HONG KONG, Feb. 1, 2024 /PRNewswire/ — Alpha Technology Group Limited (the “Company” or “Alpha”)(NASDAQ: ATGL), a holding company incorporated in the British Virgin Islands that currently provides cloud-based IT solution services through its operating subsidiaries, Techlution Service Limited and Neural Sense Limited (collectively, “Operating Subsidiaries”), today reported its financial results for the fiscal year ended September 30, 2023.
Fiscal Year 2023 Financial Highlights:
Revenues increased by HK$4.27 million (approximately US$0.55 million), or 96.55%, from HK$4.42 million for the year ended September 30, 2022 to HK$8.69 million (approximately US$1.11 million) for the year ended September 30, 2023. Gross profit increased by HK$1.85 million (approximately US$0.24 million), or approximately 183.99%, from HK$1.00 million for the year ended September 30, 2022 to HK$2.85 (approximately US$0.36 million) for the year ended September 30, 2023. Gross profit margin increased from 22.67% for the year ended September 30, 2022 to 32.75% for the year ended September 30, 2023.
For the Years Ended September 30
(in HK$ millions; differences due
to rounding)
2023
2022
% Change
(differences due
to rounding,
and % were
extracted from
annual report)
Revenues
$
8.69
$
4.42
96.55 %
Cost of revenue
5.84
3.42
70.92 %
Gross profit
2.85
1.00
183.99 %
Gross profit margin
32.75 %
22.67 %
10.08 percentage
point
Selling, general, and administrative
expenses
7.23
3.72
94.47 %
Loss from operations
(6.75)
(2.71)
148.86 %
Net loss
(6.99)
(2.66)
162.33 %
Mr. Tsang Chun Ho Anthony, our executive director and president, and Mr. Leung Tsz Him, our Chief Executive Officer, commented, “Alpha recorded a significant increase in revenue of 96.55% to HK$8.69 million (approximately US$1.11 million) for the year ended September 30, 2023. This impressive growth was driven by (i) the increase in our revenue generated from system development services as a result of the completion of several projects for two carpark management companies in Hong Kong; (ii) the increase in revenue from NFT-related services resulting from our engagement of two NFT projects in 2023; and (iii) the increase in revenue from our technological support and maintenance service and other services resulting from provision of the maintenance services to a local non-government organization.”
“Alpha’s cost of revenue saw a significant annual increase of 70.92% to HK$5.84 million (approximately US$0.75 million) for the year ended September 30, 2023. This increase was primarily stemmed from higher staff costs and the increase in consultancy fee, which was in line with our business growth.”
“Despite the increased costs, Alpha still demonstrated it recorded an increased gross profit margin of 32.75% for the year ended September 30, 2023, compared to 22.67% in the previous year. This positive trend was primarily attributed to the higher gross profit margins associated with revenue from NFT-related services, which typically entailed higher profit margins compared to those of system development services and web and mobile application development services.”
“Alpha’s selling, general, and administrative expenses increased by 94.47% to HK$7.23 million (approximately US$0.92 million) for the year ended September 30, 2023, mainly attributable to (i) the increase in our staff costs and our Director’s remuneration of our Operating Subsidiaries and our Company; (ii) the increase in the audit fee; and (iii) the increase in amortization of our intangible assets. Consequently, Alpha incurred a net loss of HK$6.99 million (approximately US$0.89 million) for the year, reflecting the Company’s continued expansion on its operations and capturing growth opportunities. “Looking ahead, Alpha remains committed to optimizing its cost structure while exploring avenues for revenue growth. With our solid foundation and a focus on strategic execution, we believe Alpha is well-positioned to enhance its financial performance in the future.”
Fiscal Year 2023 Financial Results:
Revenues
Our revenue significantly increased by HK$4.27 million (approximately US$0.55 million), or 96.55%, from HK$4.42 million for the year ended September 30, 2022 to HK$8.69 million (approximately US$1.11 million) for the year ended September 30, 2023, primarily due to (i) the increase in our revenue generated from system development services, attributed to the completion of several projects including the development of parking management solution, pre-booking systems and other internal systems for two carpark management companies in Hong Kong in 2023; (ii) the increase in revenue from NFT-related services resulting from our engagement of two NFT projects in 2023, which involved creating an NFT marketplace, developing NFT-related artworks, building an NFT minting site, and preparing a proposal in relation to an NFT-related game; and (iii) the increase in revenue from our technological support and maintenance service and other services, primarily attributable to the provision of the maintenance services on the enrollment and payment system of a local non-government organization which is dedicated to the welfare services of children and youth in Hong Kong.
The following table set forth the breakdown of our revenue by services types for the years indicated:
For the Years Ended September 30,
(In HK$ millions; difference due
to rounding)
2023
2022
Variance
Amount
Amount
Amount
%
System development
$
5.97
$
3.60
$
2.37
65.83
%
Web and mobile application
development
–
0.39
(0.39)
(100)
%
AI-OCR services
0.08
0.07
0.01
14.29
%
Technological support and
maintenance service and
other services
1.05
0.36
0.69
191.67
%
NFT
1.59
–
1.59
100
%
Total
$
8.69
$
4.42
$
4.27
96.55
%
Cost of revenue
Our cost of revenue saw a significant increase of HK$2.42 million (approximately US$0.31 million), or 70.92%, from HK$3.42 million for the year ended September 30, 2022 to HK$5.84 million (approximately US$0.75 million) for the year ended September 30, 2023. This increase primarily stemmed from (i) the increase in staff costs as a result of our business growth, which required us to increase the headcount to support our business; and (ii) the increase in the consultancy fee which was charged by our Operating Subsidiaries’ independent suppliers for providing cloud architecture services to support our cloud-based IT solution services. Our management fee mainly represented the fee charged by Simplus IO Limited and ProAlgories Limited, which provided ad-hoc technical support services and staff to assist us on project execution. Since February 8, 2023, following our team’s expansion, our Operating Subsidiaries have ceased to procure the ad-hoc technical support services and human resources from these two related companies, resulting in a 56.01% decrease in our management fee for the year ended September 30, 2023. We anticipate that our management fee will continue to decrease in the future.
Gross profit and margin
Our gross profit for the years ended September 30, 2022 and 2023, amounted to HK$1.00 million and HK$2.85 million (approximately US$0.36 million), respectively, which was in line with our revenue growth as mentioned above. Our gross profit margin has also increased from 22.67% for the year ended September 30, 2022 to 32.75% for the year ended September 30, 2023, which was mainly attributable to the increase in our revenue from NFT-related services which generally entailed higher gross profit margins as compared to those of system development services and web and mobile application development services.
Selling, general and administrative expenses
Our selling, general and administrative expenses increased by HK$3.51 million (approximately US$0.45 million), or 94.47%, from HK$3.72 million for the year ended September 30, 2022 to HK$7.23 million (approximately US$0.92 million) for the year ended September 30, 2023 for the year ended September 30, 2023. The increase was primarily due to (i) the increase in staff costs as a result of the increase in number of our administrative and marketing staff to support our business expansion; (ii) an increase in director’s remuneration of our Operating Subsidiaries and our Company, primarily attributable to our appointments of two executive directors in February 2023 and an independent non-executive director in January 2023; (iii) the increase in audit fee due to an audit fee for a listed corporation charged by our auditor; and (iv) the increase in amortization of our intangible assets (i.e. our technical know-how and coding for our system development services and our AI-OCR services). However, such increase was partially offset by the decrease in consultancy fees, mainly attributable to the service fee for composing the codes and developing programs to facilitate our web and mobile application development services during the year ended September 30, 2022, which was not replicated during the year ended September 30, 2023. Additionally, we purchased a data scraper software for preliminary works for the system development projects in the fiscal year ended September 30, 2022, while no such cost was incurred during this year.
Net loss
As a result of the foregoing, net loss increased by HK$4.32 million (approximately US$0.55 million), or 162.33% from HK$2.66 million for the year ended September 30, 2022 to HK$6.99 million (approximately US$0.89 million) for the year ended September 30, 2023.
Recent developments
Initial public offering:
On November 2, 2023, Alpha completed its initial public offering and raised approximately US$7.00 million from the sale of 1,750,000 Ordinary Shares at a price of US$4 per share. Additionally, the underwriters exercised the over-allotment option to purchase an additional 262,500 Ordinary Shares at the public offering price of $4.00 per share. After deducting underwriting discounts and all offering expenses paid or payable by us, the net proceeds totaled around US$5.32 million.
About Alpha Technology Group Limited
Alpha is a holding company incorporated in the British Virgin Islands and currently conducts its business through its Operating Subsidiaries, Techlution Service Limited and Neural Sense Limited. Our Operating Subsidiaries are cloud-based IT solution service providers in Hong Kong that utilize analytic skills, programming skills, artificial intelligence technologies, and technological know-how to provide comprehensive solutions designed to optimize business performance, meet various industry-specific operational challenges and create new business opportunities. Though its Operating Subsidiaries, Alpha provides (i) system development services; (ii) web and mobile application development services; and (iii) artificial intelligence-powered optical character recognition (“AI-OCR”) services with a view to achieving digitalization of customers’ business and operations. Alpha also provides technological support, maintenance and NFT-related services such as creation of NFT artwork, marketplace and development of NFT-related games to customers. Our Operating Subsidiaries have a diversified customer base and our customers come from a variety of industries with different scales of operations, including consulting, real estate planning, carpark management and social services, etc. For more information, please visit https://alphatechnologys.com and https://techlution.io.
Forward-Looking Statement
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements contained in this press release other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “goal,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” and “ongoing,” or the negative of these terms, similar expressions or other comparable terminology intended to identify statements about the future. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company’s goals and strategies; the future business development, financial condition and results of operation, the expectations regarding demand for and market acceptance of our services; the ability to continue to develop new technologies and/or upgrade our existing technologies; and changes in general economic, business and industry conditions and other risks contained in the annual reports for the year ended September 30, 2023 filed by our Company with the SEC. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company’s filings with the SEC, which are available for review at www.sec.gov. Our Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.
For more information, please contact:
Company
Alpha Technology Group Limited
Investor Relations Department
Email: [email protected]
Investor Relations
WFS Investor Relations Inc.
Janice Wang, Managing Partner
Email: [email protected]
Phone: +86 13811768599
+1 628 283 9214
ALPHA TECHNOLOGY GROUP LIMITED
CONSOLIDATED BALANCE SHEETS
(Predecessor)
(Successor)
As of September 30,
2022
2023
HK$
HK$
US$
(Note)
Assets
Current assets:
Cash and cash equivalent
2,801,810
3,629,347
463,471
Accounts receivable, net
4,500
247,655
31,626
Rental deposit
119,548
119,548
15,266
Deferred cost of revenue
1,838,776
2,088,175
266,662
Deferred offering costs
—
18,758,367
2,395,460
Due from shareholders
—
100
13
Due from a related party
1,343,240
683,438
87,275
Total current assets
6,107,874
25,526,630
3,259,773
Property and equipment, net
33,511
55,117
7,038
Intangible assets
—
4,605,133
588,080
Goodwill
—
10,176,959
1,299,607
Right of use asset-finance lease
415,336
166,716
21,290
Total non-current assets
448,847
15,003,925
1,916,015
TOTAL ASSETS
6,556,721
40,530,555
5,175,788
Liabilities
Current liabilities:
Bank loans – current
681,046
562,331
71,810
Accrued expenses and other liabilities
657,704
11,886,957
1,517,975
Lease liability-finance lease
111,738
116,834
14,920
Deferred revenue
6,209,827
5,168,876
660,070
Advance from customers
325,000
842,433
107,579
Deferred tax liabilities
—
844,274
107,815
Tax payables
—
233,259
29,787
Due to directors
—
444,379
56,748
Due to related parties
1,065,569
—
—
Total current liabilities
9,050,884
20,099,343
2,566,704
Non-current liabilities
Bank loans – non-current
1,469,529
911,272
116,370
Lease liability-finance lease-non-current
259,897
143,057
18,268
Total non-current liabilities
1,729,426
1,054,329
134,638
TOTAL LIABILITIES
10,780,310
21,153,672
2,701,342
ALPHA TECHNOLOGY GROUP LIMITED
CONSOLIDATED BALANCE SHEETS — (Continued)
(Predecessor)
(Successor)
As of September 30,
2022
2023
HK$
HK$
US$
(Note)
Shareholders’ equity (deficit)
Ordinary shares
Alpha Technology Group Limited, US$0.0001 par value;
1,500,000,000 shares authorized; 13,250,000 shares issued as
of September 30, 2023
—
10,000,100
1,273,914
Neural Sense Limited, no par value; 10,000 shares authorized;
10,000 and 10,000 shares issued and outstanding as of
September 30, 2021 and 2022, respectively
10,000
—
—
Techlution Service Limited, HK$1 par value; 10,000 shares
authorized; 10,000 and 10,000 shares issued and outstanding
as of September 30, 2021 and 2022, respectively
10,000
—
—
Capital reserves
—
16,364,143
2,084,633
Accumulated other comprehensive income
—
—
8,190
Accumulated deficit
(4,243,589)
(6,987,360)
(892,291)
Total shareholders’ equity (deficit)
(4,223,589)
19,376,883
2,474,446
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
6,556,721
40,530,555
5,175,788
ALPHA TECHNOLOGY GROUP LIMITED
CONSOLIDATED STATEMENTS OF OPERATION AND COMPREHENSIVE LOSS
(Predecessor)
(Successor)
For the year
ended
September 30,
2021
For the year
ended
September 30,
2022
From
October 1,
2022 to
October 11,
2022
From
October 12,
2022 to
September 30,
2023
HK$
HK$
HK$
HK$
US$
(Note)
Revenues
4,055,406
4,421,208
—
8,689,749
1,109,689
Cost of revenue
(2,598,293)
(3,419,035)
—
(5,843,677)
(746,243)
Gross profit
1,457,113
1,002,173
—
2,846,072
363,446
Operating expenses:
Listing expenses
—
—
—
(2,373,596)
(303,110)
Selling, general and administrative
expenses
(2,382,351)
(3,716,233)
(173,188)
(7,053,591)
(900,749)
Total operating expenses
(2,382,351)
(3,716,233)
(173,188)
(9,427,187)
(1,203,859)
Loss from operations
(925,238)
(2,714,060)
(173,188)
(6,581,115)
(840,413)
Other income:
Other income, net
16,500
210,450
16,801
77,137
9,850
Interest expense, net
(47,74))
(86,621)
—
(74,587)
(9,525)
Total other income (loss), net
(31,243)
123,829
16,801
2,550
325
Loss before tax expense
(956,481)
(2,590,231)
(156,387)
(6,578,565)
(840,088)
Income tax expense
(24,554)
(73,323)
—
(252,408)
(32,233)
Net loss
(981,035)
(2,663,554)
(156,387)
(6,830,973)
(872,321)
Other comprehensive loss
Foreign currency translation gain, net
of taxes
—
—
—
—
8,190
Total comprehensive loss
(981,035)
(2,663,554)
(156,387)
(6,830,973)
(864,131)
Net loss per share attributable to
ordinary shareholders of the
Company
— Basic
(49)
(133)
(8)
(1)
—
— Diluted
—
—
—
(6)
—
Weighted average number of
ordinary shares used in computing
net loss per share
— Basic
20,000
20,000
20,000
13,250,000
—
— Diluted
—
—
—
1,169,808
—
ALPHA TECHNOLOGY GROUP LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Predecessor)
(Successor)
For the year
ended
September 30,
For the year
ended
September 30,
From
October
1,
2022 to
October
11,
From
October 12,
2022 to
September 30,
2021
2022
2022
2023
HK$
HK$
HK$
HK$
US$
(Note)
Operating activities
Net loss
(981,035)
(2,663,554)
(156,387)
(6,830,973)
(872,321)
Adjustments to reconcile net loss
to net cash operating activities:
Depreciation
450
6,429
—
9,904
1,265
Amortization of intangible
assets
—
—
—
511,681
65,342
Amortization of right-of-use
asset
43,720
131,159
—
248,620
31,749
Non cash lease expense
353,128
150,640
—
—
—
Loss on disposal on property
and equipment
—
—
—
16,923
2,161
Allowance for doubtful
account
—
313,362
—
—
—
Changes in operating assets and
liabilities:
Accounts receivable
(76,924)
69,138
(32,828)
(210,327)
(26,859)
Rental deposit
—
(119,548)
—
—
—
Accrued expenses and other
liabilities
139,031
409,762
(452,715)
11,456,057
1,462,949
Advance from customers
160,000
165,000
—
517,433
66,076
Lease liability
(426,513)
(188,717)
—
—
—
Deferred revenue
517,315
4,666,012
365,328
(1,406,279)
(179,583)
Income taxes payable
—
—
—
233,259
29,787
Deferred cost of revenue
(261,000)
(1,377,776)
—
(249,399)
(31,848)
Cash provided by (used in)
operating activities
(531,828)
1,561,907
(276,602)
4,296,899
548,718
Investing activities
Advance to a related party
(809,170)
—
—
—
—
Purchase of property and
equipment
(14,935)
(25,455)
—
(48,432)
(6,185)
Repayment from a related party
—
404,182
—
—
—
Payment to acquire right of use
assets-finance lease
(77,133)
—
—
—
—
Net cash used to acquire
subsidiaries in business
combinations
—
—
—
(10,000,000)
(1,277,008)
Cash provided by (used in)
investing activities
(901,238)
378,727
—
(10,048,432)
(1,283,193)
Financing activities
Proceeds from issue of shares
—
—
—
10,000,100
1,273,914
Capital reserves from shareholders
—
—
—
16,364,143
2,084,633
Repayment to bank loans
(38,679)
(431,746)
—
(676,972)
(86,450)
Proceeds from bank loans
2,304,000
—
—
—
—
Deferred offering costs
—
—
—
(18,758,367)
(2,395,459)
Advanced to related parties
—
(38,000)
—
(1,749,007)
(223,350)
Borrowings from a related party
492,700
—
—
—
—
Borrowings to shareholders
—
—
—
(100)
(13)
Repayment from a director
—
—
(18,966)
1,806,585
230,702
Principal payment for obligation
under finance leases
(34,578)
(106,869)
—
(111,744)
(14,270)
Cash (used in) provided by
financing activities
2,723,443
(576,615)
(18,966)
6,874,638
869,707
Net increase (decreased) in cash
1,290,377
1,364,019
(295,568)
1,123,105
135,232
Unrealized exchange difference
separately from cash flows from
financing activities
—
—
—
—
8,190
Cash as of beginning of the year/
period
147,414
1,437,791
2,801,810
2,506,242
320,049
Cash as of the end of the year/
period
1,437,791
2,801,810
2,506,242
3,629,347
463,471
Supplementary Cash Flows
Information
Cash paid for interest
55,189
105,854
—
74,587
9,525
Cash paid for taxes
24,554
73,323
—
19,149
2,445
Non-cash transaction
Lease liabilities arising from
obtaining right-of-use assets
513,082
—
—
—
—
Provision for income tax
—
—
—
270,466
34,539