Company: YSXT
Filing Date: 2025-07-31
Form Type: 20-F
Source: 0001410578-25-001545
Chunk: 46

Company: YSX Tech Co., Ltd
Filing Date: 2025-07-31
Form: 20-F
Item: Item 3
Chunk 46
---
cluded from operating our business, which would have a material adverse effect on our financial condition and results of operations.

Thes hareholders of the VIEs may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.

The equity interests of the VIEs are held by a number of shareholders. Their interests may differ from the interests of our Company as a whole. They may breach, or cause the VIEs to breach, or refuse to renew the existing VIE Agreements, which would have a material adverse effect on our ability to effectively control the VIEs and receive economic benefits from them through the VIE Agreements. Pursuant to the VIE Agreements, each VIE shall pay service fees equal to all of its net profit after tax payments to WFOE, while WFOE has the power to direct the activities of the VIEs, which can significantly impact the VIEs’ economic performance and has the right to receive substantially all of the economic benefits of the VIEs because the VIE Agreements are designed so that the operations of the VIEs are solely for the benefit of WFOE and, ultimately, the Company. As such, under U. S. GAAP, the Company is deemed to be the primary beneficiary of the VIEs to the extent that it consolidates the financial results of the VIEs in its consolidated statements under U. S. GAAP, for accounting purposes only.

The shareholders of the VIEs may be able to cause the VIE Agreements to be performed in a manner adverse to us by, among other things, failing to remit payments due under the VIE Agreements to us on a timely basis. We cannot assure you that when conflicts of interest arise, any or all of these shareholders will act in the best interests of our Company or such conflicts will be resolved in our favor.

Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and our Company, except that we could exercise our purchase option under the Share Disposal and Exclusive Option to Purchase Agreement with these shareholders to request them to transfer all of their equity interests in the VIEs to a PRC entity or individual designated by us, to the extent permitted by PRC laws. If we cannot resolve any conflict of interest or dispute between us and the shareholders of the VIEs, we would have to rely on legal proceedings, which could result in the disruption of our business and subject us to substantial uncertainty