Company: KPEA
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006580
Chunk: 9

Company: Kun Peng International Ltd.
Filing Date: 2025-02-14
Form: 10-Q
Item: Item 2
Chunk 9
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 in equipment rental of $54,950. To further streamline our selling costs, we no longer engaged
external customer support services; however, we rented several pieces of health care equipment for promotional activities during the
three months ended December 31, 2024.

Other
income

Other
income primarily included bank interest income, government grants, investment income from cooperative enterprise, and foreign
exchange gain or loss. Our other income for the three months ended December 31, 2024 and 2023 was $47,079 and $32,190, respectively.
During the three months ended December 31, 2023, we recognized government grants from the City of Tianjin of $31,817. We recognized
a $36,525 gain on write-offs of long-term payables and a $14,486 gain on the disposal of an associated company for the three month period
ended December 31, 2024.

Income
tax expense

For
both the three month periods ended December 31, 2024 and 2023, the income tax expense of the Company was nil. Due to the net loss before
income tax, the Company recognized a full valuation recognition against its deferred tax assets, which mainly included net operating
loss carryforwards, as management believes it is more likely than not that the Company will not realize its net operating loss carryforwards
in the near future or before they expire.

43

Net
loss

As
a result of the factors discussed above, for the three months ended December 31, 2024 and 2023, our net loss amounted to $651,007 and
$534,806, respectively.

Foreign
currency translation adjustment

The
functional currency of our operations in the PRC is Chinese Yuan or Renminbi (“RMB”), while the functional currency of our
operation in Hong Kong is Hong Kong Dollars (“HKD”). The financial statements are translated to U.S. dollars using the period
end rates of exchange for assets and liabilities; equity is translated at historical exchange rates; and average rates of exchange (for
the period) are used for revenues and expenses and cash flows. Transaction gains and/or losses that arise from exchange rate fluctuations
on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. As
a result of foreign currency translation, which is a noncash adjustment, we reported a foreign currency translation gain of $281,895
and loss of $145,966 for