Mega Fortune Company Limited(MGRT) - 2025 Q4 - Annual Report

Financial Position - As of September 30, 2025, the company had cash deposits of US$0.8 million with reputable banks in Hong Kong, up from US$0.4 million in 2024[416]. - The company had outstanding bank loans of US$634,266 as of September 30, 2025, with a potential interest expense increase of US$6,343 per annum for a 1% rise in the Hong Kong Dollar Prime Rate[424]. - Total contractual obligations as of September 30, 2025, amounted to US$730,440, including US$661,746 for bank loan repayments[430]. Revenue and Customer Concentration - The top 5 customers accounted for 69.9% of total revenues in 2025, with Customer A contributing US$2,052,650 (18.5%) and Customer B contributing US$1,808,898 (16.3%)[418]. Supplier Concentration - The top 5 suppliers accounted for 95.0% of the cost of revenues in 2025, with Supplier A contributing US$2,019,295 (40.2%) and Supplier B contributing US$1,456,099 (29.0%)[419]. Accounts Receivable and Credit Losses - As of September 30, 2025, total accounts receivable was US$4,593,117, representing 73.7% of total accounts receivable[421]. - The allowance for expected credit losses increased to US$446,688 as of September 30, 2025, compared to US$212,252 in 2024[417]. - As of September 30, 2025, the allowance for expected credit losses against financial assets was US$446,688, compared to US$212,252 as of September 30, 2024, indicating a significant increase in the allowance[439]. - The company continues to evaluate the reasonableness of its allowance policy for expected credit losses and updates it as necessary[439]. Research and Development - The company has not incurred significant expenditures on in-house research and development but relies on third-party technologies for IoT solutions[427]. Financial Guarantees and Off-Balance Sheet Financing - There were no significant off-balance sheet financing arrangements or financial guarantees as of the reporting date[428]. Economic Environment - Inflation in Hong Kong has shown year-over-year increases of 1.0% for the years ended September 30, 2025, and 2024, and 0.9% for the years ended September 30, 2024, and 2023, but has not materially affected the company's operations[435]. - The company does not anticipate any material trends or uncertainties that could significantly affect its financial condition or operating results[434]. Accounting Policies and Estimates - The company prepares its consolidated financial statements in accordance with U.S. GAAP, which involves significant judgments and estimates affecting reported amounts of assets and liabilities[436]. - The critical accounting policies include revenue recognition, income taxes, and accounts receivable, which are subject to significant judgment and uncertainty[437]. - The recoverability of long-lived assets is assessed based on undiscounted future pre-tax cash flows expected to be generated by the asset[438]. - No impairment of long-lived assets was recognized as of September 30, 2025, and 2024, indicating stable asset valuations[438]. - The adjusted carrying amount of impaired assets becomes the new cost basis and is depreciated over the asset's remaining useful life[438]. - Recent accounting pronouncements are discussed in the summary of significant accounting policies, indicating ongoing compliance with evolving standards[440].