Company: KPEA
Filing Date: 2025-01-14
Form Type: 10-K
Source: 0001493152-25-002124
Chunk: 112

Company: Kun Peng International Ltd.
Filing Date: 2025-01-14
Form: 10-K
Item: Item 3
Chunk 112
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 and 2023, respectively.

Restricted
net assets

Our
ability to pay dividends is primarily dependent on us receiving distributions of funds from its subsidiary or VIE. Relevant PRC statutory
laws and regulations permit payments of dividends by only out of its retained earnings, if any, as determined in accordance with PRC
accounting standards and regulations and after it has met the PRC requirements for appropriation to statutory reserves. Share capital
of the PRC subsidiary and VIE included in the Company’s consolidated net assets are also non-distributable for dividend purposes.
The results of operations reflected in the accompanying consolidated financial statements prepared in accordance with U.S. GAAP differ
from those reflected in the statutory financial statements of KP Tian Yu, the foreign-invested enterprise, King Eagle (China), King Eagle
(Tianjin), the VIE and its subsidiaries. The Company is required to set aside at least 10% of their after-tax profits each year, if any,
to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, the Company may allocate
a portion of its after-tax profits based on PRC accounting standards to enterprise expansion fund and staff bonus and welfare fund at
its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends.

    F-40

As
a result of the foregoing restrictions, KP Tian Yu, King Eagle (China) and King Eagle (Tianjin) are restricted in their ability to
transfer their net assets to the Company. Foreign exchange and other regulation in the PRC may further restrict these two entities
from transferring funds to the Company in the form of dividends, loans and advances. As of September 30, 2024, and 2023, the Company
had negative net assets which included common stock, additional paid-in capital, subscription receivable, accumulated deficit and
foreign exchange translation adjustment of its subsidiaries in BVI, Hong Kong and the PRC and the VIE that are included in the
Company’s consolidated financial statements. As of September 30, 2024, King Eagle (China), King Eagle (Tianjin) and KP Tian Yu
incurred negative assets in the amount of $1,327,000, $2,539,081 and $962, respectively. As of September 30, 2023, King Eagle
(China), King Eagle (Tianjin) and KP Tian Yu incurred negative assets in the amount of $1,080