2.
Summary of Significant Accounting Policies
a)
Basis of presentation
The
accompanying consolidated interim financial statements and related notes have been prepared in accordance with generally accepted accounting
principles in the United Stated of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange
Commission (“SEC”), regarding interim financial reporting. In the opinion of management, all adjustments (which include
normal recurring adjustments) necessary to present a fair presentation of the Company’s financial position, its results of operations
and its cash flows, as applicable, have been made. Interim results are not necessarily indicative of results to be expected for the full
year. These unaudited Consolidated Financial Statements should be read in conjunction with the audited financial statements and the
notes thereto included in the Company Annual Report on Form 20-F for the fiscal year ended March 31, 2024.
Going
Concern
For
the six months ended September 30, 2024, the Company had net loss of $2,936,434 , a sharp decrease in revenue for the amount of $1,374,691
(92%), and recorded net cash used in operating activities of $645,726. As of September 30, 2024, the Company has working capital of $15,623,536
. Therefore, the management assesses that current working capital will be sufficient to meet its obligations for the next 12 months from
the issuance date of this report. The financial statements are prepared on going concern basis.
b)
Principles of consolidation
The
consolidated financial statements include the financial statements of the Company, its subsidiaries and the VIE. All significant inter-company
transactions and balances between the Company, its subsidiaries and the VIE have been eliminated upon consolidation.
c)
Use of estimates
In
preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date
of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the
valuation of accounts receivable, prepayments, and other receivables, useful lives of property and equipment and intangible assets, the
recoverability of long-lived assets and provision necessary for contingent liabilities. Actual results could differ from those estimates.
d)
Business combinations
Business
combinations are recorded using the acquisition method of accounting. The assets acquired, the liabilities assumed, and any non-controlling
interests of the acquiree at the acquisition date, if any, are measured at their fair values as of the acquisition date. Goodwill is
recognized and measured as the excess of the total consideration transferred plus the fair value of any non-controlling interest of the
acquiree and fair value of previously held equity interest in the acquiree, if any, at the acquisition date over the fair values of the
identifiable net assets acquired. Common forms of the consideration made in acquisitions include cash and common equity instruments.
Consideration transferred in a business acquisition is measured at the fair value as of the date of acquisition. Acquisition-related
expenses and restructuring costs are expensed as incurred.
ASC
805 establishes a measurement period to provide the Company with a reasonable amount of time to obtain the information necessary to identify
and measure various items in a business combination and cannot extend beyond one year from the acquisition date.
Where
the consideration in an acquisition includes contingent consideration the payment of which depends on the achievement of certain specified
conditions post-acquisition, the contingent consideration is recognized and measured at its fair value at the acquisition date and is
recorded as a liability, it is subsequently remeasured at fair value at each reporting date with changes in fair value reflected in earnings.
e)
Cash
Cash
include cash on hand, cash accounts, interest bearing savings accounts. The Group maintains most of the bank accounts in the PRC. Cash
balances in bank accounts in PRC are not insured by the Federal Deposit Insurance Corporation or other programs.
f)
Accounts receivable, net
Accounts
receivable consists principally of amounts due from trade customers. Credit is extended based on an evaluation of the customer’s
financial condition and collateral is not generally required.
The
Company evaluates its accounts receivable for expected credit losses on a regular basis. The Company maintains an estimated allowance
for credit losses to reduce its accounts receivable to the amount that it believes will be collected. The Company uses the length of
time a balance has been outstanding, the payment history, creditworthiness and financial conditions of the customers and industry trend
as credit quality indicators to monitor the Company’s receivables within the scope of expected credit losses model, along with
reasonable and supportable forecasts as a basis to develop the Company’s expected loss estimates. The Company adjusts the allowance
percentage periodically when there are significant differences between estimated credit losses and actual bad debts. If there is strong
evidence indicating that the accounts receivable is likely to be unrecoverable, the Company also makes specific allowance in the period
in which a loss is determined to be probable. Accounts receivable balances are written off after all collection efforts have been exhausted.
The Group considers there is no allowance for credit loss for the six months periods ended September 30, 2024 and 2023.
g)
Long-term investment
Long-term
investments represent the Group’s investment in privately held company. The Group applies the equity method of accounting to equity
investments, in common stock or in-substance common stock, over which it has significant influence but does not own a majority equity
interest or otherwise control. Under the equity method, the Group initially records its investment at cost. The difference between the
cost of the equity investment and the amount of the underlying equity in the net assets of the equity investee is recognized as equity
method goodwill or as an intangible asset as appropriate, which is included in the equity method investment on the consolidated balance
sheets. The Group subsequently adjusts the carrying amount of the investment to recognize the Group’s proportionate share of each
equity investee’s net income or loss into consolidated statements of operations and comprehensive income/(loss) after the date
of acquisition.
h)
Property and equipment, net
Property
and equipment are recorded at cost including the cost of improvements less accumulated depreciation. Maintenance and repairs are charged
to expense as incurred. Depreciation and amortization are provided on the straight-line method based on the estimated useful lives of
the assets as follows:
Schedule
of Estimated Useful Lives of Assets
| Server hardware | |
5 years |
| Vehicles | |
5 years |
Expenditures
for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures
for major renewals and betterment which substantially extend the useful life of assets are capitalized. The cost and related accumulated
depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated
statements of operations and comprehensive income in other income or expenses.
Direct
costs that are related to the construction of property and equipment and incurred in connection with bringing the assets to their intended
use are capitalized as construction in progress. Construction in progress is transferred to specific property and equipment, and the
depreciation of these assets commences when the assets are ready for their intended use.
i)
Intangible assets, net
Intangible
assets with definite lives are carried at cost less accumulated amortization. Amortization of definite-lived intangible assets is computed
using the straight-line method over the estimated average useful lives, which are as follows:
Schedule
of Estimated Average Useful Lives of Intangible Assets
| Software | |
5 years |
| Courseware | |
5 years |
| Copyrights | |
5 years |
j)
Lease
Leases
are classified at lease commencement date as either a finance lease or an operating lease. A lease is a finance lease if it meets any
of the following criteria: (a) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term. (b)
the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (c) the lease
term is for the major part of the remaining economic life of the underlying asset, (d) the present value of the sum of the lease payments
and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all
of the fair value of the underlying asset or (e) the underlying asset is of such a specialized nature that it is expected to have no
alternative use to the lessor at the end of the lease term. When none of the foregoing criteria is met, the lease shall be classified
as an operating lease.
For
a lessee, a lease is recognized as a right-of-use asset with a corresponding liability at lease commencement date. The lease liability
is calculated at the present value of the lease payments not yet paid by using the lease term and discount rate determined at lease commencement.
The right-of-use asset is calculated as the lease liability, increased by any initial direct costs and prepaid lease payments, reduced
by any lease incentives received before lease commencement. The right-of-use asset itself is amortized on a straight-line basis unless
another systematic method better reflects how the underlying asset will be used by and benefits the lessee over the lease term.
In
February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.
2016-02, Leases (Topic 842). The amendments in this ASU require an entity to recognize a right-of-use asset and lease liability for all
leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance
or operating lease. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. The Company
adopted ASC 842, effective as of the beginning of the first period presented, by using a modified retrospective transition approach in
the accompanying financial statements of the Company. The adoption of this standard had an immaterial impact on the Company’s financial
position, with no material impact on the results of operations and cash flows.
The
Company’s accounting policy is to recognize lease payments as rental expense for short-term leases less than 12 months and operating
lease over 12 months on a straight-line basis. During the six months ended September 30, 2024 and 2023, the Company’s recognized
rental expenses amounted $41,728 and $95,456 , respectively, pertaining to short-term leases.
k)
Impairment of long-lived assets
The
Group evaluates its long-lived assets with finite lives for impairment whenever events or changes in circumstances (such as a significant
adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount of an asset may
not be fully recoverable. When these events occur, the Group evaluates the impairment by comparing carrying amount of the assets to an
estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the
sum of the expected future undiscounted cash flows is less than the carrying amount of the assets, the Group recognizes an impairment
loss based on the excess of the carrying amount of the long-lived assets over their fair value.
l)
Convertible Bonds
Per
the ASU 2020-06, it simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. A debt
with an embedded conversion feature shall be accounted for in its entirety as a liability and no portion of the proceeds from the issuance
of the convertible debt instrument shall be accounted for as attributable to the conversion feature. Convertible bond will be accounted
for as a single liability measured at its amortized cost.
On
March 3, 2023, the Company issued a one-year convertible bond with the original principal amount of $1,000,000.00
and 7%
annual interest rate on a basis of a 360-day year. According to the agreement, if the closing bid price of ordinary shares of Company
as reported by Nasdaq exceeds the Conversion Price at $1.82
per share for at least five consecutive days,
all of the outstanding balances shall be automatically converted into ordinary shares (“Mandatory Conversion”). From March
27 to March 31, 2023, stock price exceeded $1.82
for five consecutive days, thus mandatory event
was triggered on March 31, 2023, and the Company recorded this conversion into additional paid in capital for the year ended March 31,
2023, due to issuance of the common shares were not completed until subsequently after March 31, 2023. On April 3, 2023, the Company
issued 549,451
ordinary shares of par value $0.0002
per share at the conversion price of US$1.82
per the conversion terms to the lender, Fun and
Cool Limited, with the total conversion amount in $1,000,000.00.
The Company then reclassified an amount of $110
from additional paid in capital into common stock
when the issuance of common shares was completed on April 3, 2023.
m)
Long-term loans
Long-term
borrowings are recognized at carrying amount. Interest expense is accrued over the estimated term of the facilities and recorded in the
consolidated statements of operations and comprehensive income/(loss).
n)
Fair value of financial instruments
The
fair value of a financial instrument is defined as the exchange price that would be received from an asset or paid to transfer a liability
(as exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
at the measurement date. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, time deposits,
accounts receivable and other current assets, accounts payable, and other current liabilities, approximate their fair values because
of the short maturity of these instruments and market rates of interest.
ASC
825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as 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. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize
the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as
follows:
| ● | Level
1 - Quoted prices in active markets for identical assets and liabilities. |
| | |
| ● | Level
2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that
are observable for the asset or liability, either directly or indirectly, for substantially
the full term of the financial instrument. |
| | |
| ● | Level
3 - Unobservable inputs that are supported by little or no market activity and that are significant
to the fair value of the assets and liabilities. This includes certain pricing models, discounted
cash flow methodologies and similar techniques that use significant unobservable inputs. |
The
Group considers the carrying amount of its financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts
receivable, prepayments, other receivables, accounts payable and other payable approximate the fair value of the respective assets and
liabilities as of September 30, 2024 and March 31, 2024 owing to their short-term nature or present value of the assets and liabilities.
o)
Revenue recognition
The
Group has adopted Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers” (“ASC 606”)
effective as of April 1, 2018. The Group has chosen to use the full retrospective transition method, under which it is required to revise
its consolidated financial statements for the year ended March 31, 2017, as if ASC 606 had been effective for those periods. Under ASC
606, the Group recognizes revenue when a customer obtains control of promised goods, in an amount that reflects the consideration which
the Group expects to receive in exchange for the goods. To determine revenue recognition for arrangements within the scope of ASC 606,
the Group performs the following five steps: (1) identify the contracts with a customer; (2) identify the performance obligations in
the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract;
and (5) recognize revenue when or as the entity satisfies a performance obligation. The Group applies the five-step model to contracts
when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods it transfers to the customer.
The
Group’s revenue is principally derived from the rendering of education services as principal to the members through an online education
platform. The online education services currently comprise of two aspects: online vocational training and virtual simulation experimental
training. Students that sign up for the online vocational training can log into the platform and access pre-recorded courses in the areas
of their professional development. Virtual simulation technology training offers college students the opportunity to conduct experiments
in a virtual environment as part of their curricula. For VIP members who have access to all platforms except virtual simulation experimental
training, the Group charges a flat annual fee of RMB100 per member. For VIP members who signed up between July 2018 and March 2019 enjoy
the sales promotion of extending the membership period from one year to two years. For SVIP members who have access to all platforms
including virtual simulation experimental training, the Group charges a flat fee of RMB300 per member per quarter. In response to the
outbreak of the COVID-19 in China, all courseware of the Company was free of charge during February 1, 2020 to February 29, 2020, and
the membership period of the existing paying-members was automatically extended for one month. During the quarter from April to June
2020, the company had a promotion campaign for the new registered VIP members and SVIP members: for new VIP members, they gained a two-years
membership which normally be only one-year; for new SVIP members, they gained a six-months membership which normally be only three-months.
The
membership services mainly provide access to online education services, which are accounted for as a single performance obligation as
the membership services are highly integrated. These service fees are collected in lump-sum for a specific contracted service period
when the service contract is signed and the revenues are recognized proportionally over the time throughout service period, as the Group
concluded that the membership service represents a stand ready obligation to provide the services while the member simultaneously receives
and consumes the benefits of such services throughout the contract period. Deferred revenue refers to the remaining unamortized amount
of membership fee that online members paid in advance.
The
Group also generates revenue from technology services including software development as well as comprehensive cloud services for private
companies, academic institutions and government agencies in PRC, which is recognized proportionally over the time throughout the service
period.
Contract
balances
The
following table provides information about the Group’s contract liabilities arising from contract with customers. The increase
in contract liabilities primarily resulted from the Group’s business growth.
Schedule
of Contract Liabilities Arising from Contract With Customers
| | |
September 30, 2024 | | |
March 31, 2024 | |
| | |
As of | |
| | |
September 30, 2024 | | |
March 31, 2024 | |
| | |
(Unaudited) | | |
(Audited) | |
| Deferred revenue-current | |
$ | 12,039 | | |
$ | 111,630 | |
| Deferred revenue-non-current | |
| — | | |
| — | |
| Total | |
$ | 12,039 | | |
$ | 111,630 | |
| | |
2024 | | |
2023 | |
| | |
For the six months ended September 30, | |
| | |
2024 | | |
2023 | |
| Revenue recognized from deferred revenue balance | |
$ | 108,307 | | |
$ | 1,357,236 | |
Deferred
revenue primarily consists of membership fee received from customers for which the Group’s revenue recognition criteria have not
been met. The deferred revenue will be recognized as revenue once the criteria for revenue recognition have been met.
The
Group’s remaining performance obligations represents the amount of the transaction price for which service has not been performed.
As of September 30, 2024, the aggregate amount of the transaction price allocated for the remaining performance obligations amounted
to $12,039. The Group expects to recognize revenue of $12,039 related the remaining performance obligations over the next 12 months.
p)
Cost of revenue
Cost
of revenue is mainly composed of copyright fees and related expenses for courseware and content development, website maintenance and
information technology technicians and other employees, depreciation and amortization expenses, server management and bandwidth leasing
fees paid to third-party providers and other miscellaneous expenses.
q)
Employee benefit expenses
All
eligible employees of the Group are entitled to staff welfare benefits including medical care, welfare subsidies, unemployment insurance,
pension benefits and housing funds through a PRC government-mandated multi-employer defined contribution plan. The Group is required
to make contributions to the plan and accrues for these benefits based on certain percentages of the qualified employees’ salaries.
The Group recorded employee benefit expenses of $34,867 and $35,964 for the six months periods ended September 30, 2024 and 2023, respectively.
r)
Selling and marketing expenses
Selling
and marketing are expensed as incurred in accordance with ASC 720-35. Among these, advertising and promotion costs were $503 and $29,841
for the six months periods ended September 30, 2024 and 2023, respectively.
s)
Research and development expenses
Research
and development expenses consist of compensation and benefit expenses to the technology development personnel. Research and development
expenses are primarily incurred in the development of new features and general improvement of the technology infrastructure to support
its business operations. Research and development costs are expensed as incurred unless such costs qualify for capitalization as software
development costs. In order to qualify for capitalization, (i) the preliminary project should be completed, (ii) management has committed
to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended,
and (iii) it will result in significant additional functionality in the Group’s services. No research and development expenses
were capitalized for all years presented as the Group has not met all of the necessary capitalization requirements.
t)
Income taxes
The
Group follows the liability method of accounting for income taxes in accordance with ASC 740 (“ASC 740”), Income Taxes. Under
this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases
of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse.
The Group records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not
that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized
in tax expense in the period that includes the enactment date of the change in tax rate.
The
Group accounted for uncertainties in income taxes in accordance with ASC 740. Interest and penalties related to unrecognized tax benefit
recognized in accordance with ASC 740 are classified in the consolidated statements of income as income tax expense.
u)
Value added tax (“VAT”)
The
Group is subject to VAT and related surcharges on revenue generated from the rendering of education services to the members through online
education platform. The Group records revenue net of output VAT. This output VAT may be offset by qualified input VAT paid by the Group
to suppliers. Net VAT balance between input VAT and output VAT is recorded in the line item of tax payable on the consolidated balance
sheets.
The
Group is subject to VAT at the rate of 6% depending on whether the entity is a general tax payer, and related surcharges on revenue generated
from providing services. Entities that are VAT general taxpayers are allowed to offset qualified input VAT, paid to suppliers against
their output VAT liabilities.
v)
Ordinary Shares
The
Company accounts for repurchased ordinary shares under the cost method and include such treasury shares as a component of the common
shareholders’ equity. Cancellation of treasury shares is recorded as a reduction of ordinary shares, additional paid-in capital
and retained earnings, as applicable. An excess of purchase price over par value is allocated to additional paid-in capital first with
any remaining excess charged entirely to retained earnings.
w)
Related parties
Parties
are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject
to common control or significant influence, such as a family member or relative, shareholder, or a related corporation.
x)
Statutory reserves
The
Company’s PRC subsidiaries are required to make appropriations to certain non-distributable reserve funds.
In
accordance with China’s Company Laws, the Company’s PRC subsidiary that are Chinese companies, must make appropriations from
their after-tax profit (as determined under the Accounting Standards for Business Enterprises as promulgated by the Ministry of Finance
of the People’s Republic of China (“PRC GAAP”)) to non-distributable reserve funds including (i) statutory surplus
fund and (ii) discretionary surplus fund. The appropriation to the statutory surplus fund must be at least 10% of the after-tax profits
calculated in accordance with PRC GAAP. Appropriation is not required if the statutory surplus fund has reached 50% of the registered
capital of the respective company. Appropriation to the discretionary surplus fund is made at the discretion of the respective company.
Pursuant
to the laws applicable to China’s Foreign Investment Enterprises, the Company’s subsidiaries that are foreign investment
enterprises in China have to make appropriations from their after-tax profit (as determined under PRC GAAP) to reserve funds including
(i) general reserve fund, (ii) enterprise expansion fund and (iii) staff bonus and welfare fund. The appropriation to the general reserve
fund must be at least 10% of the after tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the reserve
fund has reached 50% of the registered capital of the respective company. Appropriations to the other two reserve funds are at the respective
company’s discretion. The use of the general reserve fund, statutory surplus fund and discretionary surplus fund are restricted
to the offsetting of losses to increase the registered capital of the respective company. These reserves are not allowed to be transferred
out as cash dividends, loans or advances, nor can they be distributed except under liquidation.
y)
Earnings per share
The
Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires
companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as Net profit divided by the weighted
average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share
basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning
of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase
income per share or decrease loss per share) are excluded from the calculation of diluted EPS.
z)
Foreign currency translation
The
Group’s principal country of operations is the PRC. The financial position and results of its operations are determined using RMB,
the local currency, as the functional currency. The consolidated financial statements are reported using U.S. Dollars as presentational
currency. The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate
of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated
at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical
rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts
related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the
corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from
period to period are included as a separate component of accumulated other comprehensive income (loss) included in consolidated statements
of changes in equity. Gains and losses from foreign currency transactions are included in the consolidated statement of income and comprehensive
income.
The
value of RMB against U.S. Dollar may fluctuate and is affected by, among other things, changes in the PRC’s political and economic
conditions. Any significant revaluation of RMB may materially affect the Group’s consolidated financial condition in terms of reporting.
The following table outlines the currency exchange rates that were used in the consolidated financial statements:
Schedule of Currency Exchange Rates
| | |
September 30, 2024 | |
March 31, 2024 | |
September 30, 2023 |
| Year-end spot rate | |
US$1=7.0074 RMB | |
US$1=7.0950 RMB | |
US$1=7.1798 RMB |
| Average rate | |
US$1= 7.0994 RMB | |
US$1=7.1157 RMB | |
US$1=7.1206 RMB |
aa)
Comprehensive income/(loss)
Comprehensive
income/(loss) is defined as the changes in shareholders’ equity during a period arising from transactions and other events and
circumstances excluding transactions resulting from investments by shareholders and distributions to shareholders. Comprehensive income
or loss is reported in the consolidated statements of comprehensive income/(loss). Accumulated other comprehensive income/(loss), as
presented on the accompanying consolidated balance sheets, consists of accumulated foreign currency translation adjustments.
ab)
Segment reporting
In
accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision-making group,
in deciding how to allocate resources and in assessing performance. The Group has only one reportable segment since the Group does not
distinguish revenues, costs and expenses by operating segments in its internal reporting, and reports costs and expenses by nature as
a whole. The Group’s CODM, who has been identified as the CEO, reviews the consolidated results when making decisions about allocating
resources and assessing performance of the Group as a whole. As the Group generates all of its revenue in the PRC, no geographical segments
are presented.
ac)
Concentration of risks
Exchange
Rate Risks
The
Company’s Chinese subsidiaries and VIE may be exposed to significant foreign currency risks from fluctuations and the degree of
volatility of foreign exchange rates between the U.S. Dollar and the RMB. As of September 30, 2024 and March 31, 2024, the RMB denominated
cash amounted to $17,328,142 and $17,574,082 respectively.
Currency
Convertibility Risks
Substantially
all of the Group’s operating activities are transacted in RMB, which is not freely convertible into foreign currencies. All foreign
exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies
at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of
China or other regulatory institutions requires submitting a payment application form together with other information such as suppliers’
invoices, shipping documents and signed contracts.
Concentration
of Credit Risks
Financial
instruments that potentially subject the Group to concentration of credit risks consist primarily of cash and cash equivalents and accounts
receivable, the balances of which stated on the consolidated balance sheets represented the Group’s maximum exposure. The Group
places its cash and cash equivalents in good credit quality financial institutions in China. Concentration of credit risks with respect
to accounts receivables is linked to the concentration of revenue. To manage credit risk, the Group performs ongoing credit evaluations
of customers’ financial condition.
ad)
Risks and uncertainties
The
operations of the Group are located in the PRC. Accordingly, the Group’s business, financial condition, and results of operations
may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The
Group’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the
Group has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including
its organization and structure disclosed in Note 1, this may not be indicative of future results.
ae)
Recently announced accounting standards
The
Group considers the applicability and impact of all accounting standards updates (“ASU”). Management periodically reviews
new accounting standards that are issued.
In
June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject
to Contractual Sale Restrictions”, which clarifies that a contractual restriction on the sale of an equity security is not considered
part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify
that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. This guidance also requires
certain disclosures for equity securities subject to contractual sale restrictions. The new guidance is required to be applied prospectively
with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. This guidance
is effective for the Company for the year ending March 31, 2025 and interim reporting periods during the year ending March 31, 2025.
Early adoption is permitted.
Disaggregation
of Income Statement Expenses
In
November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense disaggregation disclosures
(Topic 220) - Disaggregation of Income Statement Expenses. This ASU is expected to improve the disclosures about a public business
entity’s expenses and address requests from investors for more detailed information about the types of expenses in commonly presented
expense captions. This ASU requires public business entities to disclose, on an annual and interim basis, disaggregated information about
certain income statement expense line items in the notes to the financial statements. Public business entities are required to apply
the guidance prospectively and may elect to apply it retrospectively. This ASU is effective for fiscal years beginning after December
15, 2026 (fiscal 2028) and interim periods within fiscal years beginning after December 15, 2027 (fiscal 2029). The Company is currently
evaluating the effect of adopting this new accounting guidance.
The
Group does not believe recently issued but not yet effective accounting standards would have a material effect on the consolidated financial
position, statements of operations and cash flows.
af)
Recently adopted accounting standards
In
August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging -Contracts
in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,
which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt
instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments
and requires the use of the if-converted method. For public companies, the guidance is effective for fiscal years beginning after December
15, 2021, and interim periods within those fiscal years. Early adoption is permitted. The Group adopted this standard beginning April,
2022 and the impact was not material to the consolidated financial statements.
In
January 2020, the FASB issued ASU 2020-01, “Investments — Equity Securities (Topic 321), Investments — Equity Method
and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) — Clarifying the Interactions between Topic 321, Topic
323, and Topic 815 (a consensus of the FASB Emerging Issues Task Force)”, which clarifies the interactions of the accounting for
certain equity securities under ASC 321, investments accounted for under the equity method of accounting in ASC 323, and the accounting
for certain forward contracts and purchased options accounted for under ASC 815. ASU 2020-01 could change how an entity accounts for
(i) an equity security under the measurement alternative and (ii) a forward contract or purchased option to purchase securities that,
upon settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting
or the fair value option in accordance with ASC 825 “Financial Instruments”. These amendments improve current U.S. GAAP by
reducing diversity in practice and increasing comparability of the accounting for these interactions. The new guidance is effective prospectively
for the Company for the year ending March 31, 2022 and interim reporting periods during the year ending March 31, 2022. The Company adopted
the accounting standard in October 2022. The adoption of the new guidance did not have a material impact on the Group’s consolidated
statement of financial statement.
In
December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which
simplifies various aspects related to accounting for income taxes. ASU 2019-12 removes certain exception to the general principles in
ASC 740 and also clarifies and amends existing guidance to improve consistent application. The new guidance is effective for the company
for the year ending March 31, 2022 and interim reporting periods during the year ending March 31, 2022. The Company adopted the accounting
standard in October 2022. The adoption of the new guidance did not have a material impact on the Group’s consolidated statement
of financial statement.
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