{"url_path":"/sec/iotr/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-07-07","source_url":"https://www.sec.gov/Archives/edgar/data/1997637/0001213900-26-075976-index.html","accession_number":"0001213900-26-075976","cik":"0001997637","ticker":"IOTR","issuer_name":"iOThree Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1997637/0001213900-26-075976-index.html","primary_entity_key":"0001997637","primary_entity_name":"iOThree Ltd"},"word_count":8062,"has_tables":true,"body_markdown":"**ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS**\n\n \n\n*You should read the following\ndiscussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements\nand the related notes included elsewhere in this Annual Report. This discussion may contain forward-looking statements. Our actual results\nmay differ materially from those anticipated in these forward-looking statements because of various factors, including those set forth\nunder “Item 3.D. Risk Factors” or in other parts of this Annual Report. See also “Forward-Looking Statements.”* \n\n** **\n\n**5.A. Operating Results**\n\n** **\n\n**Overview**\n\n \n\nWe are a holding company\nincorporated as an exempted company under the laws of the Cayman Islands. As a holding company with no material operations of our own,\nwe conduct all of our operations through our operating entity incorporated in Singapore, iO3 Singapore.\n\n \n\nWe are a leading provider\nof maritime digital technologies including satellite connectivity and digitalization solutions in Singapore focused on facilitating the\nmaritime industry towards digital transformation. Based on the Frost & Sullivan Report, as of March 31, 2024, we ranked fifth in the\nSingaporean market based on revenue from the provision of maritime connectivity and digital solutions with a market share of approximately\n6.2%. Our company was established to adopt an innovative approach towards the management of solutions accustomed to contemporary needs\nand drive the digital evolution in the maritime industry.\n\n \n\nWe generate revenue from\nour two operating segments: (i) satellite connectivity solution, and (ii) digitalization and other solutions. In the satellite\nconnectivity segment, we offer integrated satellite connectivity solutions through the provision of satellite connectivity services and\nthe sales and/or lease of satellite network equipment and devices for shipboard network management. In the digitalization and other solutions\nsegment, we are involved in designing digital solutions, providing IT support, and providing shipboard support services for IT and OT\napplications enablement.\n\n \n\n49\n\n \n\n \n\nOur digitalization platform\n— “Just A Really Very Intelligent System” (“JARVISS”) — has been specifically designed to support\nenhanced integrated solutions, asset optimization and delivery of secured critical applications globally. It hosts a fleet of native applications\ndeveloped by us as well as third party applications, consolidating essential functions such as IoT and vessel management. Our unique platform\nseamlessly integrates these applications, simplifying maritime operations and fostering unprecedented efficiency and leads us to be a\npioneer of integrated maritime connectivity and digital solution providers. In addition to JARVISS, our portfolio of digital solutions\nencompasses our V.Suite solutions and our new maritime ERP system FRIDAY.\n\n** **\n\n**Factors Affecting Our Performance and Related\nTrends**\n\n \n\nWe believe that the key factors\naffecting our performance and financial performance include:\n\n** **\n\n**Impact of the overall economic conditions\nand oil prices**\n\n \n\nThe health of the global\neconomy, particularly fluctuations in oil prices, directly affects shipping volumes and maritime activity. Prolonged economic downturns\nor volatile fuel prices may lead to reduced demand for our technology solutions as shipping companies seek to cut costs.\n\n** **\n\n**Maritime regulations impacting our services\nand offerings**\n\n \n\nMaritime regulations that\nfacilitate or limit our ability to provide our offerings impact our financial performance. For example, our operations may benefit from\nthe changes to the regulatory requirements applicable to the shipping and maritime industry including but not limited to stricter requirements\nadopted by international organizations, such as the International Maritime Organization, or by individual countries or charterers and\nactions taken by regulatory authorities for safety and environmental compliance. Compliance with such laws, regulations and standards,\nwhere applicable, may require installation of new equipment or implementation of operational changes and may create new business opportunities\nto the Company. On the other hand, these costs could have a material adverse effect on the costs of maintaining our customers’ vessels,\nwhich in turn affects their financial ability to subscribe to our services or offerings. In addition, a failure to comply with applicable\nlaws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of operations\nof our customers’ vessels, which in turn affects our business operations since the customers would have to cease operating their\nvessels, hence terminating our services and their subscriptions to our services.\n\n** **\n\n**Our ability to expand into other jurisdictions**\n\n \n\nWe intend to expand our business\noperations in terms of the services and solutions we offer by establishing offices in other Asian countries and the Middle East in order\nto increase and diversify revenue channels and further engage our customers. As such, we plan to scale up our services in terms of sales\nand lease of equipment and devices, and solution offerings. Entering new geographic markets requires us to invest in personnel, marketing,\nand infrastructure, including additional offices and distribution networks. Our international expansion may result in increased costs\nand is subject to a variety of risks, including low initial brand awareness, local competition, inventory risks and compliance with foreign\nlaws and regulations. While we expect our operating expenses to increase as we continue to expand our business, we expect such expenses\nto decrease as a percentage of revenue over time as we continue to streamline our business and benefit from economies of scale. We believe\nthat our ability to successfully expand our business operations, both geographically and through our offerings, is paramount to our ability\nto achieve and maintain long-term profitability.\n\n** **\n\n**Impact of fluctuations in costs of revenue**\n\n \n\nWe are sensitive to price\nmovements in equipment for satellite connectivity solutions and digitalization and other solutions. Our material purchases are for electronics\nequipment and satellite connectivity such as antenna, satellite phone, modem, IP handsets, wireless access points etc. for satellite connectivity\nsolution, and hardware/software components and shipboard equipment for digitalization and other solutions. Prices for these products,\nalong with costs for transportation and delivery, fluctuate with market conditions, and have generally increased over time with inflation.\nWe may be unable to offset the impact of price increases on a timely basis due to outstanding commitments to our customers, and our financial\nperformance could be adversely impacted. A failure by our suppliers to continue to supply us with component parts and equipment for satellite\nconnectivity at reasonable prices could have a material adverse effect on us. To the extent there are material fluctuations in the prices\nof electronics equipment and satellite connectivity, our margins could be materially adversely impacted.\n\n** **\n\n50\n\n \n\n ** **\n\n**Chip supply constraints**\n\n \n\nChips are integral to our\nequipment and digital solutions. An on-going shortage of chips could materially affect our operations and business. We may encounter higher\nprices of electronic equipment such as modems, routers, and antennas, which would significantly increase our cost of sales, thereby affecting\nour profitability and financial performance. In addition, as satellite connectivity forms a substantial part of our revenues, should the\nsatellite operators increase their bandwidth pricing, it may have a significant impact on our service costs, and hence increase our cost\nof sales.\n\n** **\n\n**Components of Results of Operations**\n\n** **\n\n**Revenue**\n\n* *\n\n*Satellite Connectivity Solution*\n\n \n\nThere are two main categories\nof revenue generated through satellite connectivity solution:\n\n \n\n \n(i)\nSubscription income — Monthly subscription fee is charged to customer for the satellite connection service in relating to the airtime, bandwidth subscription plan and value-added service subscribed. The contracts with customers are normally within five years and are generally non-cancellable; and\n\n \n\n \n(ii)\nSales and lease of satellite network equipment and devices.\n\n \n\nWe sell or lease the satellite\nnetwork equipment and devices to customers. We provide engineering and installation service to our customers. The revenue generated, inclusive\nof shipping and handling fees charged to customers, are as below:\n\n \n\n \n(a)\nSales of equipment and devices;\n\n \n\n \n(b)\nSales-type lease of equipment and devices; and\n\n \n\n \n(c)\nOperating lease of equipment and devices.\n\n* *\n\n*Digitalization and Other Solutions*\n\n \n\nOur revenue generated from\ndigitalization and other solutions are as below:\n\n \n\n \n(i)\nSubscription income from JARVISS digital platform — JARVISS digital platform was launched in early 2022. We provide customers access to the digital platform to help their daily operation management. Monthly subscription fee is charged to the customers based on the number of user access and number of service elements subscribed.\n\n \n\n \n(ii)\nRevenue generated from IT support services — Customers specify their IT support requirements in the contracts, which may include purchase of IT equipment, purchase and installation of software in certain IT equipment and devices. We charge customers the equipment cost and service fee. We also provide IT help desk service and technical support and charge customers a monthly fee.\n\n \n\n \n(iii)\nRevenue generated from shipboard support services — At the customers’ request, we supply and install shipboard equipment as per customer’s specification. We charge customers the equipment cost, installation fee, shipping and handling fee.\n\n* *\n\n51\n\n \n\n \n\n*Cost of Revenue*\n\n* *\n\n*Satellite Connectivity Solution*\n\n \n\nOur cost of revenue for satellite\nconnectivity solution consists primarily of:\n\n \n\n \n(i)\nCosts of satellite subscription services payable to satellite operators in relating to airtime consumed, bandwidth subscription plan, and value-added service subscribed.\n\n \n\n \n(ii)\nCosts of satellite network equipment and devices such as antenna, satellite phone, modem, IP handsets, wireless access points, etc.\n\n \n\n \n(iii)\nOther costs include staff costs, subcontractor costs, depreciation and shipping and handling costs.\n\n* *\n\n*Digitalization and Other Solutions*\n\n \n\nOur cost of revenue for digitalization\nand other solutions consists primarily of:\n\n \n\n \n(i)\nCosts of IT software and hardware, including network infrastructure related devices, firewalls and security appliances, computer and servers, printer and scanning equipment etc.;\n\n \n\n \n(ii)\nCosts of shipboard equipment; and\n\n \n\n \n(iii)\nOther costs include staff costs, subcontractor costs, amortization and shipping and handling costs.\n\n** **\n\n**Operating Cost and Expenses**\n\n* *\n\n*Sales and Marketing Expenses*\n\n \n\nOur sales and marketing expenses\nconsist primarily of (i) staff costs of our sales and marketing personnel which include salaries, central provident funds, staff\nbonus and other employee benefits, (ii) commission to our agents, and (iii) marketing and advertising fee.\n\n* *\n\n*General and Administrative Expenses*\n\n \n\nOur general and administrative\nexpenses consist primarily of wages and salaries, travelling expenses, general office expenses, depreciation expenses, IT expenses, repairs\nand maintenance and entertainment expenses.\n\n* *\n\n*Other Operating (Expenses)/Income, Net*\n\n \n\nOur other operating income\nconsists primarily of government grants, foreign exchange gains, commission received and others. Our other operating expenses consist\nprimarily of foreign exchange losses and others such as withholding tax for overseas customers.\n\n* *\n\n*Finance Income*\n\n \n\nOur finance income consists\nof interest income from sales-type lease of satellite network equipment.\n\n* *\n\n*Finance Costs*\n\n \n\nOur finance costs consist\nprimarily of interest expenses relating to finance lease and bank borrowing.\n\n** **\n\n52\n\n \n\n ** **\n\n**Results of Operations**\n\n \n\n  \nYears ended March 31, \n\n  \n2026  \n2025  \n2024 \n\n  \n(US$)  \n(US$)  \n(US$) \n\nRevenues, net \n 14,709,239  \n 10,478,550  \n 8,570,070 \n\nCost of revenue \n (11,557,897) \n (8,614,316) \n (6,724,479)\n\nGross profit \n 3,151,342  \n 1,864,234  \n 1,845,591 \n\n  \n    \n    \n   \n\nOperating cost and expenses: \n    \n    \n   \n\nSales and marketing expenses \n (580,751) \n (579,042) \n (406,870)\n\nGeneral and administrative \n (3,727,801) \n (1,475,028) \n (1,453,282)\n\nOther operating income/(expenses) \n 23,607  \n (12,818) \n (18,588)\n\nTotal operating cost and expenses \n (4,284,945) \n (2,066,888) \n (1,878,740)\n\n  \n    \n    \n   \n\nLoss from operations \n (1,133,603) \n (202,654) \n (33,149)\n\nFinance income \n 15,679  \n 23,671  \n 20,743 \n\nFinance cost \n (64,749) \n (34,702) \n (35,830)\n\n  \n    \n    \n   \n\nLoss before income taxes \n (1,182,673) \n (213,685) \n (48,236)\n\nIncome tax credit/(expense) \n 21,432  \n (16,830) \n 43,790 \n\n  \n    \n    \n   \n\nNET LOSS \n (1,161,241) \n (230,515) \n (4,446)\n\n** **\n\n**Revenue**\n\n \n\nWe derive our revenue from\nour two operating segments: (i) satellite connectivity solution, and (ii) digitalization and other solutions. The following\ntable sets out the breakdown of our revenue for the periods indicated:\n\n \n\n  \nFor the year ended March 31, \n\n  \n2026  \n2025  \n2024 \n\n  \n(US$)  \n(US$)  \n(US$) \n\nRevenue from external customers \n   \n   \n  \n\nSatellite connectivity solution \n   \n   \n  \n\nSubscription \n 5,090,759  \n 4,408,157  \n 3,678,354 \n\nSales and lease of equipment and devices \n 1,548,864  \n 2,250,024  \n 1,933,744 \n\n  \n 6,639,623  \n 6,658,181  \n 5,612,098 \n\nDigitalization and other solutions \n    \n    \n   \n\nSubscription \n 1,411,220  \n 503,586  \n 369,179 \n\nEquipment and engineering services \n 6,658,396  \n 3,316,783  \n 2,588,793 \n\n  \n 8,069,616  \n 3,820,369  \n 2,957,972 \n\nRevenue from external customers \n 14,709,239  \n 10,478,550  \n 8,570,070 \n\n** **\n\n**Comparison of the Years Ended March 31, 2026\nand 2025**\n\n** **\n\n**Revenue**\n\n** **\n\nTotal revenue increased by\napproximately $4.2 million or 40.0% from approximately $10.5 million for the year ended March 31, 2025 to approximately $14.7 million\nfor the year ended March 31, 2026. The increase in revenue was contributed by customers from Singapore of approximately $4.9 million,\nUnited Kingdom of approximately $0.3 million and Malaysia of approximately $0.2 million. The increase was offset by the decrease in contribution\nfrom Thailand of approximately $0.2 million, China of approximately $0.2 million, Vietnam of approximately $0.2 million, Israel of approximately\n$0.1 million, Republic of Marshall Islands of approximately $0.1 million, Indonesia of approximately $0.1 million and others of approximately\n$0.3 million.\n\n \n\n53\n\n \n\n \n\nRevenue generated from our\nsatellite connectivity solution was approximately the same as the year ended March 31, 2025. Sales and lease of satellite network equipment,\ndevice and services decreased by approximately $0.7 million or 30.4% from approximately $2.2 million for the year ended March 31, 2025\nto approximately $1.5 million for the year ended March 31, 2026. However, the subscription revenue increase by approximately $0.7 million\nor 15.9% from approximately $4.4 million for the year ended March 31, 2025 to approximately $5.1 million for the year ended March 31,\n2026.\n\n \n\nRevenue generated from digitalization\nand other solutions increased by approximately $4.2 million or 110.5% from approximately $3.8 million for the year ended March 31, 2025\nto approximately $8.0 million for the year ended March 31, 2026, mainly due to increase in revenue generated from sales of IT equipment\nand services of approximately $3.3 million.\n\n \n\n**Gross Profit**\n\n \n\nThe overall gross profit increased\nby $1.3 million or 68.4% to $3.2 million for the year ended March 31, 2026, from $1.9 million for the same period last year. The increase\nwas mainly contributed by the increase in revenue generated from digitalization and other solutions as mentioned above.\n\n \n\nThe gross profit margin of\nsatellite connectivity solution was approximately 26.3% for the year ended March 31, 2026, compared to approximately 25.5% for the same\nperiod last year.\n\n \n\nThe gross profit margin of\ndigitalization and other solutions increased to 17.4% for the year ended March 31, 2026, from 4.3% for the same period last year. This\nwas mainly due to the improvement in economic scale as we expand our business.\n\n \n\nAs a result, the overall gross\nprofit margin increased to approximately 21.4% for the year ended March 31, 2026, from 17.8% for the same period last year.\n\n** **\n\n*Sales and Marketing Expenses*\n\n \n\nThe sales and marketing expenses\nwere approximately $0.6 million for the year ended March 31, 2026, which was consistent with the same period last year.\n\n** **\n\n*General and Administrative expenses*\n\n \n\nThe general and administrative\nexpenses increased by $2.2 million to approximately $3.7 million for the year ended March 31, 2026, from $1.5 million for the same period\nlast year.\n\n \n\nThe increase was mainly due\nto higher staff costs of approximately $0.8 million resulting from the recruitment of additional employees, and listing company compliance\ncosts of approximately $1.6 million, including legal fees, investor relations fees, and other related expenses.\n\n** **\n\n**Loss before Income Taxes**\n\n \n\nAs a result of the foregoing,\nthe loss before income tax for the year ended March 31, 2026 was approximately $1.2 million compared to loss before tax of approximately\n$0.2 million for the same period last year.\n\n** **\n\n**Income Tax Credit/(Expense)**\n\n \n\nWe recorded an income tax\ncredit of approximately $21,000 for the year ended March 31, 2026 mainly due to the reversal of overprovision of income taxes relating\nto prior financial years.\n\n** **\n\n**Net Loss**\n\n \n\nAs a result of the foregoing,\nthe net loss was $1.2 million for the year ended March 31, 2026 compared to net loss of approximately $0.2 million for the same period\nlast year.\n\n \n\n**Comparison of the Years Ended March 31, 2025\nand 2024**\n\n \n\nOur total revenue increased\nby approximately $1.9 million or 22.1% from approximately $8.6 million for the year ended March 31, 2024 to approximately $10.5 million\nfor the year ended March 31, 2025. The increase in revenue was contributed by customers from Singapore of approximately $1.8 million,\nIsrael of approximately $0.5 million, Taiwan of approximately $0.2 million and Vietnam of approximately $0.1 million. The increase was\noffset by the decrease in contribution from Indonesia of approximately $0.4 million and Thailand of approximately $0.3 million.\n\n \n\n54\n\n \n\n \n\nOur revenue generated from\nour satellite connectivity solution increased by approximately $1.1 million or 19.6% from approximately $5.6 million for the year ended\nMarch 31, 2024 to approximately $6.7 million for the year ended March 31, 2025, due to the increase in subscription income from satellite\nconnectivity services of approximately $0.7 million and increase in sales and lease of satellite network equipment, device and services\nof approximately $0.4 million.\n\n \n\nOur revenue generated from\ndigitalization and other solutions increased by approximately $0.8 million or 26.7% from approximately $3.0 million for the year ended\nMarch 31, 2024 to approximately $3.8 million for the year ended March 31, 2025, mainly due to increase in revenue generated from sales\nof IT equipment and services of approximately $0.7 million.\n\n** **\n\n**Cost of Revenue**\n\n \n\nOur cost of revenue for our\nsatellite connectivity solution increased by approximately $1.0 million or 25.0%, from approximately $4.0 million for the year ended March\n31, 2024 to approximately $5.0 million for the year ended March 31, 2025, primarily attributable to the increase in cost incurred in provision\nof satellite connectivity services of approximately $0.9 million. The increase in cost of revenue was consistent with the increase in\nrevenue\n\n \n\nOur cost of revenue for our\ndigitalization and other solutions increased by approximately $0.9 million or 32.1%, from approximately $2.8 million for the year ended\nMarch 31, 2024 to approximately $3.7 million for the year ended March 31, 2025. This was consistent with the increase in revenue.\n\n** **\n\n**Gross Profit**\n\n \n\nAs a result of the foregoing,\n(i) our gross profit for our satellite connectivity solution was approximately $1.7 million for each of the years ended March 31,\n2025 and 2024, and (ii) our gross profit for our digitalization and other solutions was approximately $0.2 million for each of the years\nended March 31, 2025 and 2024.\n\n \n\nThe gross profit margin of\nsatellite connectivity solution decreased from approximately 29.6% for the year ended March 31, 2024 to approximately 25.5% for the year\nended March 31, 2025 due to the rollout of Starlink satellite connection services to the market which has a lower margin.\n\n \n\nThe gross profit margin of\ndigitalization and other solutions decreased from approximately 6.2% for the year ended March 31, 2024 to approximately 4.3% for the year\nended March 31, 2025 due to the increase in staff costs in digitalization segment of approximately $0.3 million arising from the increase\nin number of head count gradually from 9 as at March 31, 2024 to 12 as at March 31, 2025.\n\n \n\nAs a result, the overall\ngross profit margin decreased from approximately 21.5% for the year ended March 31, 2024 to approximately 17.8% for the year ended March\n31, 2025.\n\n* *\n\n*Sales and Marketing Expenses*\n\n \n\nOur sales and marketing expenses\nincreased by approximately $0.2 million or 50.0%, from approximately $0.4 million for the year ended March 31, 2024 to approximately $0.6\nmillion for the year ended March 31, 2025, attributable to the increase in staff costs of approximately $0.2 million as the number of\nheadcounts for marketing department increased by 2.\n\n* *\n\n*General and Administrative expenses*\n\n \n\nOur general and administrative\nexpenses were approximately $1.5 million, which was roughly the same as the year ended March 31, 2024. The audit fee decreased by $0.2\nmillion for year ended March 31, 2025 compared to year ended March 31, 2024. This was mainly due to a higher audit fee for the year ended\nMarch 31, 2024, because this was the year we engaged our US GAAP auditor to carry out the FY2022 to FY2024 audit and half-year review\nfor the six months ended September 30, 2022, and 2023. The decrease was offset by the increase in staff costs and depreciation of approximately\n$0.1 million each. The increase in staff costs was mainly due to an increase in salaries and staff bonuses.\n\n* *\n\n55\n\n \n\n \n\n**Other Operating (Expenses)/Income, Net**\n\n \n\nOur other operating expenses\ndecreased by approximately $6,000 from approximately $19,000 for the year ended March 31, 2024 to approximately $13,000 for the year ended\nMarch 31, 2025 mainly due to the foreign exchange losses decreased by approximately $10,000. The decrease was offset by the decrease in\ngovernment grants of approximately $2,000 and other income of approximately $2,000.\n\n** **\n\n**Finance Income and Finance Costs**\n\n \n\nOur finance income consists\nof interest income from sales-type lease of satellite network equipment. Our finance income increased by approximately $3,000 or 14.3%\nfrom approximately $21,000 for the year ended March 31, 2024 to approximately $24,000 for the year ended March 31, 2025 due to the increase\nin the number of sales-type lease of satellite network equipment over the years.\n\n \n\nOur finance costs were approximately\n$35,000 for the year ended March 31, 2025. It was about the same as that for the year ended March 31, 2024 of approximately $36,000.\n\n** **\n\n**Loss before Income Taxes**\n\n \n\nAs a result of the foregoing,\nour loss before income taxes increased from approximately $48,000 for the year ended March 31, 2024 to a loss of approximately $214,000\nfor the year ended March 31, 2025.\n\n** **\n\n**Income Tax Credit/(Expense)**\n\n \n\nWe recorded an income tax\nprovision of approximately $17,000 for the year ended March 31, 2025. However, there was an income taxes credit of approximately $44,000\nfor the year ended March 31, 2024 mainly due to the reversal of over provision of income taxes in relation to prior financial years.\n\n** **\n\n**Net Loss**\n\n \n\nAs a result of the foregoing,\nour net loss increased from approximately $4,000 for the year ended March 31, 2024 to a loss of approximately $231,000 for the year ended\nMarch 31, 2025.\n\n \n\n**5.B. Liquidity and Capital Resources**\n\n \n\nWe were incorporated in the\nCayman Islands as a holding company and our Cayman Islands holding company did not have active business operations as of the date of this\nreport. Our consolidated assets and liabilities, consolidated revenue and net income are the operation results of our subsidiary in Singapore.\nCurrent Singapore regulations permit such Singapore subsidiary to pay dividends to its respective shareholders only out of its accumulated\nprofits, if any, determined in accordance with Singapore accounting standards and regulations. There are no exchange or capital controls\nunder Singapore laws and both residents and non-residents are free to convert Singapore dollars to foreign currencies and/or remit such\ncurrencies out of the country. Under current Singapore tax rules, there is no withholding tax imposed on dividends, regardless of whether\nthey are paid to Singapore or foreign shareholders. However, foreign shareholders may be taxed on the receipt of such dividends back in\ntheir own home country, which will depend on the tax laws in the respective countries where they are resident. As of March 31, 2026, none\nof the net assets of our subsidiary in Singapore were restricted net assets. During the year ended March 31, 2026, iO3 Singapore paid\napproximately $1.0 million of operating expenses on behalf of iO3 Cayman, our Cayman Islands holding company, which amounts constitute\nadvances from iO3 Singapore to iO3 Cayman. During the same period, approximately $4.9 million in IPO proceeds and investor funds were\ntransferred from iO3 Cayman to iO3 Singapore. As of March 31, 2026, the net intercompany balance reflected iO3 Singapore owing iO3 Cayman\napproximately $0.9 million.\n\n \n\nFor the year ended March\n31, 2025, iO3 Singapore, our subsidiary in Singapore transferred approximately $9,000 to iO3 Cayman, our Cayman Islands holding company,\nin August 2024.\n\n \n\nIn assessing our liquidity,\nwe monitor and analyze our cash on-hand and our operating expenditure commitments. Our liquidity needs are to meet our working capital\nrequirements and operating expense obligations. Historically, we have financed our operations primarily through cash generated by operations\nand bank borrowing. Other than bank borrowing, the Company has no other debt instruments.\n\n \n\nAs at March 31, 2026, our\nworking capital was approximately $2.5 million, our cash and cash equivalents amounted to approximately $2.1 million, our current\nassets were approximately $5.6 million, and our current liabilities were approximately $3.1 million.\n\n \n\nBased on our current operating\nplan, we believe that our existing cash and cash equivalents and anticipated cash generated from operating activities will be sufficient\nto meet our anticipated working capital and capital expenditures for at least the next 12 months. Our future working capital requirements\nwill depend on many factors, including the rate of our revenue growth, our introduction of new solutions, and expansion of our business\noperation. To the extent that our cash and cash equivalents, and cash flow from operating activities are insufficient to fund our future\nactivities, we may need to raise additional funds through bank credit arrangements, public or private equity or debt financings. We also\nmay need to raise additional funds in the event we decide in the future to acquire businesses, technologies and products that will complement\nour existing operations. In the event additional funding is required, we may not be able to obtain bank credit arrangements or equity\nor debt financing on terms acceptable to us or at all.\n\n** **\n\n56\n\n \n\n ** **\n\n**Cash Flows for the Years Ended March\n31, 2026, 2025 and 2024**\n\n \n\nThe following summarizes\nthe key components of our cash flows for the years ended March 31, 2026, 2025 and 2024:\n\n \n\n  \nFor the year ended March 31, \n\n  \n2026  \n2025  \n2024 \n\n  \n(US$)  \n(US$)  \n(US$) \n\nNet cash (used in)/provided by operating activities \n (2,237,782) \n 488,097  \n 1,631,420 \n\nNet cash used in investing activities \n (661,492) \n (581,050) \n (491,365)\n\nNet cash provided by/(used in) financing activities \n 4,574,900  \n (465,532) \n (539,194 \n\nEffect on exchange rate change on cash and cash equivalents \n 2,066  \n 6,510  \n (7,317)\n\nNet change in cash and cash equivalents \n 1,677,692  \n (551,975) \n 593,544 \n\n* *\n\n*Operating Activities*\n\n \n\nFor the year ended March\n31, 2026, the Company had net cash used operating activities of approximately $2.2 million was mainly attributable to (i) net loss before\nincome taxes after adjustment for depreciation, amortization of intangible assets, fixed assets written off and intangible assets written\noff of approximately $0.3 million, (ii) change in other payables and accrued liabilities of approximately $0.5 million, (iii) change in\ninventories of approximately $0.4 million, (iv) increase in deposits, prepayments and other receivables of approximately $1.1 million,\nand (v) decrease in account payable of approximately $0.2 million, partially offset by (i) decrease in account receivables of approximately\n$0.2 million, and (ii) change in net investment in sales-type lease of approximately $0.2 million.\n\n \n\nFor the year ended March\n31, 2025, the Company had net cash provided by operating activities of approximately $0.5 million attributable to (i) income before income\ntaxes after adjustment for depreciation and amortization of intangible assets of approximately $0.3 million, (ii) change in other payables\nand accrued liabilities of approximately $0.4 million, (iii) change in inventories of approximately $0.2 million, (iv) change in net investment\nin sales-type lease of approximately $0.1 million, and (v) increase in deposits, prepayments and other receivables of approximately $0.1\nmillion, partially offset by (i) increase in account receivables of approximately $0.4 million, and (ii) decrease in customer deposits\nof approximately $0.2 million.\n\n \n\nFor the year ended March\n31, 2024, the Company had net cash provided by operating activities of approximately $1.6 million attributable to (i) loss before income\ntaxes of approximately $48,000, (ii) change in customer deposits of approximately $1.2 million, and (iii) adjustment for depreciation\nof approximately $0.3 million, partially offset by (i) change in net investment in sales-type leases of approximately $0.2 million, and\n(ii) change in deposits, prepayments, and other receivables of approximately $0.1 million.\n\n \n\n*Investing Activities*\n\n \n\nFor the year ended March\n31, 2026, the Company had net cash used in investing activities of approximately $0.7 million which was mainly attributable to purchase\nof equipment.\n\n \n\nFor the year ended March\n31, 2025, the Company had net cash used in investing activities of approximately $0.6 million which was mainly attributable to purchase\nof equipment.\n\n \n\nFor the year ended March\n31, 2024, the Company had net cash used in investing activities of approximately $0.5 million which was attributable to purchase of equipment\nof approximately $0.5 million.\n\n* *\n\n57\n\n \n\n \n\n*Financing Activities*\n\n \n\nFor the year ended March\n31, 2026, the Company had net cash provided by financing activities of approximately $4.6 million mainly attributable to net proceeds\nfrom initial public offering of approximately $3.6 million, proceeds from issuance of ordinary shares $1.4 million, proceeds from bank\nborrowings of approximately $0.4 million. The cash inflow was offset by repayment of lease liabilities of approximately $0.6 million,\nrepayment of bank borrowings of $0.1 million and consideration paid for cancellation of warrants of $0.1 million.\n\n \n\nFor the year ended March\n31, 2025, the Company had net cash used in financing activities of approximately $0.5 million attributable to repayment of lease liabilities\nof approximately $0.6 million and payment of deferred offering costs of approximately $0.2 million. The cash outflow from financing activities\nwas partially offset by proceeds from lease financing of approximately $0.3 million.\n\n \n\nFor the year ended March\n31, 2024, the Company had net cash used in financing activities of approximately $0.5 million attributable to payment of deferred offering\ncosts of approximately $0.8 million and repayment of lease liabilities of approximately $0.5 million. The cash outflow from financing\nactivities was partially offset by funds injected by shareholders of approximately $0.7 million and proceeds from lease financing of approximately\n$0.4 million.\n\n \n\n*Bank Borrowing*\n\n \n\nWe had bank borrowing obtained\nfrom a financial institution in Singapore, which bear annual interest at a fixed rate of 7.75% and are repayable in five years. As of\nMarch 31, 2026, 2025 and 2024, we had bank borrowing of approximately $0.4, $0.1 million and $0.1 million, respectively.\n\n** **\n\n**Dividends Paid**\n\n \n\nNo dividend was declared\nor paid during the years ended March 31, 2026 and 2025.\n\n \n\nFor the year ended March\n31, 2024, iO3 Singapore paid dividends of approximately $293,000.\n\n** **\n\n**Off-Balance Sheet Arrangements**\n\n \n\nWe did not have any off-balance\nsheet arrangements as of March 31, 2026, 2025 and 2024.\n\n** **\n\n**Capital Expenditures**\n\n \n\nFor the years ended\nMarch 31, 2026, 2025 and 2024, we had capital expenditures of approximately $0.7, $0.6 million and $0.5 million, respectively. Our capital\nexpenditures were mainly used for the purchase of property, equipment and intangible assets.\n\n** **\n\n**Lease Liabilities**\n\n \n\nOur lease liabilities consist\nprimarily of finance lease liabilities and operating lease liabilities. We have entered into finance lease agreements to purchase the\nequipment used in our operation. We have also entered into operating lease agreements for office and warehouse. As of March 31, 2026,\n2025 and 2024, we had lease liability of approximately $1.2 million, $0.6 million and $0.7 million, respectively. The following table\nsets forth our lease liabilities as of March 31, 2026, 2025 and 2024:\n\n \n\n  \nAs of March 31, \n\n  \n2026  \n2025  \n2024 \n\n  \n(US$)  \n(US$)  \n(US$) \n\nCurrent \n   \n   \n  \n\nFinance lease liabilities \n 193,092  \n 308,125  \n 317,057 \n\nOperating lease liabilities \n 374,248  \n 115,945  \n 112,392 \n\n  \n 567,340  \n 424,070  \n 429,449 \n\nNon-current \n    \n    \n   \n\nFinance lease liabilities \n 89,420  \n 216,430  \n 283,878 \n\nOperating lease liabilities \n 545,144  \n -  \n 5,692 \n\n  \n 634,564  \n 216,430  \n 289,570 \n\nTotal lease liabilities \n 1,201,904  \n 640,500  \n 719,019 \n\n \n\n58\n\n \n\n \n\n**Net investment in sales-type leases**\n\n \n\nWe have entered into sales-type\nlease agreements with our customers for sales of equipment. The lease terms are three to five years. Net investment in sales-type\nleases represents the sum of the present value of the future contractual lease payments from our customers.\n\n \n\nAs of March 31, 2026, 2025\nand 2024, we had net investment in sales-type leases of approximately $0.3 million, $0.5 million and $0.6 million, respectively.\nThe following table sets forth our net investment in sales-type leases as of March 31, 2026, 2025 and 2024:\n\n \n\n  \nAs of March 31, \n\n  \n2026  \n2025  \n2024 \n\n  \n(US$)  \n(US$)  \n(US$) \n\nGross lease receivable \n 587,671  \n 794,126  \n 867,751 \n\nReceived cash \n (227,711) \n (267,877) \n (236,225)\n\nUnearned interest income \n (16,025) \n (28,369) \n (36,663)\n\n  \n 343,935  \n 497,880  \n 594,863 \n\n  \n    \n    \n   \n\nReported as: \n    \n    \n   \n\nCurrent net investment in sales-type lease \n 154,947  \n 203,381  \n 230,209 \n\nNon-current net investment in sales-type lease \n 188,988  \n 294,499  \n 364,654 \n\n  \n 343,935  \n 497,880  \n 594,863 \n\n \n\nOur net investment in sales-type\nleases decreased by approximately $0.2 million (30.9%) and $0.1 million (16.3%) as of March 31, 2026 and March 31, 2025\nrespectively compared to previous year, mainly due to the repayment of lease receivable from customers.\n\n \n\n**5.C. Research and Development, Patents and Licenses, etc.**\n\n** **\n\nSee “*Item 4. Information\non the Company—B. Business Overview*.”\n\n** **\n\n**5.D. Trend Information**\n\n \n\nOther than as disclosed elsewhere\nin this Annual Report, we are not aware of any trends, uncertainties, demand, commitments or events that are reasonably likely to have\na material effect on our net revenues and income from operations, profitability, liquidity, capital resources, or would cause reported\nfinancial information not to be indicative of future operation results or financial condition.\n\n \n\n**5.E. Critical Accounting Estimates**\n\n \n\nThe preparation of consolidated\nfinancial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported\namounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements\nand the reported amounts of revenues and expenses during the years presented. The accounting estimates that require our most significant\nand subjective judgments have an impact on revenue recognition, the determination of lease, fair values assessment in relating to financial\ninstruments and impairment of intangible and long-lived assets.\n\n \n\n59\n\n \n\n \n\nWe evaluate our estimates\nand judgments on an ongoing basis. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved\nin making those estimates, actual results could differ from these estimates. The critical accounting policies and estimates, assumptions\nand judgments that we believe have the most significant impact on our consolidated financial statements are described below.\n\n** **\n\n**Revenue Recognition**\n\n \n\nWe recognize revenue in accordance\nwith ASC 606 which follows a five-step model to recognize revenue consisting of identifying contracts with customers, the performance\nobligations promised in those contracts, determining and allocating the transaction price to the obligations, and recognizing revenue\nwhen the Company satisfies its obligations. Revenue is recognized when a customer obtains control of promised products and services. The\namount of revenue recognized reflects the consideration which we expect to be entitled to receive in exchange for these products and services.\n\n \n\nContracts with customers\nmay comprise multiple performance obligations and may have lease and/or non-lease components. The total contract consideration is allocated\nto the separate lease components and non-lease components, which represent distinct performance obligations, based on the relative estimated\nstandalone selling price in accordance with ASC 606, Revenue Recognition. We generally determine standalone selling prices based on observable\nprice of the goods and services. If the standalone selling price is not directly observable, it is estimated using appropriate data that\nreflects the amount of consideration that we expect to receive in exchange for transferring such goods or services to the customer (i.e.,\ncost plus expected margin). Assumptions and estimations have been made in estimating the relative selling price of each distinct performance\nobligation, and changes in judgements relating to these assumptions and estimates may impact revenue recognition.\n\n \n\nThe timing of revenue recognition\neach performance obligation depends on the nature of transaction and service provided.\n\n* *\n\n*Satellite connectivity solution*\n\n \n\nThe Company provide various\ntype of satellite connectivity solution to our customers:\n\n \n\n \n(a)\nSubscription\n\n \n\nMonthly subscription fee\nis charged to customers for the satellite connection service in relating to the airtime, bandwidth subscription plan and value-added service\nsubscribed. The revenue is recognized ratably over the period of the contract.\n\n \n\n \n(b)\nSales or lease of satellite network equipment and devices\n\n \n\nFor satellite network equipment\nand devices, the Company assesses at contract inception whether it meet the criteria of lease. If the criteria are met, the revenue is\nrecognized according to ASC 842, Leases (refer to the note in relating to lease below). The leased equipment is antenna and the connected\ndevices.\n\n \n\nIf the criteria are not met,\nthe revenue from the sales of satellite network equipment and devices are recognized upon the completion of installation and the transfer\nof control to the customer. The sales of satellite network equipment and devices including antenna, satellite phone, battery, wall charger,\nmodem etc. The equipment is shipped and installed at the destination specified by the customer. As such, shipping and handling services\nare part of the performance obligation to deliver the equipment to customers and therefore the fee charged to the customers are included\nas part of the revenue from sales of satellite network equipment and devices.\n\n* *\n\n*Digitalization and other solutions*\n\n \n\n \n(a)\nDigital platform service — The Company provides customers access to our JARVISS digital platform to obtain real time information for their daily operation management. Monthly subscription fee is charged to the customers based on the number of user access and number of service elements subscribed, e.g. V.SION, V.Sight, V.IoT, V,Secure, V.Mail etc. Revenue recognition commences ratably when control of the services is transferred to the customers, in an amount that reflects the consideration that the Company expects to receive in exchange for those services over the contractual term.\n\n \n\n60\n\n \n\n  \n\n \n(b)\nProvision of information technology (IT) support — Customer specifies their IT support requirement in a contract, which may include IT help desk service, technical support, installation of software in the devices as specified etc. Performance obligations promised in the contract are identified based on the goods or services that to be delivered to the customer. Revenue recognition commences when or as the Company satisfies a performance obligation and the control of the goods or services transferred to the customer.\n\n \n\n \n(c)\nProvision of shipboard support services — The Company supplies shipboard equipment and/or engineering service as per customer’s specification. The shipboard equipment includes equipment relating to navigation systems, automatic identification system, electronic chart display and information system, voyage data recorders etc. Equipment is installed at the destination specified by the customers. As such, shipping and handling services are part of the performance obligation to deliver the equipment to customers. Revenue, including the shipping and handling fee charged to customers, is recognized when or as the Company satisfies a performance obligation and the control of the goods or services transferred to the customer.\n\n** **\n\n**Leases**\n\n \n\nWe assess at contract inception\nwhether a contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of\ntime in exchange for consideration. The lease term corresponds to the non-cancellable period of each contract.\n\n \n\nLeases with an initial term\nof 12 months or less are not recorded on the consolidated balance sheet. We recognize lease expense or income for these leases on\na straight-line basis over the lease term.\n\n* *\n\n*Our Company as a lessor*\n\n \n\nOther than outright sales,\nwe also offer our customers to purchase the antenna and the connected devices through sales-type lease or operating lease arrangement.\n\n \n\nAt the commencement date,\nthe lease payments are fixed payments. Lease payments do not include variable lease payments from our customers that do not depend on\nan index or a rate.\n\n \n\nWe classify a lease as a\nsales-type lease when the lease meets any of the following criteria:\n\n \n\n \n(a)\nthe lease transfers ownership of the underlying asset to the lessee by the end of the lease term;\n\n \n\n \n(b)\nthe lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise;\n\n \n\n \n(c)\nthe lease term is for the major part of the remaining economic life of the underlying asset;\n\n \n\n \n(d)\nthe present value of the sum of the lease payments equals or exceeds substantially all of the fair value of the underlying asset; or\n\n \n\n \n(e)\nthe 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.\n\n \n\nNotwithstanding the above\ncriteria, leases are classified as operating leases if they have variable lease payments that do not depend on an index or rate and if\nclassifying the lease as a sales-type lease or a direct financing lease would result in the recognition of a selling loss.\n\n \n\n61\n\n \n\n  \n\nFor a sales-type lease, at\nthe lease commencement, net investment in the lease is recognized by the sum of the lease receivable and the unguaranteed residual asset.\nLease receivable is the present values of the sum of lease payments and the guaranteed residual asset. We recognize all revenue and costs\nassociated with the sales-type lease as revenue from leasing activities and cost of leasing activities upon delivery of the underlying\nasset to the customer. Interest income based on the implicit rate in the lease is recorded to finance income over time as customers are\ninvoiced on a monthly basis.\n\n \n\nAll other leases are accounted\nfor as operating leases wherein we recognize, at the commencement date, the lease payments as income in profit or loss over the lease\nterm on a straight-line basis and we recognize variable lease payments as income in profit or loss in the period in which the changes\nin facts and circumstances on which the variable lease payment are based occur.\n\n \n\nWe suspend recognition of\nsales-type lease revenue and operating lease revenue and place the account on non-accrual status when management determines that collection\nof future income is not probable (generally after 60 days past due). We resume recognition of revenue, and recognize previously suspended\nincome, when we consider collection of remaining amounts to be probable. We write off interest earned but uncollected prior to the receivables\nbeing placed on non-accrual status through allowance for credit losses when, in the judgment of management, we consider it to be uncollectible.\n\n* *\n\n*Our Company as a lessee*\n\n \n\nLeases are classified at\nthe inception date as either a finance lease or an operating lease. While we offer our customers to purchase the antenna and the connected\ndevices through lease arrangement, we also purchase some of our antenna through finance lease.\n\n \n\nAs the lessee, a lease is\na finance lease if any of the following conditions exist:\n\n \n\n \n(a)\nownership is transferred to the lessee by the end of the lease term;\n\n \n\n \n(b)\nthere is a bargain purchase option;\n\n \n\n \n(c)\nthe lease term is at least 75% of the asset’s estimated remaining economic life;\n\n \n\n \n(d)\nthe present value of the minimum lease payments at the beginning of the lease term is 90% or more of the fair value of the leased asset to the lessor at the inception date; or\n\n \n\n \n(e)\nthe leased asset is of such a specialized nature that it is expected to have no alternative use.\n\n \n\nFinance lease assets are\npresented separately on the consolidated balance sheet as finance lease right-of-use assets, and current and non-current portion of finance\nlease liabilities.\n\n \n\nAll other leases are accounted\nfor as operating leases wherein rental payments are expensed on a straight-line basis over the periods of their respective leases. We\nleased our office and warehouse through operating lease arrangements. Operating leases (with an initial term of more than 12 months)\nare included in operating lease right-of-use (“ROU”) assets, operating lease liabilities (current), and operating lease liabilities\n(non-current) in the consolidated balance sheet. ROU assets represent our right to use an underlying asset for the lease term and lease\nliabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized\nat commencement date based on the present value of lease payments over the lease term. We utilize a market-based approach to estimate\nthe incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.\nThe operating lease ROU asset also includes any lease prepayments, reduced by lease incentives and accrued rent. The lease terms may include\noptions to extend or terminate the lease when it is reasonably certain that we will exercise that option.\n\n \n\nThe accounting update also\nrequires that for finance leases, a lessee recognizes interest expense on the lease liability, separately from the amortization of the\nright-of-use asset in the statements of earnings, while for operating leases, such amounts should be recognized as a combined expense.\nIn addition, this accounting update requires expanded disclosures about the nature and terms of lease agreements.\n\n** **\n\n**Net Investment in Sales-type Lease**\n\n \n\nA net investment in finance\nlease is recognized if a lease meets specific criteria under the sales-type lease (refer to lease accounting policy above for more information)\nat its inception. Upon commencement of the lease, the book value of the equipment is de-recognized and a net investment in finance lease\nis recognized in our Consolidated Balance Sheets based on the present value of fixed payments under the contract and the residual value\nof the underlying asset, discounted at the rate implicit in the lease. We recognize the difference between the book value of the equipment\nand the net investment in the lease in equipment sales in our Consolidated Statement of Operations. Interest income on our net investment\nin finance leases is recognized over the lease term in a manner that produces a constant rate of return on the net investment in the lease.\n\n** **\n\n62\n\n \n\n \n\n**Intangible Assets**\n\n \n\nSoftware license consists\nof costs paid to third party for the right to use the licensed property and systems which was used as a base structure for JARVISS digital\nplatform. It was initially recognized at cost and subsequently carried at cost less accumulated amortization and accumulated impairment\nlosses, if any. Amortization is calculated on a straight-line basis over its expected useful lives of 7 years.\n\n \n\nWe are currently developing\na new maritime ERP software. Costs incurred in the preliminary stages of development are expensed as incurred. Once an application has\nreached the technological feasibility stage, internal and external costs, if direct and incremental, are capitalized until the software\nis substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. The Company\nalso capitalizes costs related to specific upgrades and enhancements when it is probable that the expenditures will result in additional\nfeatures and functionality. Maintenance costs are expensed as incurred. As of balance sheet date, the software is in progress of development\nand not amortized until it is ready for intended use.\n\n \n\nAn intangible asset is derecognized\non disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible\nasset, measured as the difference between the net disposal proceeds and the carrying amount of the intangible asset, are recognized in\nprofit or loss when the intangible asset is derecognized.\n\n \n\nThe intangible assets are\ntested annually for impairment.\n\n** **\n\n**Impairment of Long-lived Assets**\n\n \n\nWe evaluated our long-lived\nassets, including fixed assets, intangible assets and right of use assets, for impairment. Whenever events or changes in circumstances\n(such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount\nmay not be fully recoverable or that the useful life is shorter than the Company had originally estimated. When these events occur, we\nevaluate the impairment by comparing carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated\nfrom the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the\ncarrying value of the assets, we recognize an impairment loss based on the excess of the carrying value of the assets over the fair value\nof the assets.\n\n** **\n\n**Fair value measurement**\n\n \n\nWe apply ASC 820, Fair Value\nMeasurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value and\nexpands disclosures about fair value measurements. ASC 820 requires disclosures to be provided for fair value measurements.\n\n \n\nASC 820 establishes a three-tier\nfair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:\n\n \n\n \n●\nLevel 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. The fair values are determined based on prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities.\n\n \n\n \n●\nLevel 2 — Includes other inputs that are directly or indirectly observable in the marketplace. The fair values are determined using the project future cash flows models and discount the future amounts to a present value using market-based observable inputs.\n\n \n\n \n●\nLevel 3 — Unobservable inputs which are supported by little or no market activity. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.\n\n \n\nDuring the reporting periods,\nwe assessed the fair values of our financial instruments. The carrying values of the financial instruments included in current assets\nand liabilities approximate their fair values due to their short-term maturities. The carrying amount of long-term borrowings and account\nreceivables approximates its fair value due to the fact that the related interest rates approximate market rates for similar debt instruments\nof comparable maturities.\n\n \n\n63\n\n \n\n  \n\nFair value estimates are\nmade at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in\nnature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions\ncould significantly affect the estimates. Our significant accounting policies are fully described in the notes to the audited financial\nstatements (refer to Note 2 in our consolidated financial statements for the years ended March 31, 2026, 2025 and 2024) included elsewhere\nin this report."}