RISKS AND UNCERTAINTIES |
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| RISKS AND UNCERTAINTIES | 18. RISKS AND UNCERTAINTIES
The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.
The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.
The Company’s reporting currency is the U.S. dollar. The functional currency of the parent company is the U.S. dollar and the functional currency of the Company’s operating subsidiaries is the Chinese Renminbi (“RMB”). For the subsidiaries whose functional currencies are the RMB, all assets and liabilities are translated at exchange rates at the balance sheet date, which was 7.02 and 7.26 as of December 31, 2025 and March 31, 2025, respectively. Revenue and expenses are translated at the average yearly exchange rates, which was 7.091 and 7.188, 7.160 and 7.197 for the three and nine months ended December 31, 2025 and 2024, respectively. Equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustments to other comprehensive loss, a component of equity.
The followings are the percentages of accounts receivable balance of the top customers over accounts receivable for each segment as of December 31, 2025 and March 31, 2025.
Garment manufacturing segment
The high concentration as of December 31, 2025 was mainly due to business development of a large distributor of garments.
Logistics services segment
Property management and subleasing segment
There was no account receivable for the property management and subleasing segment as of December 31, 2025 and March 31, 2025.
Concentration on customers
For the three months ended December 31, 2025, three customers from the logistics services segment provided more than 10% of total revenue of the Company, representing 63.5% of total revenue of the Company for that period. For the nine months ended December 31, 2025, three customers from the logistics services segment provided more than 10% of total revenue of the Company, representing 53.8% of total revenue of the Company for that period .
For the three months ended December 31, 2024, three customers from the logistics services segment provided more than 10% of total revenue of the Company, representing 48.6% of total revenue of the Company for that period. For the nine months ended December 31, 2024, two customers from logistics services segment provided more than 10% of total revenue of the Company, representing 36.5% of total revenue of the Company for that period.
Concentration on suppliers
The following tables summarize the purchases from five largest suppliers of each of the reportable segments for the three and nine months ended December 31, 2025 and 2024.
The Company’s exposure to interest rate risk primarily relates to the interest expenses on our outstanding bank borrowings and the interest income generated by cash invested in cash deposits and liquid investments. As of December 31, 2025, the total outstanding borrowings amounted to $717,849 (RMB5,037,112) with various interest rate from 4.34% to 16.2% p.a. (Note 12)
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