Dividends and Shareholder Returns - For the fiscal year ended September 30, 2023, the company did not declare any dividends to shareholders[40]. - The company intends to retain all available funds and future earnings for business operations and expansion, with no dividends anticipated in the foreseeable future[39]. - The company has not paid dividends or made distributions to U.S. investors as of the date of the annual report[40]. - The company does not expect to pay dividends in the foreseeable future, which may affect shareholder returns[59]. - The company does not expect to pay dividends in the foreseeable future, relying instead on price appreciation for returns on investment[195]. - The company did not declare any dividends for the fiscal years ended September 30, 2023, 2024, and 2025[178]. Financial Performance and Projections - Revenues for the fiscal year ended September 30, 2023, were HK$163.69 million, with a projected increase to HK$182.16 million in 2024 and HK$192.39 million in 2025, representing a growth of 11.5% from 2023 to 2024 and 5.5% from 2024 to 2025[48]. - Gross profit decreased from HK$48.04 million in 2023 to HK$30.74 million in 2025, indicating a decline of 36.8% over the two-year period[48]. - Net income for 2023 was HK$9.80 million, which is expected to turn into a net loss of HK$18.48 million by 2025, reflecting a significant downturn in profitability[48]. - The company reported a net cash used in operating activities of HK$13.54 million in 2023, with a recovery to HK$14.10 million in 2024, followed by a further decline to HK$15.46 million in 2025[49]. - For the fiscal years ended September 30, 2023, 2024, and 2025, the company recorded revenues of HK$163.7 million, HK$182.2 million, and HK$192.4 million (US$24.7 million) respectively[176]. - The net income for the fiscal years ended September 30, 2023, 2024, and 2025 was HK$9.8 million, HK$10.7 million, and a net loss of HK$18.5 million (US$2.4 million) respectively[176]. Cash Management and Liquidity - The company has implemented an internal cash management policy to ensure financial control and liquidity management[42]. - Cash and cash equivalents increased from HK$16.40 million in 2023 to HK$52.34 million in 2024, before decreasing to HK$35.24 million in 2025, showing volatility in liquidity[49]. - Total assets rose from HK$114.44 million in 2023 to HK$157.08 million in 2024, but are projected to decline to HK$125.95 million in 2025, indicating potential challenges in asset management[48]. - Total liabilities increased slightly from HK$58.02 million in 2023 to HK$59.36 million in 2024, but are expected to decrease to HK$39.80 million in 2025, suggesting improved debt management[48]. - As of September 30, 2023, 2024, and 2025, the company had cash and restricted cash of HK$16.4 million, HK$52.3 million, and HK$35.2 million (US$4.5 million) held in financial institutions[168]. - The total unprotected cash and restricted cash held in banks amounted to HK$14.3 million, HK$50.0 million, and HK$30.4 million (US$3.9 million) as of September 30, 2023, 2024, and 2025 respectively[168]. Regulatory Environment and Compliance - The company is subject to the Holding Foreign Companies Accountable Act, which may impact trading of its Class A ordinary shares if audit reports are not inspected by the PCAOB for two consecutive years[44]. - The company’s auditor, Marcum Asia CPAs LLP, is not subject to the PCAOB's previous restrictions and is expected to continue regular inspections[45]. - The company is subject to new regulatory requirements from the PRC government regarding overseas listings, which may affect its operations and share value[93]. - The company is subject to data protection laws in Hong Kong, including the Personal Data (Privacy) Ordinance, which mandates lawful collection and processing of personal data[74]. - The recent amendments to the Personal Data (Privacy) Ordinance criminalize doxing and expand the enforcement powers of the Privacy Commissioner for Personal Data[76]. - The company is required to include a report on its internal control over financial reporting in its annual report for the fiscal year ended September 30, 2024, as mandated by the Sarbanes-Oxley Act[224]. Operational Risks and Challenges - The company has significant reliance on recurring customers, and any loss of business from these customers could adversely affect financial performance[56]. - The company is subject to various risks related to conducting operations in Hong Kong, including political and economic instability, which could impact profitability[57]. - The company relies entirely on the earnings and cash flow from its Hong Kong subsidiaries, which may face restrictions on paying dividends or transferring funds due to potential PRC government interventions[78]. - The company may face significant liabilities due to work safety risks and occurrences of accidents during its operations[143]. - The company may experience labor shortages or increases in labor costs, which could harm business operations and growth[121]. - The company may incur significant costs and harm its reputation due to claims arising from personal injuries or property damage during service provision[144]. Corporate Governance and Structure - The company’s corporate structure does not include a Variable Interest Entity (VIE) and does not intend to establish one[37]. - The company’s directors and officers collectively own 98.9% of the total voting power of the outstanding ordinary shares, which may significantly influence corporate decisions[192]. - The dual-class share structure allows Class B shares to have 50 votes per share compared to 1 vote per Class A share, concentrating control in the hands of a few[198]. - The company is incorporated under Cayman Islands law, which may limit shareholders' ability to protect their interests[209]. - Shareholders have no general rights under Cayman Islands law to inspect corporate records or requisition general meetings[211]. - The company's status as a "controlled company" under Nasdaq rules may exempt it from certain corporate governance requirements, potentially affecting shareholder protections[190]. Market and Competitive Landscape - The company faces significant competition in the security-related engineering services industry, which may lead to downward pricing pressures and reduced profit margins[182]. - The trading price of the company's Class A ordinary shares may be volatile, influenced by regulatory developments, operational results, and market conditions[186]. - Companies with public floats comparable to this company have experienced extreme volatility, which may affect the assessment of the Class A ordinary shares' value[201]. - If analysts downgrade the Class A ordinary shares or cease coverage, the market price and trading volume could decline[202]. Customer and Revenue Dependence - The company relies on contracts from recurring customers, and any decrease or loss of business from these customers may adversely affect its financial condition[99]. - For the fiscal years ended September 30, 2023, 2024, and 2025, the company had 351, 352, and 346 recurring customers, representing approximately 79.8%, 81.5%, and 80.7% of the total number of customers, respectively[99]. - Approximately 81.1%, 61.8%, and 84.2% of revenues from security-related engineering services were contributed by recurring customers for the fiscal years ended September 30, 2023, 2024, and 2025[99]. Internal Control and Reporting - The company identified material weaknesses in its internal control over financial reporting, including a lack of accounting staff knowledgeable in U.S. GAAP and SEC requirements[221]. - The company may incur increased costs to comply with existing and new regulations, which could adversely affect its business operations and financial condition[91]. - The company must maintain a minimum shareholders' equity of US$2,500,000 and a minimum of 300 public holders to comply with Nasdaq listing requirements[228]. - If the company fails to meet Nasdaq's continued listing requirements, it risks delisting, which could adversely affect trading and investor confidence[229].
SU Group(SUGP) - 2025 Q4 - Annual Report