Company: KPEA
Filing Date: 2025-01-14
Form Type: 10-K
Source: 0001493152-25-002124
Chunk: 491

Company: Kun Peng International Ltd.
Filing Date: 2025-01-14
Form: 10-K
Item: Item 1
Chunk 491
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ements would have a material adverse effect on our business, financial condition, and results of operations.

If
our VIE, our VIE’s subsidiaries, or our VIE’s equity holders fail to perform their respective obligations under the contractual
arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. Although we have entered
into an option agreement in relation to our variable interest entity, which provides that we may exercise an option to acquire, or nominate
a person to acquire, ownership of the equity in that entity or, in some cases, its assets, to the extent permitted by applicable PRC
laws, rules, and regulations, the exercise of the option is subject to the review and approval of the relevant PRC governmental authorities.
We have also entered into an equity interest pledge agreement with respect to the variable interest entity to secure certain obligations
of such VIE or its equity holders to us under the contractual arrangements. However, the enforcement of such agreement through arbitral
or judicial agencies may be costly and time-consuming and would be subject to uncertainties in the PRC legal system. Moreover, our remedies
under the equity pledge agreement are primarily intended to help us collect debts owed to us by the variable interest entity equity holders
under the contractual arrangements and may not help us in acquiring the assets or equity of the variable interest entity.

The
contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration or court proceedings
in China. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance
with PRC legal procedures. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States.
Moreover, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a variable interest
entity should be interpreted or enforced under PRC law, and as a result it may be difficult to predict how an arbitration panel or court
would view such contractual arrangements. As a result, uncertainties in the PRC legal system could limit our ability to enforce the contractual
arrangements. Under PRC law, if the losing parties fail to carry out the arbitration awards or court judgments within a prescribed time
limit, the prevailing parties may only enforce the arbitration awards or court judgments in PRC courts, which would require additional
expense and delay. In the event we are unable to enforce the contractual arrangements, we may not be able to exert effective control
over