Mega Fortune Co Ltd

Mega Fortune Company Limited, through its wholly owned subsidiary QBS System Limited, operates as an Internet of Things (IoT) solution provider in Hong Kong, specializing in delivering comprehensive IoT solutions and services across various industries including construction, retail, electronics, food and beverage, telecommuting, robotics, and logistics. The IoT market in Hong Kong and Asia is described as highly competitive and fragmented, with competition based on service quality, pricing, and continuous innovation. The company faces competition from vendors of IoT devices and products, cloud platform providers, hardware providers offering sensors, and IoT platforms from companies with existing relationships with hardware and software companies.

The company's competitive strengths include increased efficiency and productivity for clients through IoT sensors that monitor equipment performance and predict maintenance needs, cost savings by improving operational efficiency and optimizing resource utilization, and enhanced customer experiences through personalized, real-time services. The company has received awards including the Hong Kong RFID Award Winner 2013 and the Hong Kong ICT Award Silver Award 2013. The company's principal operating subsidiary, QBS System, has been in business since 2011, providing over 13 years of operational experience and technical know-how.

The company generates revenue through four primary service lines: IoT Integration Solution Services, Business Process Outsourcing (BPO) Services, IoT Support and Maintenance Services, and Trading of IoT-Related products. Revenue from IoT Integration Solutions services and BPO services is recognized over time using input methods based on costs incurred, while revenue from IoT Support and Maintenance services is also recognized over time. Trading sales revenue is recognized at a point in time upon physical delivery of products. The company typically collects 20% to 50% of contract sum upfront for IoT Integration Solution Services, with the remaining collected in installments according to predefined milestones. Customers are generally contractually required to make payment within 90 days following invoice issuance for service contracts, while trading sales require payment upon delivery with no credit period offered.

IoT Integration Solution Services generated revenue of $5,955,416 ¹ for the year ended September 30, 2025, representing 53.7% of total revenues, compared to $1,852,645 ² (55.7%) in 2024 and $1,859,927 ³ (57.3%) in 2023. This service helps clients build applications using available IoT devices, sensors, frameworks, and platforms, integrating hardware and software solutions with existing landscapes or implementing new IoT solutions. Applications include Enterprise IoT and Industrial IoT, focusing on technologies such as Low Carbon Property Management, Energy Management, Stock Management, GreenTech Management, and Hospitality industry Management. The gross profit margin for this segment was 52.4% ⁴ in 2025, compared to 62.1% ⁵ in 2024 and 40.0% ⁶ in 2023.

BPO Services generated revenue of $2,623,287 ⁷ for the year ended September 30, 2025, representing 23.7% of total revenues, compared to $1,028,838 ⁸ (30.9%) in 2024 and $772,954 ⁹ (23.8%) in 2023. This service provides end-to-end technology outsourcing to assist enterprises in launching IoT projects, creating new technology solutions, upscaling existing IoT applications, or integrating IoT solutions with legacy systems. IoT Support and Maintenance Services generated revenue of $2,453,816 ¹⁰ for the year ended September 30, 2025, representing 22.1% of total revenues, compared to $429,910 ¹¹ (12.9%) in 2024 and $460,396 ¹² (14.2%) in 2023. Trading Sales generated revenue of $53,029 ¹³ for the year ended September 30, 2025, representing 0.5% of total revenues, compared to $14,597 ¹⁴ (0.5%) in 2024 and $154,266 ¹⁵ (4.7%) in 2023.

The company completed its initial public offering on the NASDAQ on July 16, 2025, issuing 3,750,000 ¹⁶ ordinary shares at a price of US$4.00 ¹⁷ per share. On July 17, 2025, the initial public offering closed with gross proceeds totaling US$15.0 million ¹⁸, before deducting underwriting discounts and offering expenses. The ordinary shares began trading on July 16, 2025 on The Nasdaq Capital Market under the ticker symbol MGRT. The underwriter was granted a 45-day option to purchase up to an additional 562,500 ¹⁹ ordinary shares at the public offering price of US$4.00 ²⁰ per share to cover any over-allotment, but did not exercise this option. On October 23, 2024, Mega Fortune effected a 100 for 1 forward split/share subdivision, changing the par value of Ordinary Shares from US$0.0001 to US$0.000001, subdividing the authorized share capital from 100,000 shares to 10,000,000 ²¹ shares. On July 8, 2024, all 1,000 shares of QBS System Pty Ltd were transferred to Wong Ka Ki for a consideration of AUD10,000 ²².

Total revenues increased by 233.3% from US$3.3 million for the year ended September 30, 2024 to US$11.1 million for the year ended September 30, 2025. Net income increased by 345.4% from approximately US$0.4 million for the year ended September 30, 2024 to approximately US$1.8 million for the year ended September 30, 2025. Gross profit margin was 50.7% ²³ for the year ended September 30, 2025, compared to 53.9% ²⁴ for 2024 and 39.3% ²⁵ for 2023. The company recorded net cash outflow from operating activities of US$12.0 million ²⁶ for the year ended September 30, 2025, compared to US$0.1 million ²⁷ in 2024 and US$32,724 ²⁸ in 2023.

The company's growth strategy includes diversifying sales channels to reach a wider audience through e-commerce, partnerships, and different industry events, enhancing digital marketing efforts to improve online visibility, and expanding product offerings to meet evolving market needs. Primary targeted markets for expansion are America, Southeast Asia, and Australia. The company plans to expand its staff recruiting beyond Hong Kong to source technology specialists, programmers, researchers, and skilled technicians from America, where highly skilled workers are available at lower costs than in Hong Kong, with jobs that can be done remotely due to the predominantly digital nature of some projects.

The company has introduced new product and service lines focusing on Robotic Process Automation (RPA), Ultra-wideband (UWB), and large language model (LLM) technologies, which are centered on company operation automation and optimization for better cost saving and closer monitoring. The Hardware Security Modules (HSM) adoption fits the Hong Kong government's demands on cybersecurity. The company's research and development focuses on key cutting-edge technologies including Hardware Security Modules (HSM), Robotic Process Automation (RPA), and Ultra-wideband (UWB) to maintain competitive advantage. The company intends to broaden its product and service offerings and design and develop products and solutions covering more application scenarios for focus industries.

The company's gross profit margin decreased from 53.9% for the year ended September 30, 2024 to 50.7% for the year ended September 30, 2025. The gross profit margin of IoT Integration Solutions services significantly decreased to 52.4% for 2025 compared to 62.1% for 2024, driven by a shift in project mix toward larger and more complex integration projects requiring greater hardware procurement and more extensive deployment coordination. The gross profit margin of BPO services increased from 36.9% ²⁹ for 2024 to 43.5% ³⁰ for 2025, driven by better utilization of manpower resources and productivity gains from scale. The gross profit margin of IoT Support and Maintenance services decreased to 55.1% ³¹ for 2025 compared to 60.4% ³² for 2024, due to a higher proportion of premium support packages requiring additional coordination and technical oversight.

The company's principal executive office is located in Unit 327, 3/F, Building 16W, 16 Science Park West Avenue, Hong Kong Science Park, Shatin, New Territories, Hong Kong, with 3-year leases for approximately 1,069 square feet of office space. The leases will expire on June 16, 2027, and can be renewed upon mutual agreement with the landlord. The company plans to expand its staff recruiting beyond Hong Kong to source technology specialists from America, where highly skilled workers are available at lower costs. As of September 30, 2025, the company had 17 ³³ employees, compared to 11 ³⁴ in 2024 and 17 ³⁵ in 2023.

The company's research and development focuses on key cutting-edge technologies including Hardware Security Modules (HSM), Robotic Process Automation (RPA), and Ultra-wideband (UWB). The company has not historically incurred significant expenditures on in-house research and development activities, but does incur expenses in connection with technology related training, industry seminars, conferences, and similar professional development activities. The company does not own any material proprietary software, patents, or licenses, relying primarily on third party hardware and software technologies together with internal technical personnel and project execution capabilities.

The company completed its initial public offering on July 16, 2025, issuing 3,750,000 ordinary shares at US$4.00 per share, with gross proceeds totaling US$15.0 million before deducting underwriting discounts and offering expenses. Net proceeds from the issuance of common shares pursuant to the IPO were US$13,355,628 ³⁶ for the year ended September 30, 2025. The company had an outstanding principal of bank loans of US$634,266 ³⁷ as of September 30, 2025. The company does not have any present plan to declare or pay any dividends on its Ordinary Shares in the foreseeable future, intending to retain all available funds and future earnings for the operation and expansion of its business.

The company faces risks associated with the expansion of its business operations internationally beyond Hong Kong, including high costs of investment to establish a presence in new markets, competition in unfamiliar markets, foreign currency exchange rate fluctuations, regulatory differences, and challenges in managing international sales channels effectively. The company also faces risks from heightened tensions in international relations, particularly between the United States and China, which could reduce levels of trade, investments, technological exchanges, and other economic activities. The U.S. has imposed tariffs on Chinese goods reaching 145% ³⁸, with China responding with tariffs of 125% ³⁹ on U.S. imports, and a framework agreement in June 2025 established a 55% ⁴⁰ tariff on Chinese goods.

The company faces significant regulatory and political risks associated with its operations in Hong Kong, including the potential for the PRC government to extend oversight and control over offerings conducted overseas and/or foreign investment to Hong Kong-based issuers. The enactment of the Hong Kong National Security Law and the Hong Kong Autonomy Act could impact the company's operating subsidiary. The company also faces risks from the complex and evolving PRC laws and regulations, including those relating to data and cyberspace security and anti-monopoly concerns, which could be applied to operations in Hong Kong. The company is not currently subject to the New Overseas Listing Rules or CAC regulations, but faces uncertainty regarding future interpretations and enforcement.

The company faces significant customer concentration risk, with the top five largest customers accounting for approximately 70% ⁴¹ of total revenues in 2025, compared to 43% ⁴² in 2024 and 59% ⁴³ in 2023, and the largest customer representing 19% ⁴⁴ of total revenues in 2025. The company also faces high supplier concentration, with the top five suppliers accounting for 95.0% ⁴⁵ of cost of revenues in 2025, including Supplier A at 40.2% ⁴⁶ and Supplier B at 29.0% ⁴⁷. The company recorded negative cash flow from operating activities of $12.00 million in 2025, compared to $0.10 million in 2024 and $0.03 million in 2023, and may not achieve or sustain profitability. The company faces significant regulatory risks from the complex and evolving PRC laws and regulations that could be applied to Hong Kong operations, including potential cybersecurity reviews and overseas listing rules, which could materially affect the company's ability to conduct business or offer securities to investors. The company does not maintain any insurance policies covering business risks such as properties, receivables, goods in transit, and public liability, exposing it to potential uninsured losses.

Management's message emphasizes the company's vision to become the preferred choice for IoT solutions for enterprises and projects in the Asia-Pacific region, achieved through helping enterprises undergo digital transformation, launch IoT initiatives, upscale existing IoT applications, or integrate IoT solutions with legacy systems. The company recorded revenue of approximately $3.25 million ⁴⁸, $3.33 million ⁴⁹, and $11.09 million ⁵⁰ and profit of approximately $0.54 million ⁵¹, $0.40 million ⁵², and $1.79 million ⁵³ for the years ended September 30, 2023, 2024, and 2025, respectively. The strategic priorities emphasized for the period ahead include building on competitive strengths to expand the scale of business and further strengthen market position in Hong Kong, engaging in further overseas expansion, diversifying sales channels, enhancing digital marketing efforts, expanding product offerings, and leveraging strategic partnerships to gain access to new markets.