Company: YSXT
Filing Date: 2025-07-31
Form Type: 20-F
Source: 0001410578-25-001545
Chunk: 215

Company: YSX Tech Co., Ltd
Filing Date: 2025-07-31
Form: 20-F
Item: Item 19
Chunk 215
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 (or the “ YSX Operating Companies”), are controlled through contractual arrangements in lieu of direct equity ownership by the Company.
A VIE is an entity which has a total equity investment that is insufficient to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity or obligation to absorb the expected losses of the entity. The variable interest holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiary of, and must consolidate, the VIE, for accounting purposes, because it met the condition under U. S. GAAP to consolidate the VIE.
WFOE, is deemed to have a controlling financial interest in and be the primary beneficiary of the YSX Operating Companies for accounting purposes because it has both of the following characteristics:
The power to direct activities of the YSX Operating Companies that most significantly impact such entities’ economic performance, and
The right to receive benefits from, the YSX Operating Companies that could potentially be significant to such entities.
Pursuant to these contractual arrangements, the YSX Operating Companies shall pay service fees equal to all of their net profits after tax payments to WFOE. Such contractual arrangements are designed so that the operations of the YSX Operating Companies are solely for the benefit of WFOE and ultimately, the Company, and therefore the Company consolidates the YSX Operating Companies under U. S. GAAP.
Risks associated with the VIE structure
The Company believes that the contractual arrangements with the VIEs are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could:
●revoke the business and operating licenses of the Company’s PRC subsidiary and VIEs;
●discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiary and VIEs;
●limit the Company’s business expansion in China by way of entering into contractual arrangements;
●impose fines or other requirements with which the Company’s PRC subsidiary and VIEs may not be able to comply;
●require the Company or the Company’s PRC subsidiary and VIEs to restructure the relevant ownership structure or operations; or
●restrict or prohibit the Company’s