Metalpha Technology : Annual Report for Fiscal Year Ending March 31, 2026 (Form 20-F)

About this update from Metalpha Technology Holding Limited

OPERATING AND FINANCIAL REVIEW AND PROSPECTS A. Operating Results Overview Upon the completion of the Disposition in March 2023, we discontinued and ceased the supply chain management business and terminated the VIE structure. Currently, we provide digital asset services to customers through our subsidiaries. We began offering these services in December 2021 and generated income primarily from the execution of cryptocurrency-related transactions, including the issuance of derivative products to OTC clients and income from our proprietary trading activities. For the fiscal years ended March 31, 2024, 2025 and 2026, the income generated from our digital asset services was $16.8 million, $41.5 million and $37.1 million, respectively. Moreover, our Hong Kong subsidiary, LSQ Capital Limited, is licensed by SFC to provide asset management services in Hong Kong. For the fiscal years ended March 31, 2024, 2025 and 2026, our total revenue was $16.8 million, $44.6 million and $37.1 million, respectively, and our net profit (loss) for the year amounted to a loss of $3.7 million, a profit of $15.9 million, and a profit of $1.2 million, respectively. B. Factors Affecting Our Results of Operations In the course of our operations, our performance is influenced by several key factors. Below are the principal factors that we believe significantly impact our results of operations. Trends and Volatility in the Crypto Industry The trends and volatility in the crypto industry have a direct bearing on our results of operations. The value of our products and the underlying cryptocurrencies are subject to market conditions. A downturn in market prices of cryptocurrencies or increased volatility may impact our customers' willingness to purchase our products, subsequently affecting our revenue, income and profits. See "Item 3. Key Information-D. Risk Factors-Risks Relating to Our Business and Industry-We may face several risks due to disruptions in the crypto asset markets, including but not limited to the risk from depreciation in our stock price, loss of customer demand, financing risk, risk of increased losses or impairments in our investments or other assets, risks of legal proceedings and government investigations, and risks from price declines or price volatility of crypto assets." Our Risk and Portfolio Management Capabilities Our results of operations are largely dependent on our ability to effectively manage the market risks in our trading portfolio. Leveraging our growing experience in the crypto industry, we have effectively executed our risk-hedging trading strategies in our daily operation. However, market conditions can change rapidly and we may not be able to adjust our trading strategies in a timely manner, which may impact our results of operations. Our Relationships with Certain Key Customers We generate a significant amount of income from certain key customers. For the fiscal year ended March 31, 2024, the aggregate transaction size of the products traded was approximately $517.0 million, among which our top three customers subscribed to products of an aggregate transaction size of approximately $275.3 million, representing approximately 53.2% of the total transaction size for the same fiscal year. For the fiscal year ended March 31, 2025, the aggregate transaction size of the products traded was approximately $816.6 million, among which our top three customers subscribed to products of an aggregate transaction size of approximately $291.3 million, representing approximately 35.7% of the total transaction size for the same fiscal year. For the fiscal year ended March 31, 2026, the aggregate transaction size of the products traded was approximately $1,124.2 million, among which our top three customers subscribed to products of an aggregate transaction size of approximately $223.1 million, representing approximately 19.8% of the total transaction size for the same fiscal year. If our relationships with such top customers deteriorate, they may significantly reduce or even cease their purchase of our products, which could materially impact our results of operations. See "Item 3. Key Information-D. Risk Factors-Risks Relating to Our Business and Industry- Our digital asset business is subject to customer concentration risk." Our Ability to Acquire Qualified New Customers Our growth also depends on our ability to acquire new customers. Currently, our clientele for our digital asset services comprises institutional investors and high-net-worth individuals who meet the criteria of professional investors. We plan to constantly tap into new markets and attract and retain new customers to maintain our business growth. However, given the compliance requirements and our client demographic, we do not, and cannot, advertise our business to the public. Our marketing campaigns may not be effective in attracting new customers and there is no assurance that existing customers will stay with us. We may also incur significant expenses in connection with our branding and marketing efforts to acquire new customers and retain existing ones. Our results of operations may be adversely affected if we fail to acquire qualified new customers. Our Partnerships with Key Service Providers in the Crypto Industry Our business operations depend on several key partners in the crypto industry for trading and asset custody, such as Binance and Deribit. Our portfolio of digital assets is held under the custodianship of these key partners. The state of our partnerships with these key service providers directly affects the availability of our products and underlying digital assets, which may impact our results of operations. Key Line Items Affecting Our Results of Operations Revenue The following table sets forth our income generated from continuing operation for the periods indicated: For the fiscal year ended March 31, 2026 2025 2024 US$ US$ US$ Income from digital asset services - Unrealized fair value change of trading of digital assets, listed securities, funds and derivative contracts 6,634,615 45,354,354 5,865,294 - Realized gain (loss) on trading of listed securities, funds and derivative contracts 27,809,199 (5,828,824 ) 9,745,407 - Interest income on trading of digital assets and derivative contracts 2,146,423 1,859,490 916,616 - Services fee income 542,726 73,209 236,228 37,132,963 41,458,229 16,763,545 Income from securities advising and asset management services - Performance fee income - 2,785,944 - - Gain on disposal of financial assets at FVTPL - 323,084 - - 3,109,028 - Total Revenue 37,132,963 44,567,257 16,763,545 We started the digital asset business in December 2021. For such business, we generate income primarily from the execution of cryptocurrency-related transactions, including the issuance of derivative products to OTC clients and income from our proprietary trading activities. For the fiscal years ended March 31, 2024, 2025 and 2026, income from our digital asset services was $16.8 million, $41.5 million and $37.1 million, respectively. Our Hong Kong subsidiary, LSQ Capital Limited, provides securities advising and asset management services to customers in Hong Kong. LSQ Capital Limited holds the Type 1 (Dealing in Securities), Type 4 (Advising on Securities) and Type 9 (Asset Management) licenses as per the SFC regulations. We did not recognize any income from such services during the fiscal year ended March 31 2024. For the fiscal year ended March 31, 2025 and 2026, income from our securities advising and asset management services was $3.1 million and nil, respectively. Cost of Income Cost of income consists of commission to traders, technical support fees and transaction fees. For the fiscal years ended March 31, 2024, 2025 and 2026, our cost of income for continuing operation was $11.1 million, $23.3 million and $21.7 million, respectively. Share Purchase Warrants Expenses Share purchase warrants expenses represent the expenses in relation to the issuance of warrants to certain consultants, employees, and Northstar Technologies in the fiscal years ended March 31, 2022 and 2023. For the fiscal years ended March 31, 2024, 2025 and 2026, our share purchase warrants expenses for continuing operation was $6.0 million, $1.7 million and nil, respectively. General and Administrative Expenses General and administrative expenses for continuing operation consist primarily of share-based compensation, the professional fees paid to legal advisors, consultants and the auditor, wages and benefits for our general and administrative personnel, director fees in relation to compensation and incentives paid for services rendered by our directors, insurance costs and amortization of right-of-use assets. For the fiscal years ended March 31, 2024, 2025 and 2026, our general and administrative expenses for continuing operation were $4.3 million, $3.8 million and $14.0 million, respectively. Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods presented, both in absolute amount and as a percentage of our income from principal activities for the years presented. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative of our future results. For the fiscal year ended March 31, 2026 2025 2024 US$ % US$ % US$ % Revenue 37,132,963 100.0 44,567,257 100.0 16,763,545 100.0 Cost of income (21,743,170 ) (58.6 ) (23,264,964 ) (52.2 ) (11,135,797 ) (66.4 ) Gross profit 15,389,793 41.4 21,302,293 47.8 5,627,748 33.6 Operating expenses Selling and promotion (5,745 ) (0.0 ) (69,663 ) (0.2 ) (41,411 ) (0.2 ) General and administrative (14,031,348 ) (37.8 ) (3,793,419 ) (8.5 ) (4,254,719 ) (25.4 ) Total operating expenses (14,037,093 ) (37.8 ) (3,863,082 ) (8.7 ) (4,296,130 ) (25.6 ) Profit from operation 1,352,700 3.6 17,439,211 39.1 1,331,618 7.9 Other income and expenses, net Other income 237,525 0.6 882,238 2.0 1,041,062 6.2 Impairment on financial asset at fair value through profit or loss - - (671,403 ) (1.5 ) - - Share purchase warrants expenses - - (1,680,038 ) (3.8 ) (6,047,848 ) (36.1 ) Finance costs (17,777 ) (0.0 ) (75,253 ) (0.2 ) (4,241 ) (0.0 ) Total other income and expenses, net 219,748 0.6 (1,544,456 ) (3.5 ) (5,011,027 ) (29.9 ) Profit (loss) before income tax expense 1,572,448 4.2 15,894,755 35.7 (3,679,409 ) (21.9 ) Income tax expense (289,094 ) (0.8 ) - - - - Profit (loss) for the year 1,283,354 3.5 15,894,755 35.7 (3,679,409 ) (21.9 ) Fiscal Year ended March 31, 2026 Compared to Fiscal Year ended March 31, 2025 Income Our income decreased from $44.6 million for the fiscal year ended March 31, 2025 to $37.1 million for the fiscal year ended March 31, 2026, primarily because of a decrease in unrealized fair value gains on our digital asset and derivative trading, and the absence of income from our securities advising and asset management services (which was $3.1 million for the fiscal year ended March 31, 2025), which were partially offset by an increase in realized gains on trading of digital assets and derivative contracts. Cost of Income Our cost of income decreased from $23.3 million for the fiscal year ended March 31, 2025 to $21.7 million for the fiscal year ended March 31, 2026, which was primarily driven by a reduction in consulting fee related to trading support services and performance bonus paid to traders, which generally decreased in line with the overall reduction in our total income. General and Administrative Expenses Our general and administrative expenses increased to $14.0 million for the fiscal year ended March 31, 2026, as compared to $3.8 million for the fiscal year ended March 31, 2025, primarily due to the recognition of share-based compensation expenses following the grant of new share awards to eligible participants, combined with a substantial increase in wages and benefits associated with the expansion of our digital asset operations and management teams. Share Purchase Warrants Expenses Our share purchase warrants expenses for continuing operation were $1.7 million and nil for the fiscal year ended March 31, 2025 and 2026, respectively, mainly in relation to the fact that previously issued warrants had been fully amortized and expensed in prior periods. Net Profit As a result of the foregoing, we recorded a net profit of $1.3 million for the fiscal year ended March 31, 2026, as compared to a net profit of $15.9 million for the fiscal year ended March 31, 2025. Fiscal Year ended March 31, 2025 Compared to Fiscal Year ended March 31, 2024 Income Our income generated from continuing digital asset business increased significantly from $16.8 million for the fiscal year ended March 31, 2024 to $44.6 million for the fiscal year ended March 31, 2025, primarily because (i) we secured more digital asset deals from our customers for the fiscal year ended March 31, 2025, (ii) provides more securities advising and asset management services to customers in Hong Kong, and (iii) we recognized income from both the unrealized fair value change and interest income of the deals in other investments including digital assets, listed securities and its related derivative contracts. We entered these deals with the aim to diversify our investment portfolio and reduce the related risks. Cost of Income Our cost of income generated from continuing digital asset business increased significantly from $11.1 million for the fiscal year ended March 31, 2024 to $23.3 million for the fiscal year ended March 31, 2025, which was generally in line with the growth in income generated from our continuing business. General and Administrative Expenses Our general and administrative expenses from continuing operation remained relatively stable at $3.8 million for the fiscal year ended March 31, 2025, as compared to $4.3 million for the fiscal year ended March 31, 2024. Share Purchase Warrants Expenses Our share purchase warrants expenses for continuing operation were $6.0 million and $1.7 million for the fiscal year ended March 31, 2024 and 2025, respectively, mainly in relation to issuance of warrants to certain consultants pursuant to the May 2022 Consulting Agreement (defined below), to certain of our employees in May 2022 and to Northstar Technologies in November 2022. Consulting Agreement (defined below) and October 2021 Consulting Agreement (defined below) with these personnel. See "Item 10. Additional Information-C. Material Contracts." Net Profit (Loss) As a result of the foregoing, we recorded a net profit of $15.9 million for the fiscal year ended March 31, 2025, as compared to a net loss of $3.7 million for the fiscal year ended March 31, 2024. C. Liquidity and Capital Resources Cash Flows The following table sets forth a summary of our cash flows for the years presented: For the Fiscal Year Ended March 31, 2026 2025 2024 US$ Net cash (used in) generated from operating activities (14,861,934 ) 71,990 (11,599,148 ) Net cash (used in) generated from investing activities 208,422 (23,309 ) 32,678 Net cash generated from financing activities 11,791,758 2,108,179 9,733,969 Net (decrease) increase of cash and cash equivalents (2,861,754 ) 2,156,860 (1,832,501 ) Effect of foreign currency translation (119,994 ) (117,404 ) (35,201 ) Cash and cash equivalents at beginning of the year 6,919,869 4,880,413 6,748,115 Cash and cash equivalents at end of the year 3,938,121 6,919,869 4,880,413 Our cash and cash equivalents consist of cash, bank deposits and other currency of value. As of March 31, 2024, 2025 and 2026, our cash and cash equivalents were $4.9 million, $6.9 million and $3.9 million, respectively. Our change in prepayments and other receivables as of March 31, 2024, 2025 and 2026 were increased by $0.1 million, decreased by $4.5 million and decreased by $15.3 million, respectively. We expect that substantially all of our future income will be denominated in USD. Operating Activities Net cash used in operating activities for the fiscal year ended March 31, 2026 was $14,861,934. The net cash inflow was primarily attributable to our profit before income tax expense of $1.5 million, adjusted by (i) certain non-cash items, primarily comprising (a) unrealized fair value change of trading of digital assets, listed securities, funds and derivative contracts of $6.6 million, (b) cost of income of $17.1 million, and (c) share-based compensation expenses of $3.3 million; and (ii) changes in working capital, primarily comprising (a) an increase in financial assets at fair value through profit or loss of $90.5 million, (b) an increase in other receivables and prepayments of $15.3 million offset by (c) an increase in payable to customers of $77.2 million, (d) an increase in other payables of $7.2 million, and (e) an increase in financial liabilities at fair value through profit or loss of $1.7 million. Net cash generated from operating activities for the fiscal year ended March 31, 2025 was $71,990. The net cash inflow was primarily attributable to our profit before income tax expense of $16.0 million, adjusted by (i) certain non-cash items, primarily comprising (a) unrealized fair value change of trading of digital assets, listed securities, funds and derivative contracts of $45.3 million, (b) cost of income of $23.3 million, (c) impairment loss on financial assets at fair value through profit or loss of $0.7 million, and (d) share purchase warrants expense of $1.7 million ;and (ii) changes in working capital, primarily comprising (a) increase in other receivables and prepayments $4.5 million, (b) decrease in financial assets at fair value through profit or loss $20.5 million, (c) decrease in other payables $4.5 million, and (d) decrease in payable to customer $7.3 million. Net cash used in operating activities for the fiscal year ended March 31, 2024 was $11.6 million. The net cash outflow was primarily attributable to our loss before income tax expense of $3.7 million, adjusted by (i) certain non-cash items, primarily comprising (a) cost of income of $6.7 million, (b) share purchase warrants expenses of $6.0 million, and (c) unrealized fair value change of trading of digital assets, listed securities, funds and derivative contracts of $5.9 million; and (ii) changes in working capital, primarily comprising (a) increase in financial assets at fair value through profit and loss of $18.6 million, (b) an increase in accounts and other payables of $3.8 million, and (c) an increase in payable to customers of $0.5 million. Investing Activities Net cash generated from investing activities for the fiscal year ended March 31, 2026 was $208,422, which was entirely attributable to interest received and the proceed received from disposal of investment. Net cash used in investing activities for the fiscal year ended March 31, 2025 was $23,309, primarily due to proceed paid on purchase of property and equipment. Net cash generated from investing activities for the fiscal year ended March 31, 2024 was $32,678, primarily due to interest received of $33,959, which was partially offset by addition of property and equipment of $1,281. Financing Activities Net cash generated from financing activities for the fiscal year ended March 31, 2026 was $11.8 million, primarily due to proceeds of approximately $12.0 million from the issuance of shares in private placements, which was partially offset by the payment of the principal portion of lease liabilities of $189,802 and the repurchase of shares of $18,340. Net cash generated from financing activities for the fiscal year ended March 31, 2025 was $2.1 million, primarily due to proceed from shares issued on private placement of $2.3 million. Net cash generated from financing activities for the fiscal year ended March 31, 2024 was $9.7 million, primarily due to (i) proceeds from shares issued on private placement of $4.8 million, partially offset by the repurchase of shares of $82,127, (ii) issuance of notes of $5.0 million and (iii) the payment of principal portion of lease liabilities of $0.1 million. Net cash used in financing activities for discontinued operation for the fiscal year ended March 31, 2024 was nil. Material Cash Requirements Capital Expenditures Our capital expenditure was nil, $47,000 and nil for the fiscal years ended March 31, 2024, 2025 and 2026, respectively. We intend to fund our future capital expenditures, if any, with our existing cash balance and cash flow from operating activities. We will continue to make capital expenditures to meet the expected growth of our business. Lease Liabilities As of March 31, 2026, the Company had leased buildings used for its operations. The following table sets forth a breakdown of the carrying amounts of lease liabilities as of the dates indicated. As of March 31, 2026 US$ Lease Liabilities Current 353,221 Non-current 183,342 Total 536,563 For the fiscal years ended March 31, 2024, 2025 and 2026, we incurred lease payments of $0.1 million, $0.14 million and $0.19 million, respectively, which was mainly associated with our leased offices in Hong Kong and mainland China. For the fiscal years ended March 31, 2024, 2025 and 2026, we incurred interest on lease liabilities of $4,241, $7,702 and $17,777, respectively. There have been no material changes to our contractual obligations since March 31, 2026. D. Research and Development, Patents and Licenses, etc. See "Item 4. Information on the Company-B. Business Overview-Intellectual Property." E. Trend Information The value of crypto assets are subject to price volatility due to various factors , including but not limited to market demand, regulatory developments, macroeconomic trends and monetary policies, technological advancements and security vulnerabilities and market manipulation risks. Significant events such as the bankruptcy of certain well-known crypto assets market participants, e.g. FTX, may also reduce market confidence. See "Risk Factors-Risks Relating to Our Business and Industry-We may face several risks due to disruptions in the crypto asset markets, including but not limited to the risk from depreciation in our stock price, loss of customer demand, financing risk, risk of increased losses or impairments in our investments or other assets, risks of legal proceedings and government investigations, and risks from price declines or price volatility of crypto assets" for more details. Digital asset markets have experienced extreme price volatility and several other entities in the digital asset industry have been, and may continue to be, negatively affected, further undermining confidence in the digital assets markets. These events have also negatively impacted the liquidity of the digital assets markets as certain entities affiliated with FTX engaged in significant trading activity. If the liquidity of the digital assets markets continues to be negatively impacted by these events, digital asset prices may continue to experience significant volatility and confidence in the digital asset markets may be further undermined. These events are continuing to develop and it is not possible to predict at this time all of the risks that they may pose to us or on the digital asset industry as a whole. We had no direct exposure to FTX or any of the above-mentioned cryptocurrency companies. We do not have material assets that may not be recovered or may otherwise be lost or misappropriated due to the bankruptcies. However, the failure or insolvency of large exchanges like FTX may cause decreases in the prices of cryptocurrencies and investor confidence in the ecosystem, which could adversely affect the valuation of our solutions. High volatility and downturns in cryptocurrency prices may impact our customers' confidence in the market, thereby adversely affecting our operations and financial condition. We will timely adjust our strategies to expand our business and optimize our operating efficiency in the current dynamic market conditions. F. Critical Accounting Estimates Critical Accounting Policies, Estimates and Judgments The consolidated financial statements of our Company have been prepared in accordance with IFRS. This basis of accounting involves the application of accrual accounting and consequently, revenue and gains are recognized when earned, and expenses and losses are recognized when incurred. Our consolidated financial statements are expressed in U.S. dollars. The accompanying consolidated financial statements include the accounts of our Company and significant subsidiaries on a consolidated basis. We also include subsidiaries over which a direct or indirect legal or effective control exists and for which we are deemed to direct the significant activities and has the obligation to absorb the losses or benefits of the entities. All intercompany accounts, balances and transactions with consolidated entities have been eliminated. The preparation of financial statements in conformity with IFRS requires that management 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 reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Digital Assets Digital assets are held mainly for the purposes of trading in the ordinary course of our digital asset business. Digital assets are held mainly for the purposes of both trading for another token and entering a derivative contract in which such digital tokens are provided as margin in the ordinary course of our digital asset business. Digital assets held in our digital asset wallets primarily comprise digital assets that are prefunded by and traded with, but not yet withdrawn by counterparties (or "customers") under Digital Asset Trading Agreements ("DATA"). Digital assets obtained from counterparties are recorded as digital assets of our Company (see below for the measurement) which can be used in our ordinary business, with a corresponding liability recorded due to the counterparties (under "digital assets payables" measured at fair value through profit or loss in current liabilities). Upon maturity of the financing arrangements, we transfer the digital assets at a rate stipulated in the DATA to the counterparty's wallet and the related digital assets and liabilities due to the counterparty is derecognized. Our digital asset portfolio mainly comprises cryptocurrencies and since we actively trade cryptocurrencies, purchasing them with a view to their resale in the near future, and generating a profit from fluctuations in the price. We apply the guidance in IAS 2 for commodity broker-traders and measures the digital assets at fair value less costs to sell. We consider there are no significant "costs to sell" digital assets and hence measurement of digital assets is based on their fair values with changes in fair values recognized in profit or loss in the period of the changes. Fair Value Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, we take into account the characteristics of the asset or liability which market participants would take into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis. In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: Level 1 - inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 - inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 - inputs are unobservable inputs for the asset or liability. Our policy is to recognize transfers into and transfers out of any of the three levels as of the date of the event or change in circumstances that caused the transfer. The following table summarizes our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy: (i) Disclosures of level in fair value hierarchy: Fair value measurements using Description Level 1 Level 2 Level 3 Total US$ US$ US$ US$ As of March 31, 2026 Digital assets 379,920,883 - - 379,920,883 Digital assets receivables - 20,973 - 20,973 Listed equity securities 81,163,900 - - 81,163,900 Listed futures contracts (1,679,636 ) - - (1,679,636 ) Unlisted equity securities - - 100,000 100,000 Digital assets payable - - (135,267,935 ) (135,267,935 ) Digital assets payable - related party - - (38,721,758 ) (38,721,758 ) Payable to client (240,280,513 ) - - (240,280,513 ) Payable to client - related party (1,411,323 ) - - (1,411,323 ) Total 217,713,311 20,973 (173,889,693 ) 43,844,591 As of March 31, 2025 Digital assets 221,162,809 - - 221,162,809 Listed equity securities 13,538,564 - - 13,538,564 Listed futures contracts 1,005 - - 1,005 Unlisted equity securities - - 240,001 240,001 Investments in funds 79 - - 79 Digital assets payable - - (138,224,157 ) (138,224,157 ) Digital assets payable - related party - - (10,702,814 ) (10,702,814 ) Payable to client (53,141,585 ) - - (53,141,585 ) Payable to client - related party (691,588 ) - - (691,588 ) Total 180,869,205 - (148,686,891 ) 32,182,314 (ii) Disclosures of valuation process used by the Company and valuation techniques and inputs used in fair value measurements as of March 31, 2026 and 2025: Our directors are responsible for the fair value measurements of assets and liabilities required for financial reporting purposes, including level 3 fair value measurements. For level 3 fair value measurements, we will normally engage external valuation experts with the recognized professional qualifications and recent experience to perform the valuations. The Company's digital assets payables are revalued as of March 31, 2026 and 2025 by independent professional qualified valuer, who has the recent experience in the categories of digital assets payables being valued. The digital assets are measured at level 1 fair value. The determination of fair value hierarchy level for valuation of the digital assets would depend on whether the underlying digital assets is traded in an active market. For the year ended March 31 2026, the fair value of the digital assets payable are determined based on the Summation, Monte Carlo Simulation and Black-Scholes Pricing Model. The significant unobservable inputs under Monte Carlo Simulation mainly include risk-free rate from 3% to 4% and volatility of cryptocurrency from 45% to 80%. The significant unobservable input under Black-Scholes Pricing Model mainly included risk free rate range of 2% to 3 % and expected volatility of 25%. The fair value increase with the increase in the risk-free rate or expected volatility or the value of the underlying portfolio asset values For the year ended March 31 2025, the fair value of the digital assets payable are determined based on the Summation, Binomial Option Pricing Model and Black-Scholes Pricing Model. The significant unobservable inputs under Binomial Option Pricing Model mainly include risk free rate of nil and expected volatility of 51.57%. The significant unobservable input under Black-Scholes Pricing Model mainly included risk free rate range of nil and expected volatility of range of 52.92% to 88.84%. The fair value increase with the increase in the risk-free rate or expected volatility or the value of the underlying portfolio asset values There were no transfers between levels 2 and 3 for recurring fair value measurements during the fiscal years ended March 31, 2026 and 2025. During the fiscal years ended March 31, 2026, there the valuation techniques used Summation, Monte Carlo Simulation and Black-Scholes Pricing Model (2025: Summation, Binomial Option Pricing Model and Black-Scholes Pricing Model.) Our directors consider that the carrying amounts of our financial assets and financial liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The fair values of our lease liabilities are determined by using the discounted cash flows method using discount rate that reflects our borrowing rate as of the end of the reporting period. The own non-performance risk as of March 31, 2026 and 2025 was assessed to be insignificant. Income Digital Asset Business We participate in digital asset business and earn profits, at a point in time, when executing buy and sell orders on various exchanges. We present trading income from digital asset business that primarily represents trading margin arising from trading various digital assets and net gain or loss from remeasurement of digital assets and digital assets payable. We are exposed to net trading gains or losses from holding digital assets for trading up to the point when a trade (to buy or sell digital assets) with a customer is concluded with fixed terms of trade with respect to the type, unit and price of digital assets.

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