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INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 14 - INCOME TAXES

 

Corporate income taxes

 

Cayman Islands

 

The Company was incorporated in the Cayman Islands and is not subject to tax on income or capital gains under the laws of the Cayman Islands. The Company mainly conducts its operating business through its subsidiaries in the PRC and Hong Kong. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.

 

British Virgin Islands

 

The Company’s subsidiary incorporated in the BVI is not subject to taxation.

 

Hong Kong

 

The Company’s Hong Kong subsidiaries, including Hing Fat Industrial Limited, Kambo Locksets Limited, Bamberg (HK) Limited and Kambo Hardware Limited, are subject to Hong Kong Profits Tax on their taxable income as reported in their statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. Hong Kong Profits Tax was calculated at 16.5% of the estimated assessable profit for 2025 and 2024. Tax losses can be carried forward to offset profits in future years until fully absorbed but cannot be carried back.

 

PRC

 

The Company’s PRC operating subsidiary, Dongguan Xingfa Hardware Products Co., Ltd, is governed by the income tax laws of the PRC and the income tax provisions in respect to operations in the PRC is calculated at the applicable tax rate on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), Chinese enterprises are subject to an income tax rate of 25% after appropriate tax adjustments. Tax losses incurred by PRC enterprises can generally be carried forward for up to five years, subject to the satisfaction of applicable tax filing and compliance requirements, through 2030.

 

The components of the income tax provision (benefit) were follows:

 

SCHEDULE OF COMPONENTS OF INCOME TAX PROVISION (BENEFIT) 

          
   For the years ended 
   December 31, 
   2025   2024   2023 
Current income tax provision  $25,854   $83,214   $56,237 
Deferred income tax benefit   —    —    — 
Total  $25,854   $83,214   $56,237 

 

(Loss) before provision for income taxes was attributable to the following geographic locations for the years ended December 31:

 

   2025   2024   2023 
   For the years ended 
   December 31, 
   2025   2024   2023 
Cayman and BVI  $(13,969,798)  $(2,076,775)  $(1,658,203)
Hong Kong   (2,050,171)   (1,871,990)   (1,959,799)
PRC   (3,301,616)   341,692    172,723 
Total  $(19,321,585)  $(3,607,073)  $(3,445,281)

 

Significant components of deferred tax assets are as follows:

 

   2025   2024 
   As of December 31, 
   2025   2024 
Deferred tax assets:          
Net operating loss carry forwards  $1,645,202   $1,306,923 
Total deferred tax assets   1,645,202    1,306,923 
Deferred tax liabilities:          
Depreciation   —    — 
Total deferred tax liabilities   —    — 
           
Total deferred tax assets-net   1,645,202    1,306,923 
Less: Valuation allowance   (1,645,202)   (1,306,923)
Deferred tax assets, net  $—   $— 

 

Future tax benefits which may arise as a result of net operating loss carry-forward have not been recognized in the accompanying consolidated financial statements as their realization has not been determined likely to occur. As of December 31, 2025 and 2024, the Company believes it is more likely than not that its PRC and HK subsidiaries will be unable to fully utilize their deferred tax assets related to their net operating loss carry-forward in the PRC and Hong Kong. If the Company is unable to generate taxable income in its PRC and Hong Kong operations, it is more likely than not that it will not have sufficient income to recognize the net deferred tax assets. As a result, the Company provided a 100% valuation allowance on its net deferred tax assets of approximately $1,645,202 and $1,306,923 for its operations in the PRC and Hong Kong as of December 31, 2025 and 2024, respectively. The valuation allowance increased by $338,278, $333,993 and $336,242 during 2025, 2024 and 2023, respectively.

 

 

Reconciliation of effective income tax rate is as follows:

 

   Amount   Percentage 
   For the years ended 
   December 31, 2025 
   Amount   Percentage 
Statutory income tax rate   (4,830,396)   (25.0)%
Tax effect of permanent difference   851,256    4.4 
Foreign tax effect in Hong Kong          
Statutory income tax rate difference between Hong Kong and China   174,265    0.9 
Change in valuation allowance   338,279    1.8 
Tax effect of tax exempt in Cayman and BVI   3,492,450    18.1 
Effective income tax   25,854    0.1%

 

       
   For the years ended 
   December 31, 
   2024   2023 
PRC statutory tax rate   25%   25%
Effect of tax rate differential (HK)   (4.4)   (4.8)
Tax effect of non-deductible expenses   0.3    (0.6)
Valuation allowance   (18.5)   (18.0)
Effective tax rate   2.4%   1.6%

 

Uncertain tax position

 

There were no uncertain tax positions as of December 31, 2025 and 2024 and management does not anticipate any potential future adjustments which would result in a material change to its tax positions. For 2025, 2024 and 2023, the Company did not incur any tax related interest or penalties.