Business
Solowin : Annual Report for Fiscal Year Ending March 31, 2026 (Form 20-F)
Solowin : Annual Report for Fiscal Year Ending March 31, 2026 (Form
About this update from Solowin Holdings
OPERATING AND FINANCIAL REVIEW AND PROSPECTS You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F. This discussion may contain forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements because of various factors, including those set forth under Item 3 "Key Information-D. Risk Factors" or in other parts of this annual report on Form 20-F. See also "Introductory Notes-Forward-looking Information." A. Operating Results Overview The Company is a regulated global fintech company integrating traditional finance, digital assets and artificial intelligence. Founded in 2016 and headquartered in Hong Kong, the Company underwent a fundamental strategic transformation in fiscal 2026 following the acquisition of AlloyX Group, repositioning itself from a Hong Kong-centric securities brokerage firm into a global dual-pillar digital economy infrastructure platform focused on Digital Asset Tokens and AI Tokens. The Company maintains a globally regulated business footprint through its core subsidiaries. Its Hong Kong arm holds full HKSFC Type 1, 4, 6 and 9 licenses for securities, corporate finance, asset management and virtual asset regulated services. The Company also possesses valid payment and money services qualifications in Singapore, the United States and Canada. In June 2026, its Bahrain subsidiary became the world's first recipient of a formal stablecoin issuer license under the Central Bank of Bahrain framework, supporting its global stablecoin issuance and cross-border payment infrastructure business. Solowin operates two core business verticals. Its Digital Asset Tokens segment covers cross-border payment and stablecoin treasury systems, RWA tokenization platform and blockchain protocol solutions, offering compliant tokenization, settlement and decentralized financial services. Its AI Tokens segment is anchored by full-stack AI platform, delivering AI model aggregation, intelligent agent governance and enterprise cloud infrastructure services. The Company continues to retain its mature traditional brokerage, wealth management and asset management businesses to form a diversified and compliant revenue ecosystem. Fiscal 2026 represented a transformative high-growth year for the Company, with total revenue surging nearly tenfold year-over-year, alongside substantial increases in trading volume, assets under administration, payment throughput and tokenized asset scale. Consistent with its global expansion strategy, the Company incurred net losses driven by ongoing investments in technology research, regulatory compliance and business scaling. The Company's future growth is primarily driven by the expansion of its institutional AI client base and the continued commercialization of its global payment and digital asset infrastructure business lines. As of March 31, 2026, our financial and operating highlights were as follows: ● Revenue increased approximately 10x to $28.05 million for the fiscal year ended March 31, 2026 as compared to $2.82 million for the same period of last year; ● Net loss increased by 56% to $13.29 million for the fiscal year ended March 31, 2026, as compared to $8.54 million for the same period of last year; ● Basic and diluted loss per share improved by 79% to $0.11 for the fiscal year ended March 31, 2026, as compared to $0.53 for the same period of last year; ● The AX ONE platform launched and has processed Total Payment Volume reaching $226 million; ● The FERION platform launched 10 RWA projects, and Total Value Tokenized reached $52million; ● The KOVAR platform launched KovaRouter, our enterprise AI model aggregation and intelligent routing platform, and continued to develop and commercialize the Know-your-Agent governance layer; ● Assets under Administration on SOLOMON platform increased by 347% to $848.8 million as compared to $189.8 million for the same period of last year; and -89- ● Total trading volume of stablecoins and fiat currencies increased by 395% to $1.04 billion as compared to $210 million for the same period of last year. ● AX Coin Bahrain received the stablecoin issuer license in-principle approval from the Central Bank of Bahrain ("CBB"). Following the fiscal year end, in June 2026, it was officially granted the full license by the CBB to carry out stablecoin issuer activities - the first license granted under the CBB's stablecoin regulatory framework. Principal Factors Affecting Our Financial Performance Our consolidated operating results are primarily affected by the following factors: ● Scale of stablecoin issuance, circulation and institutional adoption. A core portion of our revenue is derived from stablecoin reserve yield, minting/redemption fees and cross-border payment transaction fees. Our top-line performance is directly determined by the circulating scale of our AXUSD and AXBHD stablecoins, institutional adoption volume, and the overall market outlook for regulated stablecoin applications in cross-border settlement and treasury management. ● Transaction volume across our digital asset and payment platforms. Our fee-based revenue is highly correlated with business activity volume generated by our core platforms. Total payment volume processed by the AX ONE payment infrastructure, RWA tokenization project scale and trading volume executed on the FERION platform, and stablecoin and fiat trading volume across our ecosystem directly drive transaction fee and tokenization service income. ● Enterprise client demand and usage intensity for AI infrastructure services. AI model invocation fees, platform subscription fees and enterprise solution integration fees represent our fast-growing revenue streams. Our revenue growth relies entirely on continuous enterprise client demand, sustained usage of the AI routing and agent governance systems, and scaled deployment of our AI infrastructure solutions. ● Institutional client concentration and key client retention. Following our strategic transformation, our revenue is heavily concentrated among a limited number of institutional enterprise and financial clients, rather than retail users. Sustained cooperation, repeat orders and expanding service consumption by major institutional clients are critical to our revenue stability. The loss or reduced spending of key clients will directly lower our consolidated revenue. ● Global interest rate levels affecting stablecoin reserve yields. Interest income generated from stablecoin reserve assets is a key recurring revenue component. Fluctuations in global market interest rates directly impact the yield level of our high-quality reserve portfolios, resulting in direct variability in our interest revenue. ● Market competition and industry pricing pressure. We face ongoing competition from global stablecoin issuers, traditional financial institutions and alternative AI infrastructure providers. Competitive dynamics may drive pricing compression for tokenization fees, payment processing charges and AI service fees, restricting our revenue margin and growth potential. ● Regulatory restrictions on revenue-generating business scope. Regulatory changes in Bahrain, Hong Kong and other jurisdictions may limit permissible stablecoin activities, virtual asset service scope, RWA tokenization models and AI financial service scenarios. Any regulatory restrictions on our revenue-bearing businesses will directly constrain our income generation capacity. ● Traditional capital market activity and client asset scale. Our securities brokerage, asset management and wealth management revenue is affected by Hong Kong market activity, IPO and fundraising volume, client trading frequency and total assets under administration. Market fluctuations directly impact trading commissions, management fees and corporate finance income. -90- Taxation Cayman Islands Solowin is incorporated in the Cayman Islands. The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is currently no estate duty, inheritance tax or gift tax. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the Cayman Islands. The Cayman Islands is a party to a double tax treaty entered into with the United Kingdom in 2010 but otherwise is not party to any double tax treaties applicable to any payments made to or by the Company. There are no exchange control regulations or currency restrictions in the Cayman Islands. Payments of dividends and capital in respect of the Ordinary Shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of the Ordinary Shares, nor will gains derived from the disposal of the Ordinary Shares be subject to Cayman Islands income or corporation tax. Hong Kong Our subsidiaries incorporated in Hong Kong each are subject to Hong Kong profit tax at a rate of (1) 8.25% on the assessable profits up to HK$2,000,000; and (2) 16.5% on any part of assessable profits over HK$2,000,000. No Hong Kong profit tax has been levied as we did not have assessable profit that was earned in or derived from our Hong Kong subsidiaries for the fiscal year ended March 31, 2023. Income tax expense of nil and $19,000 was recorded for the fiscal year ended March 31, 2026 and 2025. Hong Kong does not impose a withholding tax on dividends. Our Reportable Segments ASC Topic 280, Segment Reporting, establishes standards for reporting information about operating segments on a basis consistent with the Company's internal organizational structure as well as information about geographical areas, business segments and major customers in consolidated financial statements for details on the Company's business segments. 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 ("CODM") for making operating decisions and assessing performance as the source for determining the Company's reportable segments. The Company's CODM are the Executive Directors and Chief Executive Officer, who review the operation results by customer base of each separate operating segment when making decisions about allocating resources and assessing the performance of the segment. With the recent developments in the Company's business, the Company has reorganized its business segments which now consist of two reportable segments: (i) Digital Asset Tokens, and (ii) AI Tokens ("Segment Reorganization"). As part of the Segment Reorganization, the Company has: ● combined the former "Investment advisory fees" and "Corporate consultancy service income" as "Consultancy service fee". ● combined the former "Securities and virtual assets brokerage commissions and handling income" and "Referral income" as "Transaction service fee". ● renamed the former "Asset management income - related parties" as "Asset management service fee". ● combined "Interest income", "Tokenization service fee", "Transaction service fee", "Asset management service fee", and "Consultancy service fee" as a new segment "Digital Asset Tokens". ● introduced a new segment, "AI Tokens" containing "AI infrastructure service fee". -91- Results of Operations Comparison of Years Ended March 31, 2026, 2025 and 2024 Year Ended March 31 Increase (Decrease) For Year Ended March 31 2026 2025 2024 2026 and 2025 2025 and 2024 $'000 $'000 $'000 $'000 % $'000 % Revenues Digital Asset Tokens (i) Interest income - 30 128 (30 ) (100 )% (98 ) (77 )% (ii) Tokenization service fee 2,722 - - 2,722 100 % - - (iii) Transaction service fee 852 110 312 742 675 % (202 ) (65 )% (iv) Asset management service fee 593 655 871 (62 ) (9 )% (216 ) (25 )% (v) Consultancy service fee 1,677 2,024 2,980 (347 ) (17 )% (956 ) (32 )% 5,844 2,819 4,291 3,025 107 % (1,472 ) (34 )% AI Tokens (i) AI infrastructure service fee 22,204 - - 22,204 100 % - - 22,204 - - 22,204 100 % - - Total revenues 28,048 2,819 4,291 25,229 895 % (1,472 ) (34 )% Expenses Marketing and promotion expenses 863 1,006 927 (143 ) (14 )% 79 9 % Commission and handling expenses 501 474 15 27 6 % 459 3,060 % Professional fee 3,214 4,669 774 (1,455 ) (31 )% 3,895 503 % Information technology expenses 2,551 749 383 1,802 241 % 366 96 % Office expenses 1,525 888 342 637 72 % 546 160 % AI cloud service costs 21,293 - - 21,293 100 % - - Employee benefits expenses 8,964 2,290 5,043 6,674 291 % (2,753 ) (55 )% General and administrative expenses 1,688 1,377 383 311 23 % 994 260 % Allowance for (reversal of) credit losses 453 (502 ) 854 955 (190 )% (1,356 ) (159 )% Total expenses 41,052 10,951 8,721 30,101 275 % 2,230 26 % Loss from operations (13,004 ) (8,132 ) (4,430 ) (4,872 ) 60 % (3,702 ) 84 % -92- Other (expenses) income Interest income 7 46 29 (39 ) (85 )% 17 59 % Other (expenses) income (321 ) 16 3 (337 ) (2,106 )% 13 433 % Interest expenses - (5 ) - 5 (100 )% (5 ) 100 % Share of results of an associate 30 (54 ) (3 ) 84 (156 )% (51 ) 1,700 % Loss on disposal of an associate - (100 ) - 100 (100 )% (100 ) 100 % Impairment loss of long-term investments, net - (290 ) - 290 (100 )% (290 ) 100 % Total other (expenses) income, net (284 ) (387 ) 29 103 (27 )% (416 ) (1,434 )% Loss before income tax expense (13,288 ) (8,519 ) (4,401 ) (4,769 ) 56 % (4,118 ) 94 % Income tax expense - 19 155 (19 ) (100 )% (136 ) (88 )% Net loss (13,288 ) (8,538 ) (4,556 ) (4,750 ) 56 % (3,982 ) 87 % Net loss attributable to Owners of the Company (13,174 ) (8,538 ) (4,556 ) (4,636 ) 54 % (3,982 ) 87 % Non-controlling interests (114 ) - - (114 ) 100 % - - (13,288 ) (8,538 ) (4,556 ) (4,750 ) 56 % (3,982 ) 87 % Other comprehensive (loss) income Foreign currency translation adjustment (11 ) 33 16 (44 ) (133 )% 17 106 % Total comprehensive loss (13,299 ) (8,505 ) (4,540 ) (4,794 ) 56 % (3,965 ) 87 % Attributable to Owners of the Company (13,185 ) (8,505 ) (4,540 ) (4,680 ) 55 % (3,965 ) 87 % Non-controlling interests (114 ) - - (114 ) 100 % - - (13,299 ) (8,505 ) (4,540 ) (4,794 ) 56 % (3,965 ) 87 % Basic and diluted net loss per share (0.11 ) (0.53 ) (0.33 ) 0.42 (79 )% (0.20 ) 61 % Weighted average number of shares outstanding - basic and diluted 124,898,113 16,127,380 13,724,658 108,770,733 674 % 2,402,722 18 % -93- Year ended March 31, 2026 Digital Asset Tokens segment AI Tokens segment Corporate Total $'000 $'000 $'000 $'000 Revenues- excluding related party income 5,251 22,204 - 27,455 Revenues- related party income 593 - - 593 Total revenues 5,844 22,204 - 28,048 Marketing and promotion expenses (23 ) (41 ) (799 ) (863 ) Commission and handling expenses (417 ) - (84 ) (501 ) Allowance for credit losses (100 ) (353 ) - (453 ) Employee benefits expenses (3,731 ) (1,881 ) (3,352 ) (8,964 ) AI cloud service costs - (21,293 ) - (21,293 ) General and administrative expenses (1,386 ) (3,813 ) (3,779 ) (8,978 ) Total expenses (5,657 ) (27,381 ) (8,014 ) (41,052 ) Interest income 6 - 1 7 Other income (expenses) 23 35 (379 ) (321 ) Share of results of an associate - - 30 30 Total other income (expenses), net 29 35 (348 ) (284 ) Income (loss) before income tax expense 216 (5,142 ) (8,362 ) (13,288 ) Total assets 9,874 20,606 20,226 50,706 Total liabilities (5,924 ) (11,259 ) (8,412 ) (25,595 ) Net assets 3,950 9,347 11,814 25,111 -94- Year ended March 31, 2025 Digital Asset Tokens segment AI Tokens segment Corporate Total $'000 $'000 $'000 $'000 Revenues- excluding related party income 2,164 - - 2,164 Revenues- related party income 655 - - 655 Total revenues 2,819 - - 2,819 Marketing and promotion expenses - - (1,006 ) (1,006 ) Commission and handling expenses (474 ) - - (474 ) Reversal of credit losses 92 - 410 502 Employee benefits expenses - - (2,290 ) (2,290 ) General and administrative expenses (1,134 ) - (6,549 ) (7,683 ) Total expenses (1,516 ) - (9,435 ) (10,951 ) Interest income - - 41 41 Other expenses - - (374 ) (374 ) Share of results of an associate - - (54 ) (54 ) Total other expenses, net - - (387 ) (387 ) Income (loss) before income tax expense 1,303 - (9,822 ) (8,519 ) Total assets 348 - 11,960 12,308 Total liabilities (5,124 ) - (2,453 ) (7,577 ) Net assets (liabilities) (4,776 ) - 9,507 4,731 -95- Year ended March 31, 2024 Digital Asset Token segment AI Tokens segment Corporate Total $'000 $'000 $'000 $'000 Revenues- excluding related party income 3,420 - - 3,420 Revenues- related party income 871 - - 871 Total revenues 4,291 - - 4,291 Marketing and promotion expenses - - (927 ) (927 ) Commission and handling expenses (15 ) - - (15 ) Allowance for credit losses (444 ) - (410 ) (854 ) Employee benefits expenses - - (5,043 ) (5,043 ) General and administrative expenses (335 ) - (1,547 ) (1,882 ) Total expenses (794 ) - (7,927 ) (8,721 ) Interest income - - 29 29 Other income - - 3 3 Share of results of an associate - - (3 ) (3 ) Total other income, net - - 29 29 Income (loss) before income tax expense 3,497 - (7,898 ) (4,401 ) Total assets 8,716 - 6,685 15,401 Total liabilities (5,136 ) - (1,341 ) (6,477 ) Net assets 3,580 - 5,344 8,924 Comparison of the years ended March 31, 2026 and 2025 Revenue. We have generated revenue through interest income, tokenization service fee, transaction service fee, asset management service fee, consultancy service fee, and AI infrastructure service fee. Our total revenue was $28,048,000 for the fiscal year ended March 31, 2026, compared to $2,819,000 for the year ended March 31, 2025, an increase of $25,229,000, or 895%. The increase in revenue was mainly driven by the increase in revenue from AI infrastructure services. -96- The following table sets forth the breakdown of our revenue for the periods presented: For the years ended March 31, 2026 2025 (in thousands) % of revenue (in thousands) % of revenue Interest income - - 30 1 % Tokenization service fee 2,722 10 % - - Transaction service fee 852 3 % 110 4 % Asset management service fee 593 2 % 655 23 % Consultancy service fee 1,677 6 % 2,024 72 % AI infrastructure service fee 22,204 79 % - - Total 28,048 100 % 2,819 100 % ● For the fiscal years ended March 31, 2026 and 2025, we had interest income of nil and $30,000, respectively. The decrease was primarily due to a reduction in outstanding from the rolling balance cash clients in relation to the securities brokerage services, attributable to increased client repayments during the period. Interest income accounted for nil of total revenue for the year ended March 31, 2026, compared to 1% for the year ended March 31, 2025. ● For the fiscal years ended March 31, 2026 and 2025, we had tokenization service fee of $2,722,000 and nil, respectively. The increase was due to the introduction of such services during the year after the acquisition of AlloyX Limited and its subsidiaries. Tokenization service fee accounted for 10% of total revenue for the year ended March 31, 2026, compared to nil for the year ended March 31, 2025. ● For transaction service fee, revenue from securities brokerage commissions and handling income decreased by $53,000, or 48%, to $57,000 for the fiscal year ended March 31, 2026 from $110,000 for the fiscal year ended March 31, 2025. The slight decrease in commissions earned is due to lower frequency of trading activities in the U.S. market. We started to provide such services in January 2017. Virtual assets transaction income increased by $290,000, or 1,933%, to $305,000 for the fiscal year ended March 31, 2026 from $15,000 for the fiscal year ended March 31, 2025. The increase is primarily attributable to the launch and growing adoption of the Company's virtual assets services, including trading of digital assets through Solomon VA+, and subscription and redemption services for the Bitcoin spot ETF and Ethereum spot ETF. We did not have referral income for the fiscal year ended March 31, 2025, compared to $490,000 referral income for the fiscal year ended March 31, 2026. The referral income was generated by referring investors to our corporate customers or brokers or insurance companies. We acted as an agent and earned referral income in a percentage of subscription amount stipulated in the agreement. No such referral activities occurred for the fiscal year ended March 31, 2025. Transaction service fee accounted for 3% of our total revenue for the fiscal year ended March 31, 2026, as compared to 4% for the fiscal year ended March 31, 2025. We began to provide such services in October 2021. ● Revenue from asset management income decreased by $62,000, or 9% to $593,000 for the fiscal year ended March 31, 2026 from $655,000 for the fiscal year ended March 31, 2025. The decrease was primarily due to decrease of performance fees derived from Solomon Capital Fund SPC - Solomon Capital SP2, resulting from reduced investor subscriptions and weaker fund performance for the fiscal year ended March 31, 2026. All revenues from asset management during these periods were derived from management fee, performance fees and fund subscription of investment fund products. Asset management services accounted for 2% of our total revenue for the fiscal year ended March 31, 2026, as compared to 23% for the fiscal year ended March 31, 2025. We began to provide such services in April 2021. ● For consultancy service fee, revenue from corporate consultancy service income decreased by $2,000, or 0.2% to $997,000 for the fiscal year ended March 31, 2026 from $999,000 for the fiscal year ended March 31, 2025. The increase was primarily driven by the acquisition of new clients and growing interest from corporate clients seeking to list in the U.S. market. We began to provide such services in December 2021. Revenue from investment advisory fees decreased by $345,000, or 34% to $680,000 for the fiscal year ended March 31, 2026 from $1,025,000 for the fiscal year ended March 31, 2025. The decrease was primarily due to a reduced client base and decrease in value-added services to institutional clients. Consultancy service fee accounted for 6% of our total revenue for the fiscal year ended March 31, 2026, as compared to 72% for the fiscal year ended March 31, 2025. We began to provide such services in October 2021. ● For the fiscal years ended March 31, 2026 and 2025, we had AI infrastructure service fee of $22,204,000 and nil, respectively. The increase was due to the introduction of such services during the year after the acquisition of AlloyX Limited and its subsidiaries. AI infrastructure service fee accounted for 79% of total revenue for the year ended March 31, 2026, compared to nil for the year ended March 31, 2025. -97- Expenses. Our expenses include commission and handling expenses, general and administrative expenses, marketing and promotion expenses, (reversal of) allowance for credit losses and employee benefits expenses. Our expenses increased by $30,101,000, or 275%, to $41,052,000 for the fiscal year ended March 31, 2026 from $10,951,000 for the fiscal year ended March 31, 2025. Such increase was mainly due to increase in AI cloud service costs and employee benefits expenses for the fiscal year ended March 31, 2026. ● Marketing and promotion expenses - Our marketing and promotion expenses consist primarily of advertising and other promotional activities. Our marketing and promotion expenses decreased by $143,000, or 14%, to $863,000 for the fiscal year ended March 31, 2026, from $1,006,000 for the fiscal year ended March 31, 2025. This decrease was mainly due to the decrease in holding marketing activities. ● Commission and handling expenses - Our commission and handling expenses are mainly derived from our securities related services and consultancy services, which increased by $27,000, or 6% to $501,000 for the fiscal year ended March 31, 2026 from $474,000 for the fiscal year ended March 31, 2025. The increase was mainly due to increase in brokerage fees paid to other financial institutions for trading activities in oversea markets, reflecting higher trading activities in US market. ● Employee Benefits Expenses - Our employee benefits expenses increased by $6,674,000, or 291%, to $8,964,000 for the fiscal year ended March 31, 2026, from $2,290,000 for the fiscal year ended March 31, 2025. This increase was mainly due to the 750,000 ordinary shares were issued to an employee as share rewards for the fiscal year ended March 31, 2026 and no such award was issued to the employees for the fiscal year ended March 31, 2025. The acquisition of AlloyX Limited and its subsidiaries also increased the total headcount of the Company and therefore increased the overall payroll expenses. ● General and administrative expenses - Our general and administrative expenses consist primarily of depreciation of property and equipment, amortization of intangible assets, professional fee, information technology expenses, office leases, insurance, public investor expenses and general office expenses. Our general and administrative expenses increased by $1,295,000, or 17% to $8,978,000 for the fiscal year ended March 31, 2026 from $7,683,000 for the fiscal year ended March 31, 2025. As a percentage of revenue, general and administrative expenses decreased to 32% for the fiscal year ended March 31, 2026 from 273% for the fiscal year ended March 31, 2025. ● (Reversal of) Allowance for Credit Losses - We recorded provision for expected credit losses of $453,000 for the fiscal year ended March 31, 2026, compared to the reversal of provision for expected credit losses of $502,000 for the fiscal year ended March 31, 2025. This is mainly due to the increase in overall receivables from customers which was in line with increase in revenue. Loss from Operations. Loss from operations increased to $13,004,000 for the fiscal year ended March 31, 2026, from $8,132,000 for the fiscal year ended March 31, 2025, an increase of $4,872,000 or 60%. Other (Expenses) Income, net. Other expenses, net decreased to $284,000 for the fiscal year ended March 31, 2026, compared to net of $387,000 for the fiscal year ended March 31, 2025. Other income mainly consisted of interest income from bank deposits and loan receivables. Other expenses mainly consisted of interest expenses from short-term borrowings, share of results of an associate, loss on disposal of an associate and impairment loss of long-term investments. ● Share of results of an associate - We recorded a share of profit of $30,000 for the fiscal year ended March 31, 2026, compared to a loss of $54,000 in the prior year. ● Loss on disposal of an associate - Nil loss on disposal of an associate was recognized in the fiscal year ended March 31, 2026. For the fiscal year ended March 31, 2025, we recorded a loss of $100,000 on the disposal of an associate in connection with the sale of its equity interest back to the associate. ● Impairment loss of long-term investments - No impairment losses were recorded during the fiscal year ended March 31, 2026. For the fiscal year ended March 31, 2025, we recorded an impairment loss of $290,000 on one of our long-term investments which does not have a readily determinable fair value. -98- Income tax expense. Income tax expense of nil and $19,000 was recorded for the fiscal year ended March 31, 2026 and 2025. See also "- Taxation " above. Net Loss . Net loss increased to $13,288,000 for the fiscal year ended March 31, 2026, from $8,538,000 for the fiscal year ended March 31, 2025, an increase of $4,750,000 or 56%. Basic and Diluted Net Loss per Share. Basic and diluted net loss per share decreased to $0.11 for the fiscal year ended March 31, 2026, from $0.53 for the fiscal year ended March 31, 2025. Comparison of the years ended March 31, 2025 and 2024 During the year s ended March 31, 2025 and 2024, there was no revenue generated from the AI Tokens segment. All revenue was attributable to the Digital Assets Tokens segment. Revenue. During the years ended March 31, 2025 and 2024, we have generated revenue through interest income, transaction service fee, asset management service fee and consultancy service fee. Our total revenue was $2,819,000 for the fiscal year ended March 31, 2025, compared to $4,291,000 for the year ended March 31, 2024, a decrease of $1,472,000, or 34%. The decrease in revenue was mainly driven by the decrease of revenue from consultancy services. The following table sets forth the breakdown of our revenue for the periods presented: For the years ended March 31, 2025 2024 (in thousands) % of revenue (in thousands) % of revenue Interest income 30 1 % 128 3 % Transaction service fee 110 4 % 312 7 % Asset management service fee 655 23 % 871 20 % Consultancy service fee 2,024 72 % 2,980 70 % Total 2,819 100 % 4,291 100 % For the fiscal years ended March 31, 2025 and 2024, we had interest income of $30,000 and $128,000, respectively. The decrease was primarily due to decrease in outstanding from the rolling balance cash clients in relation to the securities brokerage services. Interest income accounted for 1% of total revenue for the year ended March 31, 2025, compared to 3% for the year ended March 31, 2024. Decrease in transaction service fee was due to the overall decrease in revenue from securities brokerage commissions and handling income, virtual asset service income, as well as referral income. Revenue from securities brokerage commissions and handling income increased by $44,000, or 86%, to $95,000 for the fiscal year ended March 31, 2025 from $51,000 for the fiscal year ended March 31, 2024. The slight increase in commissions earned is due to a higher volume of trading activity in the U.S. market. We started to provide such services in January 2017. Virtual assets transaction income of $15,000 was first recognized for the fiscal year ended March 31, 2025. The increase is primarily attributable to the launch and growing adoption of the Company's virtual assets services, including trading of digital assets through Solomon VA+, and subscription and redemption services for the Bitcoin spot ETF and Ethereum spot ETF. We did not have referral income for the fiscal year ended March 31, 2025, compared to $261,000 referral income for the fiscal year ended March 31, 2024. The referral income was generated by referring investors to our corporate customers or brokers for IPO subscriptions in oversea markets. We acted as an agent and earned referral income in a percentage of subscription amount stipulated in the agreement. Revenue from asset management income decreased by $216,000, or 25% to $655,000 for the fiscal year ended March 31, 2025 from $871,000 for the fiscal year ended March 31, 2024. The decrease was primarily due to decrease of performance fees derived from Solomon Capital Fund SPC - Solomon Capital SP2, resulting from reduced investor subscriptions and weaker fund performance for the fiscal year ended March 31, 2025. All revenues from asset management during these periods were derived from management fee, performance fees and fund subscription of investment fund products. Asset management services accounted for 23% of our total revenue for the fiscal year ended March 31, 2025, as compared to 20% for the fiscal year ended March 31, 2024. We began to provide such services in April 2021. -99- The decrease in revenue from consultancy service income was due to the overall decrease from investment advisory services and corporate consultancy service income. Revenue from investment advisory fees decreased by $1,835,000, or 64% to $1,025,000 for the fiscal year ended March 31, 2025 from $2,860,000 for the fiscal year ended March 31, 2024. The decrease was primarily due to a reduced client base and decrease in value-added services to institutional clients. Investment advisory services accounted for 36% of our total revenue for the fiscal year ended March 31, 2025, as compared to 67% for the fiscal year ended March 31, 2024. We began to provide such services in October 2021. Revenue from corporate consultancy service income increased by $879,000, or 733% to $999,000 for the fiscal year ended March 31, 2025 from $120,000 for the fiscal year ended March 31, 2024. The increase was primarily driven by the acquisition of new clients and growing interest from corporate clients seeking to list in the U.S. market. Corporate consultancy service income accounted for 36% of our total revenue for the fiscal year ended March 31, 2025, as compared to 3% for the fiscal year ended March 31, 2024. We began to provide such services in December 2021. Expenses. Our expenses include commission and handling expenses, general and administrative expenses, marketing and promotion expenses, (reversal of) provision for expected credit losses and employee benefits expenses. Our expenses increased by $2,230,000, or 26%, to $10,951,000 for the fiscal year ended March 31, 2025 from $8,721,000 for the fiscal year ended March 31, 2024. Such increase was mainly due to increase in general and administrative expenses, marketing and promotion expenses and professional fee for the fiscal year ended March 31, 2025. ● Marketing and promotion expenses - Our marketing and promotion expenses consist primarily of advertising and other promotional activities. Our marketing and promotion expenses increased by $79,000, or 9%, to $1,006,000 for the fiscal year ended March 31, 2025, from $927,000 for the fiscal year ended March 31, 2024. This increase includes expenses related to the Hong Kong FinTech Week 2024 and other significant marketing events which were aimed to enhance brand visibility, and promote our services to attract more investors and potential clients. ● Commission and handling expenses - Our commission and handling expenses are derived from our securities related services and corporate consultancy services, which increased by $459,000, or 3,060% to $474,000 for the fiscal year ended March 31, 2025 from $15,000 for the fiscal year ended March 31, 2024. The increase was mainly due to (i) increase in brokerage fees paid to other financial institutions for trading activities in oversea markets, which amounted to $23,000 for the fiscal year ended March 31, 2025, compared to $15,000 in the prior year, reflecting higher trading activities in US market and was in line with our increase in securities brokerage commissions and handling income. As a percentage of revenue from securities brokerage, brokerage commission and handling expenses increased to 24% for the fiscal year ended March 31, 2025 from 29% for the fiscal year ended March 31, 2024; (ii) $451,000 in referral fees paid to third-party for successfully introducing new corporate clients for corporate consultancy or financial advisory services. These referral fee represented approximate 45% of the total corporate consultancy service income for the fiscal year ended March 31, 2025 and no such referral expenses were recorded during the same period in 2024. The referral activities contributed to the substantial growth in corporate consultancy service income. ● Employee Benefits Expenses - Our employee benefits expenses decreased substantially by $2,753,000, or 55%, to $2,290,000 for the fiscal year ended March 31, 2025, from $5,043,000 for the fiscal year ended March 31, 2024. This decrease was mainly due to the implementation of the 2023 Equity Incentive Plan under which 1,500,000 ordinary shares were issued to employees as share rewards for the fiscal year ended March 31, 2024 and no such award was issued to the employees for the fiscal year ended March 31, 2025. ● General and administrative expenses - Our general and administrative expenses consist primarily of depreciation of property and equipment, amortization of intangible assets, professional fee, information technology expenses, office leases, insurance, public investor expenses and general office expenses. Our general and administrative expenses increased by $5,801,000, or 308% to $7,683,000 for the fiscal year ended March 31, 2025 from $1,882,000 for the fiscal year ended March 31, 2024. As a percentage of revenue, general and administrative expenses increased to 273% for the fiscal year ended March 31, 2025 from 44% for the fiscal year ended March 31, 2024. ● (Reversal of) Provision for Expected Credit Losses - We recorded reversal of provision for expected credit losses of $502,000 for the fiscal year ended March 31, 2025, compared to the provision for expected credit losses of $854,000. This is mainly due to the loan receivables which were previously subject to an allowance for expected credit losses but were fully repaid in July 2024. The reversal also reflects the improved recoverability of the receivables in accordance with our credit loss policy. -100- Loss from Operations. Loss from operations increased to $8,132,000 for the fiscal year ended March 31, 2025, from $4,430,000 for the fiscal year ended March 31, 2024, an increase of $3,702,000 or 84%. Other (Expenses) Income, net. Other expenses, net increased to $387,000 for the fiscal year ended March 31, 2025, compared to other income, net of $29,000 for the fiscal year ended March 31, 2024. Other income mainly consisted of interest income from bank deposits and loan receivables. Other expenses consisted of interest expenses from short-term borrowings, share of results of an associate, loss on disposal of an associate and impairment loss of long-term investments. ● Share of results of an associate - We recorded a share of loss of $54,000 for the fiscal year ended March 31, 2025, compared to a loss of $3,000 in the prior year ● Loss on disposal of an associate - For the fiscal year ended March 31, 2025, we recorded a loss of $100,000 on the disposal of an associate in connection with the sale of its equity interest back to the associate. ● Impairment loss of long-term investments - For the fiscal year ended March 31, 2025, we recorded an impairment loss of $290,000 on one of our long-term investments which does not have a readily determinable fair value. No impairment losses were recorded during the same period in 2024. Income tax expense. Income tax expense of $19,000 and $155,000 was recorded for the fiscal year ended March 31, 2025 and 2024. See also "- Taxation " above. Net Loss . Net loss increased to $8,538,000 for the fiscal year ended March 31, 2025, from $4,556,000 for the fiscal year ended March 31, 2024, an increase of $3,982,000 or 87%. Basic and Diluted Net Loss per Share. Basic and diluted net loss per share increased to $0.53 for the fiscal year ended March 31, 2025, from $0.33 for the fiscal year ended March 31, 2024. B. Liquidity and Capital Resources As of March 31, 2026, cash and cash equivalents increased to $16.8 million, from $3.84 million as of March 31, 2025. To date, we have financed our operations primarily through a combination of net cash flows generated from operations, and equity and debt financings provided by investors and the Company's major shareholders. We believe that our current levels of cash and cash flows from operations will be sufficient to meet our anticipated cash needs for our operations and expansion plans for at least the next 12 months. We may, however, in the future require additional cash resources due to changing business conditions, implementation of our strategy to expand our business, or other investments or acquisitions we may decide to pursue. If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities could result in dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects. Cash Flows for the Years Ended March 31, 2026, 2025 and 2024 The following table sets forth a summary of our cash flows for the periods presented: Years Ended March 31, 2026 2025 2024 $'000 $'000 $'000 Net cash used in operating activities (15,335 ) (1,057 ) (5,607 ) Net cash provided by (used in) investing activities 4,452 287 (1,376 ) Net cash provided by financing activities 21,074 2,376 6,720 Net change in cash and cash equivalents and cash segregated for regulatory purpose 10,191 1,606 (263 ) Cash and cash equivalents and cash segregated for regulatory purpose at beginning of the year 8,857 7,251 7,514 Cash and cash equivalents and cash segregated for regulatory purpose at end of the year 19,048 8,857 7,251 -101- Operating Activities Net cash used in operating activities was $15,335,000, $1,057,000 and $5,607,000 for the fiscal years ended March 31, 2026, 2025 and 2024, respectively. For the fiscal year ended March 31, 2026, the net loss of $13,288,000 and decrease in payables to customers of $2,185,000, were the primary drivers of the cash used in operating activities. For the fiscal year ended March 31, 2025, the operating loss before working capital changes of $5,211,000, offset by the decrease of $2,770,000 in receivables from customers and the decrease of $999,000 in prepaid expenses and other current assets, were the primary drivers of the cash used in operating activities. For the fiscal year ended March 31, 2024, the net loss of $4,556,000, the increase of $2,038,000 in receivables from customers and increase of $1,656,000 in prepaid expenses and other current assets, were the primary drivers of the cash used in operating activities. Investing Activities Net cash provided by investing activities was $4,452,000 for the fiscal year ended March 31, 2026, consisted of net cash and cash equivalents obtained from acquisition of subsidiaries of $5,304,000. Net cash provided by investing activities was $287,000 for the fiscal year ended March 31, 2025, mainly consisted of repayment of loan to a third party in the amount of $1,010,000, offset by the purchase of long-term investments in the amount of $658,000. Net cash used in investing activities was $1,376,000 for the fiscal year ended March 31, 2024, mainly consisted of loan to third party in the amount of $958,000 and acquisition of an associate in the amount of $257,000. Financing Activities Net cash provided by financing activities was $21,074,000 for the fiscal year ended March 31, 2026, mainly consisted of proceeds from capital injection from investors of $16,878,000 and proceeds from issuance of convertible notes of $5,000,000. Net cash provided by financing activities was $2,376,000 for the fiscal year ended March 31, 2025, representing proceeds from shareholders' contribution in the amount of $1,000,000, advance from directors in the amount of $942,000 and proceeds from other borrowings in the amount of $420,000. Net cash provided by financing activities was $6,720,000 for the fiscal year ended March 31, 2024, mainly consisted of consisted of net proceeds from IPO after deducting any payment for IPO costs, in the amount of $6,656,000. Capital Expenditures We did not incur any capital expenditure for the fiscal years ended March 31, 2026, 2025, and 2024. We plan to make capital expenditures in the future to meet the needs that may result from the expected growth of our business. Holding Company Structure Solowin is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiaries. As a result, Solowin's ability to pay dividends depends upon dividends paid by its subsidiaries. If its existing subsidiaries or any newly formed subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to Solowin. -102- C. Research and Development Research and development is fundamental to advancing our dual-pillar strategy and maintaining technological leadership. In the Digital Asset Tokens pillar, our engineering teams focus on enhancing the AX ONE platform's custody architecture, smart routing capabilities, and enterprise API connectivity. We also continue to expand FERION's multi-asset tokenization functionality and integrate AI-driven tools for post-issuance compliance monitoring. In the AI Tokens pillar, R&D is centered on the KOVAR platform. We are actively developing the Know-your-Agent governance layer to strengthen identity verification, permission controls, and behavioral auditing for AI agents. At the same time, we are improving KovaRouter's intelligent routing algorithms to optimize performance across cost, speed, and quality. A key cross-pillar initiative is the continued development of AgenPay, which enables secure and compliant agentic payments using regulated stablecoins. We maintain an agile, cost-efficient engineering culture that supports rapid iteration and enterprise-grade deployment. Currently, our research and development team is comprised of five internal R&D product officers and outsource technical development resources, focusing on the technical development, functional optimization and ongoing maintenance of the Company's core technology platforms. Historically, our R&D efforts were mainly dedicated to upgrading and maintaining the Solomon VA+ trading platform. Following the acquisition of AlloyX Group and the Company's strategic transformation in fiscal 2026, our R&D focus has shifted to the development and enhancement of our digital asset infrastructure platforms, namely the FERION RWA tokenization platform and the AX ONE digital currency treasury and payment orchestration platform. As the Solomon VA+ trading system has become fully mature and stable, no incremental R&D investment was made for this platform during the fiscal year ended March 31, 2026. Our R&D team maintains solid technical capabilities in financial system architecture, blockchain infrastructure and institutional fintech product iteration. It undertakes full-cycle technical development, API integration, system testing and operational optimization for FERION and AX ONE, supporting the continuous upgrade of our RWA tokenization, digital payment, custody and treasury management businesses. R&D investment supports our technological iteration and business scalability, sustaining our product competitiveness in digital asset and fintech infrastructure. For the fiscal years ended March 31, 2026, 2025 and 2024, our R&D expenditures were approximately $0.54 million, $0.46 million and $0.4 million, representing 34%, 6% and 21% of our general and administrative expenses, respectively. The fluctuations in R&D spending primarily reflect changes in our strategic technical roadmap. We incurred substantial one-time setup and development costs for our emerging digital asset platforms in fiscal 2025. In fiscal 2026, after completing the core framework development of FERION and AX ONE and ceasing further development spending on the mature trading platform, our overall R&D expenses decreased, with resources reallocated to refining and expanding our digital infrastructure product functions. -103- D. Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trend, uncertainty, demand, commitment or event that is reasonably likely to have a material effect on our net revenues and income from continuing operations, profitability, liquidity, capital resources, or would cause reported financial information not necessarily to be indicative of future operation results or financial condition. E. Critical Accounting Policies and Estimates We prepare our consolidated financial statements in conformity with accounting principles generally accepted by the U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect our reported amount of assets, liabilities, revenue, costs and expenses, and any related disclosures. Although there were no material changes made to the accounting estimates and assumptions in the past three years, we continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. We believe that the following accounting policies involve a higher degree of judgment and complexity in their application and require us to make significant accounting estimates. Accordingly, these are the policies we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations. Receivables from customers, broker-dealers and clearing organizations Receivables from customers arise from (i) the business of dealing in investment securities and virtual assets for customers; (ii) investment advisory business; (iii) corporate consultancy business; (iv) asset management business; and (v) AI infrastructure services Receivables from broker-dealers and clearing organizations arise from the business of investment securities. Broker-dealers will require balances to be placed with them in order to cover the positions taken by its customers. Clearing house receivables typically represent proceeds receivable on trades that have yet to settle and are usually collected within two days. The balance of receivables from customers related to the Company's customer in (i) trading activities; (ii) rendering the investment advisory services; (iii) rendering the corporate consultancy services; and (iv) rendering the asset management services. In evaluating the collectability of receivables balances, the Company considers specific evidence including the aging of the receivable, the customers' payment history, its current creditworthiness, its underlying equity securities secured and current economic trends. The receivables from customers, broker-dealers and clearing organizations, such as Hong Kong Exchanges and Clearing Limited ("HKEx"), are normally viewed as past due or delinquent based on how recently payments have been received. The Company has contractual rights to receive cash on demand from customers, broker-dealers and clearing organizations. As of March 31, 2026 and 2025, there are receivables from customers past due over 90 days. Management is actively monitoring these receivables and continues to assess their recoverability with reference to customers' payment history, credit standing, and the status of the underlying securities held. As of March 31, 2026 and 2025, the allowance for expected credit losses on receivables from customers were approximately $929,000 and $501,000, respectively. As of March 31, 2026 and 2025, no receivables from clearing organizations and broker-dealers are past due or delinquent as the receivables are normally being settled within two days after the trade execution. As of March 31, 2026 and 2025, the Company has evaluated the probable losses on receivables from broker-dealers and clearing organizations are minimal and the allowance for expected credit losses on receivables from broker-dealers and clearing organizations were approximately $13,000 and nil, respectively. -104- The Company regularly reviews the adequacy and appropriateness of the allowance for expected credit losses. The receivables are written off after all collection efforts have ceased. The receivables from customers related to trading activities are secured in the form of underlying equity securities. The Company is entitled to dispose such collateral held on behalf of the customers for the purpose of settling any liability owed. The Company applies the practical expedient based on collateral maintenance provisions under ASC 326, Financial Instruments - Credit Losses, in estimating an allowance for credit losses for receivables from customers. In accordance with the practical expedient, when the Company reasonably expects that borrowers (or counterparties, as applicable) will replenish the collateral as required, there is no expectation of credit losses when the collateral's fair value is greater than the amortized cost of the financial asset. If the amortized cost exceeds the fair value of collateral, then credit losses are estimated only on the unsecured portion. 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 core principle of the guidance requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company currently generates its revenue from the following main sources: (a) Interest income The Company earns interest income primarily from its rolling cash balance accounts or IPO financing offered by the Company to customers in relation to the securities brokerage services. Revenue is recognized over the period that the rolling cash balance account or IPO financing are outstanding. The Company offers rolling cash balance account or IPO financing to individual customers as a principal. Interest income is directly charged at fixed percentage over the financing amount from the customer's account when customers repay the balance account or principal amount of IPO financing. The transaction price is a variable consideration as the price is determined to be a fixed percentage of the transaction amount. (b) Tokenization service fee The Company provides real-world-assets ("RWA") tokenization project-based services to clients who want to engage in web3 activities and trading of tokenized products on chains. The Company acts as a principal by deploying in-house IT personnel and technical support to enable the provision of such tokenization services, together with the inputs from sales team and support team to fulfill the demand of the clients. (c) Transaction service fee (i) Wealth management services Revenue from wealth management services is primarily derived from securities brokerage commission and handling income and investment advisory income. Securities brokerage commission income generated by provision of securities brokerage services of executing trades to customers, who are individual customers or brokers, and is recognized at a point in time (trade date) when the performance obligation has been satisfied by the completion of trades and the risks and rewards of ownership have been transferred to/from the customer. The Company acts as an agent. The transaction price is a variable consideration as the price is determined by a fixed percentage of transaction amounts. Commission fees are directly charged from the customer's account when the transactions are executed. -105- Handling income generated from providing services such as settlement (clearing) of securities, new share subscription services in relation to IPOs and dividend collection, to individual customers or brokers. Securities settlement service income is recognized at a point in time when the transactions are completed. The transaction price is a variable consideration as the price is determined to be a fixed percentage of the transaction amount. New share subscription handling income is recognized at the time when the performance obligation has been satisfied by successfully submitting the IPO subscription to banks on behalf of customers. New share subscription handling income is fixed per IPO subscription order and no variable consideration in the transaction. Dividend collection handling income is recognized at the time when the performance obligation has been satisfied by receiving dividends by the Company on behalf of customers. When the Company receives the cash dividend distributed by the stocks on behalf of customers, the net dividend will be distributed and deposited into the account of the customers, after deducting the dividend collection handling fees. Dividend collection handling income is charged at a fixed percentage of dividend collected and therefore the transaction price is a variable consideration as the price is determined to be a fixed percentage of dividend amount. The Company acts as an agent and handling income is directly charged from the customer's account when the transactions are executed. (ii) Virtual assets services The Company provides virtual asset trading services by executing buy and sell orders for digital assets (e.g., Bitcoin, Ethereum) to both individual and institutional customers. The Company's performance obligation is fulfilled when it completes each trade order, transferring control of the virtual asset to or from the customer. Revenue is recognized at a point in time on the trade date, as this is when the Company has satisfied its distinct performance obligation by executing the trade. The Company acts as an agent as the risks and rewards remain with the customer. Transaction fees for trading are variable and based on a fixed percentage of the transaction amount. Fees are charged directly to the customer's account upon execution of each trade. The Company acts as a participating dealer for certain virtual asset spot ETFs, each in-kind or in-cash subscription or redemption represents a distinct performance obligation, fulfilled when the subscription or redemption process is completed. Revenue is recognized at a point in time, specifically upon the completion of each subscription or redemption transaction. The Company acts as an agent in these transactions, arranging the exchange on behalf of the client and ETF providers. Fees for subscription and redemption services are considered variable and are calculated as a fixed percentage of the transaction amount. Fees are charged directly to the customer's account upon completion of each transaction. (iii) Referral income Referral income generated by provision of referral services by acting as agent to corporate customers or brokers. The Company refers investors to corporate customers or brokers and earns referral income. The Company enters into a distinct referral agreement with corporate customers or brokers for the provision of referral services. The referral service is distinct and is identified as one performance obligation. The transaction price is a variable consideration as the consideration is determined to be a fixed percentage of subscription amount in the transaction, either IPO or fund raised in other fundraising activities. Revenue from providing referral services to customers is recognized at a point in time when the transaction and the performance is completed, which is generally at the completion of an IPO or fundraising activities. (d) Asset management services Revenue from asset management is primarily in connection with (i) services as an investment manager or an advisor from funds or investments; and (ii) fund subscription services to customers. The Company rendered management services to individual customers as a principal, which are recorded over the period of service provided. Asset management service fee is charged by the Company to funds monthly and collected directly out of custodial accounts. The Company acts as a principal to provide asset management services directly to individual customers. The services include market research, asset allocation, equity selection, regular portfolio oversight, risk reassessment and rebalancing as needed. The Company charges customers management fees at a fixed percentage of asset value under management in accordance with the agreement. The fee is due and paid within the specified terms of payment. The transaction price is a variable consideration as the price is determined to be a fixed percentage of asset value. Performance fees are accounted for when the return on assets under management, over a given period established in each fund's private memorandum, exceeds certain return benchmarks or other performance benchmarks, depending on each fund's private memorandum. Performance fees are calculated on an annual basis. Performance fees are a form of variable consideration. The Company recognizes these fees when the associated performance obligations are satisfied, the related uncertainties are resolved, the likelihood of a claw-back or reversal is improbable and the likely amount of the transaction prices can be estimated without significant chance of reversal, indicating high probability of economic benefits and cash inflow to the Company. -106- Subscription fees charged to fund subscriber for subscription of funds are recognized at a point in time when participating share is successfully subscribed. The Company acts as an agent between funds and fund subscribers to provide fund subscription services and charges a fund subscription fee at a fixed rate with reference to the size of the subscription amount to fund subscribers through funds when the subscription of funds is completed, and typically due in no more than 30 days from invoicing. The transaction price is a variable consideration as the price is determined to be a fixed percentage of the transaction amount. (e) Consultancy service fee (i) Corporate finance services Revenue from corporate finance services is generated through corporate consultancy service income and company secretarial services income. Corporate consultancy income generated by acting as advisers to customers, including but not limited to listed companies or companies planning for IPO, advising on the terms and structures of the proposed corporate transactions, or the relevant implications and compliance matters under the Hong Kong regulatory framework for listed companies; market research, strategic analysis, and other advisory services to support customers in developing new business areas or enhancing existing operations, in return for consultancy service income. The Company enters into a distinct contract with its customers for the provision of corporate consultancy services. The scope of work under consultancy services can vary from project to project. For projects involve multiple tasks which are separable or distinct as the Company's customers can benefit from each standalone task, the entire transaction prices of consultancy services are generally allocated to each separatable and identifiable service component. For projects involve a series of tasks which are interrelated and are not separable or distinct as the Company's customers cannot benefit from any standalone task, the entire transaction prices of consultancy services are generally allocated to a single performance obligation. The transaction price might be variable even when the stated price in the contract is fixed because the Company may be entitled to upfront payment only when the contract is lapsed before completion of consultancy services. Payment is typically made in installments, with an upfront payment received upon signing the contract and subsequent payments made based on the completion of specific service stages as outlined in the contract between the Company and the customer. The transaction price and payment terms are stated in the contract for each individual engagement. Corporate consultancy service income received from customers is non-refundable, and the Company is entitled to receive upfront payment upon signing the contract. Revenue from upfront payment and other installments is recognized based on the point in time either (a) when the deliverables, in the form of reports are delivered based on the specific terms of the contract; or (b) lapse of the consultancy service contract. (ii) Company secretarial services income Company secretarial services income is generated by acting as a company secretarial service provider to customers, including support for statutory compliance and corporate structuring. The Company acts as an agent and recognizes revenue on a net basis, representing only the fee earned. Revenue is recognized at the point in time when the Company's facilitation obligation is fulfilled. There were no contract asset and contract liability balances as of March 31, 2026 and 2025. (iii) Investment advisory services Investment advisory income is recognized when the relevant advice has been provided or the relevant services have been rendered. The Company enters into a distinct contract with its customers as a principal for the provision of investment advisory services. The Company provides customers with global economic information, industry analysis, investment recommendations and portfolio allocation strategies. The Company concludes that each monthly investment advisory service is both (1) distinct and (2) it meets the criteria for recognizing revenue over time. In addition, the Company concludes that the services provided each month are substantially similar and result in the transfer of substantially similar services to the customers each month. That is, the benefit consumed by the customers is substantially similar for each month, even though the exact volume of services may vary. Therefore, the Company concludes that the monthly investment advisory services satisfy the requirements of ASC 606-10-25-14(b) to be accounted for as a single performance obligation. There is no variable consideration in the transaction price. Accordingly, based on the output methods, the Company recognizes revenues from investment advisory services on a monthly basis when it satisfies its performance obligations throughout the contract terms. The Company issues invoices to customers quarterly and the contractual payment terms are typically due no more than 30 days from invoicing. -107- (f) AI Infrastructure service fee The Company operates an integrated service model that provides enterprise customers with end-to-end cloud and digital application solutions. The Company acts as a total solution partner which spans initial assessment, solution design, cloud deployment, application implementation, and continuous post-launch support. The Company acts as a principal to work with certain suppliers such as third-party cloud service procurement, data infrastructure costs, implementation labor, technical personnel costs, and other support-related delivery expenses. to have the necessary infrastructure to enable the provision of such integrated services, together with the inputs from IT personnels and sales team to fulfill the demand of the clients. Goodwill Goodwill represents the excess of the purchase consideration over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed of the acquired entity as a result of the Company's acquisitions of interests in its subsidiaries. The Company annually, or more frequently if the Company believes indicators of impairment exist, reviews the carrying value of goodwill to determine whether impairment may exist. In performing the two-step quantitative impairment test, the first step compares the fair values of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit's goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for the purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. An impairment loss is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill. Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, assigning assets, liabilities and goodwill to reporting units, and determining the fair value of each reporting unit. Recent accounting pronouncements From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. Recently adopted accounting standards In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company adopted this update beginning April 1, 2025 and the adoption of ASU 2023-09 does not have a material impact on its consolidated financial statements and disclosures. -108- New accounting standards not yet adopted In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires incremental disclosures about specific expense categories, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization and selling expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted and the amendments may be applied either prospectively or retrospectively. Management is currently evaluating this ASU to determine its impact on the Company's disclosures. In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses- Measurement of Credit Losses for Accounts Receivable and Contract Assets (Topic 326), which added a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset when estimating expected credit losses for current accounts receivable and current contract assets. The guidance is effective for annual periods beginning after December 15, 2025. The Company is evaluating the impact of the adoption of this update on the consolidated financial statements. In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-06, amending the accounting for costs related to internal-use software. The ASU removes reference to software development project stages. Additionally, the ASU requires capitalization of software costs to begin when management has authorized and committed to funding the software and it is probable that the project will be completed and the software will be used to perform the function intended. The requirements of the new standard are effective for annual periods beginning after December 15, 2027, and interim periods within those annual periods. Early adoption is permitted and the amendments may be applied on a prospective, retrospective, or modified basis. The Company is in the process of analyzing the impact on our results of operations and financial position. " In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which provides updated guidance on how to recognize, measure, and present government grants. The ASU will be effective for annual reporting periods beginning after December 15, 2028, including interim periods within those fiscal years with early adoption permitted. The Company is assessing the effect of this update on its consolidated financial statements. Except as mentioned above, the Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company's consolidated balance sheet, statements of operations and comprehensive loss and statements of cash flows.