Company: KPEA
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010699
Chunk: 28

Company: Kun Peng International Ltd.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 28
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 Therefore, the risk of bankruptcy at the institutions that the
Company maintains deposits has increased. In the event of bankruptcy, the Company is unlikely to reclaim its deposits in full since it
is unlikely to be classified as a secured creditor under PRC laws.

Risks
of variable interest entity structure

In
the opinion of management, (i) the corporate structure of the Company is in compliance with existing PRC laws and regulations; (ii) the
VIE Arrangements are valid and binding, and do not result in any violation of PRC laws or regulations currently in effect; and (iii) the
business operations of the foreign-invested enterprise and the VIE are in compliance with existing PRC laws and regulations in all material
respects.

However,
there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations. Accordingly,
the Company cannot be assured that PRC regulatory authorities will not ultimately take a contrary view to the foregoing opinion of its
management. If the current corporate structure of the Company or the VIE Arrangements is found to be in violation of any existing or future
PRC laws and regulations, the Company may be required to restructure its corporate structure and operations in the PRC to comply with
changing and new PRC laws and regulations. In the opinion of management, the likelihood of loss in respect of the Company’s current
corporate structure or the VIE Arrangements is remote based on current facts and circumstances.

Foreign
currency exchange risk

The
value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political
and economic conditions and the foreign exchange policy adopted by the PRC government. It is difficult to predict how market forces or
PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. There remains significant
international pressure on the PRC government to adopt a more flexible currency policy, which could result in greater fluctuation of the
RMB against the U.S. dollar. The Company is a holding company and it relies on dividends paid by the Company’s operating subsidiaries
in China for its cash needs. Any significant revaluation of the RMB may materially and adversely affect its liquidity and cash flows.
To the extent that the Company needs to convert U.S. dollars into RMB for its operations, appreciation of the RMB against the U.S. dollar
would have an