Company: KPEA
Filing Date: 2025-01-14
Form Type: 10-K
Source: 0001493152-25-002124
Chunk: 662

Company: Kun Peng International Ltd.
Filing Date: 2025-01-14
Form: 10-K
Item: Item 1A
Chunk 662
---
 may be costly and time-consuming and
would be subject to uncertainties in the PRC legal system.

Additionally,
the binding rights over the VIE’s subsidiaries in the contractual arrangements between King Eagle (China) and King Eagle (Tianjin)
are implicit and indirect and the company laws and regulations in the PRC governing the business operations of the VIE’s subsidiaries
are uncertain. Consequently, the contractual arrangements may not be as effective as direct ownership in ensuring our control over the
relevant portion of our business operations.

Any
failure by our VIE, our VIE’s subsidiaries, or our VIE’s equity holders to perform their obligations under the contractual
arrangements 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