| Summary of Significant Accounting Policies | 2.
Summary of Significant Accounting Policies Basis
of Presentation and Consolidation The
consolidated financial statements include all accounts of the Company and its wholly owned subsidiaries (Collectively, the “Company”)
and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Consolidation The
consolidated financial statements include the financial statements of the Company and its wholly owned subsidiary. All intercompany transactions
and balances among the Company and its subsidiary have been eliminated upon consolidation. Risk
and Uncertainty Significant
Risks Currency
Risk The
Company’s operating activities are transacted in HKD. Foreign exchange risk arises from future commercial transactions, and recognized
assets and liabilities. The Company considers the foreign exchange risk in relation to transactions denominated in HKD with respect to
USD is not significant as HKD is pegged to USD. Concentration
Risk For the years ended March 31, 2024,
2023 and 2022, all of the Company’s assets were located in Hong Kong and all of the Company’s revenue were derived from its
subsidiaries located in Hong Kong. The Company has a concentration of its revenue and accounts receivable with specific customers. During the years ended March 31,
2024, 2023 and 2022, there were two, four and two customers generated income which accounted for over 10% of the total revenue generated
for that year, respectively. The details are as follows: Schedules
of Concentration Risks
For the years ended March 31,
2024 2023 2022
Customer A 62.2 % 15.7 % 8.3 %
Customer B 13.3 % 14.9 % 0 %
Customer C 6.2 % 42.1 % 23.6 %
Customer D 0.6 % 15.4 % 50.0 % As
of March 31, 2024 and 2023, accounts receivable due from these customers, and there were two and three accounts receivable which accounted
for over 10% of the total consolidated accounts receivable, respectively. The details are as follows:
As
of March 31
2024 2023
Customer E 47.6 % 0 %
Customer F 19.3 % 0 %
Customer C 9.2 % 11.4 %
Customer B 5.9 % 51.4 %
Customer D 4.8 % 1.0 %
Customer A 3.1 % 30.0 % During the years ended March 31,
2024, 2023 and 2022, there were zero, zero and zero supplier accounted for over 10% of the total purchases for that year, respectively. As
of March 31, 2024 and 2023, there were one and zero supplier which accounted for over 10% of the total consolidated accounts payable,
respectively. The details are as follows:
As
of March 31
2024 2023
Supplier A 12.0 % 0 % Credit
Risk The
Company adopted ASC 326. The Company estimates expected credit losses over the contractual period in which the Company is exposed to
credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. Assets
that potentially subject the Company to a significant concentration of credit risk primarily consist of life insurance policy, cash surrender value ,
The
exposure to credit risk, which will cause a financial loss to us due to failure to discharge an obligation by the counterparties, relates
primarily to our life insurance policy, cash surrender value ,
1,080,514 323,958 The
Company believes that there is no significant credit risk associated with cash, which was held by reputable financial institutions in
the jurisdictions where the Company and its subsidiaries are located. The
Company has adopted a credit policy of dealing with creditworthy counterparties to mitigate the credit risk from defaults. The credit
exposure is controlled by counterparty limits that are reviewed and approved by the senior management of the Company periodically. The
management team periodically evaluates the creditworthiness of the existing customers in determining an allowance for expected credit
loss primarily based on many factors, including the age of the balance, customer’s historical payment history, its current creditworthiness
and current or future economic trends. Interest
rate risk The
following table details the interest rate risk profile of the Company’s borrowings as of March 31, 2024 and 2023: Schedule
of Interest Rate Risk
2024 2023
As
of March 31
2024 2023
USD USD
Fixed
rate borrowings:
Finance lease liabilities, current 67,372 84,959
Finance lease liabilities, non-current 114,495 216,373
Bank borrowings, current - 51,905
Bank borrowings, non-current - -
Floating
rate borrowings:
Bank borrowings, current 3,818,453 3,771,728
Bank borrowings, non-current 3,033,780 1,498,485 Fluctuations
in market interest rates may negatively affect the Company’s financial condition and results of operations. The Company is exposed
to floating interest rate risk on and floating rate bank borrowing. The Company has not used any derivative financial instruments to
manage the interest risk exposure. At
March 31, 2024, and 2023, it is estimated that a general increase/ decrease of 100 basis points in interest rates, with all other variables
held constant, would have decreased/ increased the Company’s profit after tax 52,950 15,079 The
sensitivity analysis above indicates the instantaneous change in the Company’s profit after tax that would arise assuming that
the change in interest rates had occurred at the end of the reporting period and had been applied to re-measure those financial instruments
held by the Company which expose the Company to fair value interest rate risk at the end of the reporting period. In respect of the exposure
to cash flow interest rate risk arising from floating rate non-derivative instruments held by the Company at the end of the reporting
period, the impact on the group’s profit after tax is estimated as an annualized impact on interest expense or income of such a
change in interest rates. Liquidity
risk Liquidity
risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that
are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as
possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Company’s reputation. Typically,
the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 30 days, including the
servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted,
such as natural disasters. Labor
price risk Our
business requires a substantial number of personnel. Any failure to retain stable and dedicated labor by us may lead to disruption to
our business operations. Although we have not experienced any labor shortage to date, we have observed an overall tightening and increasingly
competitive labor market. We have experienced, and expect to continue to experience, increases in labor costs due to increases in salary,
social benefits and employee headcount. We compete with other companies in our industry and other labor-intensive industries for labor,
and we may not be able to offer competitive remuneration and benefits compared to them. If we are unable to manage and control our labor
costs, our business, financial condition and results of operations may be materially and adversely affected. Use
of Estimates The
preparation of the audited consolidated financial statements in conformity with accounting principles generally accepted in U.S. GAAP,
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the audited consolidated financial statements and the reported amounts of revenues and expenses
during the reporting periods. Management makes these estimates using the best information available when the calculations are made; however,
actual results could differ materially from those estimates. The
measurement of the expected credit loss allowance for financial assets measured at amortized cost is an area that requires the use of
significant assumptions about future economic conditions and credit behavior (e.g. the likelihood of customers defaulting and the resulting
losses). A number of significant judgements are also required in applying the accounting requirements for measuring expected credit loss,
such as considering debtors’ credit risk characteristics, historical settlement record, the days past due and forward-looking information. Foreign
currency translation and transaction and Convenience translation The
Company’s reporting currency is the United States dollars (“USD”). The Company’s operations are principally conducted
in Hong Kong where Hong Kong dollars (“HKD”) is the functional currency. Transactions
denominated in other than the functional currencies are re-measured into the functional currency of the entity at the exchange rates
prevailing on the transaction dates. Monetary assets and liabilities denominated in currencies other than the applicable functional currencies
are translated into the functional currency at the prevailing rates of exchange at the balance date. The resulting exchange differences
are reported in the consolidated statements of operations and comprehensive income. The
exchanges rates used for translation from HKD to USD was 7.8000 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, accounts receivable, deposits, life
insurance policy, cash surrender value, amount due from a related party and other current assets, accounts payable, finance lease liabilities
and other current liabilities, the amount represented bank overdrafts 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
Company considers the carrying amount of its financial assets and liabilities, which consist primarily of life insurance policy, cash surrender value ,
The
Company noted no transfers between levels during any of the periods presented. The Company did not have any instruments that were measured
at fair value on a recurring nor non-recurring basis as of March 31, 2024 and 2023. Cash
and cash equivalents Cash
and cash equivalents consist of petty cash on hand and cash held in banks, which are highly liquid and have original maturities of three
months or less and are unrestricted as to withdrawal or use. The Company maintains the bank accounts in Hong Kong. Cash balances in bank
accounts in Hong Kong are insured under the Deposit Protection Scheme introduced by the Hong Kong Government for a maximum amount of
HK$ 500,000 Accounts
Receivable, net Accounts
receivable represents an unconditional right to consideration arising from our performance under contracts with customers which include
retainage amount that is conditional only on the passage of time. The Company grant credit to customers, without collateral, under normal
payment terms (typically 17 to 60 days after invoicing). Generally, invoicing occurs within 30 days after the related works are performed.
The carrying value of such receivable, net of the expected credit loss and allowance for doubtful accounts, represents its estimated
realizable value. The Company expect to collect the outstanding balance of current accounts receivable, net within the next 12 months.
The Company has elected to use probability of default and loss given default methods to estimate allowance for credit loss. Measurement
of credit losses on financial instruments Effective
April 1, 2019, the Company adopted ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326) — Measurement of
Credit Losses on Financial Instruments.” This guidance replaced the “incurred
loss” impairment methodology with an approach based on “expected losses” to estimate credit losses on certain types
of financial instruments and requires consideration of a broader range of reasonable and supportable information to inform credit loss
estimates. The guidance requires financial assets to be presented at the net amount expected to be collected. The allowance for credit
losses is a valuation account that is deducted from the cost of the financial asset to present the net carrying value at the amount expected
to be collected on the financial asset. Deferred
Offering Costs Deferred
offering costs consist principally of all direct offering costs incurred by the Company, such as underwriting, legal, accounting, consulting,
printing, and other registration related costs in connection with the initial public Offering (“IPO”) of the Company’s
ordinary shares. Such costs are deferred until the closing of the offering, at which time the deferred costs are offset against the offering
proceeds. In the event the offering is unsuccessful or aborted, the costs will be expensed. Leases On
April 1, 2020, the Company adopted ASU 2016-02 Leases (Topic 842) (“Topic 842”) issued by the FASB. The
adoption of Topic 842 resulted in the presentation of right-of-use assets – finance lease and finance lease liabilities on the
consolidated balance sheet. The
Company has elected the package of practical expedients permitted which allows the Company not to reassess the following at adoption
date: (i) whether any expired or existing contracts are or contains a lease, (ii) the lease classification for any expired or existing
leases, and (iii) initial direct costs for any expired or existing leases (i.e. whether those costs qualify for capitalization under
ASU 2016-02). The Company also elected the short-term lease exemption for certain classes of underlying assets including office space
and machinery, with a lease term of 12 months or less. The
Company determines whether an arrangement is or contain a lease at inception. A lease for which substantially all the benefits and risks
incidental to ownership remain with the lessor is classified by the lessee as an operating lease. A
lease is classified as a finance lease when the lease meets any of the following criteria at lease commencement: (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. However, if the commencement date falls
at or near the end of the economic life of the underlying asset, this criterion shall not be used for purposes of classifying the lease. (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. (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. Finance
leases are included in right-of-use (“ROU”) assets – finance lease, finance lease liabilities, current, and finance
lease liabilities, non-current in the Company’s consolidated balance sheets. ROU
assets – finance lease represent the Company’s right to use an underlying asset for the lease term and finance lease liabilities
represent its obligation to make lease payments arising from the lease. The ROU assets – finance lease and finance lease liabilities
are recognized at lease commencement date based on the present value of lease payments over the lease term. At
the commencement date, the cost of the ROU assets – finance lease shall consist of all of the following: (a)
The amount of the initial measurement of the lease liability (b)
Any lease payments made to the lessor at or before the commencement date, minus any lease incentives received (c)
Any initial direct costs incurred by the lessee. The
Company uses the implicit rate based on the terms of the leases in determining the present value of lease payments. The ROU assets –
finance lease also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options
to extend or terminate the lease. Renewal options are considered within the ROU assets – finance lease and finance lease liabilities
when it is reasonably certain that the Company will exercise that option. For
operating leases with a term of one year or less, the Company has elected not to recognize a lease liability or ROU asset – operating
lease on its consolidated balance sheets. Instead, it recognizes the lease payments as expenses on a straight-line basis over the lease
term. Short-term lease costs are immaterial to its consolidated statements of operations and cash flows. Property
and Equipment, net Property
and Equipment is stated at cost, net of accumulated depreciation and impairment charge. Depreciation
is provided for on a straight-line basis over the estimated useful lives of the related assets as follows: Schedule
of Estimated Useful Life
Equipment
3.33
Motor
vehicle 3.33
Property 23.33 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 betterments 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. Impairment
of Long-Lived Assets The
Company reviews the impairment of its long-lived assets, whenever events or changes in circumstances indicate that the carrying amount
of an asset may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of
the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual
disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize
an impairment loss, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash
flows. There were no Life
insurance policy, cash surrender value Life
insurance policy-cash surrender value was life insurance purchase for Mr. Chi Ming Lam (position with a director and CEO of the Company)
and MSHK was as beneficiary. The insured amount of the contract (death benefit) was USD 1,000,000 165,493 160,891 165,493 36,627 24,309 16,920 155,751 165,493 28,746 21,568 16,920 Revenue
Recognition In
May 2014, the FASB issued Topic 606, “Revenue from Contracts with Customers”. This topic clarifies the principles for recognizing
revenue and develops a common revenue standard for U.S. GAAP. Simultaneously, this topic supersedes the revenue recognition requirements
in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. The
Company perform a majority of wet trade works under master construction agreements and other contracts that contain customer-specified
construction requirements. These agreements include discrete pricing for individual tasks. A contractual agreement exists when each party
involved approves and commits to the agreement, the rights of the parties and payment terms are identified, the agreement has commercial
substance, and collectability of consideration is probable. Construction services are performed for the sole benefit of our customers,
whereby the assets being created or maintained are controlled by the customer and the services we perform do not have alternative benefits
for us. Contract revenue is recognized as our obligations are satisfied over time consistent with our services are performed and customers
simultaneously receive and consume the benefits the Company provide. The
Company recognizes contract revenue over time, as performance obligations are satisfied, due to the continuous transfer of control to
the customer in accordance with ASC Topic 606, Revenue from Contracts with Customers. Upon adoption of ASC Topic 606, contracts which
include construction services are generally accounted for as a single deliverable (a single performance obligation) and are no longer
segmented between types of services. The Company has not bundled any goods or services that are not considered distinct. Output
measures such as construction works delivered are utilized to assess progress against specific contractual performance obligations for
the majority of services. The selection of the method to measure progress towards completion requires judgment and is based on the nature
of the services to be provided. The Company expects the reference to progress certificates issued by customers depicts the Company’s
performance in transferring control of goods or services promised to customers for individual projects, the Company satisfies the performance
obligation over time and therefore, the output method using construction works delivered best represents the measure of progress against
the performance obligations incorporated within the contractual agreements. This method captures the amount of works delivered pursuant
to contracts and is used only when performance does not produce significant amounts of work in process prior to complete satisfaction
of the performance obligation and the gross billing value of contracting work can be measured reliably. The
typical contract length of the Company entered is ranged from 12 months to 24 months. Contracted
but not yet recognized revenue was approximately
USD 43,951,727 44,751,559
as of March 31, 2024 and 2023, respectively. The nature of the Company’s
construction contracts gives rise to several types of variable consideration, including unpriced change orders and claims. The Company
mainly considers the change orders as the contract modification. And the Company accounted for the contract modification as if it were
a part of the existing contract as the remaining services are not distinct and, therefore, form part of a single performance obligation
that is partially satisfied at the date of the contract modification. Variable
consideration related to construction projects may be incurred due to amendments to the scope of work or remeasurement of quantities,
which can impact the transaction price and amount of revenue recognized. The final transaction price and revenue recorded may differ from
initial estimates contract sum based on these variable factors. The amount of variable consideration is included in the transaction price
only to the extent that it is highly probable that such an inclusion will not result in a significant revenue reversal in the future when
the uncertainty associated with the variable consideration is subsequently resolved. At the end of each reporting period, the Company
updates the estimated transaction price to represent faithfully the circumstances present at the end of the reporting period. The Company generally provides
limited warranties for work performed under its construction contracts. The warranty periods typically extend for a limited duration following
substantial completion of the Company’s work on the project. Historically, warranty claims have not resulted in material costs incurred
for which the Company was not compensated for by the customer. There were
no material amounts of unapproved change orders or claims recognized during the years ended March 31, 2024, 2023 and 2022. Contract
Assets and Contract Liabilities Contract
assets included two parts: revenue recognized in excess of amounts billed, and retainage. Certain of our contracts contain retention
provisions whereby a portion of the revenue earned is withheld from payment as a form of security until contractual provisions are satisfied.
Contract assets were assessed for impairment in accordance with ASC 326. Contract
liabilities consist of payment received from customers in excess of revenue recognized. Contract
assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. Government
Subsidies Government subsidies primarily
relate to one-off entitlement granted by the Hong Kong government pursuant to the Employment Support Scheme under the Anti-epidemic Fund.
The Company recognizes government subsidies as other income when they are received because they are not subject to any past or future
conditions. Government subsidies received and recognized as other income totaled nil 772,505 73,251 Cost
of Revenue The
Company’s cost of revenue is primarily comprised of the material costs, subcontracting costs, direct labor costs and overhead costs
that are directly attributable to services provided. General
and administrative expenses General
and administrative expenses mainly consist of administrative staff cost, motor vehicle expenses, office supplies and upkeep expenses,
legal and professional fees, change of credit loss allowances and other miscellaneous administrative expenses. Income
Taxes The
Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets
to the amount expected to be realized. The
provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for
consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This
interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred
income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. We
believe there were no uncertain tax positions as of March 31, 2024, and 2023. We do not expect that our assessment regarding unrecognized
tax positions will materially change over the next 12 months. We are not currently under examination by an income tax authority, nor
has been notified that an examination is contemplated. Earnings
Per Share The
Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”).
ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS are computed by dividing income
available to ordinary shareholders of the Company by the weighted average ordinary shares outstanding during the period. Diluted EPS
takes into account the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised and
converted into ordinary shares. Commitments
and Contingencies In
the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business,
which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred
and the amount of the assessment can be reasonably estimated. If
the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be
estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially
material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the
contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss
contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee
would be disclosed. Related
parties The
Company adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. Recently
Accounting Pronouncements The
Company is an “emerging growth company” (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012
(the “JOBS Act”). Under the JOBS Act, EGC can delay adopting new or revised accounting standards issued subsequent to the
enactment of the JOBS Act until such time as those standards apply to private companies. Other
accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material
impact on the consolidated financial statements upon adoption. The Company does not discuss recent standards that are not anticipated
to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures. |
