Techlution(ATGL) - 2025 Q4 - Annual Report

Corporate Structure and Governance - The company is classified as an "emerging growth company" until it meets certain criteria, including a market value of Class A Ordinary Shares exceeding $700 million or total annual gross revenues of $1.235 billion[153]. - The company currently relies on exemptions from certain corporate governance requirements due to being a "controlled company," with Mr. Tsang Chun Ho Anthony holding approximately 62.14% voting rights[155]. - The company does not maintain a directors' and officers' insurance policy, which may complicate future insurance procurement and increase costs[154]. - The company may choose to adopt BVI corporate governance practices in the future, which could afford less protection to shareholders compared to Nasdaq standards[167]. - The dual-class share structure allows Class B shareholders to have 20 votes per share, while Class A shareholders have only one vote per share, concentrating control[196]. - As of the report date, Mr. Tsang Chun Ho Anthony holds approximately 2.60% of Class A Ordinary Shares and 100% of Class B Ordinary Shares, representing 62.14% of voting rights[197]. Regulatory Environment and Compliance - The company operates in Hong Kong and is not currently subject to Mainland China's laws, but there are uncertainties regarding potential future regulatory impacts from the PRC government[168]. - Compliance with Mainland China's laws could result in significant operational changes, increased costs, and potential liabilities, adversely affecting the value of Class A Ordinary Shares[173]. - The evolving nature of PRC laws poses risks to the company's operations in Hong Kong, particularly in the IT Solutions Market[175]. - The Personal Information Protection Law took effect on November 1, 2021, impacting personal information processing activities in and outside Mainland China[177]. - Significant uncertainty exists regarding the interpretation and enforcement of PRC laws related to cybersecurity and data privacy, which could disrupt operations and affect financial conditions[178]. - The CSRC's Trial Administrative Measures for overseas securities offerings came into effect on March 31, 2023, requiring domestic companies to fulfill filing procedures[179]. - The Hong Kong legal system's uncertainties may limit legal protections for the company's Operating Subsidiaries, affecting business operations and contractual rights[180]. - Political risks in Hong Kong, including social unrest and changes in the legal environment, could adversely impact the company's financial conditions and operations[187]. - The U.S. has revoked Hong Kong's preferential trade status, which may impose similar tariffs and trade restrictions as those on Mainland China, potentially harming the company's business[189]. Financial Performance and Risks - Revenue is susceptible to social, economic, and political instability in Hong Kong, with adverse events potentially leading to significant impacts on business operations[190]. - The company recorded share compensation of HK$43,299,650 (approximately US$5,564,864) for the year ended September 30, 2025, due to the grant of shares under the 2024 Share Incentive Plan[199]. - The 2024 Share Incentive Plan allows for the issuance of up to 1,526,250 ordinary shares, with an automatic annual increase of 10% of total shares outstanding[199]. - The market price for Class A Ordinary Shares is expected to be volatile, influenced by factors such as financial projections and negative publicity[223]. - The trading of Class A Ordinary Shares may be thinly traded, potentially limiting the ability to sell shares at desired prices[229]. - Substantial sales of Class A Ordinary Shares in the public market could adversely affect the market price and impair future capital raising efforts[230]. - The company has broad discretion in the use of net proceeds from securities offerings, which may not necessarily improve operational results or share price[240]. - If classified as a Passive Foreign Investment Company (PFIC), U.S. investors may incur increased tax liabilities and burdensome reporting requirements[241]. - The company is subject to potential litigation and regulatory investigations, which could adversely impact its financial condition and operational results[247]. Currency and Interest Rate Risks - The company is subject to potential PRC government controls on foreign currency conversion, which may limit future foreign exchange transactions and dividend payments[191]. - The company has not used any derivative financial instruments to hedge foreign exchange risk, which could affect the value of investments due to currency fluctuations between the U.S. dollar and Hong Kong dollar[613]. - The Company is exposed to floating interest rate risk on cash deposits and borrowings, but the risks due to changes in interest rates are not material[616]. - The Company has not used any derivative financial instruments to manage interest rate risk exposure[616]. Customer Concentration - For the period from October 12, 2022 to September 30, 2023, the top three customers accounted for 35.01%, 32.50%, and 16.23% of the Company's total revenue, respectively[615]. - For the year ended September 30, 2024, the top three customers accounted for 21.04%, 18.67%, and 12.31% of the Company's total revenue, respectively[615]. - For the year ended September 30, 2025, the top three customers accounted for 31.53%, 26.51%, and 8.46% of the Company's total revenue, respectively[615]. Audit and Regulatory Compliance - The SEC and PCAOB have implemented stricter criteria for auditors of companies with significant operations in the PRC, which could impact the company's trading status[202]. - The HFCA Act requires foreign companies to certify they are not controlled by a foreign government if their auditors are not PCAOB inspected, with potential trading prohibitions for non-compliance[207]. - The company has engaged Audit Alliance LLP as its auditor, which is subject to PCAOB inspections, but risks remain if the PCAOB cannot fully inspect the auditors[214]. - The PCAOB has secured complete access to inspect and investigate registered public accounting firms in mainland China and Hong Kong as of December 15, 2022[217]. - The lack of PCAOB inspection could lead to the delisting of the company's securities from Nasdaq if the auditor is not compliant[217]. - The market price of the company's Class A Ordinary Shares may be adversely affected by uncertainties related to U.S. regulatory access to audit information[219]. Listing and Shareholder Status - The Class A Ordinary Shares are listed on the Nasdaq Capital Market under the symbol "ATGL," and failure to meet listing requirements could result in delisting, negatively impacting share price[237]. - The company has 900 million authorized Class A Ordinary Shares, with only 15,262,500 currently outstanding, allowing for potential dilution of existing shareholders[245]. - Substantial future sales of Class A Ordinary Shares, or the anticipation of such sales, could lead to a decline in share price, with 2 million shares registered for resale by existing shareholders[246]. - If the company ceases to qualify as a foreign private issuer, it would incur significant additional legal and accounting expenses[235]. - The company may lose its status as a "foreign private issuer" if more than 50% of its voting securities are held by U.S. holders, which would lead to substantial costs for compliance with U.S. regulations[236].