$1.51 -4.59 (-75.25%) As of 04:00 PM Eastern
Mission Consumer electronic devices have a limited life, but some rest idle with meaningful useful life left. We help make every minute of recycled consumer electronic devices' lives count with our expertise in quickly connecting their demands and supplies, thereby facilitating the circular economy in the consumer electronic devices business and reducing waste. Creative Global Technology Holdings Limited is a Cayman exempted company formed on January 11, 2023. In March 2023, CGT Holdings completed a reorganization of its corporate structure. CGT Holdings owns 100% equity interest in Creative Global Technology (BVI) Limited ("CGT BVI"), a BVI holding company formed on January 12, 2023. On March 9, 2023, CGT BVI became the 100% owner of CGTHK. CGTHK, the operating entity conducting substantially all of our business operations, was founded under the laws of Hong Kong in 2016. Since its formation, CGTHK has been engaged in the business of sourcing pre-owned consumer electronic devices (mainly smartphones, tablets, and laptops) from suppliers in the U.S., Japan, and some other developed countries, pursuant to the orders placed by wholesalers that will sell these goods in Southeast Asia and other areas. Although CGTHK has been expanding into the retail and leasing of consumer electronic devices business since 2021, the traditional wholesale of pre-owned electronic devices business still accounted for over 90% of CGTHK's revenue in 2023. CGT Holdings is not an operating company but is a Cayman Islands holding company with operations conducted by its wholly owned subsidiary, CGTHK, and this structure involves unique risks to investors. Investors in CGT Holdings' Ordinary Shares are not purchasing equity interests in CGT Holdings' Hong Kong operating entity but instead are purchasing equity interests in a Cayman Islands holding company. --- We conduct our business through CGTHK, a Hong Kong-based company sourcing and reselling recycled consumer electronic devices, currently mostly smartphones, tablets, and laptops. We embody the circular economy in our entire business process. Wholesale of Pre-Owned Consumer Electronic Devices Business Consumer electronic devices have a limited life, which can be further shortened by affluent consumers who retire devices still in working condition when new models come out. Developed economies such as the U.S. and Japan, where more affluent consumers can afford the latest models, have a large number of such retired consumer electronic devices collected through trade-in plans offered by network carriers or stores. Without an efficient channel to put these retired consumer electronic devices back into use, they will rest idle, and their remaining useful life wasted. In contrast, consumers in developing countries are less affluent but still desire for consumer electronic devices and the lifestyle offered thereby. Pre-owned devices offered at a reasonable price pose a solution. CGTHK helps expedite the trip of the retired consumer electronic devices from idleness back into use. CGTHK operates under a model providing capital liquidity and efficient inventory management. Wholesalers of consumer electronic devices in Southeast Asia and other areas first send their inquiries containing the number and specifications of the consumer electronic devices needed. Then CGTHK gets in touch with suppliers in the U.S., Japan, and some other developed countries. CGTHK will not enter into agreements with the clients or place orders with the suppliers unless it has secured sufficient goods meeting the requirements. As a result, CGTHK has been operating with a lean inventory. CGTHK's logistics arrangements and grading system facilitate the process. CGTHK uses air freight to ship most of its ordered pre-owned consumer electronic devices for time efficiency. The courier firms will ship the goods to CGTHK's storage space in Hong Kong and clear customs. The ordered consumer electronic devices usually arrive within three to seven business days after the placement of an order, depending on the origination place, number, and types of the goods ordered. CGTHK inspects the consumer electronic devices upon their arrival and sorts them into five grades, each priced differently. After completion of the inspection and grading process, and the removal of any user data remaining on the devices, CGTHK's clients will be informed to pick up the goods and arrange the shipment from CGTHK's storage space by themselves. It usually takes one to three weeks, but not more than one (1) month, between CGTHK's receipt of a client's inquiry and the ordered goods are ready for pick-up. CGTHK has curated a solid client base and supplier network over the years. The suppliers are willing to prioritize orders placed by CGTHK because it offers competitive payment terms and rarely cancels orders. The stable supply of pre-owned consumer electronic devices helps CGTHK build a good reputation with its clients, which in turn helps CGTHK's relationships with the suppliers. The synergy connecting upper and lower business streams is what distinguishes CGTHK from its competitors. By efficiently bridging the demands and supplies of recycled consumer electronic devices, CGTHK maintains a high turnover rate of its inventory, which meaningfully reduces the idle time of the recycled consumer electronic devices, promote the circular economy in the consumer electronic devices business, and helps with CGTHK's liquidity position. Selling pre-owned consumer electronic devices to wholesalers is the primary business of CGTHK. CGTHK fulfilled 64 and 132 orders in six months ended March 31, 2024 and 2023, respectively, generating revenue of US$20.50 million (99.2% of total revenue) and net income of US$1.53 million in six months ended March 31, 2024, and revenue of US$27.82 million (99.9% of total revenue) and net income of US$1.94 million in six months ended March 31, 2023. CGTHK fulfilled 200 and 120 orders in the years ended September 30, 2023 and 2022, respectively, generating revenue of US$50.2 million (99.8% of total revenue) and net income of US$3.17 million in year ended September 30, 2022, and revenue of US$27.65 million (99.2% of total revenue) and net income of US$3.35 million in year ended September 30, 2022. Built on the success, CGTHK has been exploring new business opportunities, including the retail business of recycled consumer electronic devices and the lease of consumer electronic devices. Retail Sales of Pre-Owned Consumer Electronic Devices In the year ended September 30, 2021, CGTHK launched its retail business, offering consumers in Hong Kong an access to recycled consumer electronic devices. CGTHK orders from suppliers pre-owned electronics that it believes most popular based on its own database. CGTHK displays the available products on its website. Local consumers in Hong Kong will inquire and place orders online, and come to CGTHK's storage space to inspect, pick up, and complete payment for the selected devices. CGTHK's retail business is still in the early stages. For the six months ended March 31, 2024, CGTHK purchased 182 pre-owned iPhones for the retail business. As of March 31, 2024, 61 units of these iPhones had been sold, generating revenue of US$36,759. For the year ended September 30, 2023, CGTHK purchased 133 pre-owned iPhones for the retail business. As of September 30, of 2023, over 80% of these iPhones had been sold, generating revenue of US$73,452. For the year ended September 30, 2022, CGTHK purchased 700 pre-owned iPhones for the retail business. As of September 30, of 2022, over 90% of these iPhones had been sold, generating revenue of US$212,555. CGTHK plans to increase the number and expand types of devices offered in the upcoming years. Consumer Electronic Device Rental Business The COVID-19 pandemic and governmental measures taken in response to it caused a surge in the demand for short-term consumer electronic devices rental. When the COVID-19 pandemic broke out, many employees started working remotely. Because they had little or no access to the devices located in offices, and the demands were temporary thus did not warrant purchases, leased consumer electronic devices became a solution. With the advantages in cost management empowered by pre-owned device souring capability, CGTHK started its local consumer electronic device rental business in 2022. Information about the consumer electronic devices available for rent is posted on CGTHK's website. A rental client will contact CGTHK for the availability, specifications, and prices of the devices. If the client intends to proceed, it will come to CGTHK's office and storage space to inspect, make payment and deposit for, and pick up the devices. Upon completion of the lease, the client is responsible for returning the leased devices. The deposit will be refunded upon CGTHK's receipt and confirmation of the returned devices. CGTHK's consumer electronic device rental business is currently focused on the lease of laptop computers. Because of CGTHK's relationship with suppliers of pre-owned consumer electronic devices and its inspection capabilities, CGTHK is able to obtain computers in good conditions at low prices, generating a profit margin. CGTHK's electronic device rental business is still in the experimental stage, and CGTHK seeks to expand the rental business by providing rental of other devices. Products - pre-owned consumer electronic devices The recycled consumer electronic devices offered by CGTHK include smartphones (iPhone, Samsung), tablets (iPad, Samsung Tablet), laptops (MacBook), and other accessories (smartwatches, headphones, etc.). For the six months ended March 31, 2024 and 2023, revenues generated from Apple products (iPhones, iPads, MacBooks, Apple Watches, etc.) accounted for over 99.8% and 99.91% of our revenue, respectively. Below is a chart listing the products CGTHK sold and the respective percentage of sales by value for each category of products for the six months ended March 31, 2024 and 2023, respectively. Six Month Ended March 31, 2024 2023 Smartphones 75.2 % 88.8 % Tablets 7.2 % 3.7 % Laptops and Others 17.6 % 7.5 % The core business process of CGTHK includes inspection and testing, grading, and pricing. CGT Holdings' principal executive offices are located at Unit 03, 22/F, Westin Centre, 26 Hung To Road, Kwun Tong, Kowloon, Hong Kong. CGT Holdings' registered office in the Cayman Islands is located at Conyers Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands. CGT Holdings' agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, New York.
