Company: NTCL
Filing Date: 2025-02-18
Form Type: 20-F
Source: 0001410578-25-000153
Chunk: 21

Company: NetClass Technology Inc
Filing Date: 2025-02-18
Form: 20-F
Item: Item 5
Chunk 21
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Item 5. Operating and Financial Review and Prospects— B. Liquidity and Capital Resources— Holding Company Structure

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If the Company intends to distribute dividends, NetClass International, NetClass HK and NetClass Singapore will transfer the dividends to NetClass. In addition, NetClass Training, NetClass Education, NetClass Management and NetClass HR will transfer dividends to NetClass China, which then will transfer the dividends to WOFE, which then will transfer the dividends to NetClass HK in accordance with the laws and regulations of the PRC, and then NetClass HK will transfer the dividends to NetClass, and the dividends will be distributed from NetClass to all shareholders respectively in proportion to the shares they hold, regardless of whether the shareholders are U. S. investors or investors in other countries or regions.

Table of Contents

During the fiscal years ended September 30, 2024, 2023 and 2022, no transfers, dividends, or distributions were made to date between the holding company and its subsidiaries, or to investors. For the foreseeable future, the Company intends to use the earnings for research and development (“ R& D”), to develop new products and to expand its operations. As a result, we do not expect to pay any cash dividends. Also, as of the date of this annual report, no cash generated from one subsidiary is used to fund another subsidiary’s operations and we do not anticipate any difficulties or limitations on our ability to transfer cash between subsidiaries. We have not installed any cash management policies that dictate the amount of such funding.

Our PRC subsidiaries’ ability to distribute dividends is based upon their distributable earnings. Current PRC regulations permit our PRC subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of each of their registered capitals. These reserves are not distributable as cash dividends. For risks relating to the fund flows of our operations in China, see “ Item 3. Key Information - D. Risk Factors - Risks Relating to Doing Business in China - The Chinese government exerts substantial influence over the manner in which we must conduct our business activities. We are currently not required to obtain approval from Chinese authorities to list on U. S exchanges, however, if our subsidiaries or the holding