{"url_path":"/sec/caho/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-07-15","source_url":"https://www.sec.gov/Archives/edgar/data/1678105/0001640334-26-001184-index.html","accession_number":"0001640334-26-001184","cik":"0001678105","ticker":"CAHO","issuer_name":"Caro Holdings Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1678105/0001640334-26-001184-index.html","primary_entity_key":"0001678105","primary_entity_name":"Caro Holdings Inc."},"word_count":1425,"has_tables":true,"body_markdown":"**Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations**\n\n \n\nThe following discussion should be read in conjunction with our consolidated audited financial statements and the related notes that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this annual report. Our consolidated audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.\n\n \n\n**Results of Operations**\n\n \n\nThe following summary of our results of operations should be read in conjunction with our financial statements for the year ended March 31, 2025, which are included herein. Our operating results for the year ended March 31, 2025, for the year ended March 31, 2024 and the changes between those periods for the respective items are summarized as follows:\n\n \n\n \n\n \n\n**Year Ended**\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**March 31,**\n\n \n\n \n\n**Change**\n\n \n\n \n\n**Change**\n\n \n\n \n\n \n\n**2026**\n\n \n\n \n\n**2025**\n\n \n\n \n\n**Amount**\n\n \n\n \n\n**Percentage**\n\n \n\nRevenue\n\n \n$\n11,254\n\n \n\n \n$36,319\n \n\n \n$\n(25,065\n)\n \n\n \n-69%\n\nOperating expenses\n\n \n\n \n\n293,538\n\n \n\n \n\n \n428,413\n \n\n \n\n \n\n(134,875\n)\n \n\n \n-31%\n\nLoss from operations\n\n \n\n \n\n(282,284\n)\n \n\n \n(392,094)\n \n\n \n\n109,810\n\n \n\n \n\n \n-28%\n\nOther expenses\n\n \n\n \n(125,513)\n \n\n \n(300,862)\n \n\n \n175,349\n \n\n \n\n \n-58%\n\nNet Loss\n\n \n$\n(407,797\n)\n \n$(692,956)\n \n$\n285,159\n\n \n\n \n\n \n-41%\n\n \n\nNet loss decreased from $692,956 for the year ended March 31, 2025 to $407,797 for the year ended March 31, 2026 due to the decrease in operating expenses and other expenses.\n\n \n\nDuring the year ended March 31, 2026 and 2025, we generated $11,254 and $36,319 in revenue, respectively.\n\n \n\nOperating expenses decreased from $428,413 for the year ended March 31, 2025 to $293,538 for the year ended March 31, 2026, mainly due to decreases in professional fees and general and administrative expenses.\n\n \n\nOther expenses decreased from $300,862 for the year ended March 31, 2025 to $125,513 for the year ended March 31, 2026, mainly due to a decrease in interest expense on convertible notes.\n\n \n\n**Liquidity and Financial Condition**\n\n \n\n*Working Capital (Deficiency)*\n\n \n\n \n\n \n\n**March 31, 2026**\n\n \n\n \n\n**March 31, 2025**\n\n \n\nCurrent Assets\n\n \n$\n262,757\n\n \n\n \n$256,104\n \n\nCurrent Liabilities\n\n \n\n \n\n1,986,308\n\n \n\n \n\n \n1,600,408\n \n\nWorking Capital (Deficiency)\n\n \n$\n(1,723,551\n)\n \n$(1,344,304)\n\n \n\n \n\n7\n\n*Table of Contents*\n\n \n\n*Cash Flows*\n\n \n\n \n\n \n\n \n\n \n\n**Year Ended**\n\n \n\n \n\n \n\n**March 31,**\n\n \n\n \n\n \n\n**2026**\n\n \n\n \n\n**2025**\n\n \n\nCash used in Operating Activities\n\n \n$\n(105,126\n)\n \n$(373,809)\n\nCash used in Investing Activities\n\n \n\n \n(8,080)\n \n\n \n(12,056)\n\nCash provided by Financing Activities\n\n \n\n \n111,603\n \n\n \n\n \n390,407\n \n\nEffects on changes in foreign exchange rate\n\n \n\n \n\n(11,940\n)\n \n\n \n(10,770)\n\nNet changes in cash during period\n\n \n$(13,543)\n \n$(6,228)\n\n \n\nOur total current assets as of March 31, 2026 were as $262,757 compared to total current assets of $256,104 as of March 31, 2025. The increase was primarily due to the increase in accounts receivable, convertible notes and promissory notes.\n\n \n\nOur total current liabilities as of March 31, 2026 were $1,986,308 as compared to total current liabilities of $1,600,408 as of March 31, 2025. The increase was attributed by the increase in convertible notes and accrued liabilities.\n\n \n\nWorking capital deficiency increased from $1,344,304 as of March 31, 2025 to $1,723,551 as of March 31, 2026 mainly due to the increase in convertible notes, promissory notes, due to related parties and accounts payable and accrued liabilities.\n\n \n\nThe report of our auditors on our audited financial statements for the fiscal year ended March 31, 2026, contains a going concern qualification as we have suffered losses since our inception. We have no operating revenues. We have been dependent on sales of equity securities and debt financing to conduct operations. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital and implement its business plan.\n\n \n\n***Operating Activities***\n\n \n\nFor the year ended March 31, 2026, net cash used in operating activities was $105,126, related to our net loss of $407,797, partially offset by amortization of $36,856, loss on convertible notes of $54,200, and net changes in operating assets and liabilities of $211,615.\n\n \n\nFor the year ended March 31, 2025, net cash used in operating activities was $373,809 related to our net loss of $692,956, reduced by amortization of $36,856, loss on convertible notes of $265,000 and changes in operating assets and liabilities of $17,291.\n\n \n\n**Investing Activities**\n\n \n\nFor the year ended March 31, 2026, net cash used in investing activities was $8,080, comprised of advancement on convertible loan receivable of $1,680 and advancement on promissory loan receivable of $6,400.\n\n \n\nFor the year ended March 31, 2025, net cash used in investing activities was $12,056, comprised of advancement on convertible loan receivable of $30,917 and advancement on promissory loan receivable of $12,056, offset by payment from convertible loan receivable of $30,917.\n\n \n\n***Financing Activities***\n\n \n\nFor the year ended March 31, 2026, net cash provided by financing activities was $111,603 primarily from proceeds related to convertible notes of $81,300 and advancement from related party of $30,303.\n\n \n\nFor the year ended March 31, 2025, net cash provided by financing activities was $390,407 primarily from proceeds related to convertible notes of $397,500 offset by advancement to related party of $7,093.\n\n \n\n**Off-Balance Sheet Arrangements**\n\n \n\nWe have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.\n\n \n\n**Critical Accounting Policies**\n\n \n\n*Basis of Presentation*\n\n \n\nThe financial statements are prepared in accordance with generally accepted accounting principles used in the United States of America (“US GAAP”).\n\n \n\n*Use of Estimates*\n\n \n\nIn preparing financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those estimates.\n\n \n\n \n\n8\n\n*Table of Contents*\n\n \n\n*Fair Value of Financial Instruments*\n\n \n\nThe Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures,” which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.\n\n \n\nThe estimated fair value of certain financial instruments, including accounts payable and accrued liabilities. are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our short term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.\n\n \n\nASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:\n\n \n\nLevel 1 -\nquoted prices in active markets for identical assets or liabilities\n\nLevel 2 -\nquoted prices for similar assets and liabilities in active markets or inputs that are observable\n\nLevel 3 -\ninputs that are unobservable (for example cash flow modeling inputs based on assumptions)\n\n \n\n*Recently Accounting Pronouncements*\n\n \n\nIn August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with “Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity”. The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and, (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements."}