ITEM 1A. RISK FACTORS
As a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information in this Item. Nonetheless, we are voluntarily providing risk factors herein. You should consider carefully the following risk factors when evaluating our business and financial condition, together with all the other information in this Annual Report on Form 10-K, and in our other public filings with the SEC. The occurrence of any of the following risks could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this report and those we may make from time to time. In addition, these risks are not the only ones faced by the Company. Additional risks not summarized hereafter or not presently known to the Company or that the Company currently believes are immaterial may also impair business operations and financial results.
Risks Related to Our Business and Operations
We have shifted our primary business focus.
As of the date of this report, we were primarily engaged in the business of recycled consumer electronic devices. We source and purchase pre-owned consumer electronic devices such as smartphones and tablets from suppliers and sell the electronic devices to wholesalers that re-sell these products to their wholesale and/or retail customers in Southeast Asia, Middle East Asia, Europe and other regions. In the second quarter of 2025, we discontinued our previous business in cold-formed-steel business and sold all of the Company’s ownership in the subsidiaries through which the Company conducted its cold-formed-steel business.
Our experience in the business of recycled consumer electronic devices is limited. This strategic shift exposes us to uncertainties and risks associated with operating in a new industry. Our ability to execute our new business model, secure stable supply, maintain customer relationships, compete effectively and achieve profitability is uncertain. We also may face challenges in developing the operational infrastructure, internal controls and industry expertise required for this business. In addition, we may continue to incur transitional costs or potential liabilities associated with our discontinued operations. Any of these factors could materially and adversely affect our business, financial condition and results of operations.
Our future growth strategies may not be as effective as we expect.
We are actively seeking to expand our business into new industry sectors. As previously announced and disclosed in our filing with the SEC, we entered into a non-binding Memorandum of Understanding (MoU) with Megabyte Solutions Limited (“MEGABYTE”), a Web3 technology service provider. We plan to form a strategic partnership with MEGABYTE to jointly deploy the in-depth application of Web3 technology in the Company’s cross-border B2B marketplace platform under development. Additionally, in response to the supply chain and trade needs of B2B businesses, we and MEGABYTE plan to launch an innovative decentralized, blockchain-powered service model integrating hardware and software.
These initiatives remain in early stages, and there is no assurance that the partnership will be finalized, that the planned technologies will be successfully developed or commercialized, or that market acceptance will meet our expectations. Web3 and blockchain technologies are evolving rapidly and are subject to regulatory, operational and adoption risks. We may face challenges in securing required technical expertise, integrating new technologies into our platform, or achieving the anticipated synergies and economic benefits. If our growth strategies fail to generate the expected results, our business prospects, financial condition and results of operations could be materially and adversely affected.
We are operated primarily in Hong Kong.
As of the date of this report, we operate primarily in Hong Kong, and our business, financial condition and results of operations are subject to the economic, political, legal and regulatory environments of Hong Kong. Any adverse developments in these conditions (such as changes in trade policies, geopolitical tensions, regulatory requirements, data and cybersecurity laws, taxation rules, labor conditions, or market demand) could materially and adversely affect our operations.
We face concentration risks in our revenue as we rely on our major customers.
A significant portion of our revenue is generated from a limited number of our major customers. For the year ended September 30, 2025, two customers accounted for 77% of the Company’s total revenues. For the year ended September 30, 2024, four customers accounted for 90% of the Company’s total revenues. If any of these customers reduces its purchase volume, experiences financial difficulties, delays payments, or terminates its relationship with us, our revenue and cash flows could be materially and adversely affected. Our dependence on a small customer base also limits our ability to negotiate favorable pricing and terms. If we fail to diversify our customer base or replace lost customers in a timely manner, our business, financial condition and results of operations may be materially harmed.
We face concentration risks in our purchases as we rely on our major suppliers.
We depend on a limited number of major suppliers for the purchase of pre-owned electronic device products. For the year ended September 30, 2025, two suppliers accounted for 100% of the Company’s total purchases. For the year ended September 30, 2024, two suppliers accounted for 58% of the Company’s total purchases. Any disruption in these supplier relationships could materially affect our ability to source inventory and meet customer demand. Our reliance on a concentrated supplier base also exposes us to risks associated with supplier financial instability, operational disruptions, and competitive pressures. If we are unable to diversify our supplier base or secure alternative sources of supply on commercially reasonable terms, our business, financial condition and results of operations could be materially and adversely affected.
There is no assurance that the Company will be profitable.
There is no assurance that we will earn profits in the future, or that profitability will be sustained. There is no assurance that future revenues will be sufficient to generate the funds required to continue our business development and marketing activities. If we do not have sufficient capital to fund our operations, we may be required to reduce our sales and marketing efforts or forego certain business opportunities.
The Company may not have the ability to manage its growth.
The Company anticipates that significant expansion will be required to address potential growth in its customer base and market opportunities. The Company’s anticipated expansion is expected to place a significant strain on the Company’s management, operational, and financial resources. To manage any material growth of its operations and personnel, the Company may be required to improve existing operational and financial systems, procedures, and controls and to expand, train, and manage its employee base. There can be no assurance that the Company’s planned personnel, systems, procedures, and controls will be adequate to support the Company’s future operations, that management will be able to hire, train, retain, motivate, and manage required personnel, or that the Company’s management will be able to successfully identify, manage, and exploit existing and potential market opportunities. If the Company is unable to manage growth effectively, its business, prospects, financial condition, and results of operations may be materially adversely affected.
We rely on the leadership of our management team and the performance of highly skilled personnel.
The Company is, and will be, heavily dependent on the skill, acumen, and services of the management and other employees of the Company. Our future success depends on our continuing ability to attract, develop, motivate, and retain highly qualified and skilled employees. Qualified individuals are in high demand, and we may incur significant costs to attract them. In addition, the loss of any of our senior management or key employees could materially adversely affect our ability to execute our business plan, and we may not be able to find adequate replacements. During the financial year ended September 30, 2025, we experienced changes in senior management, including the replacement of our Chief Executive Officer and Chief Financial Officer. All of our officers and employees are at-will employees, which means they may terminate their employment relationship with us at any time, and their knowledge of our business and industry would be extremely difficult to replace. The loss of any of our senior management or key employees could materially adversely affect our ability to execute our business plan, and we may not be to find adequate replacements. We cannot ensure that we will be to retain the services of any members of our senior management or other key employees. If we do not in attracting well-qualified employees or retaining and motivating existing employees, our business could be .
We have incurred costs in our compliance measures as a public company.
As a public company, we are required to comply with extensive regulatory, reporting, corporate governance and internal control requirements. These obligations have resulted in increased legal, accounting, administrative and compliance costs, and we expect such costs to continue. We may also be required to dedicate significant management time and resources to maintain and enhance our compliance programs. If we fail to comply with applicable requirements or if our compliance efforts become more costly than anticipated, our business, financial condition and results of operations could be adversely affected.
Litigation is costly and time-consuming and could have a material adverse effect on our business, results of operations, and reputation.
The Company, as well as the Company’s directors and officers, may be subject to a variety of civil or other legal proceedings relating to the business affairs of companies with which they are, were or may be in the future affiliated, with or without merit. From time to time in the ordinary course of the Company’s business, we may become involved in various legal proceedings — including commercial, employment, and other litigation and claims — as well as governmental and other regulatory investigations and proceedings. Such matters can be time-consuming, divert management’s attention and resources, and cause us to incur significant expenses. Furthermore, because litigation is inherently unpredictable, the results of any such actions may have a material adverse effect on our business, operating results, or financial condition.
Even if the claims are without merit, the costs associated with defending these types of claims may be substantial, in terms of time, money, and management distraction. In particular, patent and other intellectual property litigation may be protracted and expensive, and the results are difficult to predict and may require us to stop offering certain features, purchase licenses, or modify our products and features while we develop non-infringing substitutes or may result in significant settlement costs.
The results of litigation and claims to which we may be subject cannot be predicted with certainty. Even if these matters do not result in litigation or are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business, results or operations, and reputation.
Risks Related to Our Financing Activities
We may need new or additional financing in the future to expand our business, and our inability to obtain capital on satisfactory terms or at all may have an adverse impact on our operations and our financial results.
We may need new or additional financing in the future to expand our business, refinance existing indebtedness, or make strategic acquisitions, and our inability to obtain capital on satisfactory terms or at all may have an adverse impact on our operations and our financial results. As we grow our business, we may have to incur significant capital expenditures. We may make capital investments to, among other things, build new or upgrade our existing facilities, purchase or lease new equipment, and enhance our production processes. If we are unable to access capital on satisfactory terms and conditions, we may not be able to expand our business or meet our payment requirements under our existing credit facilities. Our ability to obtain new or additional financing will depend on a variety of factors, many of which are beyond our control. We may not be able to obtain new or additional financing because we may have substantial debt, our current receivable and inventory balances may not support additional debt availability, or we may not have sufficient cash flows to service or repay our existing or future debt. In addition, depending on market conditions and our financial performance, equity financing may not be available on terms or at all. Moreover, if we raise additional funds through issuances of equity or convertible debt securities, our current stockholders could significant dilution, and any new equity securities we issue could have rights, preferences, and privileges to those of holders of our common stock. If we are to access capital on terms and conditions, this could have an impact on our business, results of operations, and financial condition.
Future issuances of our shares or other equity securities may result in significant dilution to our existing shareholders.
To raise additional capital, we have issued and may continue to issue additional shares of our common stock or securities convertible into or exercisable for our shares of common stock. Any such issuance would dilute the ownership interests of our existing shareholders and could adversely affect the market price of our securities. We cannot predict the timing, size or terms of future issuances, and shareholders may suffer significant and substantial dilution.
Our financing activities may negatively affect our cash flows and financial flexibility.
Our financing transactions may require us to incur expenses, pay interest or other financing costs, or allocate cash to service obligations. These payments may reduce funds available for operations, limit our financial flexibility, and increase our vulnerability to adverse business conditions. If our cash flows are insufficient to meet financing obligations, our business and results of operations could be harmed.
Frequent or unfavorable financing transactions may harm our reputation and investor confidence.
If we engage in repeated or sizable capital raising activities, particularly at discounts to market price, investors may perceive us as overly reliant on external financing. Such perception may adversely affect investor confidence, harm our reputation in the capital markets, and contribute to downward pressure on the trading price of our securities. Negative market perception could also make future financings more difficult or costly to complete.
We may not be able to access the capital markets when needed, which could adversely affect our operations.
Our ability to raise capital through public or private offerings of securities depends on market liquidity, our business and financial performance, our trading volume, regulatory developments and general economic conditions. Market volatility, declining stock price, or low investor demand may restrict our ability to obtain financing in a timely manner or on acceptable terms. If we cannot raise capital when required, we may be unable to execute our business plans, meet working capital needs or respond to competitive pressures.
Risks Relating to Ownership of Our Securities
The market price of our common stock may be volatile and could, following any offering or sale, decline significantly and rapidly.
The price at which our securities are offered or sold in any registered or exempt offering will be determined by negotiations between us and the applicable underwriter, placement agent or investor, and such price may not be indicative of the prices that will prevail in the open market following the offering. The market price of our common stock may decline below the offering price, and you may not be able to sell your shares at or above the price you paid, or at all. Following any such offering, the public price of our common stock in the secondary market will continue to be determined by private buy-and-sell transactions effected through broker-dealers and may fluctuate significantly in response to various factors, many of which are outside our control.
We may experience extreme stock price volatility unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for investors to assess the rapidly changing value of our common stock.
Recently, a number of publicly traded companies, particularly those with relatively small public floats, have experienced extreme stock price run-ups followed by rapid price declines and elevated volatility. We have been and may continue to be susceptible to significant stock price volatility, extreme price run-ups, lower trading volume and reduced liquidity than large-capitalization companies. Our common stock may be subject to rapid and substantial price volatility, low volumes of trades and wide bid-ask spreads. Such volatility, including any rapid price appreciation followed by decline, may be unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for investors to assess the value of our common stock.
In addition, if the trading volumes of our common stock are low, persons buying or selling in relatively small quantities may easily influence the price of our common stock. Low trading volume could cause the price of our common stock to fluctuate significantly, including large percentage changes in a single trading day. Holders of our common stock may not be able to readily liquidate their investment or may be forced to sell at depressed prices due to limited liquidity. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our common stock.
As a result of this volatility, investors may experience losses on their investment in our common stock. A decline in the market price of our common stock could adversely affect our ability to issue additional common stock or other securities and our ability to obtain additional financing in the future. No assurance can be given that an active or liquid market for our common stock will be sustained, and if an active market does not continue, holders of our common stock may be unable to readily sell their shares or may not be able to sell their common stock at all.
We may not be able to satisfy the listing requirements of Nasdaq to maintain a listing of our common stock.
As a company listed and publicly traded on Nasdaq, we must meet certain financial and liquidity criteria to maintain such listing status. If we violate the maintenance requirements for continued listing of our common stock, our common stock may be delisted. In addition, our board may determine that the cost of maintaining our listing on a national securities exchange outweighs the benefits of such listing. A delisting of our common stock from Nasdaq may materially impair our stockholders’ ability to buy and sell our common stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock. In addition, the delisting of our common stock could significantly impair our ability to raise capital in the future.
We may be subject to securities litigation, which is expensive and could divert our management’s attention.
The market price of our securities may be volatile, and in the past, companies that experienced volatility in the market price of their securities were subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns.
