of whether we have conducted any inappropriate activities. Furthermore, securities markets may from time to time experience significant price and volume fluctuations that are unrelated to our operating performance, which may have a material and adverse effect on the trading price of our Class A Ordinary Shares.
In addition to the above factors, the price and trading volume of our Class A Ordinary Shares may be highly volatile due to multiple factors, including the following:
| ● | regulatory developments affecting us or our industry; | |
| ● | variations in our revenues, profit, and cash flow; | |
| ● | changes in the economic performance or market valuations of other financial services firms; | |
| ● | 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; | |
| ● | detrimental negative publicity about us, our services, our officers, directors, our business partners, or our industry; | |
| ● | announcements by us or our competitors of new service offerings, acquisitions, strategic relationships, joint ventures, capital raisings, or capital commitments; | |
| ● | additions to or departures of our senior management; | |
| ● | litigation or regulatory proceedings involving us, our officers or directors; | |
| ● | release or expiry of lock-up or other transfer restrictions on our outstanding Class A Ordinary Shares; and | |
| ● | sales or perceived potential sales of additional Class A Ordinary Shares. |
Any of these factors may result in large and sudden changes in the volume and price at which our Class A Ordinary Shares will trade. As a result of this volatility, investors may experience losses on their investment in our Class A Ordinary Shares. A decline in the market price of our Class A Ordinary Shares also could adversely affect our ability to issue additional Class A Ordinary Shares and our ability to obtain additional financing in the future. No assurance can be given that an active market in our Class A Ordinary Shares will develop or be sustained. If an active market does not develop, holders of our Class A Ordinary Shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all. In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition.
Our pre-IPO shareholders will be able to sell their shares subject to restrictions under Rule 144.
Our pre-IPO shareholders may be able to sell their Class A Ordinary Shares pursuant to Rule 144 under the Securities Act. Because these shareholders have paid a lower price per Class A Ordinary Share than participants in this offering, when they are able to sell their pre-IPO shares under Rule 144, they may be more willing to accept a lower sales price than the IPO price. This fact could impact the trading price of the stock following completion of the offering, to the detriment of participants in this offering. Under Rule 144, before our pre-IPO shareholders can sell their shares, in addition to meeting other requirements, they must meet the required holding period.
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Our directors, officers, and principal shareholders have significant voting power and may take actions that may not be in the best interests of our other shareholders.
The interests of these shareholders may not be the same as or may even conflict with your interests. For example, these shareholders could attempt to delay or prevent a change in control of us, even if such change in control would benefit our other shareholders, which could deprive our shareholders of an opportunity to receive a premium for their Class A Ordinary Shares as part of a sale of us or our assets and might affect the prevailing market price of our Class A Ordinary Shares due to investors’ perceptions that conflicts of interest may exist or arise. As a result, this concentration of ownership may not be in the best interests of our other shareholders.
Our board of directors may decline to register the transfer of Class A Ordinary Shares in certain circumstances.
Our board of directors may under certain circumstances decline to register a transfer including any Class A Ordinary Share which is not fully paid up or on which we have a lien. Further, our board of directors may generally require any shareholder or any person proposing to acquire our shares to provide information to show the right to make the transfer. If any such shareholder or proposed acquirer does not provide such information, or if our board of directors has reason to believe that any certification or other information provided pursuant to any such request is inaccurate or incomplete, our board of directors may decline to register any transfer or to effect any issuance or purchase of shares to which such request is related.
Our directors may also decline to register any transfer of any Class A Ordinary Share unless (i) a fee of such maximum as Nasdaq may from time to time determine to be payable (or such lesser sum as our board of directors may from time to time require) has been paid to our Company; (ii) the instrument of transfer is lodged at the registered office or, as the case may be, the transfer office accompanied by the certificate of the Shares to which it relates, and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer (and, if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do); (iii) the instrument of transfer is in respect of only one class of Share; (iv) the Shares concerned are fully paid up and free of any lien in favor of the Company; and (v) if applicable, the instrument of transfer is properly stamped; and (vi) a transfer to joint holders of which the numbers to whom the Share is to be transferred does not exceed four.
If our directors refuse to register a transfer, they shall, within one months after the date on which the instrument of transfer was lodged with the Company, send to each of the transferor was lodged and the transferee notice of such refusal. The registration of transfers of shares or of any class of shares may, after compliance with any notice requirement of Nasdaq, on fourteen (14) clear days’ notice being given by the advertisement in such one or more newspapers or by electronic means, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 clear days in any year.
This, however, is unlikely to affect market transactions of the Class A Ordinary Shares purchased by investors in the public offering. Once the Class A Ordinary Shares have been listed, the legal title to such Class A Ordinary Shares and the registration details of those Class A Ordinary Shares in the Company’s register of members will remain with the Depository Trust Company. All market transactions with respect to those Class A Ordinary Shares will then be carried out without the need for any kind of registration by the directors, as the market transactions will all be conducted through the Depository Trust Company systems.
Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
After our initial public offering, we have become subject to the periodic reporting requirements of the Exchange Act. We will design our disclosure controls and procedures to provide reasonable assurance that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of a person, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.
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We do not intend to pay dividends for the foreseeable future.
We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our Class A Ordinary Shares if the market price of our Class A Ordinary Shares increases. Our board of directors has complete discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business.
Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our Class A Ordinary Share price or trading volume to decline.
The trading market for our Class A Ordinary Shares will be influenced to some extent by the research and reports that industry or financial analysts publish about us and our business. We do not control these analysts. As a new public company, we may be slow to attract research coverage and the analysts who publish information about our Class A Ordinary Shares will have had relatively little experience with us or our industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates. If any of the analysts who cover us provide inaccurate or unfavorable research or issue an adverse opinion regarding our share price, our share price could decline. If one or more of these analysts cease coverage of us or fail to publish reports covering us regularly, we could lose visibility in the market, which in turn could cause our share price or trading volume to decline and result in the loss of all or a part of your investment in us.
Certain judgments obtained against us by our shareholders may not be enforceable.
We are a Cayman Islands exempted company and substantially all of our assets are located outside of the United States. In addition, all of our current directors and officers are nationals and residents of countries other than the United States. Substantially all of the assets of these persons are located outside the United States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon these persons or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands may render you unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding the relevant laws of the Cayman Islands, see “Enforcement of Civil Liabilities.” As a result of the foregoing, our shareholders may have more difficulties in protecting their interests through actions against us or our officers, directors or major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.
You may have more difficulty protecting your interests than you would as a shareholder of a U.S. corporation.
We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by the provisions of our Third Memorandum and Articles of Association, and by the provisions of the Companies Act and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders, and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman 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 Cayman Islands.
The rights of shareholders and the fiduciary responsibilities of our directors and officers under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in some jurisdictions in the United States, and some states (such as Delaware) have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.
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Shareholders of Cayman Islands-exempted companies have no general rights under Cayman Islands law to inspect corporate records (other than the memorandum and articles of association and any special resolutions passed by such companies, and the register of mortgages and charges of such companies) or to obtain copies of lists of shareholders of these companies. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States. To the extent we choose to follow home country practices with respect to corporate governance matters, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.
As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, or members of the board of directors than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Act and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital — Differences in Corporate Law.”
We are a foreign private issuer within the meaning of the rules under the Exchange Act, and, as such, we are exempt from certain provisions applicable to U.S. domestic public companies.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:
| ● | the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; | |
| ● | the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect to a security registered under the Exchange Act; | |
| ● | the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and | |
| ● | the selective disclosure rules by issuers of material nonpublic information under Regulation FD. |
We will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a biannual basis as press releases, distributed pursuant to the rules and regulations of Nasdaq Capital Market. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.
As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with Nasdaq corporate governance listing standards.
As a foreign private issuer, we are permitted to take advantage of certain provisions in the Nasdaq rules that allow us to follow our home country law for certain governance matters. Certain corporate governance practices in our home country, the Cayman Islands, may differ significantly from corporate governance listing standards. Currently, we plan to rely on some home country practices with respect to our corporate governance. However, if we choose to follow home country practices in the future, our shareholders may be afforded less protection than they would otherwise enjoy under the Nasdaq corporate governance listing standards applicable to U.S. domestic issuers.
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We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
We are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter. We would lose our foreign private issuer status if, for example, more than 50% of our Class A Ordinary Shares are directly or indirectly held by residents of the United States and we fail to meet additional requirements necessary to maintain our foreign private issuer status. If we lose our foreign private issuer status on this date, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors, and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements under the Nasdaq rules. As a U.S.-listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting, and other expenses that we will not incur as a foreign private issuer in order to maintain a listing on a U.S. securities exchange.
There can be no assurance that we will not be a 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 our Class A Ordinary Shares.
A non-U.S. corporation will be a PFIC for any taxable year if either (i) at least 75% of its gross income for such year consists of certain types of “passive” income, or (ii) 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 (the “asset test”). Based on our current and expected income and assets (taking into account the cash proceeds and our market capitalization following our initial public offering), we do 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 we are or will become a PFIC is a fact-intensive inquiry made on an annual basis that depends, in part, upon the composition of our income and assets. In addition, there can be no assurance that the Internal Revenue Service (“IRS”) will agree with our conclusion or that the IRS would not successfully challenge our position. Fluctuations in the market price of our Class A Ordinary Shares may cause us to become a PFIC for the current or subsequent taxable years because the value of our assets for the purpose of the asset test may be determined by reference to the market price of our Class A Ordinary Shares. The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in this offering. If we were to be or become a PFIC for any taxable year during which a U.S. holder holds our Class A Ordinary Shares, certain adverse U.S. federal income tax consequences could apply to such U.S. holder. See “Material Tax Income Consideration — Material U.S. Federal Income Tax Considerations for U.S. Holders — PFIC Consequences.”
We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.
We are an emerging growth company, as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other public companies that are not emerging growth companies, including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 of Sarbanes-Oxley for so long as we remain an emerging growth company. As a result, if we elect not to comply with such auditor attestation requirements, our investors may not have access to certain information they may deem important.
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 do not plan to opt out of such exemptions afforded to an emerging growth company. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective data.
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We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company.”
We will incur significant legal, accounting, and other expenses as a public company that we did not incur as a private company. The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), as well as rules subsequently implemented by the SEC, impose various requirements on the corporate governance practices of public companies. We are 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 this offering, (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 our Class A Ordinary Shares that is held by non-affiliates exceeds $700 million as of the prior June 30; and (2) the date on which we have issued more than $1 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 the adoption of new or revised accounting standards until such time as those standards apply to private companies.
Compliance with these rules and regulations increases our legal and financial compliance costs and makes some corporate activities more time consuming and costly. After we are no longer an “emerging growth company,” or until five years following the completion of our IPO, whichever is earlier, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of Sarbanes-Oxley and the other rules and regulations of the SEC. For example, as a public company, we will be required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We will incur additional costs in obtaining director and officer liability insurance. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.
As a “controlled company” under the rules of the Nasdaq Capital Market, we may choose to exempt our Company from certain corporate governance requirements that could have an adverse effect on our public shareholders.
Under Rule 4350(c) of the Nasdaq Capital Market, a company of which more than 50% of the voting power is held by an individual, group, or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirement that a majority of our directors be independent, as defined in the Nasdaq Capital Market Rules, and the requirement that our compensation and nominating and corporate governance committees consist entirely of independent directors. Although we do not intend to rely on the “controlled company” exemption under the Nasdaq listing rules, we could elect to rely on this exemption in the future. If we elect to rely on the “controlled company” exemption, a majority of the members of our board of directors might not be independent directors and our nominating and corporate governance and compensation committees might not consist entirely of independent directors. Accordingly, during any time while we remain a controlled company relying on the exemption and during any transition period following a time when we are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to all of the Nasdaq Capital Market corporate governance requirements. Our status as a controlled company could cause our Class A Ordinary Shares to be less attractive to certain investors or otherwise harm our trading price.
Our dual class share structure with different voting rights limits your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A Ordinary Shares may view as beneficial.
We have a dual class share structure. As of March 31, 2026, our Ordinary Shares consist of 8,388,473 Class A Ordinary Shares and 0 Class B Ordinary Shares. In respect of matters requiring the votes of shareholders, holders of Class A Ordinary Shares are entitled to one vote per share, while holders of Class B Ordinary Shares are entitled to one hundred votes per share based on our dual class share structure. Each Class B Ordinary Share is convertible into one (1) Class A Ordinary Share at any time by the holder thereof, while Class A Ordinary Shares are not convertible into Class B Ordinary Shares under any circumstances. Upon any transfer of Class B Ordinary Shares by a holder thereof to any person or entity which is not an affiliate of such holder, such Class B Ordinary Shares shall be automatically and immediately converted into the equal number of Class A Ordinary Shares.
As a result of the dual class share structure and the concentration of ownership, if Class B Ordinary Shares are issued in the future, the holders of those shares have considerable influence over matters such as decisions regarding change of directors, mergers, change of control transactions and other significant corporate actions. It may take actions that are not in the best interest of us or our other shareholders. This concentration of ownership may discourage, delay or prevent a change in control of our company, which could have the effect of depriving our other shareholders of the opportunity to receive a premium for their shares as part of a sale of our company and may reduce the price of the Class A Ordinary Shares. This concentrated control limits your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of Class A ordinary shares may view as beneficial. In addition, the significant concentration of share ownership may adversely affect the trading price of the Class A Ordinary Shares due to investors’ perception that conflicts of interest may exist or arise.
Our Selling Shareholders could sell their interests in us to a third party in a private transaction, which may result in you not realizing any change-of-control premium on your shares and subject us to the influence of a currently unknown third party.
Our Selling Shareholders will have the ability, should they choose to do so, to sell some or all of the Class A Ordinary Shares registered pursuant to this registration statement in a privately negotiated transaction, which, if sufficient in size, could result in another party gaining significant influence over us.
The ability of our Selling Shareholders to sell their Class A Ordinary Shares privately, with no requirement for a concurrent offer to be made to acquire all of the shares of our outstanding common stock that are publicly traded, could prevent you from realizing any change-of-control premium on your shares of our Class A Ordinary Shares that may accrue to our Selling Shareholders upon their private sales of our Class A Ordinary Shares.
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Item 4. Information on the Company
| A. | History and Development of the Company. |
We are a holding company incorporated under the laws of the Cayman Islands on April 14, 2022. Our wholly-owned direct subsidiary is Celestial Power, a British Virgin Islands holding company incorporated on February 22, 2022. We operate our business through Primega Construction, our Hong Kong subsidiary incorporated on July 31, 2018, which is wholly owned by Celestial Power. Primega Construction is principally engaged in soil and rock transportation services in Hong Kong.
In February 2022, Celestial Power was incorporated under the laws of the BVI as the intermediate holding company of ZDAI. One (1) share of Celestial Power, representing its entire issued share capital, was allotted and issued to ZDAI on May 4, 2022.
In April 2022, ZDAI was incorporated under the laws of the Cayman Islands as an exempted company with limited liability, as the holding company of our BVI and Hong Kong subsidiary.
In June 2022, as part of a reorganization, ZDAI acquired, through Celestial Power, all the shares of Primega Construction from Mr. Man Siu Ming and became the ultimate holding company of Celestial Power and Primega Construction. On April 14, 2022, ZDAI issued 11,249,999 ordinary shares to Mr. Man Siu Ming.
On July 20, 2022, the Mr. Man Siu Ming sold 551,250 ordinary shares each to Primewin Corporate Development Limited and Shun Kai Investment Development Limited. Primewin Corporate Development Limited and Shun Kai Investment Development Limited are wholly owned by Mr. Lau Wing Him Perry and Mr. Chan Wan Yiu, respectively. Primewin Corporate Development Limited was one of our major customers for the year ended March 31, 2021. Mr. Chan Wan Yiu is an employee of Primega Construction, our Hong Kong operating subsidiary.
On December 5, 2023, Mr. Man Siu Ming entered into individual sale and purchase agreements with each of Dusk Moon International Limited and Moss Mist Investment Limited. Pursuant to these agreements, Mr. Man Siu Ming agreed to sell, and each of Dusk Moon International Limited and Moss Mist Investment Limited agreed to purchase, 551,250 ordinary shares.
As part of the series of reorganization transactions to be completed before the IPO, a 2-for-1 share split was conducted by the Company on February 28, 2024. After the share split, the authorized share capital of the Company consists of US$50,000 divided into 1,000,000,000 ordinary shares, par value US$0.00005 each (US$0.0008, after giving effect to the share consolidation), and the issued share capital of the Company then consisted of US$1,125 divided into 22,500,000 ordinary shares, par value of US$0.00005 each.
On September 12, 2025, we changed our name to DirectBooking Technology Co., Ltd. and adopted the dual foreign name “直订科技有限公司”.
Our ordinary shares commenced trading on the Nasdaq Capital Market on July 23, 2024. On May 16, 2025, our trading symbol was changed from “PGHL” to “ZDAI”.
On July 16, 2025, Tan Yu was appointed as our Chief Executive Officer and Liu Wei was appointed as our Chief Financial Officer. We also experienced changes in the composition of our board of directors and board committees, as more fully described in “Item 6. Directors, Senior Management and Employees.”
On August 19, 2025, the Company entered into a Memorandum of Understanding (the “MOU”), dated August 18, 2025. Pursuant to the MOU, on November 11, 2025, the Company entered into a securities purchase agreement (the “SPA”) for the purchase of 49% of the total issued shares of China Wangmao. The Company paid the total purchase price of approximately US$12.7 million in or about December 2025 in accordance with the terms of the SPA. However, due to commercial considerations and unforeseen events, the Company has not yet received any shares of China Wangmao.
On December 14, 2025, our shareholders approved, among other matters, changes to our authorized share capital, the adoption of an amended and restated memorandum and articles of association, and authorization for a reverse share split and share reclassification. On January 23, 2026, our board approved a 16-for-1 reverse share split, which became effective on February 17, 2026. Following the reverse share split, the par value of each of our Class A Ordinary Shares and Class B Ordinary Shares became US$0.0008 per share. All share and per share amounts in the accompanying consolidated financial statements and notes have been retroactively adjusted to reflect the effects of the reverse stock splits, including rounding of fractional shares to whole shares where applicable.
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On March 25, 2026, our shareholders approved certain additional resolutions relating to our capital structure, including an increase in authorized share capital, amendments to the voting rights of our Class B Ordinary Shares, and the adoption of our third amended and restated memorandum and articles of association (the “Third Memorandum and Articles of Association” or the “Memorandum and Articles of Association”). See “Item 10. Additional Information—B. Memorandum and Articles of Association.”
On July 21, 2026, we entered into a strategic joint venture agreement with Beijing DeepYou Digital Technology Co., Ltd. (“DeepYou”). Under the agreement, DirectBooking will hold a 51% equity interest in the joint venture and DeepYou will hold 49%.
The two parties agreed to jointly establish a new technology company to build China’s first natively Agent-to-Agent, fully integrated travel-and-stay next-generation AI direct-booking platform for the hospitality sector. The platform will provide robotic staff solutions for hospitality enterprises on the enterprise side and robotic assistant services for users on the consumer side.
The project has set a three-year strategic target: for the AI travel and hospitality direct-booking platform to cover 30,000 to 50,000 hotels, and to provide each hotel with 3 to 10 AI “employees” to reduce operating costs while significantly improving efficiency and user experience. At the same time, through AI-driven innovation, the project aims to break the traditional OTA industry’s channel monopoly and information silos, reshape value distribution across the industry, and build a more open and inclusive industrial ecosystem.
Regarding the Prepayment for investment in China Wangmao Liquor Industry Group Co., Limited, on August 11, 2026, the Company and China Wangmao mutually agreed to terminate the SPA effective immediately. Pursuant to the termination terms, China Wangmao agreed to refund the full principal amount of US$12,700,000 and pay compensatory interest at an annual rate of 5.25% for the period during which it held the purchase price. On August 13, 2026, the Company fully recovered the principal amount of USD12.7 million together with all accrued interest in cash.
Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor New York, NY 10168.
SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC on www.sec.gov. You can also find information on our website http://www.primegagroup.com. Information contained on, or that can be accessed through, our website is not a part of, and shall not be incorporated by reference into, this annual report.
Initial Public Offering
On July 22, 2024, we entered into an underwriting agreement with Bancroft Capital, LLC, as underwriter named thereof, in connection with its IPO of 1,500,000 ordinary shares (93,750 ordinary shares after giving effect of reverse stock split on February 17, 2026) at a price of $4.00 per share. The Company’s Registration Statement on Form F-1 (File No. 333-277692) for the IPO, originally filed with the U.S. Securities and Exchange Commission (the “Commission”) on March 6, 2023 (as amended, the “Registration Statement”) was declared effective by the Commission on July 1, 2024.
Issuance under Stock Incentive Plan
On October 7, 2024, the Company issued, in aggregate, 2,400,000 ordinary shares (150,000 ordinary shares after giving effect of reverse stock split on February 17, 2026), par value US$0.00005 (US$0.0008, after giving effect to the share consolidation) each to four consultants, each an independent third party, as provided under the 2024 Stock Incentive Plan. The 2024 Stock Incentive Plan was registered on Form S-8 on October 2, 2024. None of the consultants had a shareholding of 5% or above.
The total contract amount for all consultants was US$9,216,000. For the year ended March 31, 2025, the Company recognized US$6,144,000 as an expense. The remaining portion, US$3,072,000 has been recorded as prepayment and was recognized as an expense in the 2026 financial year.
On November 10, 2025, the Company filed a registration statement on Form S-8 for the DirectBooking Technology Co., Ltd. 2025 Stock Incentive Plan. The 2025 Stock Incentive Plan covered up to 4,600,000 shares on a pre-share-consolidation basis, or 287,500 shares after giving effect to the 16-for-1 share consolidation, in each case subject to adjustment pursuant to the terms of the plan.
As of March 31, 2026, 8,388,473 Class A Ordinary Shares and Nil Class B Ordinary Shares were issued and outstanding.
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| B. | Business Overview |
Overview
We are a holding company incorporated in the Cayman Islands with operations conducted by our Hong Kong operating subsidiary, Primega Construction.
We are a provider of transportation services that employs environmentally friendly practices with the aim of facilitating reuse of C&D materials and reduction of construction waste. We operate in the Hong Kong construction industry, mainly handling transportation of materials excavated from construction sites. Our services principally comprise of (i) soil and rock transportation services and (ii) construction works, which mainly includes ELS works and bored piling. We generally provide our services as a subcontractor to other construction contractors in Hong Kong.
Our Competitive Strengths
We believe the following competitive strengths differentiate us from our competitors:
Our operating subsidiary has a fleet of 31 tipper trucks and machinery and a strong network of subcontractors
Our fleet of tipper trucks and machinery allow our operating subsidiary to undertake multiple soil and rock transportation projects at the same time. Our operating subsidiary has the capacity to undertake multiple projects simultaneously due in part to our network of subcontractors, who can provide our operating subsidiary with transportation services. Having its own fleet of trucks and machines allow our operating subsidiary to expediently deploy them to various locations. Our operating subsidiary also has an experienced in-house servicing team for its tipper trucks and other machinery to ensure that they are well maintained and operated efficiently. Our operating subsidiary’s projects department works closely with the contractor on-site, ensuring that the earthworks are carried out as per the project schedule and specifications.
Long term relationships with customers
Our operating subsidiary has established stable business relationships with its customers and its major customers for the years ended March 31, 2026, 2025 and 2024. While Primega Construction, our operating subsidiary has only commenced its operations since 2018, the close-knit relationship with Chi Yip has provided access to a wide network of customers built over the decades. As a company with a long history, Chi Yip has been operating in the Hong Kong construction industry since the year 2000. Building on the network and relationships established by Mr. Man Chi Kwan, Mr. Man Siu Ming further cultivated these business relationships during his tenure at Chi Yip. Since the establishment of Primega Construction in 2018, it has begun the gradual process of taking on and succeeding Chi Yip’s clientele. As Mr. Man Chi Kwan retires and downscales Chi Yip’s operations, Primega Construction has grown, developing its own expertise in the field. Riding on the strength of these long-standing relationships in the construction industry, Primega Construction has provided its services to its major customers in the construction industry since its inception, during which time it has had recurring invitations to provide quotations for and completed multiple projects for its customers. We believe that Primega Construction’s operating history, together with the long-established relationships with its customers cultivated over the years would increase our overall recognition and visibility in the market and enable us to attract potential business opportunities.
Experienced and professional management team
Our management members of our operating subsidiary bring with them over 10 years of experience in the construction industry. Mr. Man Siu Ming, our former director and chairman of the board and existing director of our operating subsidiary, has been in the construction industry for approximately 11 years and ample experience in construction transportation and logistics and foundation related construction work projects. Mr. Man has vast experience in the industry in project management, including the handling of construction waste, as well as established relationships with a number of construction contractors. Mr. Kan Chi Wai, our former director and chief executive officer, has also been in the construction industry for over 10 years and has acted as quantity surveyor for construction projects of various scales in Hong Kong. Their qualifications and leadership have been key to formulating business strategies and competitive quotes that are essential to us in securing new business. Their technical know-how and industry knowledge acquired and accumulated over the years have also assisted us in carrying out efficient management of project work and in coping with uncertainties encountered during the projects’ operation. We believe that our experienced and professional management team is an invaluable asset and will continue to contribute to our business development and future prospects.
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Our Strategies
We intend to pursue the following strategies to further expand our business:
Growing through selected strategic acquisition of machinery
Most of Primega Construction’s work requires the use of different machinery and equipment. Primega Construction’s capacity to provide soil and rock transportation services depends in large on the availability of tipper trucks and the loading capacity of such trucks. We believe investing in machinery will be more cost effective than leasing or relying on the provision of transportation services by third parties in the long term. By expanding its fleet of machinery and equipment Primega Construction can (i) ensure that the machinery is optimally serviced and exercise greater control over the deployment of its machinery, (ii) protect its business from fluctuation in rental costs, (iii) reduce its reliance on capacity and availability of machinery and equipment from third parties, and (iv) enhance the accuracy of its cost estimates, allowing us to budget and submit more accurate quotations.
We therefore intend to acquire additional machinery for Primega Construction so as to enhance its technical ability and to strengthen its capability to cope with different needs and requirements of different customers and to meet the expected growing demand for soil and rock transportation in Hong Kong in the foreseeable future. Such additional machinery includes but not limited to tipper trucks and excavators. Our Directors believe that by acquiring machinery, it will allow Primega Construction to operate more efficiently by providing flexibility in how it allocate its resources and expand its capability to take on more concurrent projects in the future.
Enhance our operations as a construction works subcontractor to undertake excavation works
The capacity of our operating subsidiary in undertaking construction projects depends on the amount of available working capital. There may be time lags between payments to the subcontractors and suppliers and receiving payments from our customers.
As certain machinery we possessed for the handling of C&D material, such as excavators are capable of undertaking excavation works, we plan to vertically expand our operating subsidiary’s service types to provide excavation services. This expansion can not only grow our income stream, but also enable us to better control the state of C&D material from the source to facilitate the subsequent sorting, recycling and resale.
Further enhance our project management capability
As we further expand our business and capture more sizeable projects, we will need additional project managers and engineers, quantity surveyors, with appropriate knowledge, qualifications, and experience to oversee and execute the daily operations of our operating subsidiary’s projects as well as meet the relevant requirements set by government authorities. We consider that the reputation of operating subsidiary has been built on years of satisfactory construction management services operating subsidiary provided to its customers and in order to continually deliver quality work, we intend to expand our manpower by recruiting project management and support staff to cope with our business development.
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OUR BUSINESS OPERATIONS
Through our operating subsidiary, we are engaged in the provision of (i) soil and rock transportation services and (ii) construction works.
| (i) | Soil and rock transportation services |
Construction activities, which include, among others, site clearance, excavation, construction, refurbishment, renovation, demolition and road works generate a large amount of C&D materials, a large portion of which ultimately becomes construction waste. Construction contractors are obligated to sort and dispose of construction waste at government waste disposal facilities, which charge a disposal fee with respect to the weight and type of construction waste. The producers of construction waste are required to open a billing account with the EPD prior to using a government waste disposal facility and to pay the relevant construction waste disposal charge. Primega Construction’s soil and rock transportation services are mainly provided to construction contractors to take care of excavated materials, primarily soil and rock, generated during the excavation stage of a foundation construction project. Primega Construction’s customers primarily consist of subcontractors operating in private sector construction projects.
Primega Construction’s services involve the handling, loading and transport of excavated materials, substantially comprised of soil and rock, for disposal at relevant government waste disposal facilities such as landfills, sorting facilities or public fill reception facilities, as the case may be.
Among the C&D materials generated from construction activities, only a subset of inert materials such as soil, rock and concrete are suitable for reuse and/or recycling into products with marketable value. These materials are suitable for reuse in construction projects such as reclamation, or site formation works with or without further processing. Other inert C&D materials such as asphalt, tiles, bricks and glass cannot be feasibly processed and recycled into marketable products. The excavated materials Primega Construction handles are a mix of such materials. Rather than disposing of all the C&D materials at government waste disposal facilities, Primega Construction makes efforts to reduce waste by reintroducing suitable materials back into the market as reusable or recyclable materials.
Primega Construction identifies reclamation and site formation construction contractors and other vendors interested in purchasing the excavated materials. Excavated soil can be used for land filling works while rock materials can be treated and processed into viable construction materials such as recycled aggregates for mixing concrete.
These excavated materials that can be repurposed or sold will not be subject to disposal charges at government waste disposal facilities, reduces the amount of environmental waste, and at the same time, the operational costs of our operating subsidiary.
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| (ii) | Construction works |
Primega Construction provides ELS works as subcontractor, which are typically used for establishing a supported area for deep excavation in order to facilitate construction of footing foundation basement or pile caps for further infrastructure development. ELS works typically begin by inserting steel pile wall into the soil for the planned excavation, followed by excavation within the steel pile walls. Lateral support is then added to keep the steel pile stable for deeper excavation.
Primega Construction also acts as subcontractor for piling works. Piling involves any work in connection with forming a pile in the ground by a variety of means for the purposes of foundation construction. During the years ended March 31, 2026, 2025 and 2024, Primega Construction has undertaken projects for construction of bored piles. Bored piles are a type of reinforced concrete pile expected to be used to bear heavy loads, and a common type of foundation used in Hong Kong. Bored piling requires the use of different kinds of machinery, such as excavators, air compressors, crawler cranes, oscillators, etc., and Primega Construction possesses most of the standard machinery and equipment necessary for construction of bored piles.
OUR OPERATION FLOW
Set out below is the flow chart summarizing the usual workflow of a soil and rock transportation project:
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Quotation and contract execution
As standard practice, Primega Construction is invited by its customers to provide a quotation for a potential project. The customers will typically include in its invitation a preliminary report on the composition of the materials to be excavated at the construction site. Primega Construction will review the preliminary report and conduct an on-site ground investigation to determine the physical characteristics of the site. After the investigation, Primega Construction will conduct a preliminary review and assessment of the potential project. Primega Construction would consider (i) the aggregate estimated volume of materials involved and the project timeframe, (ii) distance between the site location and the relevant reception site, (iii) capacity and resource availability, and (iv) previous experience and relationship with the customer. Once Primega Construction’s management considers the above factors and estimates the expected profitability of a potential project, they will provide a quotation to the customer.
Upon receipt of the quotation, the customer may by way of interview or enquiries clarify with Primega Construction the particulars of its submitted quote. Once the customer decides to engage Primega Construction, generally, it will be formally informed of the customer’s acceptance. Primega Construction may then enter into a formal engagement agreement with the customer.
Project planning
Upon formal engagement, the management of Primega Construction will allocate the required personnel to the project and assesses the necessary machinery and equipment on-hand. Primega Construction will estimate the volume required to be transported per day and allocate the necessary personnel and machinery to ensure completion of the project on time.
If Primega Construction’s resources are insufficient to meet the project timetable, it will make arrangements to engage subcontractors to supply additional transport vehicles to ensure sufficient loading capacity for the project.
At this stage, Primega Construction will make enquiries with other construction contractors in need of fill materials. These contractors are typically engaged in foundation projects or reclamation projects and require soil for use as filling materials.
Project execution
Forming a project team
The project team of Primega Construction is generally comprised of a project manager, a site foreman, on-site machinery operators, coordinators and truck drivers. The project manager will closely monitor the progress of the project on a continuing basis, and oversee the project on site, reporting to senior management the project status and identifying any problems that need to be resolved from time-to-time.
Transportation to relevant reception sites, recycling and treatment and disposal of construction waste
The initial stages of the projects typically involve sorting the initial layer of materials from excavation. This generally includes a mixture of inert and non-inert C&D materials, including remnant waste from the site clearance process, that are generally not suitable for reuse. The initial layer comprises approximately 20% of the overall volume of materials handled and is considered entirely construction waste. The project team loads the construction waste onto tipper trucks for disposal at the nearest landfill or sorting facility depending on the composition of inert to non-inert construction waste. When the tipper truck carrying the construction waste enters the reception facility, a corresponding transaction record (“CHIT”) is presented and the truck is weighed at the in-weighbridge and inspected as to whether the wastes are permitted to be discharged at the facility. If the contents of the waste fail to comply with the acceptance criteria, a rejection advice will be issued and the truck cannot discharge its waste at the reception facility. When accepted, the truck will be directed to the designated area for unloading the construction waste material. After discharging the waste, the truck will then be weighed again to estimate the weight of waste material discharged. Based on the recorded weight recorded on the CHIT, a waste disposal charge at a rate of HK$175 (approximately US$22.34) up to HK$200 (approximately US$25.53) per ton is payable for disposal of construction waste at sorting facilities and landfills, respectively.
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As excavation continues, the materials excavated will consist almost entirely of soil and rock, typically in a ratio of 60% to 40%. During this stage, sorting is required to separate the soil and rock materials, which is typically carried out by the construction contractor, depending on the engagement terms. After sorting, Primega Construction will confirm with other construction contractors the amount of soil that can be reused as filling material, and these contractors will arrange for on-site collection of the materials at no cost. To ensure the soil is recycled and reused, the project team maintains communication with these contractors and will obtain a set of supporting documents to track the transit of the materials until it is redeployed. Soil that meets certain standards is typically reused as backfill in foundation and reclamation projects at other construction sites.
| Delivery of recycled soil for reuse as backfill |
In March 2022, Primega Construction entered into a supply agreement to sell rock materials to a customer at a fixed rate of HK$15 (US$1.92) per ton. Subsequently in September 2022, the fixed rate was revised by mutual agreement to HK$10 (US$1.28) per ton. As part of the arrangement, Primega Construction will arrange for delivery of raw rocks to the facility designated by the customer. For the year ended March 31, 2023, Primega Construction recorded approximately HK$3.21 million of such sales, representing approximately 144,000 tons of rocks at a price point of HK$15 per ton and approximately 105,000 tons at HK$10 per ton. For the year ended March 31, 2024, Primega Construction recorded approximately HK$1,400,000 of such sales, representing approximately 140,000 tons of rocks at a price point of HK$10 per ton.
For the year ended March 31, 2025, Primega Construction entered into several agreements with different customers to transport mud materials to the facility designated by the customers, which recorded in aggregate approximately HK$931,400 in revenue. There were no mud material disposal transactions during the year ended March 31, 2026.
Project monitoring
The project manager regularly provides progress updates to the directors. Such updates include accounts on the areas of, but are not limited to, project performance, machinery and facilities on site, delays and causes, and safety and environmental matters. In addition, we would normally hold progress meetings with our customer throughout the project duration. The key members of the project team will keep monitoring the progress of their respective work, and they are all supervised by the project manager. We adopt a stringent quality standard pursuant to which our project team is required to complete the project on time.
Progress payment
Primega Construction is generally paid monthly based on the certified value of the works completed in the preceding month, measured in volume of materials disposed.
PROJECTS
As of the date of this report, we have 3 projects on hand which are in various stages of progress. For the years ended March 31, 2026, 2025 and 2024, Primega Construction completed 4, 14 and 6 projects, respectively. These projects consist of both soil and rock transportation projects and other construction works projects.
PRICING STRATEGY
The pricing of Primega Construction quotations is determined on a cost-plus basis. The pricing of soil and rock transportation services, is generally determined with reference to various factors such as: (i) the distance between the construction site and the disposal and recycling facilities; (ii) the completion time requested by customer; (iii) the estimated composition of soil and rock at the site; (iv) the estimated direct costs to be incurred; (v) the prospect of obtaining future contracts from the customer; and (vi) the prevailing market conditions.
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Primega Construction soil and rock transportation projects are either lump-sum fixed price contracts based on the estimated volume of materials involved subject to remeasurement or an agreed fixed unit price per volume or weight of materials transported.
For the biodiesel oil trading business, our pricing is based on the daily quoted price of wholesale biodiesel plus a margin which accounts for logistics costs and overhead.
For construction projects undertaken, our pricing is based on real-time market conditions, benchmarked against competitor offers, and built on current material-plus-labor cost baselines.
CUSTOMERS
Primega Construction’s customers are primarily foundation and site formation subcontractors of property development and civil engineering projects in Hong Kong.
Primega Construction’s largest customers, which contributed more than 10% our revenue each, accounted for approximately 80.73%, 84.57% and 88.88% of our revenue, respectively, for the years ended March 31, 2026, 2025 and 2024. Our related party, Chi Yip, was one of Primega Construction’s customers for the years ended March 31, 2026 and 2025, accounting for approximately 4.96% and 3.34% of our total revenues, respectively. However, Chi Yip contributed no income during the year ended March 31, 2024.
Primega Construction generally does not enter into long-term agreements with its customers, and the customers engage Primega Construction on a project-by-project basis, which we believe is in line with market practice.
SALES AND MARKETING
Primega Construction’s business opportunities arose mainly from invitation for quotation by customers, which are considered by our directors to be attributable to its well-established presence in the construction industry in Hong Kong and its good customer relationships. Primega Construction currently does not maintain a sales and marketing team. Primega Construction contacts its customers on a regular basis to maintain a good relationship with them, to obtain market and industry information, and to seek business opportunities. We also rely on word of mouth by providing quality service in all of projects to attract referrals or for retaining customers in future projects.
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SUPPLIERS
Primega Construction’s suppliers primarily supply biodiesel oil to it for operation of its vehicles and for onward sales to its customers. Due to the nature of our business, which involves transporting large volumes of excavation materials and operating a large fleet of vehicles, biodiesel oil is a major cost component of our core business. Primega Construction generally orders biodiesel oil on a project-by-project basis, and it does not enter into any long-term contracts with our suppliers. The terms of our supply contracts include the type of materials, price, quantity, and payment terms. We select suppliers mainly based on: (i) quality of materials, (ii) timeliness of delivery, (iii) previous experience and length of partnership with the supplier, (iv) competitiveness of the price offered, and (v) reputation of the supplier. Unless otherwise stated in our agreement with the customer, we usually provide construction materials for our projects. As we are provided with the standard requirements of the materials and we are liable for the quality of our projects, except in the case that we are provided with materials by our customer, as subcontractor, we are able to choose our own suppliers for our projects.
Primega Construction’s major customers, Chi Yip Eng. & (Trans.) Company Limited and Workbase Engineering Limited, also supplied it with plant and machinery from time to time.
SUBCONTRACTORS
Depending on the availability of resources, capacity of machinery, and the scale and timetable of our soil and rock transportation project, Primega Construction engages subcontractors to provide additional machinery, namely tipper trucks and excavators, labor, which may include drivers for the trucks, or transportation services. During the years ended March 31, 2025, 2024 and 2023, an affiliated company, Chi Yip Eng. & (Trans.) Company Limited, also acted as Primega Construction’s subcontractor, providing it with transportation services, which included trucks and drivers. Chi Yip Eng. & (Trans.) Company Limited was also a major customer of Primega Construction during the years ended March 31, 2023.
MACHINERY AND MATERIALS
Primega Construction will rely on the use of machinery to carry out its services.
As of the date of this report, Primega Construction has a fleet of 31 tipper trucks, 2 crawler crane, 1 hydraulic drilling rig, 4 excavators, 2 generators, 1 vibratory hammer, 4 air compressors and 1 diesel tank wagons. Primega Construction also leases additional machinery and vehicles from third parties from time to time, primarily to support its soil and rock transportation operations.
Our directors believe that investment in machinery is crucial for Primega Construction to have greater control and allow us to serve projects of larger scale in the future. The main machinery used in our soil and rock transportation operations are tipper trucks. The machinery and equipment we utilize in construction works projects include:
| A crane mounted on an undercarriage with a set of tracks with a lifting capacity of up to 90 tons. |
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| A drilling rig used to drill holes below ground. |
| Mini excavators are small scale excavators mainly used for moving earth. The upper structure sits atop an undercarriage with tracks or wheels. |
| Air compressors are devices that forces air into a chamber and compresses air to provide high-pressure air |
SEASONALITY
Our business activities do not exhibit any significant seasonality.
QUALITY CONTROL
To maintain consistent quality of services for customers, Primega Construction has established a quality management system that is certified to be in compliance with the requirements of ISO 9001:2015. Primega Construction takes an active approach to monitor the progress of each project. Primega Construction’s directors and its project management team maintain frequent dialogue with Primega Construction customers, suppliers, and subcontractors in order to make sure that each project is carried out according to the agreed plan.
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MAJOR QUALIFICATIONS, LICENSES, APPROVALS AND CERTIFICATIONS
Licenses, permits and approvals
As of the date of this report, our operating subsidiary had one diesel tank wagon duly licensed by the Hong Kong Fire Services Department to convey category 5 dangerous goods. The validity period of the dangerous goods license generally lasts for one year, subject to annual review and renewal.
As of the date of this report, our operating subsidiary had 31 tipper trucks which are vehicles approved by the Environmental Protection Department of Hong Kong for delivering inert construction waste to government waste reception facilities.
Certifications
As of the date of this report, we obtained the following certifications in recognition of Primega Construction’s quality control system:
| Certification | Description | Awarding organization or authority |
Holder | Expiry date | ||||
| ISO 9001:2015 | Certification of quality management system | Accredited Certification International Limited | Primega Construction | October 23, 2028 | ||||
| ISO 14001:2015 | Certification of environmental management system | Accredited Certification International Limited | Primega Construction | October 23, 2028 | ||||
| ISO 45001:2018 | Certification of occupational health and safety management system | Accredited Certification International Limited | Primega Construction | November 2, 2028 |
COMPETITION
The C&D materials handling industry in Hong Kong is considered relatively fragmented. Our directors consider that there are market entry barriers to the industry in Hong Kong that hinder new subcontractors from entry, including: (i) industry experience, (ii) capital intensive due to the need for specialized machinery, and (iii) sufficiency of working capital. Primega Construction’s main competitors in the industry are mainly companies that are engaged in the foundation and site formation works in Hong Kong and other subcontractors specialized in logistics and transportation of construction materials. These companies typically have the resources including machinery and personnel to handle C&D material disposal projects. We believe that Primega Construction is competing with other construction contractors on its competitive strengths and which have and will continue to contribute to our success. As such, even though competition within the industry in Hong Kong will continue to intensify in the future, we are confident that Primega Construction is able to withstand the intense competition with its competitive strengths.
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INTELLECTUAL PROPERTY
As of the date of this report, we had one registered domain name, www.primegagroup.com. As of the date of this report, neither we nor our operating subsidiary owns any patents, copyrights, trademarks or other domain names.
INSURANCE
All projects undertaken by Primega Construction and the relevant employees are respectively protected by insurance policies taken out and maintained by the relevant main contractor of the construction site.
We have insurance coverage for the liabilities under employee compensation and personal injury claims, which meets the statutory minimum insurance coverage of HK$100 million per incident. We consider such insurance coverage as to be generally sufficient for its liabilities under employees’ compensation claims and personal injury actions. We have also maintained office protection insurance, which covers loss of and damage to office contents in our office, and third-party liability insurance regarding the use of our tipper trucks, diesel tank wagons, motor vehicles and other plant and machinery.
We believe that our insurance coverage is in line with our industry norm. We review our insurance policies from time to time for adequacy in the breadth of coverage.
FACILITIES
We do not own any real property.
Our principal executive office is located at Room 2916, 29/F., New Tech Plaza, 34 Tai Yau Street, San Po Kong, Kowloon, Hong Kong. The office has a size of approximately 950 square feet, which we use as office space. The term of the lease is from October 18, 2024 to October 17, 2026.
We believe that our facilities are adequate to meet our needs for the immediate future and that, should it be needed, suitable additional space will be available on commercially reasonable terms to accommodate any expansion of our operations.
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EMPLOYEES
Our operating subsidiary employed 26, 33 and 29 full-time employees as of March 31, 2026, 2025 and 2024, respectively. As of the date of this report, we have 29 employees. The following table sets forth the number of our employees by function as of the date of this annual report:
As of the date of this report | ||||
| Directors | 1 | |||
| Project Engineering | 1 | |||
| Site Operation and Maintenance | 25 | |||
| Quantity Surveyor Department | 1 | |||
| Finance & Accounting Department | 1 | |||
| 29 | ||||
We believe that our operating subsidiary maintains a good working relationship with its employees, and it has not experienced any significant problems with our employees or any disruption to our operations due to labor disputes, nor have we experienced any material difficulties in the recruitment and retention of experienced core staff or skilled personnel during the years ended March 31, 2026, 2025 and 2024. As of the date of this report, we have a total of 29 full-time employees. There has not been any trade union set up for our employees.
We also emphasize the continuing education and quality training of our staff to enhance their work performance. Our employees are encouraged to engage in professional training on a regular basis to enhance their technical knowledge on industry quality standards, safety standards, site management, and operation of tools. We review the performance of our employees from time to time in order to determine salary adjustments and promotion appraisals.
OCCUPATIONAL HEALTH AND WORK SAFETY
We have adopted an occupational health and safety system as required by relevant occupational health and safety laws, rules and regulations for our operating subsidiary, which is managed by its safety department for the benefit of the employees and the subcontractors’ employees. We are committed to providing a safe and healthy working environment. It is also our concern not to put the general public in danger. Our occupational health and safety system has been implemented in compliance with the requirements of ISO 45001:2018 international standards.
The safety officer of Primega Construction is responsible for setting up safety plans for workers before carrying out their work at construction sites and throughout the transportation and disposal process, inspecting machinery and equipment to ensure they are safe to be used, conducting regular safe walks to maintain a safe working environment and site tidiness, setting speed limits for operation of heavy vehicles, requiring the use of safety gear, handling safety incidents, and keeping safety records. In addition, we will conduct regular internal safety audits and regular safety training provided to our staff.
LEGAL PROCEEDINGS
As of the date of this report, we are not a party to, and we are not aware of any threat of, any legal proceeding that, in the opinion of our management, is likely to have a material adverse effect on our business, financial condition, or operations.
From time to time, we may become involved in legal proceedings arising in the ordinary course of business. Other than the civil proceeding mentioned above, we are not involved in any litigation, arbitration, or claim of material importance, nor any material impact non-compliance incidents or systemic non-compliance incidents in respect to applicable laws and regulations.
ENVIRONMENTAL PROTECTION
Our operating subsidiary’s operations are subject to certain environmental requirements pursuant to the laws in Hong Kong, including primarily those in relation to waste disposal, air and water pollution control, and noise control during the years ended March 31, 2026, 2025 and 2024. Under such environmental regulations, Primega Construction is required to dispose of construction waste at specified facilities at costs based on the volume of inert construction waste. Primega Construction is further required to operate within specified hours and generally not allowed to operate powered mechanical equipment on public holidays. A wastewater treatment facility is in place for discharging construction site effluent. See “Regulations” for details on the material environmental protection requirements applicable to Primega Construction’s operations. In recognition of our environmental policies, our environmental management system for our operating subsidiary, Primega Construction, has been assessed and certified as meeting the requirements of ISO 14001:2015.
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REGULATIONS
Regulations Related to Our Business Operations in Hong Kong
Hong Kong Regulations Related to Service Providers
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. 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, issue a business registration certificate or branch registration certificate for the relevant business or the relevant branch, as the case may be.
As of the date of this report, Primega Construction holds a valid business registration certificate.
Hong Kong Regulations Related to the Sale and Transport of Diesel Oil
Dangerous Goods Ordinance (Chapter 295 of the Laws of Hong Kong)
The Dangerous Goods Ordinance controls the usage, storage, manufacturing and conveyance of the dangerous goods under the ordinance and sets out the relevant licensing requirements in relation to these activities. Section 3 of the Dangerous Goods Ordinance gives a broad meaning of dangerous goods, which include all explosives, compressed gases, petroleum and other substances giving off inflammable vapors, substances giving off poisonous gas or vapor, corrosive substances, substances which become dangerous by interaction with water or air, substances liable to spontaneous combustion or of a readily combustible nature, and there are over thousands of substances and chemicals which are classified as dangerous goods. These dangerous goods are grouped into categories and classes in accordance with their potentially hazardous nature. As of the date of this report, there were 11 categories of dangerous goods according to the subordinate legislations of the Dangerous Goods Ordinance (namely Categories 1, 2, 2.2, 3, 3A, 4 to 9 and 9A). Diesel oil is categorized as one of the dangerous goods in Class 3A.
The Fire Services Department of Hong Kong is the licensing authority for all classes of dangerous goods on land (except gases under the Gas Safety Ordinance (Chapter 51 of the Laws of Hong Kong) and schedule 1 dangerous goods under the Dangerous Goods (Application and Exemption) Regulations 2012 (Chapter 295E of the Laws of Hong Kong). Pursuant to section 6 of the Dangerous Goods Ordinance, no person shall store, convey or use any dangerous goods in excess of exempted quantity in any premises or places without a license issued by the director of the Fire Services Department. Any person who contravenes section 6 of the Dangerous Goods Ordinance shall be guilty of an offence and is liable to a fine of HK$100,000 and to imprisonment for 6 months for a first offence.
Pursuant to section 9B of the Dangerous Goods Ordinance, a breach of any term or condition endorsed upon any license issued pursuant to section 9 of the Dangerous Goods Ordinance shall constitute an offence which shall be punishable on summary conviction by a fine not exceeding HK$50,000 and imprisonment not exceeding 1 month for a first offence.
Under section 10 of the Dangerous Goods Ordinance, no person shall deliver to any warehouse owner or carrier from any part of Hong Kong by land or water unless the (a) true name or description of such goods is distinctly written, printed or marked in English and Chinese on the outside of the case or other package containing such goods; (b) the prescribed label, if any, is attached to the outside of the case or other package containing such goods; and (c) in the case of delivery, notice in writing has been given to any warehouse owner or carrier of the true name or description of such goods and the dangerous nature thereof. Any person who contravenes section 10 commits an offence and is liable on summary conviction to a fine of HK$100,000 and to imprisonment for 6 months.
Pursuant to section 15 of the Dangerous Goods Ordinance, any employee or agent of any person holding a license issued under the Dangerous Goods Ordinance who commits an offence under this ordinance is liable for such offence and to the penalty provided therefor, unless he proves that the offence was committed without his knowledge or consent and that he had exercised all due diligence to prevent the commission of the offence. Pursuant to section 16 of the Dangerous Goods Ordinance, where an offence under the Dangerous Goods Ordinance is committed by a company, every director and every officer concerned in the management of the company shall be guilty of the like offence unless he proves that the act constituting the offence took place without his knowledge or consent. Where a person by whom an offence under the Dangerous Goods Ordinance has been committed is a company, every director and every officer concerned in the management of the company shall be guilty of the like offence unless he proves that the act constituting the offence took place without his knowledge or consent.
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As of the date of this report, Primega Construction has obtained a valid dangerous goods license.
Dangerous Goods (Application and Exemption) Regulations 2012 (Chapter 295E of the Laws of Hong Kong)
Diesel, fuel oil and furnace oils having a flash point of or over 60°C (140° F) in closed cup test, are categorized as Class 3A dangerous goods under Schedule 2 of the regulation.
Dangerous Goods (Control) Regulation (Chapter 295G of the Laws of Hong Kong)
On March 31, 2022, the Dangerous Goods (Control) Regulation (“DG(C)R”) came into effect, providing for various updates to the regulatory system for dangerous goods in Hong Kong and aligning it with international standards. The DG(C)R also repealed the Dangerous Goods (General) Regulations (Cap. 295B of the Laws of Hong Kong) (“DG(G)R”) previously in effect, while providing for a transitional period of two years. During the transitional period, licenses granted under the repealed DG(G)R remains in force until the end of the validity period of the said license or the end of the transitional period (whichever is earlier) as if the repealed DG(G)R were still in force. In addition, a licensee may, before the end of the validity period, apply for renewal of the license in accordance with the repealed DG(G)R as if it were still in force during the transitional period.
Pursuant to Section 10 of Schedule 6 – Part 2 of the DG(C)R, the outer surface of the outermost packaging of the Schedule 2 must be legibly marked with all the following information:
| (a) | The UN number of each type of Schedule 2 dangerous good contained in the case of Class 3A dangerous good, the HK number; | |
| (b) | The proper shipping name or true name of each type of Schedule 2 dangerous good contained in the packaging, in either English or Chinese, as specified in the Code of Practice for Control of Dangerous Goods on Land (published by the Fire Services Department under Section 5A of the Dangerous Goods Ordinance). |
Pursuant to Section 140 of the DG(C)R, exemption is provided from the packing, marking and labelling requirements for, among others, Class 3A dangerous goods in an approved tank (approved under Section 114(1) of the DG(C)R, or for Schedule 2 dangerous goods that are either contained in a receptacle that is permanently installed in and forming part of a machinery or used or intended to be used for the proper functioning of the machinery.
Dutiable Commodities Ordinance (Chapter 109 of the Laws of Hong Kong)
The Dutiable Commodities Ordinance and its subsidiary legislations provide the taxation and control of liquors, tobacco, hydrocarbon oil, methyl alcohol and other substances. The duty payable on ultra-low sulfur diesel and Euro V diesel shall be at HK$2.89 per liter from January 1, 2009 onwards and HK$0 per liter from July 14, 2008 onwards.
Dutiable Commodities (Marking And Colouring Of Hydrocarbon Oil) Regulations (Chapter 109C of the Laws of Hong Kong)
The Dutiable Commodities (Marking And Colouring Of Hydrocarbon Oil) Regulations stipulate the specification and proportion of marker and coloring substance. No person shall add any marker and coloring substance to any light diesel oil except with the permission of the commissioner of Customs and Excise and any deputy or assistant commissioner of Customs and Excise. Regulation 12 of the Dutiable Commodities (Marking And Colouring Of Hydrocarbon Oil) Regulations further stipulates that no person shall deliver marked oil to any other person without also delivering a note bearing the statement in both English and Chinese “MARKED OIL IS NOT TO BE USED FOR THE PROPULSION OF MOTOR VEHICLES OR PLEASURE VESSELS” and “有標記油類不得用作推動汽車或遊樂船隻的燃料”. Any person who contravenes regulation 12 commits an offence and is liable to a maximum fine of HK$50,000 and to imprisonment for 6 months.
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Hong Kong Regulations Related to the Construction Industry
Construction Workers Registration Ordinance (Chapter 583 of the Laws of Hong Kong)
The Construction Workers Registration Ordinance provides, among others, for registration and regulation of construction workers. The principal object of the Construction Workers Registration Ordinance is to establish a system for registration of construction workers and to regulate construction workers who personally carry out construction work on construction site.
Under Sections 3(1) and 5 of the Construction Workers Registration Ordinance, the principal contractors/subcontractors/employers/controllers of construction sites are required to employ only registered construction workers to personally carry out construction work on construction sites.
Factories and Industrial Undertakings Ordinance (Chapter 59 of the Laws of Hong Kong)
The Factories and Industrial Undertakings Ordinance provides for the safety and health protection of workers in an industrial undertaking. Under the Factories and Industrial Undertakings Ordinance, it is the duty of a proprietor (including a person for the time being having the management or control of the business carried on in such industrial undertaking and also the occupier of any industrial undertaking) of an industrial undertaking to take care of, so far as is reasonably practicable, the health and safety at work of all persons employed by it at the industrial undertaking.
A proprietor who contravenes any of its duties under the Factories and Industrial Undertakings Ordinance commits an offense and is liable to a fine of HK$500,000. A proprietor who contravenes any of these requirements willfully and without reasonable excuse commits an offense and is liable to a fine of HK$500,000 and to imprisonment for six months.
Construction Industry Council Ordinance (Chapter 587 of the Laws of Hong Kong)
According to Section 32 of the Construction Industry Council Ordinance, a construction industry levy (“CIL”) is imposed in respect of all construction works/operations carried out in Hong Kong with a total value exceeding HK$3,000,000. A contractor executing construction operations is responsible for paying the CIL to the Construction Industry Council (“CIC”), “Construction operation” is exhaustively defined under Schedule 1 of the Construction Industry Council Ordinance, which includes among other things, building works, construction, alteration, repair, maintenance, extension, demolition or dismantling, external or internal cleaning. and painting or decorating any external or internal surfaces or parts of any buildings or other temporary or permanent structures forming part of land.
The CIL chargeable is 0.5% of the total value of the construction operations (as defined under Section 53 of the Construction Industry Council Ordinance) concerned. Pursuant to Section 32 and Schedule 5 of the Construction Industry Council Ordinance, no CIL is chargeable for any construction operations not exceeding HK$3,000,000.
According to Section 34 of the Construction Industry Council Ordinance, the contractor and authorized person each is required to inform the CIC in a specified form (Form 1) in respect to the construction operations within 14 days after its commencement. Failure to give such notice without reasonable excuse may be liable to a fine at Level 1, which is fixed at HK$2,000. Notice is only required for term contracts or if the reasonable estimation of the total value of construction operations exceed HK$3,000,000.
Pursuant to Section 35 of the Construction Industry Council Ordinance, a contractor is required to give a Notice of Payment (“NOP”) in a specified form (Form 2) to the CIC within 14 days after the contractor receives a payment in respect to the construction operation. Failure to give the NOP without reasonable excuse may be liable to a fine at Level 3, which is fixed at HK$10,000.
Pursuant to Section 36 of the Construction Industry Council Ordinance, a contractor is required to give a Notice of Completion (“NOC”) in a specified form (Form 3) to the CIC within 14 days after the completion of the construction operation. Failure to give the NOC without reasonable excuse may be liable to a fine at Level 3, which is fixed at HK$10,000.
The CIC shall assess the CIL payable upon receiving the NOP or NOC and give a Notice of Assessment in writing specifying the amount of CIL. The CIC can also make the assessment notwithstanding if a NOP or NOC has been given. According to Section 41 of the Construction Industry Council Ordinance, if a contractor fails to give the NOP or NOC, a surcharge not exceeding twice the amount of the CIL payable may be imposed and a Notice of Surcharge in writing shall be given by the CIC.
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Regulations Related to Employment and Labor Protection
Occupational Safety and Health Ordinance (Chapter 509 of the Laws of Hong Kong)
The Occupational Safety and Health Ordinance provides for the safety and health protection to employees in workplaces, both industrial and non-industrial. Employers must, as far as reasonably practicable, ensure the safety and health in their workplaces. Failure to comply with the above constitutes an offense, and the employer is liable on conviction to a fine of HK$200,000. An employer who fails to do so intentionally, knowingly or recklessly commits an offense and is liable on conviction to a fine of HK$200,000 and to imprisonment for 6 months.
Employment Ordinance (Chapter 57 of the Laws of Hong Kong)
The Employment Ordinance is an ordinance enacted for, among other things, the protection of the wages of employees and the regulation of the general conditions of employment and employment agencies. Under the Employment Ordinance, an employee is generally entitled to, among 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)
The Employees’ Compensation Ordinance 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 to injuries or death caused by accidents arising out of and in the course of employment or by prescribed occupational diseases.
Under the Employees’ Compensation Ordinance, if an employee sustains an injury or dies as a result of an accident arising out of and in the course of his or her employment, his or her employer is in general liable to pay compensation even if the employee might have committed acts of fault or negligence when the accident occurred. Similarly, an employee who suffers incapacity arising from an occupational disease is entitled to receive the same compensation as that payable to employees injured in occupational accidents.
According to Section 24 of the Employees’ Compensation Ordinance, a principal contractor shall be liable to pay compensation to subcontractors’ employees who are injured in the course of their employment to the subcontractor. The principal contractor is, nonetheless, entitled to be indemnified by the subcontractor who would have been liable to pay compensation to the injured employee independently of this section. The employees in question are required to serve a notice in writing on the principal contractor before making any claim or application against such principal contractor.
Pursuant to Section 40 of the Employees’ Compensation Ordinance, all employers (including contractors and subcontractors) are required to take out insurance policies to cover their liabilities both under the Employees’ Compensation Ordinance and at common law for injuries at work in respect to all their employees (including full-time and part-time employees). Under Section 40(1B) of the Employees’ Compensation Ordinance, where a principal contractor has undertaken to perform any construction work, it may take out an insurance policy for an amount not less than HK$200 million per event to cover its liability and that of its subcontractor(s) under the Employees’ Compensation Ordinance and at common law. Where a principal contractor has taken out a policy of insurance under Section 40(1B) of the Employees’ Compensation Ordinance, the principal contractor and a subcontractor insured under the policy shall be regarded as having complied with Section 40(1) of the Employees’ Compensation Ordinance.
An employer who fails to comply with the Employees’ Compensation Ordinance to secure an insurance cover is liable (i) on conviction upon indictment to a fine at Level 6 (currently at HK$100,000) and imprisonment for two years, and (ii) on summary conviction to a fine at Level 6 and imprisonment for one year.
According to Section 15 of the Employees’ Compensation Ordinance, an employer must notify the Commissioner for Labour of any work accident by submitting Form 2 or Form 2B (within 14 days for general work accidents and within seven days for fatal accidents), irrespective of whether the accident gives rise to any liability to pay compensation. If the happening of such accident was not brought to the notice of the employer or did not otherwise come to its knowledge within such periods of seven and 14 days, respectively, then such notice shall be given not later than seven days or, as may be appropriate, 14 days, after the happening of the accident was first brought to the notice of the employer or otherwise came to its knowledge.
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As of the date of this report, employee compensation insurance has been obtained for all employees of Primega Construction.
Immigration Ordinance (Chapter 115 of the Laws of Hong Kong)
Pursuant to Section 38A of the Immigration Ordinance, a construction site controller (i.e., the principal or main contractor, which includes a subcontractor, owner, occupier, or other person who has control over or is in charge of a construction site) should take all practicable steps to prevent having illegal immigrants from being on the construction site and should prevent illegal workers who are not lawfully employable from taking employment on the construction site.
Where it is proved that an illegal immigrant was on a construction site, or such illegal worker, who is not lawfully employable, took employment on a construction site, the construction site controller commits an offense and is liable to a fine of HK$350,000.
As of the date of this report, Primega Construction has complied with the provisions under the Immigration Ordinance.
Minimum Wage Ordinance (Chapter 608 of the Laws of Hong Kong)
The Minimum Wage Ordinance provides for a prescribed minimum hourly wage rate (currently at HK$40 per hour) during the wage period for every employee engaged under a contract of employment under the Employment Ordinance.
Any provision of the employment contract that purports to extinguish or reduce the right, benefit, or protection conferred on the employee by the Minimum Wage Ordinance is void.
As of the date of this report, Primega Construction has complied with the provisions under the Minimum Wage Ordinance.
Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong)
The Mandatory Provident Fund Schemes Ordinance (“MPFSO”) is an ordinance enacted for the purposes of providing for the establishment of non-governmental mandatory provident fund schemes (each, a “MPF Scheme”). 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. 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 this requirement commits a criminal offense and is liable on conviction to a fine and imprisonment.
As of the date of this report, the Company believes it has made all contributions required under the MPFSO.
Regulations Related to Personal Data
Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong)
The Personal Data (Privacy) Ordinance (“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; |
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| ● | 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 that 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 correction of any data the individual considers to be inaccurate. |
The PDPO criminalizes, 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, by reason of a contravention of the PDPO in relation to his or her personal data may seek compensation from the data user concerned.
As of the date of this report, Primega Construction is in compliance with the provisions of the PDPO.
Regulations Related to Environmental Protection
Waste Disposal Ordinance (Chapter 354 of the Laws of Hong Kong)
The Waste Disposal Ordinance controls the production, storage, collection, treatment, reprocessing, recycling, and disposal of wastes. At present, livestock waste and chemical waste are subject to specific controls, while unlawful deposition of waste is prohibited. Import and export of waste is generally controlled through a permit system.
A contractor shall observe and comply with the Waste Disposal Ordinance and its subsidiary regulations, including, without limitation, the Waste Disposal (Charges for Disposal of Construction Waste) Regulation (Chapter 354N of the Laws of Hong Kong) and the Waste Disposal (Chemical Waste) (General) Regulation (Chapter 354C of the Laws of Hong Kong).
Under the Waste Disposal (Charges for Disposal of Construction Waste) Regulation, construction waste can only be disposed at designated prescribed facilities, and a main contractor who undertakes construction work with a value of HK$1,000,000 or above will be required, within 21 days after being awarded the contract, to establish a billing account in respect to that particular contract with the director of the Environmental Protection Department to pay any disposal charges for the construction waste generated from the construction work under that contract. The construction waste disposal charge imposed on each construction waste producer is dependent upon the proportion of inert construction waste.
Under Schedule 5 of the Waste Disposal (Charges for Disposal of Construction Waste) Regulation, inert construction waste means rock, rubble, boulder, earth, soil, sand, concrete, asphalt, brick, tile, masonry or used bentonite. The charge imposed by the government on disposal of construction waste ranges from HK$71 to HK$200 per ton, with HK$71 charged per ton of public fill disposed of at public fill reception facilities, HK$175 per ton of construction waste at sorting facilities and HK$200 per ton of construction waste at landfills. Pursuant to the Waste Disposal (Charges for Disposal of Construction Waste) Regulation (Amendment of Schedules) Notice 2023, as of April 1, 2024, the relevant charges will be increased to HK$87 per ton, HK$340 per ton and HK$365 per ton for disposal at public fill reception facilities, sorting facilities and landfills, respectively.
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Under the Waste Disposal Ordinance, a person shall not use, or permit to be used, any land or premises for the disposal of waste unless he has a license from the director of the Environmental Protection Department. A person who, except under and in accordance with a permit or authorization, does, causes, or allows another person to do anything for which such a permit or authorization is required commits an offense and is liable to a fine of HK$200,000 and to imprisonment for six months for the first offense and to a fine of HK$500,000 and to imprisonment for two years for a second or subsequent offense.
As of the date of this report, Primega Construction is in compliance with the provisions of the Waste Disposal Ordinance.
Water Pollution Control Ordinance (Chapter 358 of the Laws of Hong Kong)
The Water Pollution Control Ordinance controls the effluent discharged from all types of industrial, manufacturing, commercial, institutional, and construction activities into public sewers and public drains. For any industry/trade generating wastewater discharge (except domestic sewage that is discharged into communal sewers or unpolluted water to communal sewers or drains), they are subject to licensing control by the director of the Environmental Protection Department.
All discharges, other than domestic sewage to a communal sewer or drain or unpolluted water to a communal sewer or drain, must be covered by an effluent discharge license. The license specifies the permitted physical, chemical, and microbial quality of the effluent. The general guidelines are that the effluent does not damage sewers or pollute inland or inshore marine waters.
According to the Water Pollution Control Ordinance, unless being licensed under the Water Pollution Control Ordinance, a person who discharges any waste or polluting matter into the waters of Hong Kong in a water control zone or discharges any matter, other than domestic sewage and unpolluted water, into a communal sewer or communal drain in a water control zone commits an offense and is liable to imprisonment for six months and (a) for a first offense, a fine of HK$200,000; (b) for a second or subsequent offense, a fine of HK$400,000; and (c) in addition, if the offense is a continuing offense, a fine of HK$10,000 for each day during which it is proved to the satisfaction of the court that the offense has continued.
As of the date of this report, Primega Construction has complied with the provisions under the Water Pollution Control Ordinance.
Air Pollution Control Ordinance (Chapter 311 of the Laws of Hong Kong)
The Air Pollution Control Ordinance is the principal legislation in Hong Kong for controlling emission of air pollutants and noxious odor from construction, industrial, and commercial activities, as well as other polluting sources. Subsidiary regulations of the Air Pollution Control Ordinance impose control on air pollutant emissions from certain operations through the issue of licenses and permits.
A contractor shall observe and comply with the Air Pollution Control Ordinance and its subsidiary regulations, including, without limitation, the Air Pollution Control (Open Burning) Regulation (Chapter 311O of the Laws of Hong Kong), the Air Pollution Control (Construction Dust) Regulation (Chapter 311R of the Laws of Hong Kong), and the Air Pollution Control (Smoke) Regulations (Chapter 311C of the Laws of Hong Kong). The contractor responsible for a construction site shall devise, arrange methods of working, and carry out the work in such a manner so as to minimize dust impacts on the surrounding environment, and it shall provide experienced personnel with suitable training to ensure that these methods are implemented. Asbestos control provisions in the Air Pollution Control Ordinance require that building work involving asbestos must be conducted only by registered qualified personnel and under the supervision of a registered consultant.
Further, the Air Pollution Control (Motor Vehicle Fuel) Regulation (Chapter 311N of the Laws of Hong Kong) stipulates specifications of motor vehicle fuel and prohibits the supply, distribution and sale of motor vehicle fuels (including motor vehicle diesel and motor vehicle biodiesel) that do not meet the specifications.
As of the date of this report, Primega Construction has complied with the provisions under the Air Pollution Control Ordinance.
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Noise Control Ordinance (Chapter 400 of the Laws of Hong Kong)
The Noise Control Ordinance controls, among others, the noise from construction, industrial, and commercial activities. A contractor shall comply with the Noise Control Ordinance and its subsidiary regulations in carrying out construction work. For construction activities that are to be carried out during the restricted hours and for percussive piling during the daytime, not being a general holiday, construction noise permits are required from the director of the Environmental Protection Department of Hong Kong in advance.
Under the Noise Control Ordinance, construction work that produces noise and the use of powered mechanical equipment (other than percussive piling) in populated areas are not allowed between 7:00 p.m. and 7:00 a.m. or at any time on general holidays, unless prior approval has been granted by the director of the Environmental Protection Department of Hong Kong through the construction noise permit system. The use of certain equipment is also subject to restrictions. Hand-held percussive breakers and air compressors must comply with noise emissions standards and be issued with a noise emission label from the director of the Environmental Protection Department of Hong Kong. Any person who carries out any construction work except as permitted is liable on first conviction to a fine of HK$200,000 and on subsequent convictions to a fine of HK$200,000, and in any case to a fine of HK$20,000 for each day during which the offense continues.
As of the date of this report, Primega Construction has complied with the provisions under the Noise Control Ordinance.
Air Pollution Control (Non-road Mobile Machinery) (Emission) Regulation (Chapter 311Z of the Laws of Hong Kong)
The Air Pollution Control (Non-road Mobile Machinery) (Emission) Regulation introduces regulatory control on the emission of non-road mobile machinery (“NRMMs”), including non-road vehicles and regulated machines such as crawler cranes, excavators, and air compressors.
Unless exempted, NRMMs that are regulated under this provision are required to comply with the emission standards prescribed under the regulation. From September 1, 2015, all regulated machines sold or leased for use in Hong Kong must be approved or exempted with a proper label in a prescribed format issued by the Environmental Protection Department pursuant to Section 4 of the regulation. Under Section 5 of the regulation, starting from December 1, 2015, only approved or exempted NRMMs with a proper label are allowed to be used in specified activities and locations including construction sites. However, existing NRMMs that are already in Hong Kong on or before November 30, 2015, will be exempted from complying with the emission requirements pursuant to Section 11 of the regulation. A period of six months (from June 1, 2015 to November 30, 2015, both dates inclusive) is allowed for existing NRMMs to apply for exemption.
Any person who sells or leases a regulated machine for use in Hong Kong, or uses a regulated machine in specified activities or locations, without (i) exemption or the Environmental Protection Department’s approval is liable to a fine of up to HK$200,000 and imprisonment for up to six months, and (ii) a proper label is liable to a fine of up to HK$50,000 and imprisonment for up to three months.
As of the date of this report, Primega Construction has complied with the emission standards for its non-road mobile machinery.
Regulation Related to Competition
Competition Ordinance (Chapter 619 of the Laws of Hong Kong)
The Competition Ordinance prohibits and deters undertakings in all sectors from adopting anticompetitive conduct which has the object or effect of preventing, restricting or distorting competition in Hong Kong. The Competition Ordinance lays down three forms of behavior and imposes three rules which are intended to prevent and discourage anti-competitive conduct: (i) the first conduct rule under the Competition Ordinance prohibits agreements between undertakings that have the object or effect of preventing, restricting or distorting competition in Hong Kong; (ii) the second conduct rule under the Competition Ordinance prohibits undertakings with a substantial degree of market power in a market from abusing that power by engaging in conduct that has the object or effect of preventing, restricting or distorting competition in Hong Kong; and (iii) the merger rule under the Competition Ordinance prohibits mergers that have or are likely to have the effect of substantially lessening competition in Hong Kong. Currently, the merger rule only applies to the telecommunications sector. Each of the aforesaid rules is however subject to a number of exclusions and exemptions.
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Pursuant to section 82 of the Competition Ordinance, if the Competition Commission has reasonable cause to believe that (a) a contravention of the first conduct rule has occurred; and (b) the contravention does not involve serious anti-competitive conduct, it must, before bringing proceedings in the Competition Tribunal against the undertaking whose conduct is alleged to constitute the contravention, issue a notice to the undertaking.
However, under section 67 of the Competition Ordinance, where a contravention of the first conduct rule has occurred and the contravention involves serious anti-competitive conduct or a contravention of the second conduct rule has occurred, the Competition Commission may, instead of bringing proceedings in the Competition Tribunal in the first instance, issue a notice (an “infringement notice”) to the person against whom it proposes to bring proceedings, offering not to bring those proceedings on condition that the person makes a commitment to comply with requirements of the infringement notice. “Serious anti-competitive conduct” means any conduct that consists of any of the following or any combination of the following — (a) fixing, maintaining, increasing or controlling the price for the supply of goods or services; (b) allocating sales, territories, customers or markets for the production or supply of goods or services; (c) fixing, maintaining, controlling, preventing, limiting or eliminating the production or supply of goods or services; (d) bid-rigging.
In the event of breaches of the Competition Ordinance, the Competition Tribunal may make orders including: imposing a pecuniary penalty if satisfied that an entity has contravened a competition rule; disqualifying a person from acting as a director of a company or taking part in the management of a company; prohibiting an entity from making or giving effect to an agreement; modifying or terminating an agreement; and requiring the payment of damages to a person who has suffered loss or damage.
As of the date of this report, Primega Construction has complied with the provisions under the Competition Ordinance.
| C. | Organizational Structure |
The chart below illustrates our corporate structure and identifies our subsidiaries as of the date of this annual report:
Note: Ownership percentages based on 8,388,473 total outstanding Class A Ordinary Shares per the VStock Transfer Certified Shareholder List effective April 1, 2026. Only shareholders owning ≥3.00% are shown individually. “Public Shareholding” represents beneficial owners holding through The Depository Trust Company (CEDE & Co.).
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| Name | Background | Ownership | ||
| Celestial Power Group Limited | - A BVI company - Incorporated in February 2022 - Issued 100 shares of US$1.00 each – Intermediate holding company |
100% owned by ZDAI | ||
| Primega Construction Engineering Co., Limited | - A Hong Kong company - Incorporated in July 2018 - Issued 10,000 ordinary shares of HK$1.00 each - Provision of soil and rock transportation services |
100% owned by Celestial Power | ||
| DirectAI Technology Co., Limited |
- A Hong Kong company - Incorporated in May 2025 - Artificial intelligence general application systems, AI application software development |
100% owned by ZDAI | ||
| DirectBooking Technology PTE. Ltd. |
- A Singapore company - Incorporated in May 2025 - Artificial Intelligence, Software Development, Technical Services |
100% owned by ZDAI | ||
| Beijing Direct Booking Technology Co., Ltd. |
- A PRC company - Incorporated in May 2025 - Artificial Intelligence Software Development |
100% owned by DirectAI Technology Co., Limited |
| D. | Property Plant and Equipment |
Please refer to “Item 4. Information on the Company—B. Business Overview—Properties and Facilities.”
Item 4A. Unresolved Staff Comments
Not applicable
Item 5. Operating and Financial Review and Prospects
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report. This report contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” and elsewhere in this annual report. See “Cautionary Statement Regarding Forward-Looking Information”.
A. Operating Results
Overview
We are a provider of transportation services that employs environmentally friendly practices with the aim of facilitating reuse of C&D materials and reduction of construction waste. Through our operating subsidiary in Hong Kong, we operate in the construction industry, mainly handling transportation of materials excavated from construction sites. Our services principally comprise of soil and rock transportation services and construction works, which mainly include ELS works and bored piling. We used to engage in diesel oil trading, which we ceased in the year ended March 31, 2024. We generally provide our services as a subcontractor to other construction contractors in Hong Kong.
How We Assess Performance of Our Business
Revenues
Our revenues are principally generated from handling transportation of materials excavated from construction sites, and construction services.
Revenues from handling transportation of materials excavated from construction sites is recognized on completion of the related services. While revenues from provision of construction services are recognized based on the progress of completion of the contracts.
Our revenues are affected by the development of the construction industry which includes development of residential, commercial, industrial and infrastructure projects. The timing, size and nature of these projects will, on the other hand, be determined by a number of factors such as the Hong Kong government’s spending budget on construction projects, the investment of property developers and the general conditions and prospects of the local economy.
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Gross profit
Gross profit represents revenues less costs for providing transportation services or costs of provision of construction services. Our cost of sales mainly comprised subcontracting charges, fuel costs, depreciation of machinery and direct labor costs. Although we determine our project prices based on a cost-plus method with reference to the time, costs and potential income estimated to be involved in a project, the actual time and costs involved in completing our construction related projects or transportation services may be adversely escalated in materials and labor, adverse weather conditions, the length of time we store or handle the excavated materials, and changes in rules, regulations, and policies in Hong Kong. Therefore, any failure to control and manage the cost and time involved in a project may give rise to delays in completion of work and/or cost overruns, which in turn may materially and adversely affect our financial condition, profitability, and liquidity.
Depreciation and Amortization
We carry plant and equipment on our balance sheet at cost, net of accumulated depreciation and amortization. Depreciation on plant and equipment are computed on a straight-line basis over the estimated useful life of the asset.
General and Administrative Expenses
Our general and administrative expenses consisted mainly of staff costs, transportation costs, amortization of right-of-use assets for operating lease, and amortization of right-of-use assets for finance lease on motor vehicles for administrative purpose, depreciation expense for idle machinery, which was recognized under general and administrative expenses due to a decrease in active projects, provision of credit loss, legal and professional fees, insurance expenses, office and rental expenses and other miscellaneous expenses.
Interest Expense
Our interest expense is mainly related to our interest expenses incurred by finance leases of motor vehicles and machinery and bank borrowings.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingencies at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. As a result, management is required to routinely make judgments and estimates about the effects of matters that are inherently uncertain. Actual results may differ from these estimates under different conditions or assumptions.
Critical accounting policy is both material to the presentation of financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on financial condition or results of operations. Accounting estimates and assumptions may become critical when they are material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and that have a material impact on financial condition or operating performance.
Critical accounting estimates are estimates that require us to make assumptions about matters that were highly uncertain at the time the accounting estimate were made and if different estimates that we reasonably could have used in the current period, or changes in the accounting estimate that are reasonably likely occur from period to period, have a material impact on the presentation of our financial condition, changes in financial condition or results of operations. Due to the level of activity and lack of complex transactions, we believe there are currently no critical accounting policies and estimates that affect the preparation of our financial statements.
Exchange Rate
The exchange rates used for translation from Hong Kong dollar to USD was 7.8000, a pegged rate determined by the linked exchange rate system in Hong Kong. This pegged rate was used to translate Company’s balance sheets, income statement items and cash flow items throughout fiscal years 2025 to 2026.
For translation of Chinese Renminbi (“RMB”) into USD, the exchange rate used as of March 31, 2026, was 6.8980RMB per USD, was applied to translate the balance sheet of Beijing Direct Booking Technology Co., Ltd. (“Beijing Direct Booking”) as of that date. The exchange rate of 7.0713RMB per USD, representing the average rate for the period, was applied to translate the income statement and cash flow items of Beijing Direct Booking throughout fiscal year 2026. Fiscal year 2025 is not applicable as Beijing Direct Booking was incorporated on May 28, 2025.
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Results of Operations
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 for the periods indicated, both in absolute amount and as a percentage of our total revenues.
| For the year ended March 31, | ||||||||||||
| 2025 | 2026 | % of change | ||||||||||
| USD | USD | |||||||||||
| Revenues | ||||||||||||
| Revenue generated from third parties | 18,631,925 | 8,491,707 | (54.4 | )% | ||||||||
| Revenues generated from related parties | 643,748 | 443,314 | (31.1 | )% | ||||||||
| 19,275,673 | 8,935,021 | (53.6 | )% | |||||||||
| Cost of sales | ||||||||||||
| Cost of sales charged by third parties | (16,708,063 | ) | (9,574,016 | ) | (42.7 | )% | ||||||
| Cost of sales charged by related parties | (887,945 | ) | (1,282,408 | ) | 44.4 | % | ||||||
| Cost of sales | (17,596,008 | ) | (10,856,424 | ) | (38.3 | )% | ||||||
| Gross profit (loss) | 1,679,665 | (1,921,403 | ) | (214.4 | )% | |||||||
| Operating expenses: | ||||||||||||
| General and administrative expenses | (8,845,949 | ) | (11,808,274 | ) | 33.5 | % | ||||||
| Loss from operations | (7,166,284 | ) | (13,729,677 | ) | 91.6 | % | ||||||
| Other income, net | 290,337 | 354,097 | 22.0 | % | ||||||||
| Interest expense | (224,412 | ) | (183,361 | ) | -18.3 | % | ||||||
| Loss before tax expense | (7,100,359 | ) | (13,558,941 | ) | 91.0 | % | ||||||
| Income tax recovery | 119,291 | 267,774 | 124.5 | % | ||||||||
| Net loss | (6,981,068 | ) | (13,291,167 | ) | 90.4 | % | ||||||
Revenues
Our revenues decreased by 54.4% to USD 8,935,021 (of which USD 443,314 was generated from related parties) for the year ended March 31, 2026, from USD19,275,673 (of which USD643,748 was generated from related parties) for the year ended March 31, 2025. The revenues decrease was principally a result of the significant decrease in our undertaking of both solid and rock transportation services and construction works.
The following table sets out revenues generated from different services during the two years ended March 31, 2026 and 2025, respectively:
| For the year ended March 31, | ||||||||||||||||
| 2025 | 2026 | |||||||||||||||
| USD | % | USD | % | |||||||||||||
| Revenues | ||||||||||||||||
| Soil and rock transportation | 10,668,170 | 55.3 | % | 7,075,782 | 79.2 | % | ||||||||||
| Miscellaneous construction works | 8,607,503 | 44.7 | % | 1,859,239 | 20.8 | % | ||||||||||
| Total | 19,275,673 | 100.0 | % | 8,935,021 | 100.0 | % | ||||||||||
For the year ended March 31, 2026, as compared to 2025, revenues from soil and rock transportation services decreased. This decline was principally attributable to a decrease in transaction volume resulting from fewer business engagements during fiscal 2026. The substantial decrease in construction work segment was mainly due to the completion of three construction projects during fiscal 2025, with no comparable new projects secured or commenced during fiscal 2026 to replace the revenue generated from those completed projects.
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Cost of sales
Our total cost of sales decreased by 38.3% to USD10,856,424 for the year ended March 31, 2026, from USD17,596,008 for the year ended March 31, 2025. The decrease was mainly attributable to the decrease in subcontracting charges for new and existing projects during fiscal 2026 and in line with the decrease in revenue. Cost of sales charged by third parties decreased by 42.7% to USD9,574,016 for the year ended March 31, 2026, from USD16,708,063 for fiscal 2025. Cost of sales charged by related parties increased by 44.42% to USD1,282,408 for the year ended March 31, 2026, from USD887,945 for fiscal 2025, which was mainly due to subcontracting services provided by the related party for a relatively large-scale project undertaken during fiscal 2026. Our cost of sales mainly comprised subcontracting charges, cost of construction materials, fuel costs, depreciation of machinery and direct labor costs. Although total revenue decreased by 54.0%, total cost of sales only decreased by 38.3% due to certain fixed costs included in cost of sales, such as direct labor costs, depreciation of machinery, and repairs and maintenance, which did not decrease proportionally with the decrease in revenue, as well as an increase in fuel costs driven by a rise in fuel oil unit prices during fiscal 2026.
Gross profit and gross profit margin
For the year ended March 31, 2025, the Company recorded gross profit of $1,679,665. For the year ended March 31, 2026, the Company recorded a gross loss of $1,921,403. Our gross margin shifted from a gross profit margin of 8.7% for the year ended March 31, 2025 to a gross loss margin 21.5% for the year ended March 31, 2026.
The shift to a gross loss margin was primarily due to the substantial decrease in revenue from both revenue streams while direct costs could not be reduced proportionally. The gross profit margin for the construction works segment decreased from a gross profit margin of 10.6% in fiscal 2025 to a gross loss margin of 34.7% in fiscal 2026, largely attributable to the completion of three major construction projects during fiscal 2025 without comparable new projects secured or commenced during fiscal 2026, resulting in revenue dropping faster than project fixed overhead costs.
Additionally, the soil and rock transportation segment experienced a significant drop in gross profit margin, from a gross profit of 7.2% in fiscal 2025 to a gross loss margin of 18.0% in fiscal 2026. This decline was mainly caused by fewer business engagements and lower transaction volume, resulting the fixed direct labor costs, fixed asset depreciation, and subcontracting costs that could not be fully passed on to customer or reduced in line with the top-line decline. The following table summarizes the gross profit and gross profit margin of different segments for the periods indicated:
| For the year ended March 31, | ||||||||||||||||
| 2025 | 2026 | |||||||||||||||
| Gross profit | Gross margin | Gross profit | Gross margin | |||||||||||||
| USD | % | USD | % | |||||||||||||
| Soil and rock transportation | 771,060 | 7.2 | % | (1,275,620 | ) | (18.0 | )% | |||||||||
| Miscellaneous construction works | 908,605 | 10.6 | % | (645,783 | ) | (34.7 | )% | |||||||||
| Overall | 1,679,665 | 8.7 | % | (1,921,403 | ) | (21.5 | )% | |||||||||
General and administrative expenses
For the years ended March 31, 2025 and 2026, our general and administrative expenses consisted mainly of staff costs, transportation costs, amortization of right-of-use assets for operating lease, and amortization of right-of-use assets for finance lease on motor vehicles for administrative purpose, depreciation expense for idle machinery, which was recognized under general and administrative expenses due to a decrease in active projects, provision of credit loss, legal and professional fees, insurance expenses, office and rental expenses and other miscellaneous expenses. The following table sets forth a breakdown of our general and administrative expenses for the years ended March 31, 2025 and 2026:
| For the year ended March 31, | ||||||||||||
| 2025 | 2026 | % of change | ||||||||||
| USD | USD | |||||||||||
| Depreciation | 115,744 | 239,261 | 106.7 | % | ||||||||
| Insurance | 75,471 | 51,552 | (31.7 | )% | ||||||||
| Legal and professional fees | 6,778,458 | 7,936,318 | 17.1 | % | ||||||||
| Office expenses | 35,928 | 84,082 | 134.0 | % | ||||||||
| Others | 106,878 | 121,338 | 13.5 | % | ||||||||
| Provision of credit loss | 696,639 | 2,315,017 | 232.3 | % | ||||||||
| Staff cost | 692,455 | 611,790 | (11.6 | )% | ||||||||
| Transportation | 344,376 | 448,916 | 30.4 | % | ||||||||
| Total | 8,845,949 | 11,808,274 | 33.5 | % | ||||||||
Our general and administrative expenses increased by 33.5% to USD 11,808,274 for the year ended March 31, 2026, from USD 8,845,949 for the year ended March 31, 2025. This increase was principally attributable to increases in provision for credit loss, legal and professional fees, and depreciation. The increase in legal and professional fees for fiscal 2026 was primarily due to additional legal and advisory services undertaken in connection with the Stock incentive plans and Private Placement equity financing transactions conducted during fiscal 2026. In fiscal 2026, certain depreciation costs were reclassified from cost of sales to general and administrative expenses, as the Company could not fully utilize the fixed assets due to fewer business engagements and lower transaction volume.
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Interest expense
Our interest expense is mainly related to our interest expenses incurred by finance leases of motor vehicles and machinery, and bank borrowings. Our interest expense decreased by 18.3% to USD183,361 for the year ended March 31, 2026, from USD224,412 for the year ended March 31, 2025. The decrease was primarily due to the termination of certain fixed assets held under right-of-use finance leases, which reduced the corresponding finance lease obligations and related interest expense.
Other income
Other income comprised mainly income from machinery / motor vehicle rental, site management income, sale of scrap materials and mud, miscellaneous income, gains or losses on termination of machinery and motor vehicles under finance lease arrangements, and parking fines. The following table sets for the breakdown of our other income for the years ended March 31, 2025 and 2026:
| For the year ended March 31, | ||||||||||||
| 2025 | 2026 | % of change | ||||||||||
| USD | USD | |||||||||||
| Site management income | 33,030 | - | (100.0 | )% | ||||||||
| Machinery/ Motor vehicle rental | 225,031 | 129,678 | (42.4 | )% | ||||||||
| Sale of scrap material/ Mud | 119,410 | - | (100.0 | )% | ||||||||
| Parking fines | (80,028 | ) | (79,069 | ) | (1.2 | )% | ||||||
| (Loss) gain on termination of motor vehicle/ machinery under finance lease arrangements | (11,026 | ) | 327,403 | 3069.4 | % | |||||||
| Other income (expense) | 3,920 | (23,915 | ) | (710.1 | )% | |||||||
| Total other income, net | 290,337 | 354,097 | 22.0 | % | ||||||||
Income tax recovery
We are not subject to any income tax in the Cayman Islands and the BVI pursuant to the rules and regulations in those jurisdictions, but our subsidiary, Primega Construction, is subject to Hong Kong profits tax. Due to the operating loss of Primega Construction for the year ended March 31, 2026, the allowable tax loss can be carried forward indefinitely to offset future taxable profit, against which a full valuation allowance was provided as it is not probable that future taxable profits will be available against which the unused tax losses can be utilized. We recognized income tax recovery of USD267,774 for the year ended March 31, 2026, compared to an income tax recovery of USD119,291 for the year ended March 31, 2025. The income tax recovery in fiscal 2026 was primarily due to deferred tax movements resulting from the reversal of deferred tax liabilities brought forward from fiscal 2025 related to property, plant and equipment and right-of-use assets under finance leases.
The Company’s subsidiary incorporated in the PRC is governed by the income tax laws of the PRC, and the income tax provisions in respect to operations in the PRC are calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified 25% enterprise income tax rate, while preferential tax rates, tax holidays and even tax exemptions may be granted on a case-by-case basis. EIT grants preferential tax treatment on certain Small and Micro Enterprises (“SMEs”). Under this preferential tax treatment, SMEs are entitled to a range from 12.5% to 20% of regular income tax. The Company’s PRC subsidiary is a SME.
Net loss
For the year ended March 31, 2026, we recorded a net loss of USD 13,291,167, as compared to a net loss of USD 6,981,068 for the year ended March 31, 2025. This expansion in net loss was primarily driven by our shift from a gross profit position to a gross loss of USD 1,921,403 due to reduced revenue generation, coupled with a 33.5% increase in general and administrative expenses—principally resulting from depreciation expense for idle machinery, which was recognized under general and administrative expenses due to a decrease in active projects, recognition of higher provisions for credit losses and elevated legal and professional fees associated with our equity financing and stock incentive activities.
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 for the periods indicated, both in absolute amount and as a percentage of our total revenues.
| For the year ended March 31, | ||||||||||||
| 2024 | 2025 | % of change | ||||||||||
| USD | USD | |||||||||||
| Revenues | ||||||||||||
| Revenue generated from third parties | 13,464,430 | 18,631,925 | 38.4 | % | ||||||||
| Revenues generated from related parties | - | 643,748 | N/A | |||||||||
| 13,464,430 | 19,275,673 | 43.2 | % | |||||||||
| Cost of sales | ||||||||||||
| Cost of sales charged by third parties | (9,672,689 | ) | (16,708,063 | ) | 72.7 | % | ||||||
| Cost of sales charged by related parties | (1,023,137 | ) | (887,945 | ) | (13.2 | )% | ||||||
| Cost of sales | (10,695,826 | ) | (17,596,008 | ) | 64.5 | % | ||||||
| Gross profit | 2,768,604 | 1,679,665 | (39.3 | )% | ||||||||
| Operating expenses: | ||||||||||||
| General and administrative expenses | (1,336,394 | ) | (8,845,949 | ) | 561.9 | % | ||||||
| Income (loss) from operations | 1,432,210 | (7,166,284 | ) | (600.4 | )% | |||||||
| Other income, net | 116,397 | 290,337 | 149.4 | % | ||||||||
| Interest expense | (210,713 | ) | (224,412 | ) | 6.5 | % | ||||||
| Income (loss) before tax expense | 1,337,894 | (7,100,359 | ) | (630.7 | )% | |||||||
| Income tax (expense) recovery | (246,609 | ) | 119,291 | (148.4 | )% | |||||||
| Net income (loss) | 1,091,285 | (6,981,068 | ) | (739.7 | )% | |||||||
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Revenues
Our revenues increased by 43.2% to USD19,275,673 (of which USD643,748 was generated from related parties) for the year ended March 31, 2025, from USD13,464,430 for the year ended March 31, 2024. The revenues increase was principally a result of the significant increase in our undertaking of both solid and rock transportation services and construction works.
The following table sets out revenues generated from different services during the two years ended March 31, 2025:
| For the year ended March 31, | ||||||||||||||||
| 2024 | 2025 | |||||||||||||||
| USD | % | USD | % | |||||||||||||
| Revenues | ||||||||||||||||
| Soil and rock transportation | 8,436,223 | 62.7 | % | 10,668,170 | 55.3 | % | ||||||||||
| Miscellaneous construction works | 5,028,207 | 37.3 | % | 8,607,503 | 44.7 | % | ||||||||||
| Total | 13,464,430 | 100.0 | % | 19,275,673 | 100.0 | % | ||||||||||
For the year ended March 31, 2025, as compared to 2024, revenues from soil and rock transportation services increased because demand for our transportation services increased as we undertook 3 new large-scale transportation projects. We continued to focus on expanding construction works to fully utilize our capacity. We were engaged in more construction projects during fiscal 2025. As such, revenues from miscellaneous construction works grew by 71.2% in 2025 year-on-year.
Cost of sales
Our total cost of sales increased by 64.5% to USD17,596,008 for the year ended March 31, 2025, from USD10,695,826 for the year ended March 31, 2024. The increase was due to the increase in our revenues in both solid and rock transportation and miscellaneous construction works. Cost of sales charged by third parties increased by 72.7% to USD16,708,063 for the year ended March 31, 2025, from USD9,672,689 for fiscal 2024. Cost of sales charged by related parties decreased by 13.2% to USD887,945 for the year ended March 31, 2025, from USD1,023,137 for fiscal 2024. Our cost of sales mainly comprised subcontracting charges, cost of construction materials, fuel costs, depreciation of machinery and direct labor costs.
Gross profit and gross profit margin
Our gross profit decreased by 39.3% to USD1,679,665 for the year ended March 31, 2025, from USD2,768,604 for the year ended March 31, 2024. Our gross profit margin decreased to 8.7% for the year ended March 31, 2025, from 20.6% for the year ended March 31, 2024. The decline in gross profit margin was primarily due to cost overruns in construction projects initiated in prior years, where the gross profit margin for this sector decreased from 24.3% in fiscal year 2024 to 10.6% in fiscal year 2025. Additionally, the soil and rock transportation sector experienced a significant drop in gross profit margin, from 18.4% in fiscal year 2024 to 7.2% in fiscal year 2025, largely attributable to increasing operational challenges, including skilled labor shortage and surging transportation costs, in Hong Kong’s weak economic climate, where we had to incur larger proportion of labor costs and subcontracting costs which we could not pass on to customers. The following table summarizes the gross profit and gross profit margin of different segments for the periods indicated:
| For the year ended March 31, | ||||||||||||||||
| 2024 | 2025 | |||||||||||||||
| Gross profit | Gross margin | Gross profit | Gross margin | |||||||||||||
| USD | % | USD | % | |||||||||||||
| Soil and rock transportation | 1,548,076 | 18.4 | % | 771,060 | 7.2 | % | ||||||||||
| Miscellaneous construction works | 1,220,528 | 24.3 | % | 908,605 | 10.6 | % | ||||||||||
| Overall | 2,768,604 | 20.6 | % | 1,679,665 | 8.7 | % | ||||||||||
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General and administrative expenses
For the years ended March 31, 2024 and 2025, our general and administrative expenses consisted mainly of staff costs, transportation costs, amortization of right-of-use assets for operating lease, and amortization of right-of-use assets for finance lease on motor vehicles for administrative purpose, provision of credit loss, legal and professional fees, insurance expenses, office and rental expenses and other miscellaneous expenses. The following table sets forth a breakdown of our general and administrative expenses for the years ended March 31, 2024 and 2025:
| For the year ended March 31, | ||||||||||||
| 2024 | 2025 | % of change | ||||||||||
| USD | USD | |||||||||||
| Legal and professional fees | 313,190 | 6,778,458 | 2,064.3 | % | ||||||||
| Depreciation | 151,059 | 115,744 | (23.4 | )% | ||||||||
| Provision for (Reversal of) credit loss | (22,522 | ) | 696,639 | (3,193.1 | )% | |||||||
| Office expenses | 23,836 | 35,928 | 50.7 | % | ||||||||
| Others | 80,689 | 106,878 | 32.5 | % | ||||||||
| Staff cost | 504,763 | 692,455 | 37.2 | % | ||||||||
| Insurance | 47,557 | 75,471 | 58.7 | % | ||||||||
| Transportation | 237,822 | 344,376 | 44.8 | % | ||||||||
| Total | 1,336,394 | 8,845,949 | 561.9 | % | ||||||||
Our general and administrative expenses increased by 561.9% to USD8,845,949 for the year ended March 31, 2025, from USD1,336,394 for the year ended March 31, 2024, principally due to the increase of legal and professional fees and provision for credit loss. A significant portion of the legal and professional fees were related to the consultancy fees paid for the Company’s business review and development following the successful IPO. The consultancy fees were fully settled by issue of new ordinary shares of the Company. The management of the Company does not expect these consultancy services will recur in the future.
Interest expense
Our interest expense is mainly related to our interest expenses incurred by finance leases of motor vehicles and machinery, and bank borrowings. Our interest expense increased mildly by 6.5% to USD224,412 for the year ended March 31, 2025, from USD210,713 for the year ended March 31, 2024.
Other income
Other income comprised mainly income from machinery rental, site management income, sale of scrap materials and mud, and miscellaneous income, gains or losses from termination of machinery under finance lease arrangements, less parking fines. The following table sets for the breakdown of our other income for the years ended March 31, 2024 and 2025:
| For the year ended March 31, | ||||||||||||
| 2024 | 2025 | % of change | ||||||||||
| USD | USD | |||||||||||
| Sale of scrap materials/mud | 182,397 | 119,410 | (34.5 | )% | ||||||||
| Rental of machinery | - | 225,031 | N/A | |||||||||
| Site management income | - | 33,030 | N/A | |||||||||
| Parking fines | (69,051 | ) | (80,028 | ) | 15.9 | % | ||||||
| Other income/(expenses), net | 3,051 | (7,106 | ) | (332.9 | )% | |||||||
| Total, net | 116,397 | 290,337 | 149.4 | % | ||||||||
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Income tax expense
We are not subject to any income tax in the Cayman Islands and the BVI pursuant to the rules and regulations in those jurisdictions, but our subsidiary, Primega Construction, is subject to Hong Kong profits tax. Due to the operating loss of Primega Construction for the year ended March 31, 2025, the allowable tax loss can be carried forward to offset future taxable profit. We recognized income tax recovery of USD119,291 for the year ended March 31, 2025, as compared to income tax expense was USD246,609 for the year ended March 31, 2024. Effective tax rate for the year ended March 31, 2024 was 18.4%.
Net income/loss
For the year ended March 31, 2025, we recorded a net loss of USD6,981,068. This loss primarily stemmed from increased general and administrative expenses, including significant legal and professional fees and provisions for credit losses, alongside a decline in gross profit. Net income for the year ended March 31, 2024 was USD1,091,285.
B. Liquidity and Capital Resources
Years ended March 31, 2026 and 2025
Our use of cash was primarily related to operating activities and purchase of property, plant and equipment and entering into finance leases. We have historically financed our operations primarily through our cash flow generated from our business operations in previous years, bank borrowings and capital raised through equity financing activities.
We incurred a net loss of $13,291,167 and $6,981,068 for the years ended March 31, 2026 and 2025, respectively, and our accumulated deficits were $15,984,846 and $2,693,679 as of March 31, 2026 and 2025, respectively. In connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that these conditions raise substantial doubt about our ability to continue as a going concern within one year after the date that this report is issued.
In order to strengthen our liquidity in the foreseeable future, we have taken the following measures：
| ● | Actively expanding our business to secure more projects and generate increased revenue and profit. |
| ● | Financial support from our shareholders; and |
| ● | Other equity financing activities to fund our operations. |
We can make no assurances that required financing will be available for the amounts needed, or on terms commercially acceptable to us, if at all. If one or all of these events do not occur or subsequent capital raises are insufficient to bridge financial and liquidity shortfalls, there would likely be a material adverse effect on us and would materially adversely affect our ability to continue as a going concern.
The following table sets forth a summary of our cash flows information for the years indicated:
| For the year ended March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Cash and cash equivalents at the beginning of the year | 489,435 | 455,953 | ||||||
| Net cash used in operating activities | (2,819,237 | ) | (1,292,762 | ) | ||||
| Net cash provided by (used in) investing activities | 747 | (12,235,420 | ) | |||||
| Net cash provided by financing activities | 2,785,008 | 13,216,423 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | - | (14,010 | ) | |||||
| Cash and cash equivalents at the end of the year | 455,953 | 130,184 | ||||||
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Operating activities
Our cash inflow from operating activities was principally receipt of payments from customers. Our cash outflows from operating activities were principally due to payments for purchase of diesel oils, subcontracting fees, staff costs, and administrative and other operating expenses. Net cash provided by operating activities reflects our net income adjusted for non-cash items, including non-cash operating lease expense, depreciation, deferred tax expenses, fees for consulting services, loss on termination of right-of-use assets – finance lease, allowance for credit loss, and changes in working capital items including accounts receivable, prepaid expense, deposits and other receivable, due to related parties, accounts payable, retention receivable, accruals and other current liabilities, contract liabilities, income taxes payable and lease liabilities – operating leases.
Net cash used in operating activities for the year ended March 31, 2026 was USD1,292,762, as compared to net cash used in operating activities of USD2,819,237 during the fiscal year 2025. The decrease in net cash outflows used in operating activities due to the decrease in total accounts receivable – third parties by USD1,957,281 and the decrease in accounts payable, accruals and other current liabilities by USD253,968. During the year ended March 31, 2026, we had non-cash adjustments: net loss of USD13,291,167, non-cash operating lease expense of USD30,099, depreciation of right-of-use assets - finance lease of USD1,531,337, depreciation of property, plant and equipment of USD130,485, consulting services settled by issuance of ordinary shares of USD6,953,860, deferred tax recovery of USD267,774, allowance for credit loss of USD2,315,017. During the year ended March 31, 2026, we also had the following changes of working capital items: (i) decrease in accounts receivable – third parties of USD1,957,281; (ii) increase in accounts receivable - related parties of USD50,070; (iii) decrease in retention receivable of USD108,500; (iv) decrease in prepayment, deposits and other receivable of USD572,102; (v) decrease in accounts payable, accruals and other current liabilities of USD253,968; (vi) decrease in income taxes payable of USD216,939; (vii) decrease in lease liabilities - operating lease of USD26,266, and (viii) increase in due to related parties of USD 686,348.
Investing activities
For the year ended March 31, 2026, cash used in investing activities was USD12,235,420 and for the year ended March 31, 2025, cash provided by investing activities was USD 747. During the year ended March 31, 2026, the proceeds from termination of ROU – finance lease were USD522,169, compared to USD747 for the year ended March 31, 2025. The net increase in cash used in investing activities was mainly due to the prepayments of potential investment in Wangmao. The Company paid the total purchase price of approximately US$12.7 million in or about December 2025 in accordance with the terms of the SPA. However, due to commercial considerations and unforeseen events, the Company has not received any shares of China Wangmao over six months after paying the investment cost. Subsequent to the financial year ended, the Company and China Wangmao mutually agreed to terminate the SPA effective on August 11, 2026 and China Wangmao agreed to refund the full principal amount of US$12.7 million and pay compensatory interest at an annual rate of 5.25% for the period during which it held the purchase price. On August 13, 2026, the Company fully recovered the principal amount of USD12.7 million together with all accrued interest in cash.
Financing activities
For the year ended March 31, 2026, net cash provided by financing activities was USD13,216,423. We obtained cash from financing from net proceeds from a related party of USD491,593 and repayment of bank loans of USD98,610, principal payment of finance lease liabilities of USD951,909 and principal payment of finance lease liabilities - related parties of USD315,533, net proceeds from issuance of ordinary shares to 16 investors related to PIPE transaction in 2025-11 of USD13,950,000 and proceeds from issuance of shares to 4 individuals related to SPA in 2026-02 of USD140,882.
For the year ended March 31, 2025, net cash provided by financing activities was USD2,785,008. We obtained cash from financing from proceeds from issuance of common stocks, net of issuance costs of USD5,277,100, proceeds from a related party of USD333,172. Net cash used in financing activities included payment of offering costs of USD1,438,964, repayment of bank loans of USD93,505, principal payment of finance lease liabilities of USD990,816 and principal payment of finance lease liabilities - related parties of USD301,979.
Years ended March 31, 2025 and 2024
Our use of cash was primarily related to operating activities and purchase of property, plant and equipment and entering into finance leases. We have historically financed our operations primarily through our cash flow generated from our operations and bank borrowings.
Following the completion of the IPO, all net proceeds of approximately USD5.3 million—including the exercise of over-allotment options—were transferred from the parent company to Primega Construction.
We believe we have sufficient cash generated from operations to meet our regular working capital requirements based on the contracts on hand and cashflow projection for the next 12 months from the end of fiscal year 2025, which is also based on our management’s experience and the financial data available.
The following table sets forth a summary of our cash flows information for the years indicated:
| For the year ended March 31, | ||||||||
| 2024 | 2025 | |||||||
| USD | USD | |||||||
| Cash and cash equivalents at the beginning of the year | 240,219 | 489,435 | ||||||
| Net cash provided by (used in) operating activities | 2,394,212 | (2,819,237 | ) | |||||
| Net cash provided by investing activities | 21,276 | 747 | ||||||
| Net cash (used in) provided by financing activities | (2,166,272 | ) | 2,785,008 | |||||
| Cash and cash equivalents at the end of the year | 489,435 | 455,953 | ||||||
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Operating activities
Our cash inflow from operating activities was principally receipt of payments from customers. Our cash outflows from operating activities were principally due to payments for purchase of diesel oils, subcontracting fees, staff costs, and administrative and other operating expenses. Net cash provided by operating activities reflects our net income adjusted for non-cash items, including non-cash operating lease expense, depreciation, deferred tax expenses, fees for consulting services, loss on termination of right-of-use assets – finance lease, allowance for credit loss, and changes in working capital items including accounts receivable, prepaid expense, deposits and other receivable, accounts payable, retention receivable, accruals and other current liabilities, contract liabilities, income taxes payable and lease liabilities – operating leases.
Net cash used in operating activities for the year ended March 31, 2025 was USD2,819,237, as compared to net cash provided by operating activities of USD2,394,212 fiscal year 2024. The turnaround was mainly attributable to the net loss of USD6,981,068 recorded in fiscal year 2025, the increase in total accounts receivable by USD2,616,415 and the decrease in accounts payable, accruals and other current liabilities by USD1,209,269. During the year ended March 31, 2025, we had net loss of USD6,981,068, non-cash operating lease expense of USD76,955, depreciation of right-of-use assets - finance lease of USD1,546,442, depreciation of property, plant and equipment of USD149,291, consulting services fees of USD6,144,000 related to the Company’s business review and development which were fully settled by the issuance of the Company’s ordinary shares, deferred tax recovery of USD143,400, allowance for credit loss of USD696,639. During the year ended March 31, 2025, we also had the following non-cash adjustments and changes of working capital items: (i) increase in accounts receivable of USD2,587,091; (ii) increase in accounts receivable - related parties of USD29,324; (iii) increase in retention receivable of USD46,496; (iv) decrease in prepayment, deposits and other receivable of USD763,634; (v) decrease in accounts payable, accruals and other current liabilities of USD1,209,269; (vi) decrease in accounts payable - related parties of USD279,498; (vii) decrease in contract liabilities of USD836,911; (viii) increase in income taxes payable of USD8,772; and (ix) decrease in lease liabilities - operating lease of USD102,940.
Investing activities
For the years ended March 31, 2025 and 2024, cash provided by investing activities was 747 and 21,276. Both of them are the proceeds from termination of ROU - finance lease, respectively, both of which represented proceeds from the termination of ROU – finance lease.
Financing activities
For the year ended March 31, 2025, net cash provided by financing activities was USD2,785,008. We obtained cash from financing from proceeds from issuance of common stocks, net of issuance costs of USD5,277,100, net proceeds from a related party of USD333,172. Net cash used in financing activities included payment of offering costs of USD1,438,964, repayment of bank loans of USD93,505, principal payment of finance lease liabilities of USD990,816 and principal payment of finance lease liabilities - related parties of USD301,979.
For the year ended March 31, 2024, net cash used in financing activities was USD2,166,272. The cash used in financing activities was the repayment to a related party of USD623,776, proceeds from a related company of USD431,867, repayment of bank loans of USD34,822, principal payment of finance lease liabilities of USD1,074,899, and principal payment of finance lease liabilities - related parties of USD479,055 and payment of offering costs of USD385,587.
C. Research and Development, Patents and Licences, etc.
For the three years ended March 31, 2026, we did not incur material costs in research and development. We did not possess any patents.
Our operating subsidiary had one diesel tank wagon duly licensed by the Hong Kong Fire Services Department to convey category 5 dangerous goods. Also, Primega Construction has established a quality management system that is certified to be in compliance with the requirements of ISO 9001:2015.
D. Trend Information
Other than as disclosed elsewhere in this document, we are not aware of any trends, uncertainties, demands, commitments or events since March 31, 2026 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
E. Off-balance Sheet Arrangements
We do not have any outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency forward contracts. We do not engage in trading activities involving non-exchange traded contracts. In our ongoing business, we do not enter into transactions involving, or otherwise form relationships with, unconsolidated entities or financial partnerships that are established for the purpose of facilitating off-balance sheet arrangements for other contractually narrow or limited purposes.
F. Tabular Disclosure of Contractual Obligations
Our contractual obligations primarily consist of operating and finance lease obligations. The following table sets forth a breakdown of our contractual obligations as of March 31, 2026, and their maturity profile:
| Payment due by period | ||||||||||||||||
Less than 1 year | 1 to 3 years | More than 3 years | Total | |||||||||||||
| USD | USD | USD | USD | |||||||||||||
| Contractual Obligations: | ||||||||||||||||
| Operating leases | 10,578 | - | - | 10,578 | ||||||||||||
| Financial leases | 1,090,971 | 792,539 | - | 1,883,510 | ||||||||||||
| Bank borrowings | 102,011 | 212,616 | 537,377 | 852,004 | ||||||||||||
| Total contractual obligations | 1,203,560 | 1,005,155 | 537,377 | 2,746,092 | ||||||||||||
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Item 6. Directors, Senior Management and Employees
| A. | Directors and Senior Management |
The following table sets forth information regarding our directors and executive officers as of the date of this report.
| Directors and Executive officers | Age | Position | ||
| Mr. Tan Yu | 39 | Chief Executive Officer, Chairman of the Board and Executive Director | ||
| Ms. Liu Wei | 25 | Chief Financial Officer | ||
| Mr. Fang Chenxi | 51 | Independent director | ||
| Mr. Zhao Yong | 52 | Independent director | ||
| Mr. Zhu Xincheng | 49 | Independent director |
The following is a brief biography of each of the executive officers and directors or director appointees listed above:
Mr. Tan Yu is our Chief Executive Officer, Chairman of the Board and Director. Mr. Tan is a Chinese national and has been serving as the chief executive officer of Lanzhi Yunchuang Keji (Beijing) Co., Ltd. since March 2023, where he is responsible for, among other things, the general management of the operations of the company. Mr. Tan.holds a Bachelor’s degree from Jilin University. He has served in multiple C-suite roles across a range of companies, where he was responsible for corporate operations, strategic planning, and organizational oversight. His experience spans several industries and includes both managing day-to-day business activities and directing long-term initiatives. Mr. Tan will contribute to the Company’s overall management and support the execution of its strategic objectives.
Ms. Liu Wei is our Chief Financial Officer. Ms. Liu holds a Bachelor’s degree in Finance from Heilongjiang University of Commerce. She has experience in financial management and compliance, including a prior role as finance manager with responsibilities encompassing budgeting, internal controls, and the implementation of financial systems. Ms. Liu will contribute to the Company’s financial operations and ongoing compliance initiatives.
Mr. Fang Chenxi has served as our independent director since April 9, 2025, and is the Chairman of the Audit Committee and a member of each of the Nominating and Corporate Governance Committees and Compensation Committee. Mr. Fang is a Chinese national and has served as the general manager of Xiaoxiang Shijie Zhibo (Hangzhou) Wangluo Keiji Co., Ltd since March 2018, where he is responsible for, among other things, the general management of the operations of the company.
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Mr. Zhao Yong has served as our independent director since December 19, 2024, and is the Chairman of the Nominating and Corporate Governance Committees and a member of each of the Compensation Committee and and the Audit Committee. He is a Chinese national and served as the director of Jiuzhou Kanglian Technology Development (Beijing) Co., Ltd., a company based in the People’s Republic of China which is primarily engaged in the manufacturing and sale of medical equipment, since January 2008 where he is tasked with, amongst others, the general management of the operations of the company.
Mr. Zhu Xincheng has served as our independent director since November 21, 2025. Mr. Zhu is a Chinese national and holds an MBA degree from Hong Kong Asia Business School. Since 2022, he has served as Chief Advisor for Capital China, where he has assisted mainland SMEs in capital path planning and access to international capital markets.
Family Relationships
None of our directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.
| Board Diversity Matrix | ||
| Country of Principal Executive Offices | Hong Kong | |
| Foreign Private Issuer | Yes | |
| Disclosure Prohibited under Home Country Law | No | |
| Total Number of Directors | 4 | |
| Female | Male | Non-Binary | Did not Disclose Gender | |||||
| Part I: Gender Identity | ||||||||
| Directors | 0 | 4 | 0 | 0 | ||||
| Part II: Demographic Background | ||||||||
| Underrepresented Individual in Home Country Jurisdiction | |
|
|
|
|
0 |
|
|
| LGBTQ+ | 0 | |||||||
| Did Not Disclose Demographic Background | 0 |
| B. | Compensation |
For the year ended March 31, 2026, we paid an aggregate of approximately HK$39,000 (US$5,000), in cash to our directors. Our Hong Kong subsidiary is required by law to make contributions equal to certain percentages of each employee’s salary for his or her mandatory provident fund. We have not made any agreements with our directors or executive officers to provide benefits upon termination of employment.
| C. | Board Practices |
Board of Directors
Our board of directors consists of five directors, comprising one executive directors and three independent directors. A director is not required to hold any shares in our Company to qualify to serve as a director. Subject to making appropriate disclosures to the board of directors in accordance with our post-offering amended and restated memorandum and articles of association, directors may vote with respect to any contract, proposed contract, or arrangement in which they are interested; in voting in respect to any such matter, such director should take into account their directors’ duties. A director may exercise all the powers of the company to borrow money; mortgage its business, property, and uncalled capital; and issue debentures or other securities whenever money is borrowed or as security for any obligation of the Company or of any third party.
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Board Diversity
We seek to achieve board diversity through the consideration of a number of factors when selecting the candidates to our board, including, but not limited to, gender, skills, age, professional experience, knowledge, cultural and education background, ethnicity, and length of service. The ultimate decision of the appointment will be based on merit and the contribution that the selected candidates will bring to our board.
Our directors have a balanced mix of knowledge and skills. We will have three independent directors with different industry backgrounds, representing a majority of the members of our board. Our board is well balanced and diversified in alignment with our business development and strategy.
Committees of the Board of Directors
We have established an audit committee, a compensation committee, and a nominating and corporate governance committee under the board of directors upon the effectiveness of the registration statement of which this report forms a part. We have adopted a charter for each of the three committees upon the establishment of the committees. Each committee’s members and functions are described below.
Audit Committee
Our audit committee consists of Mr. Fang Chenxi, Zhu Xincheng, and Mr. Zhao Yong, and it is chaired by Mr. Fang Chenxi. We have determined that each of these three directors satisfies the “independence” requirements of the Nasdaq Listing Rules and meets the independence standards under Rule 10A-3(b)(1) under the Exchange Act. The Board has determined that none of the members of the Audit Committee qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. The Board believes the current members are collectively capable of analyzing and evaluating the Company’s financial statements and understanding internal controls and procedures for financial reporting. The Board may appoint a director who would qualify as an “audit committee financial expert” if it deems necessary. The audit committee oversees our accounting and financial reporting processes and the audits of our financial statements. The audit committee will be responsible for, among other things:
| ● | selecting the independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by the independent registered public accounting firm; | |
| ● | reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s responses; | |
| ● | reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; | |
| ● | discussing the annual audited financial statements with management and the independent registered public accounting firm; | |
| ● | reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any special steps taken to monitor and control major financial risk exposures; | |
| ● | annually reviewing and reassessing the adequacy of our audit committee charter; | |
| ● | meeting separately and periodically with management and the independent registered public accounting firm; | |
| ● | monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; and | |
| ● | reporting regularly to the board. |
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Compensation Committee
Our compensation committee consists of Mr. Fang Chenxi, Mr. Zhu Xincheng, and Mr. Zhao Yong, and it is chaired by Mr. Zhu Xincheng. We have determined that each of these directors satisfies the “independence” requirements of the Nasdaq Listing Rules. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which their compensation is deliberated upon. The compensation committee will be responsible for, among other things:
| ● | reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; | |
| ● | reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; | |
| ● | reviewing periodically and approving any incentive compensation or equity plans, programs, or other similar arrangements; and | |
| ● | selecting a compensation consultant, legal counsel, or other adviser only after taking into consideration all factors relevant to that person’s independence from management. |
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of Mr. Fang Chenxi, Mr. Zhu Xincheng and Mr. Zhao Yong, and it is chaired by Mr. Zhao Yong. We have determined that each of these directors satisfies the “independence” requirements of the Nasdaq Listing Rules. The nominating and corporate governance committee assists the board in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee will be responsible for, among other things:
| ● | recommending nominees to the board for election or re-election to the board or for appointment to fill any vacancy on the board; | |
| ● | reviewing annually with the board the current composition of the board in regard to characteristics such as independence, knowledge, skills, experience, expertise, diversity, and availability of service to us; | |
| ● | selecting and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself; | |
| ● | developing and reviewing the corporate governance principles adopted by the board and advising the board with respect to significant developments in the law, practice of corporate governance, and our compliance with such laws and practices; and | |
| ● | evaluating the performance and effectiveness of the board as a whole. |
Foreign Private Issuer Exemption
We are a “foreign private issuer,” as defined by the SEC. As a result, in accordance with the rules and regulations of Nasdaq, we may choose to comply with home country governance requirements and certain exemptions thereunder rather than complying with Nasdaq corporate governance standards. We may choose to take advantage of the following exemptions afforded to foreign private issuers:
| ● | Exemption from filing quarterly reports on Form 10-Q, from filing proxy solicitation materials on Schedule 14A or 14C in connection with annual or special meetings of shareholders, or from providing current reports on Form 8-K disclosing significant events within four (4) days of their occurrence, and from the disclosure requirements of Regulation FD. | |
| ● | Exemption from Section 16 rules regarding sales of Class A Ordinary Shares by insiders, which will provide less data in this regard than shareholders of U.S. companies that are subject to the Exchange Act. | |
| ● | Exemption from the Nasdaq rules applicable to domestic issuers requiring disclosure within four (4) business days of any determination to grant a waiver of the code of business conduct and ethics to directors and officers. Although we will require board approval of any such waiver, we may choose not to disclose the waiver in the manner set forth in the Nasdaq rules, as permitted by the foreign private issuer exemption. |
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Furthermore, Nasdaq Rule 5615(a)(3) provides that a foreign private issuer, such as us, may rely on our home country corporate governance practices in lieu of certain of the rules in the Nasdaq Rule 5600 Series and Rule 5250(d), provided that we nevertheless comply with Nasdaq’s Notification of Noncompliance requirement (Rule 5625), the Voting Rights requirement (Rule 5640) and that we have an audit committee that satisfies Rule 5605(c)(3), consisting of committee members that meet the independence requirements of Rule 5605(c)(2)(A)(ii). If we rely on our home country corporate governance practices in lieu of certain of the rules of Nasdaq, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. If we choose to do so, we may utilize these exemptions for as long as we continue to qualify as a foreign private issuer.
Duties of Directors
As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company — a duty to act bona fide in the best interests of the company, a duty not to make a profit based on his or her position as director (unless the company permits him to do so) and a duty not to put himself in a position where the interests of the company conflict with his or her personal interest or his or her duty to a third party. A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.
Employment Agreements
We have entered into employment agreements with each of our executive officers. The executive officers are entitled to a fixed salary and other company benefits, each as determined by the Board from time to time. We may terminate an executive officer’s employment under Hong Kong Labor Law and under other applicable laws and regulations.
Each executive officer has agreed during and after the termination or expiry of his or her employment agreement, not to reveal to any person or use all information, know-how and records that is confidential or not, which may come to their knowledge during their employment, except as authorized or required by their duties to do so. The restriction shall cease to apply to information or knowledge which may come into the public domain.
| D. | Employees |
Please refer to “Item 4. Information on the Company—B. Business Overview—Employees.”
| E. | Share Ownership |
The following table sets forth information regarding the beneficial ownership of our Class A Ordinary Shares as of the date of this report by our officers, directors, and 5% or greater beneficial owners of Class A Ordinary Shares. There is no other person or group of affiliated persons known by us to beneficially own more than 5% of our Class A Ordinary Shares. Holders of our Class A Ordinary Shares are entitled to one vote per share and vote on all matters submitted to a vote of our shareholders, except as may otherwise be required by law.
We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Unless otherwise indicated, the person identified in this table has sole voting and investment power with respect to all shares shown as beneficially owned by him or her, subject to applicable community property laws.
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| Directors and executive officers(1) | Number of Class A Ordinary Shares | Approximate percentage of outstanding Class A Ordinary Shares | ||||||
| Directors and executive officers | ||||||||
| Mr. Tan Yu (1) | — | — | ||||||
| Ms. Liu Wei (1) | — | — | ||||||
| Mr. Fang Chenxi (2) | — | — | ||||||
| Mr. Zhu Xincheng (2) | — | — | ||||||
| Mr. Zhao Yong (2) | — | — | ||||||
| All directors and executive officers (5 individuals) | — | — | ||||||
| 5% or greater shareholders | ||||||||
| OCEANSTAR ECOMMERCE CO., LTD. | 791,667 | 9.44 | % | |||||
| PING AN BIOMEDICAL CO., LID. | 716,667 | 8.54 | % | |||||
As of the date of this report, none of our outstanding Class A Ordinary Shares are held by record holders in the United States.
| (1) | Except as otherwise indicated below, the business address for our directors and executive officers is at Room 2912, 29/F., New Tech Plaza, 34 Tai Yau Street, San Po Kong, Kowloon, Hong Kong. |
| (2) | Mr. Fang Chenxi has been appointed as our independent director effective on April 9, 2025, Mr. Zhao Yong has been appointed as our independent director effective on December 19, 2024, and Mr. Zhu Xincheng has been appointed as our independent director effective on November 21, 2025. |
| 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 |
Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.”
| B. | Related Party Transactions |
Employment Agreements and Indemnification Agreements
See “Item 6. Directors, Senior Management and Employees—C. Board Practices—Employment Agreements and Indemnification Agreements.”
Other Related Party Transactions
Set forth below are the related party transactions of our company that occurred during the years ended March 31, 2026, 2025, 2024 and up to the date of this report:
List of Related Parties
| Name | Relationship | |
| Mr. Man Siu Ming (“Mr. Man”) | General Manager | |
| Chi Yip Eng. & (Trans.) Company Ltd (“Chi Yip”) | A company owned by Mr. Man Siu Ming’s parents |
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Balances with related parties:
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Accounts receivable from related party: | ||||||||
| Chi Yip | 445,573 | 339,395 | ||||||
| Amounts due to related parties: | ||||||||
| Mr. Man | 530,078 | 1,708,019 | ||||||
| Finance lease liabilities due to related parties: | ||||||||
| Chi Yip | 815,372 | 499,839 | ||||||
All balances due from Chi Yip were accounts receivables due from Chi Yip relating to our provision of soil and rock transportation services and site management services. The amounts due to Chi Yip related to subcontracting charges from Chi Yip. The largest amount outstanding from Chi Yip during the fiscal years ended March 31, 2025 and 2026 was approximately US$835,548 and US$655,761, respectively. The largest amount outstanding to Chi Yip during the fiscal years ended March 31, 2025 and 2026 was approximately US$389,975 and 815,372, respectively. The largest amount outstanding to Mr. Man during the fiscal years ended March 31, 2025 and 2026 was approximately US$586,505 and US$416,245, respectively. The amounts due to our director, Mr. Man, during the relevant periods were advances from Mr. Man which are unsecured and interest-free with no specific repayment terms. The finance lease liabilities due to related parties, Chi Yip related to payments owed under finance leases for motor vehicles and machinery assigned to Primega Construction.
Set forth below are the related party transactions of our company that occurred during the past three fiscal years up to the date of this report.
Transactions with related parties:
Summary of transactions with Chi Yip and Mr. Man Chi Kwan
Chi Yip is an affiliated company under the control of our Controlling Shareholder’s parents. Chi Yip, incorporated in Hong Kong in September 2000, has operated as a subcontractor focused on providing general transportation and logistics services in the Hong Kong construction industry for over 20 years, under the management of Mr. Man Chi Kwan, the father of our Controlling Shareholder. Mr. Man Siu Ming joined Chi Yip in 2010 and gained experience in construction transportation and logistics operations, building his own connections in the construction industry.
In 2018, Mr. Man Siu Ming founded Primega Construction, our Hong Kong subsidiary, initially capitalizing on his experience in the construction industry by taking on foundation related construction works and sale and transportation of biodiesel for construction contractors.
During the year ended March 31, 2022, Mr. Man Chi Kwan sought to downsize his business as part of his succession planning as he entered retirement, where Chi Yip began subcontracting its projects, particularly, soil and rock transportation projects to Primega Construction. From March 2021 to the date of this report, Chi Yip assigned to Primega Construction its rights to 14 tipper trucks and a diesel tank wagon under hire purchase agreements with banks in Hong Kong. Primega Construction has taken possession of the 9 tipper trucks and diesel tank wagon of Chi Yip for its own operations and reimburses the finance costs payable under the hire purchase arrangements to Chi Yip.
For the years ended March 31, 2024, 2025 and 2026, we paid finance fees to Chi Yip for the tipper trucks and diesel tank wagon assigned to Primega Construction under hire purchase financing arrangements in the amounts of approximately US$29,307, US$56,135 and US$41,285 respectively.
For the years ended March 31, 2024, 2025 and 2026, we recorded income of approximately Nil, US$643,748 and US$443,314 respectively, for soil and rock transportation services provided to Chi Yip.
For the years ended March 31, 2024, 2025 and 2026, we recorded income of approximately Nil, 33,030 and Nil for site management services provided to Chi Yip.
For the years ended March 31, 2024, 2025 and 2026, we paid total service fees charged by Chi Yip in the amounts of approximately US$1,023,137, US$887,945 and US$1,282,408 respectively, for providing rental tipper trucks and for labor to support our operations.
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Guarantees
Our related parties, from time to time provides guarantees for our benefit. Mr. Man Siu Ming provided guarantees relating to our loan obligations under 6 hire-purchase agreements entered into with Dah Sing Bank Limited as of March 31, 2026. Mr. Man Siu Ming also provided personal guarantees to secure two bank loans of Primega Construction in the principal amount of HK$4,574,286 and HK$4,574,286 with the Standard Chartered Bank (Hong Kong) Limited during the year ended March 31, 2025 and 2026. As of March 31, 2025 and 2026, the bank loans amounted to US$950,614 and US$852,004.
Policies and Procedures for Related-Party Transactions
Our board of directors has created an audit committee that is tasked with reviewing and approving all related-party transactions.
| C. | Interests of Experts and Counsel |
Not applicable.
Item 8. Financial Information
| A. | Consolidated Statements and Other Financial Information |
We have appended consolidated financial statements filed as part of this report.
Legal Proceedings
As of the date of this report, we are not a party to, and we are not aware of any threat of, any legal proceeding that, in the opinion of our management, is likely to have a material adverse effect on our business, financial condition or operations.
Dividend Policy
We currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business, and we 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 our board of directors after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects, other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments.
During the years ended March 31, 2024, 2025 and 2026, ZDAI did not declare or pay any dividends and there was no transfer of assets among ZDAI and its subsidiaries.
The declaration, amount, and payment of any future dividends will be at the sole discretion of our board of directors, subject to compliance with applicable Cayman Islands laws regarding solvency. Our board of directors will take into account general economic and business conditions; our financial condition and results of operations; our available cash and current and anticipated cash needs; capital requirements; contractual, legal, tax, and regulatory restrictions; and other implications on the payment of dividends by us to our shareholders or by our subsidiaries to us, and such other factors as our board of directors may deem relevant.
Subject to the Companies Act and our Articles of Association, our Company in general meeting may by Ordinary Resolution declare dividends to be paid to the members in accordance with the respective rights of members but no dividend shall be declared in excess of the amount recommended by our board of directors. Subject to a solvency test, as prescribed in the Companies Act, and the provisions, if any, of our Memorandum and Articles of Association, a company may pay dividends and distributions out of its share premium account. In addition, based upon English case law which is likely to be persuasive in the Cayman Islands, dividends may be paid out of profits.
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As we are a holding company with no substantial business operations, we will rely on dividends paid to us by our subsidiaries for our cash requirements, including funds to pay any dividends and other cash distributions to our shareholders, service any debt we may incur, and pay our operating expenses. Our ability to pay dividends to our shareholders will depend on, among other things, the availability of dividends from our subsidiaries. According to the BVI Business Companies Act 2004 (as amended), a British Virgin Islands company may make dividends distribution to the extent that immediately after the distribution, the value of the company’s assets exceeds its liabilities and that such company is able to pay its debts as they fall due. According to the Companies Ordinance of Hong Kong, a Hong Kong company may only make a distribution out of profits available for distribution. Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect to dividends paid by us.
Cash dividends, if any, on our Class A Ordinary Shares will be paid in U.S. dollars.
| B. | Significant Changes |
Except as disclosed elsewhere in this report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.
Item 9. The Offer and Listing.
| A. | Offering and Listing Details |
Our Class A Ordinary Shares have been listed on the Nasdaq Capital Market since July 23, 2024 under the symbol “ZDAI.” On February 17, 2026, we effected a 16-for-1 reverse share split, and our Class A Ordinary Shares began trading on a split-adjusted basis on or about February 19, 2026.
| B. | Plan of Distribution |
Not applicable
| C. | Markets |
Our Class A Ordinary Shares have been listed on the Nasdaq Capital Market since July 23, 2024 under the symbol “ZDAI.”
| D. | Selling Shareholders |
Not applicable.
| E. | Dilution |
Not applicable.
| F. | Expenses of the Issue |
Not applicable.
Item 10. Additional Information.
| A. | Share Capital |
Our authorized share capital is US$4,000,000, divided into 4,900,000,000 Class A Ordinary Shares, par value US$0.0008 per share, and 100,000,000 Class B Ordinary Shares, par value US$0.0008 per share. As of March 31, 2026, there were 8,388,473 Class A Ordinary Shares and 0 Class B Ordinary Shares issued and outstanding.
| B. | Memorandum and Articles of Association |
We are an exempted company incorporated with limited liability in the Cayman Islands and our affairs will be governed by our Third Memorandum and Articles of Association, the Companies Act and the common law of the Cayman Islands.
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The following are summaries of the material provisions of our Memorandum and Articles of Association and the Companies Act, insofar as they relate to the material terms of our Ordinary Shares. The forms of our Memorandum and Articles of Association are filed as exhibits to the registration statement of which this annual report forms a part.
Ordinary Shares
General
All of our outstanding Ordinary Shares are fully paid and non-assessable. Certificates representing the Ordinary Shares are issued in registered form. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their Ordinary Shares. We may not issue shares to bearer.
Dividends
Subject to the Companies Act and our Articles of Association, our Company may by ordinary resolution in general meeting declare dividends in accordance with the respective rights of the Members but no dividend shall be declared in excess of the amount recommended by our board of directors.
Except in so far as the rights attaching to, or the terms of issue of, any share may otherwise provide:
| (i) | all dividends shall be apportioned and paid proportionately according to the amounts paid up on the shares during the time or part of time in respect of which the dividend is paid, although no amount paid up on a share in advance of calls shall for this purpose be treated as paid up on the share; | |
| (ii) | all dividends shall be apportioned and paid pro rata in accordance with the amount paid up on the shares during any portion(s) of the period in respect of which the dividend is paid; and | |
| (iii) | our board of directors may deduct from any dividend or other monies payable to any member all sums of money (if any) presently payable by him to our Company on account of calls, instalments or otherwise. |
Where our board of directors or our Company in general meeting has resolved that a dividend should be paid or declared, our board of directors may resolve:
| (aa) | that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the members entitled to such dividend will be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment; or | |
| (bb) | that the members entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as our board of directors may think fit. |
Upon the recommendation of our board of directors, our Company may by ordinary resolution in respect of any one particular dividend of our Company determine that it may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to members to elect to receive such dividend in cash in lieu of such allotment.
Any dividend, bonus or other sum payable in cash to the holder of shares may be paid by cheque or warrant sent through the post. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent and shall be sent at the holder’s or joint holders’ risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to our Company. Any one of two or more joint holders may give effectual receipts for any dividends or other monies payable or property distributable in respect of the shares held by such joint holders.
Whenever our board of directors or our Company in general meeting has resolved that a dividend be paid or declared, our board of directors may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind.
Our board of directors may, if it thinks fit, receive from any member willing to advance the same, and either in money or money’s worth, all or any part of the money uncalled and unpaid or instalments payable upon any shares held by him, and in respect of all or any of the monies so advanced may pay interest at such rate (if any) not exceeding 20% per annum, as our board of directors may decide, but a payment in advance of a call shall not entitle the member to receive any dividend or to exercise any other rights or privileges as a member in respect of the share or the due portion of the shares upon which payment has been advanced by such member before it is called up.
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All dividends, bonuses or other distributions unclaimed within six weeks after it was declared, the Directors may pay it into a separate account in the Company’ s name. If it is paid into a separate account, our Company shall not be constituted a trustee in respect thereof. All dividends, bonuses or other distributions unclaimed for six years after having been declared may be forfeited by our board of directors and, upon such forfeiture, shall revert to our Company.
No dividend or other monies payable by our Company on or in respect of any share shall bear interest against our Company.
Our Company may exercise the power to cease sending cheques for dividend entitlements or dividend warrants by post if such cheques or warrants remain uncashed on two consecutive occasions or after the first occasion on which such a cheque or warrant is returned undelivered.
Voting Rights
Holders of Class A Ordinary Shares and Class B Ordinary Shares vote together as a single class on all matters submitted to a vote for Member’s consent, except as otherwise required by law or our Third Memorandum and Articles of Association. Each Class A Ordinary Share is entitled to one 1 vote on all matters subject to the vote at the general meetings of the Company. Each Class B Ordinary Share is entitled to one hundred 100 votes on all matters subject to the vote at the general meetings of the Company and fractional Class A and B Ordinary Shares carry proportionate fractional voting rights respectively. Members are not required to vote on his shares, nor must they vote each of his shares in the same way. Except as otherwise required under Cayman Islands law or our Third Memorandum and Articles of Association, an ordinary resolution requires the affirmative vote of a simple majority of the votes cast at a general meeting, and a special resolution requires the affirmative vote of not less than two-thirds of the votes cast at a general meeting.
Transfer of Ordinary Shares
Subject to the Companies Act and our Articles of Association, all transfers of shares shall be effected by an instrument of transfer in the usual or common form or in such other form as our board of directors may approve and may be under hand or, if the transferor or transferee is a Clearing House (as defined in the Articles) (or its nominee(s)) or a central depository house (or its nominee(s)), under hand or by machine imprinted signature, or by such other manner of execution as our board of directors may approve from time to time.
Execution of the instrument of transfer shall be by or on behalf of the transferor and the transferee, provided that our board of directors may dispense with the execution of the instrument of transfer by the transferor or transferee or accept mechanically executed transfers. The transferor shall be deemed to remain the holder of a share until the name of the transferee is entered in the register of members of our Company in respect of that share.
Our board of directors may, in our absolute discretion, at any time and from time to time remove any share on the principal register to any branch register or any share on any branch register to the principal register or any other branch register. Unless our board of directors otherwise agrees, no shares on the principal register shall be removed to any branch register nor shall shares on any branch register be removed to the principal register or any other branch register. All removals and other documents of title shall be lodged for registration and registered, in the case of shares on any branch register, at the registered office and, in the case of shares on the principal register, at the place at which the principal register is located.
Our board of directors may, in our absolute discretion, decline to register a transfer of any share (not being a fully paid up share) to a person of whom it does not approve or on which our Company has a lien. It may also decline to register a transfer of any share issued under any share option scheme upon which a restriction on transfer subsists or a transfer of any share to more than four joint holders.
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Our board of directors may decline to recognize any instrument of transfer unless a certain fee, up to such maximum sum as Nasdaq may determine to be payable, is paid to our Company, the instrument of transfer is properly stamped (if applicable), is in respect of only one class of share and is lodged at our registered office or the place at which the principal register is located accompanied by the relevant share certificate(s) and such other evidence as our board of directors may reasonably require is provided to show the right of the transferor to make the transfer (and if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do).
The registration of transfers of shares or of any class of shares may, after compliance with any notice requirement of Nasdaq, be suspended at such times and for such periods (not exceeding in the whole thirty days in any year) as our board of directors may determine.
Fully paid shares shall be free from any restriction on transfer (except when permitted by Nasdaq) and shall also be free from all liens.
Procedures on liquidation
A resolution that our Company be wound up by the court or be wound up voluntarily shall be a special resolution of our shareholders.
Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares:
| (i) | if our Company is wound up, the surplus assets remaining after payment to all creditors shall be divided among the members in proportion to the capital paid up on the shares held by them respectively; and | |
| (ii) | if our Company is wound up and the surplus assets available for distribution among the members are insufficient to repay the whole of the paid-up capital, such assets shall be distributed, subject to the rights of any shares which may be issued on special terms and conditions, so that, as nearly as may be, the losses shall be borne by the members in proportion to the capital paid up on the shares held by them, respectively. |
If our Company is wound up (whether the liquidation is voluntary or compelled by the court), the liquidator may, with the sanction of a special resolution and any other sanction required by the Companies Act, divide among the members in specie or kind the whole or any part of the assets of our Company, whether the assets consist of property of one kind or different kinds, and the liquidator may, for such purpose, set such value as he deems fair upon any one or more class or classes of property to be so divided and may determine how such division shall be carried out as between the members or different classes of members and the members within each class. The liquidator may, with the like sanction, vest any part of the assets in trustees upon such trusts for the benefit of members as the liquidator thinks fit, but so that no member shall be compelled to accept any shares or other property upon which there is a liability.
Calls on Ordinary Shares and Forfeiture of Ordinary Shares
Subject to these Articles and to the terms of allotment, our board of directors may, from time to time, make such calls as it thinks fit upon the members in respect of any monies unpaid on the shares held by them respectively (whether on account of the nominal value of the shares or by way of premium) and not by the conditions of allotment of such shares made payable at fixed times. A call may be made payable either in one sum or by instalments. If the sum payable in respect of any call or instalment is not paid on or before the day appointed for payment thereof, the person or persons from whom the sum is due shall pay interest on the same at such rate not exceeding 20% per annum as our board of directors shall fix from the day appointed for payment to the time of actual payment, but our board of directors may waive payment of such interest wholly or in part. Our board of directors may, if it thinks fit, receive from any member willing to advance the same, either in money or money’s worth, all or any part of the money uncalled and unpaid or instalments payable upon any shares held by him, and in respect of all or any of the monies so advanced our Company may pay interest at such rate (if any) not exceeding 20% per annum as our board of directors may decide.
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If a member fails to pay any call or instalment of a call on the day appointed for payment, our board of directors may, for so long as any part of the call or instalment remains unpaid, serve not less than 14 clear days’ notice on the member requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued and which may still accrue up to the date of actual payment. The notice shall name a further day (not earlier than the expiration of 14 clear days from the date of the notice) on or before which the payment required by the notice is to be made, and shall also name the place where payment is to be made. The notice shall also state that, in the event of non-payment at or before the appointed time, the shares in respect of which the call was made will be liable to be forfeited.
If the requirements of any such notice are not complied with, any share in respect of which the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of our board of directors to that effect. Such forfeiture will include all dividends and bonuses declared in respect of the forfeited share and not actually paid before the forfeiture.
A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares but shall, nevertheless, remain liable to pay to our Company all monies which, at the date of forfeiture, were payable by him to our Company in respect of the shares together with (if our board of directors shall in our discretion so require) interest thereon from the date of forfeiture until payment at such rate not exceeding 20% per annum as our board of directors may prescribe.
Redemption of Ordinary Shares
Subject to the Companies Act, our Articles of Association, and, where applicable, the Nasdaq listing rules or any other law or so far as not prohibited by any law and subject to any rights conferred on the holders of any class of Shares, any power of our Company to purchase or otherwise acquire all or any of its own Shares (which expression as used in this Article includes redeemable Shares) be exercisable by our board of directors in such manner, upon such terms and subject to such conditions as it thinks fit.
Subject to the Companies Act, our Articles of Association, and to any special rights conferred on the holders of any Shares or attaching to any class of Shares, Shares may be issued on the terms that they may, at the option of our Company or the holders thereof, be liable to be redeemed on such terms and in such manner, including out of capital, as our board of directors may deem fit.
Variations of Rights of Shares
Subject to the Companies Act and without prejudice to our Articles of Association, if at any time the share capital of our Company is divided into different classes of shares, all or any of the special rights attached to any class of shares may (unless otherwise provided for by the terms of issue of the shares of that class) be varied, modified or abrogated with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class. The provisions of the Articles relating to general meetings shall mutatis mutandis apply to every such separate general meeting, but so that the necessary quorum (whether at a separate general meeting or at its adjourned meeting) shall be not less than a person or persons together holding (or, in the case of a member being a corporation, by our duly authorized representative) or representing by proxy not less than one-third in nominal value of the issued shares of that class. Every holder of shares of the class shall be entitled on a poll to one vote for every such share held by him, and any holder of shares of the class present in person or by proxy may demand a poll.
Any special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to the terms of issue of such shares, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.
General Meetings of Shareholders
Our Company must hold an annual general meeting each fiscal year other than the fiscal year of our Company’s adoption of our Articles of Association.
Extraordinary general meetings may be convened on the requisition of one or more members holding, at the date of deposit of the requisition, not less than one tenth of the paid up capital of our Company having the right of voting at general meetings. Such requisition shall be made in writing to our board of directors or the secretary of our Company for the purpose of requiring an extraordinary general meeting to be called by our board of directors for the transaction of any business specified in such requisition. Should the directors failed to call a general meeting with 21 clear days’ from the date of receipt of a requisition, the requisitioners or any of them may call a general meeting within three months after the end of that period, and all reasonable expenses incurred by the requisitionist(s) as a result of the failure of our board of directors shall be reimbursed to the requisitionist(s) by our Company.
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Every general meeting of our Company shall be called by at least 5 clear days’ notice in writing. The notice shall be exclusive of the day on which it is served or deemed to be served and of the day for which it is given, and must specify the time, place and and particulars of the resolution(s) to be considered at that meeting and the general nature of that business; whether the meeting will be held virtually, at a physical place or both; If the meeting is to be held in any part at a physical place, the address of such place; if the meeting is to be held in two or more places, or in any part virtually, the Electronic Communication Facilities that will be used to facilitate the meeting, including the procedures to be followed by any Member or other participant of the meeting who wishes to utilise such Electronic Communication Facilities for the purposes of attending and participating in such meeting.
Although a meeting of our Company may be called by shorter notice than as specified above, such meeting may be deemed to have been duly called if it is so agreed:
| (i) | in the case of an annual general meeting, by all members of our Company entitled to attend and vote thereat; and | |
| (ii) | in the case of any other meeting, by a majority in number of the members having a right to attend and vote at the meeting holding not less than 90% of the total voting rights at the meetings of all our shareholders. |
All business transacted at an extraordinary general meeting shall be deemed special business. All business shall also be deemed special business where it is transacted at an annual general meeting, with the exception of the election of Directors which shall be deemed ordinary business.
No business other than the appointment of a chairman of a meeting shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business, and continues to be present until the conclusion of the meeting.
The quorum for a general meeting shall be one or more Members holding Shares that represent not less than one third of the outstanding Shares carrying the right to vote at such general meeting if the Company has more than one member.
Inspection of Books and Records
Our shareholders have no general right to inspect or obtain copies of the register of members or corporate records of our company. They will, however, have such rights as may be set out in our Articles of Association.
Changes in Capital
Subject to the Companies Act, our shareholders may, by ordinary resolution:
| (a) | increase our share capital by new shares of the amount fixed by that ordinary resolution and with the attached rights, priorities and privileges set out in that ordinary resolution; | |
| (b) | consolidate and divide all or any of our share capital into shares of larger amount than our existing shares; | |
| (c) | sub-divide our shares or any of them into our shares of smaller amount than is fixed by our Company’s Memorandum of Association, so, however, that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced our shares shall be the same as it was in case of the share from which the reduced our shares is derived; | |
| (d) | cancel any shares which, at the date of the passing of that ordinary resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so cancelled; and | |
| (e) | convert all or any of our paid-up shares into stock, and reconvert that stock into paid up shares of any denomination. |
Subject to the Companies Act and to any rights for the time being conferred on the shareholders holding a particular class of shares, our shareholders may, by special resolution, reduce our share capital or any capital redemption reserve in any way.
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| C. | Material Contracts |
We have not entered into any material contracts other than in the ordinary course of business and other than those described in “Item 4. Information on the Company,” “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions,” or elsewhere in this annual report on Form 20-F.
| D. | Exchange Controls |
There are currently no exchange control regulations in the Cayman Islands applicable to us or our shareholders.
| E. | Taxation |
MATERIAL INCOME TAX CONSIDERATIONS
Cayman Islands Taxation
The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to our Company levied by the Government of the Cayman Islands save for certain stamp duties which may be applicable, from time to time, on certain instruments. No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies save for those which hold interests in land in the Cayman Islands. There are no exchange control regulations or currency restrictions in effect in the Cayman Islands.
Hong Kong Profits Taxation
Our subsidiary incorporated in Hong Kong was subject to Hong Kong profits tax at 8.25% on its assessable profits up to HK$2,000,000 and 16.5% on its assessable profits over HK$2,000,000 on its assessable profits generated from operations arising in or derived from Hong Kong for the years of assessment of 2021/2022 and 2020/2021. As from year of assessment of 2018/2019 onwards, Hong Kong profits tax rates are 8.25% on assessable profits up to HK$2,000,000 and 16.5% on any part of assessable profits over HK$2,000,000. Under Hong Kong tax laws, our Hong Kong subsidiary is exempted from Hong Kong income profits tax on its foreign-derived income profits as Hong Kong’s FSIE regime which takes effect from 1 January 2023 does not apply to those years. In addition, payments of dividends from our Hong Kong subsidiary to us are not subject to any tax withholding in Hong Kong.
Material U.S. Federal Income Tax Considerations for U.S. Holders
The following discussion describes the material U.S. federal income tax consequences relating to the ownership and disposition of our Class A Ordinary Shares by U.S. Holders (as defined below). This discussion applies to U.S. Holders that hold our Class A Ordinary Shares as capital assets. This discussion is based on the U.S. Internal Revenue Code of 1986, as amended, U.S. Treasury regulations promulgated thereunder, and administrative and judicial interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect. This discussion does not address all of the U.S. federal income tax consequences that may be relevant to specific U.S. Holders in light of their particular circumstances or to U.S. Holders subject to special treatment under U.S. federal income tax law (such as certain financial institutions; insurance companies; dealers or traders in securities or other persons that generally mark their securities to market for U.S. federal income tax purposes; tax-exempt entities or governmental organizations; retirement plans; regulated investment companies; real estate investment trusts; grantor trusts; brokers, dealers, or traders in securities, commodities, currencies, or notional principal contracts; certain former citizens or long-term residents of the United States; persons who hold our Class A Ordinary Shares as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security,” or integrated investment; persons that have a “functional currency” other than the U.S. dollar; persons that own directly, indirectly, or through attribution 10% or more of the voting power of our Class A Ordinary Shares; corporations that accumulate earnings to avoid U.S. federal income tax; partnerships and other pass-through entities; and investors in such pass-through entities). This discussion does not address any U.S. state or local or non-U.S. tax consequences or any U.S. federal estate, gift, or alternative minimum tax consequences.
As used in this discussion, the term “U.S. Holder” means a beneficial owner of our Class A Ordinary Shares who is, for U.S. federal income tax purposes, (i) an individual who is a citizen or resident of the United States; (ii) a corporation (or entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof, or the District of Columbia; (iii) an estate, the income of which is subject to U.S. federal income tax regardless of its source; or (iv) a trust (x) with respect to which a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons has the authority to control all of its substantial decisions, or (y) that has elected under applicable U.S. Treasury regulations to be treated as a domestic trust for U.S. federal income tax purposes.
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If an entity treated as a partnership for U.S. federal income tax purposes holds our Class A Ordinary Shares, the U.S. federal income tax consequences relating to an investment in such Class A Ordinary Shares will depend in part upon the status and activities of such entity and the particular partner. Any such entity should consult its own tax advisor regarding the U.S. federal income tax consequences applicable to it and its partners of the purchase, ownership, and disposition of our Class A Ordinary Shares.
Persons considering an investment in our Class A Ordinary Shares should consult their own tax advisors as to the particular tax consequences applicable to them relating to the purchase, ownership, and disposition of our Class A Ordinary Shares, including the applicability of U.S. federal, state, and local tax laws and non-U.S. tax laws.
Passive Foreign Investment Company (“PFIC”) Consequences
In general, a corporation organized outside the United States will be treated as a PFIC for any taxable year in which either (i) at least 75% of its gross income is “passive income” (“PFIC income test”), or (ii) on average at least 50% of its assets, determined on a quarterly basis, are assets that produce passive income or are held for the production of passive income (“PFIC asset test”). Passive income for this purpose generally includes, among other things, dividends, interest, royalties, rents, and gains from the sale or exchange of property that gives rise to passive income. Assets that produce or are held for the production of passive income generally include cash (even if held as working capital or raised in a public offering) marketable securities, and other assets that may produce passive income. Generally, in determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.
Although PFIC status is determined on an annual basis and generally cannot be determined until the end of a taxable year, based on the nature of our current and expected income and the current and expected value and composition of our assets, we do not presently expect to be a PFIC for our current taxable year or the foreseeable future. However, there can be no assurance given in this regard because the determination of whether we are or will become a PFIC is a fact-intensive inquiry made on an annual basis that depends, in part, upon the composition of our income and assets. In addition, there can be no assurance that the IRS will agree with our conclusion or that the IRS would not successfully challenge our position.
If we are a PFIC in any taxable year during which a U.S. Holder owns our Class A Ordinary Shares, the U.S. Holder could be liable for additional taxes and interest charges under the “PFIC excess distribution regime” upon (i) a distribution paid during a taxable year that is greater than 125% of the average annual distributions paid in the three preceding taxable years, or, if shorter, the U.S. Holder’s holding period for our Class A Ordinary Shares; and (ii) any gain recognized on a sale, exchange, or other disposition, including a pledge, of our Class A Ordinary Shares, whether or not we continue to be a PFIC. Under the PFIC excess distribution regime, the tax on such distribution or gain would be determined by allocating the distribution or gain ratably over the U.S. Holder’s holding period for our Class A Ordinary Shares. The amount allocated to the current taxable year (i.e., the year in which the distribution occurs or the gain is recognized) and any year prior to the first taxable year in which we are a PFIC will be taxed as ordinary income earned in the current taxable year. The amount allocated to other taxable years will be taxed at the highest marginal rates in effect for individuals or corporations, as applicable, to ordinary income for each such taxable year, and an interest charge, generally applicable to underpayments of tax, will be added to the tax.
If we are a PFIC for any year during which a U.S. Holder holds our Class A Ordinary Shares, we must generally continue to be treated as a PFIC by that holder for all succeeding years during which the U.S. Holder holds such Class A Ordinary Shares, unless we cease to meet the requirements for PFIC status and the U.S. Holder makes a “deemed sale” election with respect to our Class A Ordinary Shares. If the election is made, the U.S. Holder will be deemed to sell our Class A Ordinary Shares it holds at their fair market value on the last day of the last taxable year in which we qualified as a PFIC, and any gain recognized from such deemed sale would be taxed under the PFIC excess distribution regime. After the deemed sale election, the U.S. Holder’s Class A Ordinary Shares would not be treated as shares of a PFIC unless we subsequently become a PFIC.
If we are a PFIC for any taxable year during which a U.S. Holder holds our Class A Ordinary Shares and one of our non-U.S. subsidiaries is also a PFIC (i.e., a lower-tier PFIC), such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC and would be taxed under the PFIC excess distribution regime on distributions by the lower-tier PFIC and on gain from the disposition of shares of the lower-tier PFIC even though such U.S. Holder would not receive the proceeds of those distributions or dispositions. Any of our non-U.S. subsidiaries that have elected to be disregarded as entities separate from us or as partnerships for U.S. federal income tax purposes would not be corporations under U.S. federal income tax law and, accordingly, cannot be classified as lower-tier PFICs. However, non-U.S. subsidiaries that have not made the election may be classified as a lower-tier PFIC if we are a PFIC during your holding period and the subsidiary meets the PFIC income test or PFIC asset test. Each U.S. Holder is advised to consult its tax advisors regarding the application of the PFIC rules to any of our non-U.S. subsidiaries.
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If we are a PFIC, a U.S. Holder will not be subject to tax under the PFIC excess distribution regime on distributions or gain recognized on our Class A Ordinary Shares if a valid “mark-to-market” election is made by the U.S. Holder for our Class A Ordinary Shares. An electing U.S. Holder generally would take into account, as ordinary income each year, the excess of the fair market value of our Class A Ordinary Shares held at the end of such taxable year over the adjusted tax basis of such Class A Ordinary Shares. The U.S. Holder would also take into account, as an ordinary loss each year, the excess of the adjusted tax basis of such Class A Ordinary Shares over their fair market value at the end of the taxable year, but only to the extent of the excess of amounts previously included in income over ordinary losses deducted as a result of the mark-to-market election. The U.S. Holder’s tax basis in our Class A Ordinary Shares would be adjusted to reflect any income or loss recognized as a result of the mark-to-market election. Any gain from a sale, exchange, or other disposition of our Class A Ordinary Shares in any taxable year in which we are a PFIC would be treated as ordinary income, and any loss from such sale, exchange, or other disposition would be treated first as ordinary loss (to the extent of any net mark-to-market gains previously included in income) and thereafter as capital loss. If, after having been a PFIC for a taxable year, we cease to be classified as a PFIC because we no longer meet the PFIC income test or PFIC asset test, the U.S. Holder would not be required to take into account any latent gain or loss in the manner described above, and any gain or loss recognized on the sale or exchange of the Class A Ordinary Shares would be classified as a capital gain or loss.
A mark-to-market election is available to a U.S. Holder only for “marketable stock.” Generally, stock will be considered marketable stock if it is “regularly traded” on a “qualified exchange” within the meaning of applicable U.S. Treasury regulations. A class of stock is regularly traded during any calendar year during which such class of stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter.
Our Class A Ordinary Shares will be marketable stock as long as they remain listed on the Nasdaq Capital Market and are regularly traded. A mark-to-market election will not apply to the Class A Ordinary Shares for any taxable year during which we are not a PFIC, but it will remain in effect with respect to any subsequent taxable year in which we become a PFIC. Such election will not apply to any of our non-U.S. subsidiaries. Accordingly, a U.S. Holder may continue to be subject to tax under the PFIC excess distribution regime with respect to any lower-tier PFICs notwithstanding the U.S. Holder’s mark-to-market election for the Class A Ordinary Shares.
Our Company and all distributions, interest, and other amounts paid by us in respect to our shares to persons who are not resident in the Cayman Islands are exempt from all provisions of the Income Tax Ordinance in the Cayman Islands. No estate, inheritance, succession, or gift tax, rate, duty, levy, or other charge is payable by persons who are not resident in the Cayman Islands with respect to any of our shares, debt obligations, or other securities. All instruments relating to transactions in respect to our shares, debt obligations, or other securities and all instruments relating to other transactions relating to our business are exempt from payment of stamp duty in the Cayman Islands, save for Cayman Islands companies which hold interests in land situated in the Cayman Islands. There are currently no withholding taxes or exchange control regulations in the Cayman Islands applicable to us or our shareholders.
The tax consequences that would apply if we are a PFIC would also be different from those described above if a U.S. Holder were able to make a valid qualified electing fund (“QEF”) election. As we do not expect to provide U.S. Holders with the information necessary for a U.S. Holder to make a QEF election, prospective investors should assume that a QEF election will not be available.
The U.S. federal income tax rules relating to PFICs are very complex. Prospective U.S. investors are strongly urged to consult their own tax advisors with respect to the impact of PFIC status on the purchase, ownership, and disposition of our Class A Ordinary Shares, the consequences to them of an investment in a PFIC, any elections available with respect to the Class A Ordinary Shares, and the IRS information reporting obligations with respect to the purchase, ownership, and disposition of Class A Ordinary Shares of a PFIC.
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Distributions
Subject to the discussion above under “PFIC Consequences,” a U.S. Holder that receives a distribution with respect to our Class A Ordinary Shares generally will be required to include the gross amount of such distribution in gross income as a dividend when actually or constructively received to the extent of the U.S. Holder’s pro rata share of our current and/or accumulated earnings and profits (as determined under U.S. federal income tax principles). To the extent a distribution received by a U.S. Holder is not a dividend because it exceeds the U.S. Holder’s pro rata share of our current and accumulated earnings and profits, it will be treated first as a tax-free return of capital and reduce (but not below zero) the adjusted tax basis of the U.S. Holder’s Class A Ordinary Shares. To the extent the distribution exceeds the adjusted tax basis of the U.S. Holder’s Class A Ordinary Shares, the remainder will be taxed as capital gain. Because we may not account for our earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should expect all distributions to be reported to them as dividends.
Distributions on our Class A Ordinary Shares that are treated as dividends generally will constitute income from sources outside the United States for foreign tax credit purposes and generally will constitute passive category income. Such dividends will not be eligible for the “dividends received” deduction generally allowed to corporate shareholders with respect to dividends received from U.S. corporations. Dividends paid by a “qualified foreign corporation” to certain non-corporate U.S. Holders may be eligible for taxation at a reduced capital gains rate rather than the marginal tax rates generally applicable to ordinary income, provided that a holding period requirement (more than 60 days of ownership, without protection from the risk of loss, during the 121-day period beginning 60 days before the ex-dividend date) and certain other requirements are met. Each U.S. Holder is advised to consult its tax advisors regarding the availability of the reduced tax rate on dividends to its particular circumstances. However, if we are a PFIC for the taxable year in which the dividend is paid or the preceding taxable year (see discussion above under “PFIC Consequences”), we will not be treated as a qualified foreign corporation, and therefore, the reduced capital gains tax rate described above will not apply.
Dividends will be included in a U.S. Holder’s income on the date of the depositary’s receipt of the dividend. The amount of any dividend income paid in Cayman Islands dollars will be the U.S. dollar amount calculated by reference to the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder should not be required to recognize foreign currency gain or loss in respect to the dividend income. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt.
A non-U.S. corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) generally will be considered to be a qualified foreign corporation with respect to any dividend it pays on Class A Ordinary Shares that are readily tradable on an established securities market in the United States.
Sale, Exchange or Other Disposition of Our Class A Ordinary Shares
Subject to the discussion above under “PFIC Consequences,” a U.S. Holder generally will recognize capital gain or loss for U.S. federal income tax purposes upon the sale, exchange, or other disposition of our Class A Ordinary Shares in an amount equal to the difference, if any, between the amount realized (i.e., the amount of cash plus the fair market value of any property received) on the sale, exchange, or other disposition and such U.S. Holder’s adjusted tax basis in the Class A Ordinary Shares. Such capital gain or loss generally will be long-term capital gain taxable at a reduced rate for non-corporate U.S. Holders or long-term capital loss if, on the date of sale, exchange, or other disposition, the Class A Ordinary Shares were held by the U.S. Holder for more than one year. Any capital gain of a non-corporate U.S. Holder that is not long-term capital gain is taxed at ordinary income rates. The deductibility of capital losses is subject to limitations. Any gain or loss recognized from the sale or other disposition of our Class A Ordinary Shares will generally be gain or loss from sources within the United States for U.S. foreign tax credit purposes.
Medicare Tax
Certain U.S. Holders that are individuals, estates, or trusts and whose income exceeds certain thresholds generally are subject to a 3.8% tax on all or a portion of their net investment income, which may include their gross dividend income and net gains from the disposition of our Class A Ordinary Shares. If you are a U.S. person that is an individual, estate, or trust, you are encouraged to consult your tax advisor regarding the applicability of this Medicare tax to your income and gains in respect to your investment in our Class A Ordinary Shares.
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Information Reporting and Backup Withholding
U.S. Holders may be required to file certain U.S. information reporting returns with the IRS with respect to an investment in our Class A Ordinary Shares, including, among others, IRS Form 8938 (Statement of Specified Foreign Financial Assets). As described above under “PFIC Consequences,” each U.S. Holder who is a shareholder of a PFIC must file an annual report containing certain information. U.S. Holders paying more than $100,000 for our Class A Ordinary Shares may be required to file IRS Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation) reporting this payment. Substantial penalties may be imposed upon a U.S. Holder that fails to comply with the required information reporting.
Dividends on and proceeds from the sale or other disposition of our Class A Ordinary Shares may be reported to the IRS unless the U.S. Holder establishes a basis for exemption. Backup withholding may apply to amounts subject to reporting if the holder (i) fails to provide an accurate U.S. taxpayer identification number or otherwise establish a basis for exemption, or (ii) is described in certain other categories of persons. However, U.S. Holders that are corporations generally are excluded from these information reporting and backup withholding tax rules.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against a U.S. Holder’s U.S. federal income tax liability if the required information is furnished by the U.S. Holder on a timely basis to the IRS.
U.S. Holders should consult their own tax advisors regarding the backup withholding tax and information reporting rules.
| F. | Dividends and Paying Agents |
Not applicable.
| G. | Statement by Experts |
Not applicable.
| H. | Documents on Display |
We previously filed a registration statement on Form F-1 (Registration No. 333-277692) with the SEC to register the issuance and sale of our ordinary shares in our initial public offering.
We are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers and are required to file reports and other information with the SEC. Specifically, we are required to file annually an annual report on Form 20-F within four months after the end of each fiscal year, which is July 31.
All information filed with the SEC can be obtained over the internet at the SEC’s website at www.sec.gov. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.
| I. | Subsidiary Information |
Not applicable.
| J. | Annual Report to Security Holders |
Not applicable.
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Item 11. Quantitative and Qualitative Disclosures About Market Risk.
Credit risk
Assets that potentially subject us to a significant concentration of credit risk primarily consist of cash, accounts receivable, retention receivable and other current assets. We believe that there is no significant credit risk associated with cash, which was held by reputable financial institutions in the jurisdictions where the Company and its subsidiaries are located. The Hong Kong Deposit Protection Board pays compensation up to a limit of HK$800,000 (approximately US$102,564) if the bank with which an individual/company holds its eligible deposit fails. As of March 31, 2026, cash balance of US$130,184 was maintained at financial institutions in Hong Kong and approximately HK$800,000 were insured by the Hong Kong Deposit Protection Board. Cash balances in bank accounts in mainland China are insured by the People’s Bank of China Financial Stability Department (“FSD”) while there is a RMB 500,000 deposit insurance limit for a legal entity’s aggregated balance at each bank.
We have designed our credit policies with an objective to minimize exposure to credit risk. Other than retention receivable which may be held by our customers for more than a year, our “receivables” are very short term, generally granted by us at 30 to 150 days, in nature and the associated risk is minimal. We conduct credit evaluations on our customers and generally do not require collateral or other security from such customers. We periodically evaluate the creditworthiness of the existing customers to ascertain receivables value at credit risk. In particular, we estimate allowance for credit loss the details of which are discussed in Note 2 to the financial statements.
Foreign currency risk
We are exposed to foreign currency risk primarily through service income or expenses that are denominated in a currency other than the functional currency of the operations to which they relate. The currencies giving rise to this risk are primarily US$. As HK$ is currently pegged to US$, our exposure to foreign exchange fluctuations is minimal.
Interest rate risk
We have finance leases in place which have fixed interest rates throughout the lease period. Interest rates of the finance leases are fixed at inception of the leases, which in turn relates to the prevailing market interest rate. We do not have an interest rate hedging policy to hedge against the risk of fluctuating interest rates. However, our management closely monitors interest rate exposures, assesses our Group’s position to take out new bank loans or finance leases.
During the year ended March 31, 2026, we had maintained floating rate facility letter withs a bank in Hong Kong which were entered into in September 2022 and December 2022. The facilities carry an annual interest rate of prime rate – 2.5%. The change in interest rates would not have a material bearing to the interest expenses incurred in the said financial period as holding other things constant.
The following table presents the potential effects on net interest income or expenses of a hypothetical change of +/- 100 bps in year-end interest rates, applied to the Company’s bank borrowings and cash and cash equivalents.
| For the year ended March 31, 2025 | For the year ended March 31, 2026 | |||||||||||||||||||
Notional principal amounts of the floating loan (US$) | Impact on net interest (expenses)/ income +100 bps (US$) | Impact on net interest (expenses)/ income -100 bps (US$) | Notional principal amounts of the floating loan (US$) | Impact on net interest (expenses)/ income +100 bps (US$) | Impact on net interest (expenses)/ income -100 bps (US$) | |||||||||||||||
| 1,078,941 | (5,907 | ) | 5,907 | 1,078,941 | (5,737 | ) | 5,737 | |||||||||||||
Our exposure to the risk of changes in market interest rates relates primarily to our bank borrowings with floating interest rates. Our policy is to obtain the most favourable interest rates available for our borrowings. Management monitors interest rate exposure and will consider hedging significant interest rate exposures should the need arise.
Item 12. Description of Securities Other than Equity Securities.
| A. | Debt Securities |
Not applicable.
| B. | Warrants and Rights |
Not applicable.
| C. | Other Securities |
Not applicable.
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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.
Material Modifications to the Rights of Security Holders
None. See “Item 10. Additional Information—B. Memorandum and Articles of Association—Ordinary Shares” for a description of the rights of securities holders, which remain unchanged.
Use of Proceeds
The following “Use of Proceeds” information relates to the registration statement on Form F-1, as amended (File Number No. 333-277692) (the “F-1 Registration Statement”) in relation to our initial public offering of 1,500,000 ordinary shares (93,750 ordinary shares after giving effect of reverse stock split on February 17, 2026), at an initial offering price of US$4.00 per Ordinary Share. Our initial public offering was completed on July 24, 2024. Bancroft Capital, LLC was the underwriter of our initial public offering.
The F-1 Registration Statement was declared effective by the SEC on July 1, 2024. The total expenses incurred for our company’s account in connection with our initial public offering was approximately US$3.1 million which included US$0.7 million in underwriting discounts and commissions for the initial public offering and approximately US$2.4 million in other costs and expenses for our initial public offering. We raised approximately US$2.9 million in net proceeds from the issuance of new shares from the initial public offering. None of the transaction expenses included payments to directors or officers of our company or their associates, persons owning more than 10% or more of our equity securities or our affiliates. None of the net proceeds from the initial public offering were paid, directly or indirectly, to any of our directors or officers or their associates, persons owning 10% or more of our equity securities or our affiliates.
We still intend to use the proceeds from our initial public offering as disclosed in the F-1 Registration Statement.
Item 15. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15 under the Exchange Act, management, including our chief executive officer and our chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report. Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitations, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding our required disclosures.
Based on the foregoing, our chief executive officer and our chief financial officer have concluded that, as of March 31, 2026, our disclosure controls and procedures were effective. We believe that the consolidated financial statements included in this report on Form 20-F correctly present our financial position, results of operations and cash flows for the fiscal years covered thereby in all material respects.
Management’s Annual Report on Internal Control over Financial Reporting and Attestation Report of the Registered Public Accounting Firm
This report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the company’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.
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Internal Control Over Financial Reporting
In connection with the audit of our consolidated financial statements included in this report, we identified several material weaknesses in our internal control over financial reporting. As defined in the standards established by the U.S. Public Company Accounting Oversight Board, 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 the annual or interim financial statements will not be prevented or detected on a timely basis.
The material weaknesses identified related to (i) inadequate segregation of duties for certain key functions due to limited staff and resources; (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; and (iii) a lack of an effective control framework in place and critical information technology general controls (“ITGC”) have design deficiencies in areas including logical access, privileged access, IT operations and cybersecurity.
We intend to implement measures designed to improve our internal control over financial reporting to address the underlying causes of these material weaknesses, including (i) hiring more qualified staff to fill the key roles in our financial operations; (ii) setting up a financial and system control framework with formal documentation of polices and controls in place; and (iii) setting up an ITGC and system control framework with formal documentation of polices and controls in place. We have effective change management processes and internal controls in place to address above measures in our business and operations.
However, we cannot assure you that all these measures will be sufficient to remediate our material weakness in time, or at all. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Class A Ordinary Shares — Our 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 our Class A Ordinary Share.”
As a company with less than US$1.235 billion in revenue for the fiscal year of 2024, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting.
Changes in Internal Control over Financial Reporting
Other than the remediation of material weaknesses as described above, there has been no change in our internal controls over financial reporting.
Item 16. Reserved
Item 16A. Audit committee financial expert.
The Board has determined that none of the members of the Audit Committee qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. The Board believes the current members are collectively capable of analyzing and evaluating the Company’s financial statements and understanding internal controls and procedures for financial reporting.
Item 16B. Code of Ethics.
Our board of directors has adopted a code of business conduct and ethics, which is applicable to all of our directors, officers, and employees. Our code of business conduct and ethics is publicly available on our website at https://www.sec.gov/Archives/edgar/data/1966678/000149315224008973/ex99-1.htm.
| 83 |
Item 16C. Principal Accountant Fees and Services.
The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by ZH CPA, LLC, our principal external auditors, for the periods indicated.
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Audit Fee (1) | 160,000 | 155,000 | ||||||
| (1) | “Audit fees” means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our principal auditors for the audit of our annual financial statements. |
The policy of our audit committee is to pre-approve all audit and non-audit services provided by ZH CPA, LLC, including audit services and other services as described above, other than those for de minimis services which are approved by the audit committee prior to the completion of the audit.
The Audit Committee of the Board of Directors on an annual basis reviews audit and non-audit services performed by the independent auditors. All audit and non-audit services are pre-approved by the Audit Committee, which considers, among other things, the possible effect of the performance of such services on the auditors’ independence.
Item 16D. Exemptions from the Listing Standards for Audit Committees.
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
None.
Item 16F. Change in Registrant’s Certifying Accountant.
None.
Item 16G. Corporate Governance.
As a Cayman Islands incorporated company listed on the Nasdaq Capital Market, we are subject to the Nasdaq Stock Market Rules corporate governance listing standards. However, Nasdaq Stock Market Rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq Stock Market Rules. We have not relied on any home country practice exemption as of the date of this annual report. However, we may choose to follow certain home country practices in the future, which may cause our shareholders to be afforded less protection than they would otherwise enjoy under the Nasdaq Stock Market’s corporate governance listing standards applicable to U.S. domestic issuers. See “Item 3. Key Information—D. Risk Factors—Risks Related to our Class A Ordinary Shares—As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with Nasdaq corporate governance listing standards.”
Item 16H. Mine Safety Disclosure.
Not applicable.
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
Item 16J. INSIDER TRADING POLICIES
The
Company has
Item 16K. CYBERSECURITY
Our
board of directors is aware of the importance of adopting a group-wide cybersecurity program.
| 84 |
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 DirectBooking Technology Co., Ltd. and its subsidiaries are included at the end of this annual report.
Item 19. Exhibits.
| 85 |
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.
| DirectBooking Technology Co., Ltd. | ||
| By: | /s/ Tan Yu | |
| Name: | Tan Yu | |
| Title: | Chief Executive Officer and Chairman of the Board | |
Date: August 17, 2026
| 86 |
DIRECTBOOKING TECHNOLOGY CO., LTD.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of
Directors of DirectBooking Technology Co., Ltd.
Opinion on the Consolidated Financial Statements
Explanatory Paragraph — Going Concern
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company’s recurring net losses, negative cash flows from operations, and accumulated deficit raised substantial doubt about its ability to continue as a going concern. The management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 2 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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 audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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 audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the 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 audits 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/
We have served as the Company’s auditor since 2022.
August 17, 2026
999 18th Street, Suite 3000, Denver, CO, 80202 USA Phone: 1.303.386.7224 Fax: 1.303.386.710 Email: [email protected]
| F-2 |
DIRECTBOOKING TECHNOLOGY CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | ||||||||
| Accounts receivable, net– third parties, net of credit loss allowance of USD | ||||||||
| Accounts receivable, net – related parties, net of credit loss allowance of USD and USD | ||||||||
| Prepayment, deposits and other receivables | ||||||||
| Retention
receivable, net of credit loss allowance of USD |
||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Right-of-use assets – Finance lease | ||||||||
| Right-of-use assets – Operating lease | ||||||||
| Retention receivable, net of credit loss allowance of USD | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | ||||||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Bank loans - current | ||||||||
| Finance lease liabilities – current | ||||||||
| Finance lease liabilities – current – related parties | ||||||||
| Operating lease liabilities – current | ||||||||
| Accounts payable, accruals, and other current liabilities | ||||||||
| Amount due to related parties | ||||||||
| Income taxes payable | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Bank loans – non-current | ||||||||
| Finance lease liabilities - non-current | ||||||||
| Finance lease liabilities – non-current – related parties | ||||||||
| Operating lease – non-current | ||||||||
| Deferred tax liabilities | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity | ||||||||
| Ordinary shares (par value of US$ ; shares authorized; shares issued and outstanding as of March 31 2025) *# | ||||||||
| Class A ordinary shares (par value of US$ per share; Class A ordinary shares authorized, Class A ordinary shares issued and outstanding as of March 31, 2026) *# | ||||||||
| Class B ordinary shares (par value of US$ per share; Class B ordinary shares authorized, Class B ordinary shares issued and outstanding as of March 31, 2026) *# | ||||||||
| Additional paid in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficits | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| * | |
| # |
The accompanying notes are an integral part of these consolidated financial statements.
| F-3 |
DIRECTBOOKING TECHNOLOGY CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
| For the year ended March 31, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| USD | USD | USD | ||||||||||
| Revenue | ||||||||||||
| Revenues generated from third parties | ||||||||||||
| Revenues generated from related parties | ||||||||||||
| Cost of sales | ||||||||||||
| Cost of sales charged by third parties | ( | ) | ( | ) | ( | ) | ||||||
| Cost of sales charged by related parties | ( | ) | ( | ) | ( | ) | ||||||
| ( | ) | ( | ) | ( | ) | |||||||
| Gross profit (loss) | ( | ) | ||||||||||
| Operating expenses: | ||||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Income (loss) from operations | ( | ) | ( | ) | ||||||||
| Other income, net | ||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ||||||
| Income (loss) before tax expense | ( | ) | ( | ) | ||||||||
| Income tax (expense) recovery | ( | ) | ||||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||
| Foreign currency translations adjustment | ( | ) | ||||||||||
| Total comprehensive income (loss) | ( | ) | ( | ) | ||||||||
| Net earnings (losses) per share attributable to ordinary shareholders | ||||||||||||
| Basic and diluted | ) | ) | ||||||||||
| Weighted average number of ordinary shares used in computing net earnings per share | ||||||||||||
| Basic and diluted# | ||||||||||||
| * | The shares and per share data are presented on a prospective basis to reflect the share reclassification on December 14, 2025 (Note 16). |
| # |
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
DIRECTBOOKING TECHNOLOGY CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
| Number of shares*# | ||||||||||||||||||||||||||||||||||||||||
| Ordinary | Ordinary | Ordinary share*# | Additional Paid-in | Retained Earnings/ Accumulated | Accumulated Other | Total Stockholders’ | ||||||||||||||||||||||||||||||||||
| share | Class A | Class B | share | Class A | Class B | Capital | Deficits | Comprehensive Income | Equity | |||||||||||||||||||||||||||||||
| USD | USD | USD | USD | USD | USD | USD | ||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2023 | ||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | |||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2024 | ||||||||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares relating to IPO, netting of underwriting discounts and commissions | — | — | ||||||||||||||||||||||||||||||||||||||
| Issuance of Ordinary shares to 4 independent consultants under Stock Incentive plan on 7 Oct 2024 | — | — | ||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Share re-classification | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of Ordinary Share to 16 investors related to PIPE Transactions in 2025-11 | — | — | ||||||||||||||||||||||||||||||||||||||
| Rounding adjustment on share consolidation (39 shares) | — | — | ||||||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares to 4 individuals related to SPA in 2026-02 | — | — | ||||||||||||||||||||||||||||||||||||||
| Issuance of Ordinary shares to 4 independent consultants under Stock Incentive plan on 7 Aug 2025 | — | — | ||||||||||||||||||||||||||||||||||||||
| Issuance of Ordinary shares to 4 independent consultants under Stock Incentive plan on 23 Oct 2025 | — | — | ||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance as of March 31, 2026 | ( | ) | ||||||||||||||||||||||||||||||||||||||
| * | |
| # |
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
DIRECTBOOKING TECHNOLOGY CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the year ended March 31, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| USD | USD | USD | ||||||||||
| Operating activities | ||||||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||
| Non-cash item adjustments: | ||||||||||||
| Non-cash operating lease expense | ||||||||||||
| Depreciation of right-of-use assets – finance lease | ||||||||||||
| Depreciation of property, plant and equipment | ||||||||||||
| Consulting services settled by issuance of ordinary shares | ||||||||||||
| Deferred tax expenses (recovery) | ( | ) | ( | ) | ||||||||
| Loss (gain) on termination of right-of-use assets – finance lease | ( | ) | ||||||||||
| (Reversal of) Allowance for expected credit loss | ( | ) | ||||||||||
| Change in working capital items: | ||||||||||||
| Change in accounts receivable – third parties | ( | ) | ( | ) | ||||||||
| Change in accounts receivable – related parties | ( | ( | ) | |||||||||
| Change in retention receivable | ( | ) | ( | ) | ||||||||
| Change in prepayment, deposits and other receivables | ( | ) | ( | ) | ||||||||
| Change in accounts payable, accruals and other current liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Change in accounts payable – related parties | ( | ) | ||||||||||
| Change in contract liabilities | ( | ) | ||||||||||
| Change in income taxes payable | ( | ) | ||||||||||
| Change in due to related parties | ||||||||||||
| Change in lease liabilities – Operating lease | ( | ) | ( | ) | ( | ) | ||||||
| Cash provided by (used in) operating activities | ( | ) | ( | ) | ||||||||
| Investing activity | ||||||||||||
| Payment for potential investment in Wangmao | ( | ) | ||||||||||
| Proceeds from termination of finance lease | ||||||||||||
| Cash provided by (used in) investing activity | ( | ) | ||||||||||
| Financing activities | ||||||||||||
| Repayments to a related party | ( | ) | ( | ) | ( | ) | ||||||
| New borrowings from a related party | ||||||||||||
| Repayment of bank loans | ( | ) | ( | ) | ( | ) | ||||||
| Principal payment of finance lease liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Principal payment of finance lease liabilities – related parties | ( | ) | ( | ) | ( | ) | ||||||
| Payment of offering costs | ( | ) | ( | ) | ||||||||
| Proceeds from issuance of common stock, net of issuance costs | ||||||||||||
| Net proceeds from issuance of ordinary shares to 16 investors related to PIPE transaction in 2025-11 | ||||||||||||
| Proceeds from issuance of shares to 4 individuals related to SPA in 2026-02 | ||||||||||||
| Cash (used in) provided by financing activities | ( | ) | ||||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ( | ) | ||||||||
| Cash and cash equivalents as of beginning of the year | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||||||
| Cash and cash equivalents as of the end of the year | ||||||||||||
| Supplementary Cash Flows Information | ||||||||||||
| Cash paid for interest | ||||||||||||
| Cash paid for income tax | ||||||||||||
| Supplementary Schedule of Non-Cash Investing and Financing Activities | ||||||||||||
| Consulting fees paid by issuance of ordinary shares | ||||||||||||
| Accruals for offering cost | ||||||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | ||||||||||||
| Right-of-use assets obtained in exchange for new finance lease liabilities | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-6 |
DIRECTBOOKING TECHNOLOGY CO., LTD. AND ITS SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
Directbooking Technology Co., Ltd. (the “Company”) was incorporated in the Cayman Islands on April 14, 2022 under the Companies Act as an exempted company with limited liability. The Company conducts its primary operations of provision of (i) soil and rock transportation services and (ii) miscellaneous construction works, including excavation and lateral support (“ELS”) work in Hong Kong through its indirectly held wholly owned subsidiaries that are incorporated and domiciled in Hong Kong, namely Primega Construction Engineering Co. Limited (“Primega Construction”). The Company holds Primega Construction via a wholly owned subsidiary, namely Celestial Power Group Limited which was incorporated and is domiciled in the British Virgin Islands.
Details of the Company and its subsidiaries (together the “Company” or the “Group”) are set out in the table as follows:
| Date of | Percentage of effective | Place of | Principal | |||||||
| Name | incorporation | ownership | incorporation | activities | ||||||
| DirectBooking Technology Co., Ltd. | ||||||||||
| Celestial Power Group Limited | % | Virgin Islands | ||||||||
| Primega Construction Engineering Co. Limited | % | |||||||||
| DirectAI Technology Co., Limited | % | |||||||||
| DirectBooking Technology PTE. Ltd. | % | |||||||||
| Beijing Direct Booking Technology Co., Ltd. (“Beijing Direct Booking”) | % | | ||||||||
Recent Developments
On September 12, 2025, we changed our name to DirectBooking Technology Co., Ltd. and adopted the dual foreign name “直订科技有限公司”.
Our ordinary shares commenced trading on the Nasdaq Capital Market on July 23, 2024. On May 16, 2025, our trading symbol was changed from “PGHL” to “ZDAI”.
On December 14, 2025, our shareholders
approved, among other matters, changes to our authorized share capital, the adoption of an amended and restated memorandum and articles
of association, and authorization for a reverse share split and share reclassification. Authorized capital increased to US$
On January 23, 2026, our board approved a
On March 25, 2026, our shareholders approved certain additional resolutions relating to our capital structure, including an increase in authorized share capital, amendments to the voting rights of our Class B Ordinary Shares, and the adoption of our third amended and restated memorandum and articles of association (the “Third Memorandum and Articles of Association” or the “Memorandum and Articles of Association”). The re-designation and re-classification were accounted for on a prospective basis from the effective date of the change.
| F-7 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The consolidated financial statements include all accounts of the Company and its wholly owned subsidiaries (Collectively, the “Company”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP).
Consolidation
The consolidated financial statements include the financial statements of the parent company and its subsidiaries. All inter-company transactions and balances between the Company and its subsidiaries have been eliminated upon consolidation.
Going Concern Assessment
The consolidated financial statements for the fiscal years ended March 31, 2026, 2025 and 2024 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
As reflected in the consolidated financial statements, the Company reported a net loss of $
The Company is actively expanding its business to secure more projects and generate increased revenue, and the Company is seeking to raise working capital through shareholder contributions, borrowings from shareholders, and other equity financing activities to fund its operations.
However, there can be no assurance that these plans and arrangements will be sufficient to meet the Company’s ongoing capital expenditure, working capital, and other requirements. The accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset and the amounts or classification of liabilities that may result from the outcome of this uncertainty.
Measurement of credit losses on financial instruments
The Company adopted ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326) — Measurement of Credit Losses on Financial Instruments,” for financial assets at amortized cost including accounts receivable, refundable deposits, other receivables, and retention receivable. This guidance replaced the “incurred loss” impairment methodology with an approach based on “expected losses” to estimate credit losses on certain types of financial instruments and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance requires financial assets to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the cost of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset.
Use of estimates
The preparation of 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to allowance for credit losses associated with the accounts receivables, accounts receivable - related party, contract assets (retention receivable), other receivables, impairment of Right-of-use assets – finance lease, impairment of the prepayments and valuation allowance against net deferred tax assets. Management believes that the estimates utilized in preparing its consolidated financial statements are reasonable and prudent. Actual results could differ from these estimates.
| F-8 |
Risks and uncertainties
The main operations of the Company are located in Hong Kong. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in Hong Kong, as well as by the general state of the economy in Hong Kong. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in Hong Kong. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, such experience may not be indicative of future results.
The Company’s business, financial condition and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt the Company’s operations.
Concentration risks
Significant customers and suppliers are those that account for greater than 10% if the Company’s revenue and purchase, respectively.
During the years ended March 31, 2026 and 2025, there were three and four customers generated income which accounted for over 10% of the total revenue generated for both years. The details are as follows:
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| Customer A | % | % | ||||||
| Customer B | % | % | ||||||
| Customer C | % | % | ||||||
| Customer D | % | |||||||
As of March 31, 2026 and 2025, accounts receivable due from these customers as a percentage of consolidated accounts receivable are as follows:
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| Customer A | % | % | ||||||
| Customer B | % | % | ||||||
| Customer C | % | % | ||||||
| Customer D | % | % | ||||||
| F-9 |
During the years ended March 31, 2026 and 2025, there were three and four suppliers accounted for over 10% of the total subcontracting fees and cost of fuel oils for that year. The details are as follows:
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| Supplier A | % | % | ||||||
| Supplier B | % | % | ||||||
| Supplier C | % | % | ||||||
| Supplier D | % | % | ||||||
| Supplier E | % | % | ||||||
| Supplier F | % | % | ||||||
As of March 31, 2026 and 2025, accounts payable due to these suppliers as a percentage of consolidated accounts payable are as follows:
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| Supplier A | % | % | ||||||
| Supplier B | % | % | ||||||
| Supplier C | % | % | ||||||
| Supplier D | % | % | ||||||
| Supplier E | % | % | ||||||
| Supplier F | % | % | ||||||
Note: The Supplier A mentioned in above is a related party of the Company.
Foreign currency translation and transaction
The Company’s reporting currency is the USD. The Company’s operations are principally conducted in Hong Kong where Hong Kong dollar is the functional currency.
Transactions denominated in other than the functional currencies are re-measured into the functional currency of the entity at the exchange rates prevailing on the transaction dates. Monetary assets and liabilities denominated in currencies other than the applicable functional currencies are translated into the functional currency at the prevailing rates of exchange at the balance date. The resulting exchange differences are reported in the statements of operations and comprehensive income (loss).
The
exchanges rates used for translation from Hong Kong dollar to USD was
For translation of Chinese Renminbi
(“RMB”) into USD, the exchange rate used as of March 31, 2026, was
Certain Risks
Credit risk is the potential financial loss to the Company resulting from the failure of a customer or a counterparty to settle its financial and contractual obligations to the Company, as and when they fall due. As the Company does not hold any collateral, the maximum exposure to credit risk is the carrying amounts of trade and other receivables (exclude prepayments), retention receivables and cash and bank deposits presented on the consolidated statements of financial position. The Company has no other financial assets which carry significant exposure to credit risk.
Interest rate risk:
The Company is exposed to interest rate risk primarily relates to the variable-rate bank loans and is mainly concentrated on the fluctuation of Hong Kong Prime Rate arising from the Company’s bank loans. The Company has not used any derivative instruments to mitigate its exposure associated with interest rate risk.
| F-10 |
Labor Price Risk
Our business requires a substantial number of personnel. Any failure to retain stable and dedicated labor by us may lead to disruption to our business operations. Although we have not experienced any labor shortage to date, we have observed an overall tightening and increasingly competitive labor market. We have experienced, and expect to continue to experience, increases in labor costs due to increases in salary, social benefits and employee headcount. We compete with other companies in our industry and other labor-intensive industries for labor, and we may not be able to offer competitive remuneration and benefits compared to them. If we are unable to manage and control our labor costs, our business, financial condition and results of operations may be materially and adversely affected.
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.
Typically, the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.
Fair Value Measurement
Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability.
Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value:
| ● | Level 1: Quoted prices in active markets for identical assets or liabilities | |
| ● | Level 2: Observable, market-based inputs, other than quoted prices, in active markets for identical asset or. | |
| ● | Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. |
The Company’s financial instrument include cash and cash equivalents, accounts receivable, retention receivable, deposit and other receivables, accounts payables, accruals and other current liabilities, and due to related parties. The carrying amounts of these financial instruments approximate their fair values due to the short-term nature of these instruments. For the Company’s bank loans and finance lease liabilities, which include both current and non-current amounts, fair values are estimated based on the present value of future cash flows using interest rates currently available to the Company for similar debt instruments with comparable terms and maturities. The carrying amounts of these instruments approximate their fair values because the interest rates applicable to the respective bank loans and finance lease liabilities approximate current market interest rates for similar financing arrangements.
The Company noted no transfers between levels during any of the periods presented. The Company did not have any instruments that were measured at fair value on a recurring nor non-recurring basis as of March 31, 2026 and 2025.
| F-11 |
Related parties
The Company adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.
Cash and cash equivalents
Cash
and cash equivalents consist of petty cash on hand and cash held in banks, which are highly liquid and have original maturities of three
months or less and are unrestricted as to withdrawal or use. The Company maintains all bank accounts in Hong Kong. Cash balances in bank
accounts in Hong Kong are protected under Deposit Protection Scheme in accordance with the Deposit Protection Scheme Ordinance. The maximum
protection is up to HK$
Accounts Receivable, net
Accounts receivable represents an unconditional right to consideration arising from our performance under contracts with customers. The Company grant credit to customers, without collateral, under normal payment terms (typically 60 to 150 days, but may be longer depending on their reputation and transaction history). Generally, invoicing occurs within 45 days after the related works are performed. The carrying value of such receivable, net of the expected credit loss, represents its estimated realizable value. The Company expect to collect the outstanding balance of current accounts receivable, net within one year. The Company has elected to use probability of default, loss given default method to estimate allowance for credit loss.
For those past due balances over 1 year and other higher risk receivables identified by management are reviewed individually for collectability. In establishing an allowance for credit losses, the Company uses reasonable and supportable information, which is based on historical collection experience, the financial condition of its customers, billing disputes and assumptions for the future movement of different economic drivers and how these drivers will affect each other. Probability of default constitutes a key input in measuring allowance for credit losses. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions. The Company writes off potentially uncollectible accounts receivable against the allowance for credit losses if it is determined that the amounts will not be collected or if a settlement with respect to a disputed receivable is reached for an amount that is less than the carrying value.
Retention receivable
Certain of our contracts contain retention provisions whereby a portion of the revenue earned is withheld from payment as a form of security until contractual provisions are satisfied. Retention receivable was assessed for impairment in accordance with ASC 326.
| F-12 |
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Major modifications or refurbishments which extend the useful life of the assets are capitalized and depreciated over the adjusted remaining useful life of the assets.
The Property, plant and equipment is calculated using the straight-line method over their estimated useful lives, as follows:
| Machinery | ||
| Motor Vehicles | ||
| Office equipment | ||
| Leasehold improvement | Shorter of the lease term or |
The assets’ useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Upon retirements or disposition of property, plant and equipment, the cost and related accumulated depreciation are removed any resulting gain or loss is recognized in consolidated statements of operations and comprehensive income (loss). The cost of maintenance and repairs is charged to expenses as incurred.
Impairment of long lived assets
The
Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the
long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition.
If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize an impairment
loss, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows.
Commitments and contingencies
In the normal course of business, the Company is subject to commitments and contingencies, including operating lease and finance lease commitments, legal proceedings and claims arising out of its business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss will occur, and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments on liability for contingencies, including historical and the specific facts and circumstances of each matter.
Revenue recognition
In May 2014, the FASB issued Topic 606, “Revenue from Contracts with Customers”. This topic clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP. Simultaneously, this topic supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification.
The Company performs a majority of services including provision of (i) soil and rock transportation services and (ii) miscellaneous construction works, including ELS work under master agreements. A contractual agreement exists when each party involved approves and commits to the agreement, the rights of the parties and payment terms are identified, the agreement has commercial substance, and collectability of consideration is probable.
| F-13 |
Provision of soil and rock transportation services
The Company derives revenues primarily from the provision of soil and rock transportation services using tipper trucks. The contracts with customers generally contain a single performance obligation and revenue is recognized at a single point in time when it has transported the soil and rock out of the construction site.
The income from operating soil and rock transportation business would depend on the volume of soil and rock transported and the price charged per unit of rock. Pricing for the Company’s services is generally a fixed unit price. Payments are received within 30 to 150 days upon completion of performance obligation but can vary based on the nature of the service provided and certain other factors.
The Company recognizes revenue on a gross basis as the Company controls the services. The Company is primarily responsible for fulfilling the promise, assumes risk of loss, has discretion in setting the prices for the services to its customers, and has the ability to direct the use of the services provided by third parties.
Construction works
Construction services are performed for the sole benefit of our customers, whereby the assets being created or maintained are controlled by the customer and the services we perform do not have alternative benefits for us. Contract revenue is recognized as our obligations are satisfied over time consistent with our services are performed and customers simultaneously receive and consume the benefits the Company provide.
The Company recognizes contract revenue over time, as performance obligations are satisfied, due to the continuous transfer of control to the customer in accordance with ASC Topic 606, Revenue from Contracts with Customers. Upon adoption of ASC Topic 606, contracts which include construction services are generally accounted for as a single deliverable (a single performance obligation) and are no longer segmented between types of services.
Output measures such as construction works delivered are utilized to assess progress against specific contractual performance obligations for construction services. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the services to be provided. The Company expects the reference to the invoice issued by the Company depicts the Company’s performance in transferring control of goods or services promised to customers for their construction projects, the Company satisfies the performance obligation over time and therefore, the output method using construction works delivered best represents the measure of progress against the performance obligations incorporated within the contractual agreements. This method captures the amount of works delivered pursuant to contracts and is used only when performance does not produce significant amounts of work in process prior to complete satisfaction of the performance obligation and the gross billing value of contracting work can be measured reliably.
The typical length of construction work can range from 3 months to 18 months, depending on the size and complexity of the project. For smaller projects, the construction period may be on the shorter end of that range, while larger, more complex projects can take closer to a year or even longer.
The nature of the Company’s construction contracts gives rise to several types of variable consideration, including unpriced change orders and claims. The Company mainly considers the change orders as the contract modification. And the Company accounted for the contract modification as if it were a part of the existing contract as the remaining services are not distinct and, therefore, form part of a single performance obligation that is partially satisfied at the date of the contract modification.
Variable consideration related to construction projects may be incurred due to amendments to the scope of work or remeasurement of quantities, which can impact the transaction price and amount of revenue recognized. The final transaction price and revenue recorded may differ from initial estimates contract sum based on these variable factors. The amount of variable consideration is included in the transaction price only to the extent that it is highly probable that such an inclusion will not result in a significant revenue reversal in the future when the uncertainty associated with the variable consideration is subsequently resolved. At the end of each reporting period, the Company updates the estimated transaction price to represent faithfully the circumstances present at the end of the reporting period.
Cost of sales
Cost of sales consists primarily of subcontracting fees, cost of fuel oils, material costs, direct labor costs and other overhead costs that are directly attributable to services provided.
| F-14 |
General and administrative expenses
Our general and administrative expenses consisted mainly of staff costs, transportation costs relevant to administrative use, amortization of right-of-use assets for operating lease, and amortization of right-of-use assets for finance lease on motor vehicles, depreciation expense for idle machinery, which was recognized under general and administrative expenses due to a decrease in active projects, provision of credit loss, legal and professional fees, insurance expenses, office and rental expenses and other miscellaneous expenses.
Interest Expense
Our interest expense is mainly related to our interest expenses incurred by finance leases of motor vehicles and machinery and bank borrowings.
Leases
The Company follows ASC 842 — Leases (“ASC 842”), which requires lessees to record right-of-use (“ROU”) assets and related lease obligations on the balance sheet, as well as disclose key information regarding leasing arrangements. If any of the following criteria are met, the Company classifies the lease as a finance lease:
| ● | The lease transfers ownership of the underlying asset to the lessee by the end of the lease term; | |
| ● | The lease grants the lessee an option to purchase the underlying asset that the Company is reasonably certain to exercise; | |
| ● | The lease term is for 75% or more of the remaining economic life of the underlying asset, unless the commencement date falls within the last 25% of the economic life of the underlying asset; | |
| ● | The present value of the sum of the lease payments equals or exceeds 90% of the fair value of the underlying asset; or | |
| ● | The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. |
Leases that do not meet any of the above criteria are accounted for as operating leases.
Finance and operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Since the implicit rate for the Company’s leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term.
Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its finance or operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception, and therefore operating lease ROU assets and liabilities do not include leases with a lease term of 12 months or less. Its leases generally do not provide a residual guarantee.
The finance or operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term for operating leases. Meanwhile, the Company recognizes the finance lease ROU assets and interest on an amortized cost basis. The amortization of finance ROU assets is recognized on an accretion basis as amortization expense, while the lease liability is increased to reflect interest on the liability and decreased to reflect the lease payments made during the period. Interest expense on the lease liability is determined each period during the lease term as the amount that results in a constant periodic interest rate of the asset on the remaining balance of the liability.
Additionally, the Company elected to apply the short-term lease exemption for leases with a non-cancelable period of twelve months or less and has chosen to combine non-lease components (such as common area maintenance for real estate leases) from lease components.
The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. For the years ended March 31, 2026 and 2025, the Company did not recognize impairment loss on its finance and operating lease ROU assets.
Income taxes
The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
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. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures.
The Company did not accrue any liability, interest or penalties related to uncertain tax positions in its provision for income taxes line of its consolidated statements of income as of March 31, 2026 and 2025, respectively. The Company does not expect that its assessment regarding unrecognized tax positions will materially change over the next 12 months.
| F-15 |
Basic earnings per share is computed by dividing net earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares.
Segment Reporting
FASB 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 of the Company’s business segments, geographical areas, and major customers. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker as the source for determining the Company’s reportable segments. The chief operating decision maker is the Company’s president and Chief Executive Officer (“CEO”). Management, including the chief operating decision maker, reviews operating results of different products at revenue level with no allocation of operating costs. Consequently, based on management’s assessment, the Company has determined that it has only one operating segment as defined by FASB ASC 280.
Recent accounting pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income (Topic 220-40): Expense Disaggregation Disclosures (“ASU 2024-03”). This update requires, among other things, more detailed disclosure about types of expenses in commonly presented expense captions such as cost of sales and selling, general, and administrative expenses, and is intended to improve the disclosures about an entity’s expenses including purchases of inventory, employee compensation, depreciation and amortization. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company has not yet adopted this new guidance and is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.
In January 2025, the FASB issued ASU 2025-01, which clarifies the effective date of ASU 2024-03 for non-calendar year-end entities. ASU 2024-03 and ASU 2025-01 are effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company has not yet adopted this new guidance and is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.
In July 2025, the FASB issued ASU 2025-05, which simplifies credit loss measurement for current accounts receivable and contract assets under Topic 326. This standard is effective for all entities for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted. The Company has not yet adopted this new guidance and is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-11, which enhances interim reporting guidance under Topic 270. For public business entities, ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. For all other entities, it is effective for interim reporting periods within annual reporting periods beginning after December 15, 2028. Early adoption is permitted for all entities. The Company has not yet adopted this new guidance and is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.
Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.
3. ACCOUNTS RECEIVABLE, NET
Accounts receivable, net— third parties, consists of the following:
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Accounts receivable— third parties | ||||||||
| Less: allowance for expected credit loss | ( | ) | ( | ) | ||||
| Accounts receivable, net— third parties | ||||||||
The movements in the allowance for credit losses for accounts receivable — third parties for the years ended March 31, 2025 and 2026 were as follows:
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Balance at beginning of the year | ||||||||
| Additions | ||||||||
| Balance at end of the year | ||||||||
Accounts receivable, net – related parties, consists of the following:
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Accounts receivable – related parties | ||||||||
| Less: allowance for expected credit loss | ||||||||
| Accounts receivable, net – related parties | ||||||||
| F-16 |
The movements in the allowance for credit losses for accounts receivable — related parties for the years ended March 31, 2025 and 2026 were as follows:
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Balance at beginning of the year | ||||||||
| Reversal | ( | ) | ||||||
| Balance at end of the year | ||||||||
The expected credit loss on accounts receivables is calculated in probability of default and loss given default method by reference to past due status of the individual debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtor, future economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions as of March 31, 2025 and 2026.
The Company classifies its accounts receivable portfolio based on the industry of customers as those receivables sharing similar risk characteristics. The credit assessment is subject to continual review by Finance & Accounting Department at least annually. This assessment includes procedures to estimate the allowance and test the adequacy of and appropriateness of the resulting balance. The level of the allowance is based upon management’s evaluation of payment history, historical default and loss experience, current and projected economic conditions in which the debtors operate.
The Company performed internal credit rating assessment on customers, based on quantitative and qualitative factors (e.g. listed companies or nor, type of collateral, relationship between creditor and debtor, historical information of the debtor in the market, historical payment behaviors, etc). Credit rating system is constructed with reference to Moody’s. Credit rating ranges from Aaa, Aa, A… to Ca-C, D. A credit rating is assigned to debtor on the initial date by using the above assessment methodology and subject to periodical reviews.
Internal credit ratings form a significant input to the model derived CECL PDs. The Company’s customers are mainly engaged in Transportation industry and Construction industry. For majority of customers. internal credit ratings are determined based on quantitative and qualitative factors (e.g.. type of collateral, relationship between creditor and debtor historically collection performance, historical information of the debtor in the market etc.) and conducted with reference to Moody’s rating methodology considering financial positions, business diversity, financial leverage, and financial policies of customers.
Irrespective of the outcome of the above assessment, the Company presumes that the credit risk has increased significantly for those outstanding balance aged over 1 year, unless the Company has reasonable and supportable information that demonstrates otherwise.
The Company writes off an account receivable when there is information indicating that the debtor is in server financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or where long-aged receivables remain unpaid despite repeated collection efforts, whichever occurs earlier.
4. PREPAID EXPENSES, DEPOSITS AND OTHER RECEIVABLES
Prepayments, deposits, and other receivables mainly consist of deposits for rented premises, autopay and utilities, prepayments for consulting fees to independent consultants, prepaid sub-contracting fees, prepayment for investment, prepayments for repair and maintenance, fuel oil fees, and insurance expenses.
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Prepaid expenses | ||||||||
| Prepayment of consulting fees | ||||||||
| Prepayment for investment in Wangmao | ||||||||
| Other receivables and deposits | ||||||||
Prepayment of consulting fees
On
July 25, 2024, the Company signed consultancy agreements with four consultants. The consultants provide services including market research,
sales and marketing strategies, customer relationship management, identifying strategic partnerships, and assessing business expansion
opportunities for the Company. Their service charges range from US$
On October 7, 2024, the Company issued, in aggregate, Ordinary Shares ( ordinary shares after giving effect of reverse stock split on February 17, 2026), par value US$ each (US$, after giving effect to the share consolidation) to four consultants, each an independent third party, as provided under the 2024 Stock Incentive Plan. The 2024 Stock Incentive Plan was registered on Form S-8 on October 2, 2024. None of the consultants had a shareholding of 5% or above.
The
total contract amount for all consultants was US$
Employment compensation claim
As
of March 31, 2026, other receivables included US$
Other receivables from Hangzhou Yuedian Technology Co., Ltd.
As of March 31, 2026, other receivables included an advance to Hangzhou Yuedian Technology Co., Ltd. The balance represents an interest-free loan provided in the ordinary course of business, which is scheduled to be fully repaid by to the Company on or before February 1, 2027.
Prepayment for investment in China Wangmao Liquor Industry Group Co., Limited (“China Wangmao”)
On August 19, 2025, the Company
entered into a Memorandum of Understanding (the “MOU”), dated August 18, 2025. Pursuant to the MOU, on November 11, 2025,
the Company entered into a securities purchase agreement (the “SPA”) for the purchase of 49% of the total issued shares of
China Wangmao. The Company paid the total purchase price of approximately US$
Subsequent to the financial year
ended, the Company and China Wangmao mutually agreed to terminate the SPA effective on August 11, 2026, Pursuant to the termination terms,
China Wangmao agreed to refund the full principal amount of US$
On August 13, 2026, the Company
fully recovered the principal amount of USD
| F-17 |
5. RETENTION RECEIVABLES
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
USD (Non-current) | USD (Current) | |||||||
| Beginning balance | ||||||||
| Additions from condition rights to consideration | ||||||||
| Less: retention released | ( | ) | ( | ) | ||||
| Less: allowance for expected credit loss | ( | ) | ( | ) | ||||
| Ending balance | ||||||||
6. BANK LOANS
The Company has two outstanding loan facilities with its principal bank, with total drawn-down principal amount of
approximately US$
The bank loans consisted of the following at March 31, 2026:
| Bank Name | Principal Amount | Amount – HKD | Amount – USD | Issuance Date | Expiration Date | Interest | ||||||||||
| Standard Chartered Bank (Hong Kong) Limited | HKD | Hong Kong Prime Rate – | ||||||||||||||
| Standard Chartered Bank (Hong Kong) Limited | HKD | Hong Kong Prime Rate
– | ||||||||||||||
| Total |
The bank loans consisted of the following at March 31, 2025:
| Bank Name | Principal Amount | Amount – HKD | Amount – USD | Issuance Date | Expiration Date | Interest | ||||||||||
| Standard Chartered Bank (Hong Kong) Limited | HKD | Hong Kong Prime Rate –
| ||||||||||||||
| Standard Chartered Bank (Hong Kong) Limited | HKD | Hong Kong Prime Rate
– | ||||||||||||||
| Total | ||||||||||||||||
The Company’s bank loans are denominated in HKD.
As
of March 31, 2026 and 2025, the bank loans amounted to US$
The following are the maturities of the above borrowings, which include principal of bank borrowing as of March 31, 2026:
| Amount | ||||
| USD | ||||
| Years ending March 31, | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 and thereafter | ||||
| Total Bank Borrowings | ||||
During
the year ended March 31, 2026, interest expense related to these credit facilities was US$
During
the year ended March 31, 2025, interest expense related to these credit facilities was US$
| F-18 |
7. LEASES
| (a) | Finance leases |
The
finance lease mainly consists of tipper trucks and machinery and equipment. The total finance lease liability balance as of March
31, 2026 and 2025 amounted to US$
Early termination and disposal of several motor vehicles and machinery under finance lease arrangements.
During
the fiscal year 2026, the Company early terminated finance lease agreements relating to several motor vehicles and machinery. Prior
to disposal, the Company settled all remaining lease liabilities by paying the outstanding amounts to the lessor and exercised the
purchase options. Upon settlement, the right-of-use assets were derecognized, and the underlying assets were reclassified to
property, plant and equipment, at which point legal title transferred to the Company. The ROU – finance lease with
carrying amount of approximately US$
| (b) | Operating leases |
The
Company leases office spaces for varying periods in Hong Kong. As the majority of the 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 components of lease expenses are as follows:
| For the year ended March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Operating lease expense | ||||||||
| Finance lease expense | ||||||||
| Amortization of right-of-use assets | ||||||||
| Interest on lease liabilities | ||||||||
| Total finance lease expense | ||||||||
The components of finance lease are as follows:
| For the year ended March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Finance lease | ||||||||
| Right-of-use assets, costs | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Termination | ( | ) | ||||||
| Right-of-use assets, net | ||||||||
| F-19 |
Other information about the Company’s leases is as follows:
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows used in operating leases | ||||||||
| Operating cash flows used in finance leases | ||||||||
| Financing cash flows used in finance leases | ||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | ||||||||
| Right-of-use assets obtained in exchange for new finance lease liabilities | ||||||||
| Weighted-average remaining lease term-operating | ||||||||
| Weighted-average remaining lease term-finance | ||||||||
| Weighted average discount rate-operating | % | % | ||||||
| Weighted average discount rate-finance | % | % | ||||||
The following is a maturity analysis of the annual undiscounted cash flows for lease liabilities as of March 31, 2026:
Operating leases | Finance leases | Total | ||||||||||
| USD | USD | USD | ||||||||||
| Year ending March 31, | ||||||||||||
| 2027 | ||||||||||||
| 2028 | ||||||||||||
| 2029 | ||||||||||||
| 2030 | ||||||||||||
| 2031 and thereafter | ||||||||||||
| Total undiscounted lease payments | ||||||||||||
| Less: imputed interest | ( | ) | ( | ) | ( | ) | ||||||
| Lease liabilities recognized in the Consolidated Balance Sheet | ||||||||||||
The following is a maturity analysis of the annual undiscounted cash flows for lease liabilities as of March 31, 2025:
Operating leases | Finance leases | Total | ||||||||||
| USD | USD | USD | ||||||||||
| Year ending March 31, | ||||||||||||
| 2026 | ||||||||||||
| 2027 | ||||||||||||
| 2028 | ||||||||||||
| 2029 | ||||||||||||
| 2030 and thereafter | ||||||||||||
| Total undiscounted lease payments | ||||||||||||
| Less: imputed interest | ( | ) | ( | ) | ( | ) | ||||||
| Lease liabilities recognized in the Consolidated Balance Sheet | ||||||||||||
| F-20 |
8. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment consists of the following as of March 31, 2026 and 2025:
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Cost | ||||||||
| Machinery | ||||||||
| Motor vehicles | ||||||||
| Office Equipment | ||||||||
| Leasehold improvement | ||||||||
| Less: accumulated depreciation | ||||||||
| Machinery | ||||||||
| Motor vehicles | ||||||||
| Office Equipment | ||||||||
| Leasehold improvement | ||||||||
| Total property, plant and equipment, net | ||||||||
Depreciation
expenses recognized for the years ended March 31, 2026 and 2025 were US$
9. ACCOUNTS PAYABLE, ACCRUALS AND OTHER CURRENT LIABILITIES
Accounts payable, accruals and other current liabilities consists of the following:
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Accounts payable | ||||||||
| Retention payable | ||||||||
| Accrued expenses and other payables | ||||||||
| F-21 |
10. INCOME TAX
Pursuant to the current rules and regulations, the Cayman Islands and the BVI currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty. Therefore, the Company is not subject to any income tax in the Cayman Islands or the BVI.
The Company’s subsidiary incorporated in the PRC is governed by the income tax laws of the PRC, and the income tax provisions in respect to operations in the PRC are calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified 25% enterprise income tax rate, while preferential tax rates, tax holidays and even tax exemptions may be granted on a case-by-case basis. EIT grants preferential tax treatment on certain Small and Micro Enterprises (“SMEs”). Under this preferential tax treatment, SMEs are entitled to a range from 12.5% to 20% of regular income tax. The Company’s PRC subsidiary is a SME.
During the year ended March 31, 2026, the Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures on a prospective basis for the first annual period beginning after December 15, 2024. Adoption did not affect the recognized amounts of income tax expense or related tax balances; it expanded the income tax disclosures presented below. Prior comparative periods are not restated (prospective application).
Components of income (loss) before income tax
The following table presents the components of income (loss) before income taxes by geographic region for the fiscal year ended March 31, 2026, in accordance with the updated requirements of ASU 2023-09:
| Year
ended March 31, 2026 | ||||
| USD | ||||
| Domestic (Cayman) | ( | ) | ||
| Foreign: | ||||
| Hong Kong | ( | ) | ||
| PRC | ( | ) | ||
| Singapore | ||||
| Total loss before income taxes | ( | ) | ||
The following table present the provisions for benefit from income taxes for the fiscal year ended March 31, 2026, in accordance with the updated requirements of ASU 2023-09:
| Year ended March 31, | ||||
| 2026 | ||||
| USD | ||||
| Current income tax expenses | ||||
| Cayman | ||||
| Hong Kong | ||||
| PRC | ||||
| Singapore | ||||
| Deferred income tax expense (recovery) | ||||
| Cayman | ||||
Hong Kong | ( | ) | ||
PRC | ||||
| Singapore | ||||
| Income tax expense (recovery) | ( | ) | ||
The following tables present the provisions for benefit from income taxes for the fiscal year ended March 31, 2025 and 2024:
| Year ended March 31, | ||||||||
| 2024 | 2025 | |||||||
| USD | USD | |||||||
| Current income tax expenses | ||||||||
| Deferred income tax expense (recovery) | ( | ) | ||||||
| Income tax expense | ( | ) | ||||||
During the fiscal year ended March 31, 2026, the Company adopted ASU 2023-09. As a result of the adoption, the effective income tax rate for the fiscal year ended March 31, 2026 as follows:
| Year ended March 31, 2026 | ||||||||
| USD | % | |||||||
| Statutory tax rate of Cayman (0%) | ||||||||
| Effect of rates different than statutory | ( | ) | ||||||
HK two-tiered profits tax regime | ( | ) | ||||||
| Non-deductible expenses | ( | ) | ||||||
| Non-taxable income | ( | ) | ||||||
| Change in valuation allowance of deferred income tax assets | ( | ) | ||||||
| Effect of rates different than statutory | ( | ) | ||||||
Cash paid for income taxes, net of refunds, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended March 31, 2026 is as follows:
| Year
ended March 31, 2026 | ||||
| USD | ||||
| BVI | ||||
| Hong Kong | ||||
| PRC | ||||
| Cayman | ||||
| Total income taxes paid, net of refunds | | |||
Reconciliation between the income tax expenses computed by applying the Hong Kong enterprise tax rate to income before income taxes and actual provision for the fiscal years ended March 2024 and 2025 were as follows:
| Year ended March 31, | ||||||||
| 2024 | 2025 | |||||||
| USD | USD | |||||||
| (Loss) income before income tax | ||||||||
| - Cayman Island and BVI entities | ( | ) | ( | ) | ||||
| - Hong Kong entities | ( | ) | ||||||
| - PRC entity | ||||||||
| Tax expenses at statutory income tax rates | ||||||||
| - Cayman Island and BVI entities | ||||||||
| - PRC entity | ||||||||
| Tax effect of rate differences in various jurisdictions | ( | ) | ||||||
| Tax effect of provision for expected credit loss | ( | ) | ||||||
| Tax effect of depreciation allowance | ( | ) | ||||||
| Tax effect of non-deductible expenditure | ||||||||
| Tax effect of tax loss not recognised | - | |||||||
| Tax effect of taxable temporary difference | ( | ) | ||||||
| Tax reduction allowed by Hong Kong government | ( | ) | ( | ) | ||||
| Income tax expense (recovery) | ( | ) | ||||||
| F-22 |
The significant components of the Company’s deferred tax assets and liabilities are as follows:
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Deferred tax assets: | ||||||||
| Property, plant and equipment | ||||||||
| Provision of credit loss | ||||||||
| Tax losses carried forward | ||||||||
| Total deferred tax assets | ||||||||
| Deferred tax liabilities: | ||||||||
| Property, plant and equipment | ( | ) | ||||||
| Right-of-use assets – finance lease | ( | ) | ( | ) | ||||
| Total deferred tax (liabilities) assets | ( | ) | ||||||
| Less: Valuation allowance | ( | ) | ||||||
| Net deferred tax (liabilities) assets | ( | ) | ||||||
As
of March 31, 2025 and 2026, the Company had
The Company has evaluated the positive and negative evidence bearing upon the realizability of its net deferred tax assets. Due to the Company’s history of net losses and the difficulty in predicting future results, the Company concluded it was not more likely than not that the deferred tax assets would be utilized. Accordingly, the Company has established a full valuation allowance against net deferred tax assets as of March 31, 2026. Significant management judgment is required in determining the Company’s deferred tax assets and liabilities and valuation allowances for purposes of assessing its ability to realize any future benefit from its net deferred tax assets. The Company intends to maintain this valuation allowance until sufficient positive evidence exists to support the reversal of the valuation allowance. Income tax expense recorded in the future will be reduced to the extent that sufficient positive evidence materializes to support a reversal of, or decrease in, the Company’s valuation allowance.
The net changes in the total valuation allowance for net deferred tax assets for the fiscal years ended March 31, 2026 and 2025 consist of the following:
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Valuation allowance at beginning of year | ||||||||
| Addition | ||||||||
| Valuation allowance at end of year | ||||||||
11. RELATED PARTY TRANSACTIONS
Save as disclosed elsewhere in these consolidated financial statements, the Company had transactions or balance with the following related parties:
The Company’s relationship with related parties who had transactions with the Company are summarized as follows:
| Related Party | Relationship to the Company | |
| Mr. Man Siu Ming | ||
| Chi Yip Eng. & (Trans.) Company Limited (“Chi Yip”) |
Transactions with related parties
In 2025, we offer soil and rock transportation services and management services to Chi Yip for utilization of our tipper trucks and drivers and our efficiency management on tipper trucks drivers while charging service fee based on terms and conditions mutually agreed between the relevant parties. Those related party transactions were conducted in the ordinary course of business of the Company. In 2024, we did not provide soil and rock transportation and site management services to Chi Yip and recorded no revenue from Chi Yip. In 2026, we did not provide site management services to Chi Yip.
| Year ended March 31, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| USD | USD | USD | ||||||||||
| Soil and rock transportation income charged to Chi Yip included in revenues | ||||||||||||
| Site management income charge to Chi Yip included in other income | ||||||||||||
| Service fee charged by Chi Yip included in cost of sales | ||||||||||||
| Finance lease: | ||||||||||||
| Finance lease expenses fees paid for Chi Yip | ||||||||||||
| Initial payment of finance lease – related parties | ( | ) | ||||||||||
| Principal payment of finance lease liabilities - related parties | ( | ) | ( | ) | ( | ) | ||||||
| Proceeds from (Repayment to) Chi Yip | ( | ) | ||||||||||
| Proceeds from Director - Man Siu Ming | ||||||||||||
| Repayments to Director - Man Siu Ming | ( | ) | ( | ) | ( | ) | ||||||
| Net (repayments to) proceeds from Man Siu Ming | ( | ) | ||||||||||
The transactions are based on the agreements entered into between the parties involved.
| F-23 |
Balances with related parties
The
amount due to related parties is non-trade in nature and unsecured, non-interest bearing and repayable on normal credit terms (typically
30 days, but may be longer due to our transaction history). The finance lease liabilities with related parties are non-trade in nature,
unsecured and repayable on an agreed schedule. All finance leases with related parties were denominated in Hong Kong dollars and the
interest rates of the Company’s obligations under finance leases are fixed at the contract date in the range of
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Accounts receivable | ||||||||
| Chi Yip Eng. & (Trans.) Company Limited | ||||||||
| Finance lease liabilities | ||||||||
| Chi Yip Eng. & (Trans.) Company Limited | ||||||||
| Amount due to related parties | ||||||||
| Mr. Man Siu Ming | ||||||||
Save as disclosed above, the Company has ongoing relations with related party as noted below:
Chi
Yip:
Key terms of the Company’s leases with Chi Yip are as follows:
| As of March 31, | ||||||||
| 2025 | 2026 | |||||||
| USD | USD | |||||||
| Weighted-average remaining lease term-finance | ||||||||
| Weighted average discount rate-finance | % | % | ||||||
The following is a maturity analysis of the annual undiscounted cash flows for lease liabilities with Chi Yip as of March 31, 2026:
| USD | ||||
| Year ending March 31, | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 and thereafter | ||||
| Total undiscounted lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Lease liabilities recognized in the Consolidated Balance Sheet | ||||
| F-24 |
12. REVENUE, SEGMENT INFORMATION
The Company follows FASB ASC Topic 280, Segment Reporting, which requires that companies disclose segment data based on how management makes decision about allocating resources to segments and evaluating their performance. Reportable operating segments include components of an entity about which separate financial information is available and which operating results are regularly reviewed by the chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess each operating segment’s performance.
The Company’s chief operating decision maker (“CODM”) is the Mr. Tan Yu, Chief Executive Officer of the Company. The CODM regularly reviews financial information, including segment revenue, gross loss, general and administrative expenses, segment net loss, segment assets and long-lived assets to evaluate segment performance and allocate resources accordingly.
Based on the internal management reporting and assessment, the Company determined that it operates in
Segment net loss excludes general corporate administrative expenses including corporate functional costs relating to legal and professional expenses and share-based compensation that are managed centrally at the corporate level and are excluded from the measure of segment performance reviewed by the CODM.
The following tables present the Company’s segment information for the year ended March 31, 2026:
| HK | Others | Internal Elimination | Total | |||||||||||||
| USD | USD | USD | USD | |||||||||||||
| Revenue | ||||||||||||||||
| Cost of sales | ( | ) | ( | ) | ||||||||||||
| Gross loss | ( | ) | ( | ) | ||||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Segment assets | ( | ) | ||||||||||||||
| Long-lived assets | ||||||||||||||||
The following table presents revenue by major revenue type for the years ended March 31, 2026 and 2025 and 2024, respectively:
| Year ended March 31, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| USD | USD | USD | ||||||||||
| Soil and rock transportation | ||||||||||||
| Miscellaneous construction works | ||||||||||||
| Total | ||||||||||||
The following table presents cost by major revenue type for the years ended March 31, 2026 and 2025 and 2024, respectively:
| Year ended March 31, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| USD | USD | USD | ||||||||||
| Soil and rock transportation | ||||||||||||
| Miscellaneous construction works | ||||||||||||
| Total | ||||||||||||
As of March 31, 2026 and 2025, the aggregate amount of the transaction
price allocated to remaining performance obligations related to construction contracts that are unsatisfied or partially unsatisfied was
approximately to US$
13. GENERAL AND ADMINISTRATIVE EXPENSES
For the years ended March 31, 2026, 2025 and 2024, general and administrative expenses mainly included staff costs, transportation, amortization of right-of-use assets, depreciation expense for idle machinery, which was recognized under general and administrative expenses due to a decrease in active projects, allowance for expected credit loss, legal and professional fees, insurance, office and rental expenses, and other miscellaneous items. Expenses increased significantly in 2026 mainly due to higher legal and professional fees and increased allowance for expected credit loss.
| Year ended March 31, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| USD | USD | USD | ||||||||||
| Legal and professional fees | ||||||||||||
| Depreciation | ||||||||||||
| (Reversal of) Provision for credit loss | ( | ) | ||||||||||
| Office expenses | ||||||||||||
| Others | ||||||||||||
| Staff cost | ||||||||||||
| Insurance | ||||||||||||
| Transportation | ||||||||||||
| F-25 |
14. OTHER INCOME, NET
Other income, net, consists of the following:
| Year ended March 31, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| USD | USD | USD | ||||||||||
| Site management income | ||||||||||||
| Machinery/ Motor vehicle rental | ||||||||||||
| Sale of scrap material/ Mud | ||||||||||||
| Parking fines | ( | ) | ( | ) | ( | ) | ||||||
| (Loss) gain on termination of motor vehicle/ machinery under finance lease arrangements | ( | ) | ||||||||||
| Other income (expense) | ( | ) | ||||||||||
| Total other income, net | ||||||||||||
Additionally, the Company entered into a supply agreement to sell rock to a customer. As part of the arrangement, the Company will arrange for delivery of raw materials to the facility designated by the customer. During the year ended March 31, 2026, the Company discontinued its sales of rock business.
15. CONTINGENCIES
Contingencies
In the ordinary course of business, the Company may be subject to legal proceedings regarding contractual and employment relationships and a variety of other matters. The Company records contingent liabilities resulting from such claims, when a loss is assessed to be probable, and the amount of the loss is reasonably estimable. In the opinion of management, there were no pending or threatened claims and litigation as of March 31, 2026 and 2025 and through the issuance date of these consolidated financial statements.
16. CAPITAL STOCK
Ordinary Shares
We
were incorporated as a Cayman Islands business company under the laws of the Cayman Islands on April 14, 2022. At incorporation, we
were authorized to issue a maximum of
2024-07 Offering
On July 24, 2024, the Company closed (1) the IPO of ( ordinary shares after giving effect of reverse stock split on February 17, 2026) Ordinary Shares at a public offering price of US$ per Ordinary Share, and (2) the resale by one existing shareholder of the Company of () Ordinary Shares at a public offering price of US$ per Ordinary Share.
2024 Stock Incentive Plan
On
October 7, 2024, the Company issued, in aggregate, , par value US$
each (US$, after giving effect to the share consolidation) to four consultants, each an independent third party, as provided
under the 2024 Stock Incentive Plan. The 2024 Stock Incentive Plan was registered on Form S-8 on October 2, 2024. None of the
consultants had a shareholding of %
or above. The total contract amount for all consultants was US$
On
August 22, 2025, the Company issued, in aggregate, remaining shares (), par value US$ each (US$, after giving effect to the share
consolidation) to five consultants, each an independent third party, as provided under the 2024 Stock Incentive Plan. The 2024 Stock
Incentive Plan was registered on Form S-8 on October 2, 2024. None of the consultants had a shareholding of or above. The total
contract amount for all consultants was US$
2025 Stock Incentive Plan
On
November 10, 2025, the Company issued, in aggregate, Ordinary Shares () under the 2025 Stock Incentive Plan. The 2025 Stock Incentive Plan was registered
on Form S-8 on November 10, 2025. None of the consultants had a shareholding of or above. The total contract amount was US$
PIPE Transaction in 2025-11
On November 3, 2025, the
“Company entered into a securities purchase agreement with each of 16 non-U.S. investors relating to the issuance and sale of ordinary share, par value
$
per ordinary share (US$, after giving effect to the share consolidation), at $ per share
for an aggregate purchase price of $
Reverse Stock Split
On
December 14, 2025, the shareholders of the Company approved, among other matters, changes to the Company’s authorized share capital,
the adoption of an amended and restated memorandum and articles of association, and authorization for a reverse share split and share
reclassification. On January 23, 2026, the Board of Directors of the Company approved a
All share and per share amounts in the accompanying consolidated financial statements and notes have been retroactively adjusted to reflect the effects of the reverse stock splits, including rounding of fractional shares to whole shares where applicable
SPA in 2026-02
On February 10, 2026, the
Company entered into several securities purchase agreements with investors relating to the issuance and sale of ordinary
share ( ordinary shares after the 16:1 share consolidation), par value $ per ordinary share (US$, after giving effect to the share consolidation), at $ per share for an
aggregate purchase price of $
| F-26 |
Share Re-designation and Re-classification
On December 15, 2026, the shareholders of the Company approved certain additional resolutions relating to the Company’s capital structure, including an increase in authorized share capital, amendments to the voting rights of the Class B Ordinary Shares, and the adoption of a third amended and restated memorandum and articles of association.
The
authorized share capital of the Company is US$
The re-designation and re-classification were accounted for on a prospective basis from the effective date of the change.
The holders of the Company’s Class A and Class B common stock (together, “common stock”) have identical liquidation and dividend rights but different voting rights. Accordingly, the Company present the earnings per share (EPS) for Class A and Class B common stock together. The following table shows the computation of basic and diluted earnings per share:
| Year ended March 31, | ||||||||||||
| 2024 | 2025 | 2026 | ||||||||||
| USD | USD | USD | ||||||||||
| Net income (loss) attributable to common stockholders | ( | ) | ( | ) | ||||||||
| Weighted average basic and diluted shares | ||||||||||||
| Basic and diluted earnings per share | ) | ) | ||||||||||
18. SUBSEQUENT EVENTS
On
July 21, 2026, DirectBooking Technology (the “Company”) entered into a strategic joint venture agreement with Beijing DeepYou
Digital Technology Co., Ltd. (“DeepYou”).
The two parties agreed to jointly establish a new technology company to build China’s first natively Agent-to-Agent, fully integrated travel-and-stay next-generation AI direct-booking platform for the hospitality sector. The platform will provide robotic staff solutions for hospitality enterprises on the enterprise side and robotic assistant services for users on the consumer side.
The project has set a three-year strategic target: for the AI travel and hospitality direct-booking platform to cover 30,000 to 50,000 hotels, and to provide each hotel with 3 to 10 AI “employees” to reduce operating costs while significantly improving efficiency and user experience. At the same time, through AI-driven innovation, the project aims to break the traditional OTA industry’s channel monopoly and information silos, reshape value distribution across the industry, and build a more open and inclusive industrial ecosystem.]
Regarding the Prepayment for investment
in China Wangmao Liquor Industry Group Co., Limited, on August 11, 2026, the Company and China Wangmao mutually agreed to terminate the
SPA effective immediately. Pursuant to the termination terms, China Wangmao agreed to refund the full principal amount of US$
Except for the above-mentioned events, the Company has assessed all events from March 31, 2026, up through the date that these consolidated financial statements are available to be issued, and unless disclosed below, there are not any material subsequent events that require recognition and or disclosure in these consolidated financial statements.
| F-27 |