Company: KPEA
Filing Date: 2025-01-14
Form Type: 10-K
Source: 0001493152-25-002124
Chunk: 658

Company: Kun Peng International Ltd.
Filing Date: 2025-01-14
Form: 10-K
Item: Item 1A
Chunk 658
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 its terms,
subject to enforceability to applicable laws and the discretion of relevant government authorities in exercising their authority in connection
with the interpretation and implementation thereof. As a result of the contractual agreements, the Company is the primary beneficiary
of the VIE for accounting purposes, and the Company has consolidated the results of operations, financial position, and cash flows of
the VIE in its consolidated financial statements under U.S. GAAP. The contractual arrangements with the VIE provide us with a “controlling
financial interest” in the VIE by granting us: (i) the power to direct activities of the VIE that most significantly affect its
economic performance; and (ii) the right to receive economic benefits from the VIE.

52

However,
there are risks associated with this structure as the PRC has not yet ruled on its legality. As such, the VIE structure involves unique
risks to our investors in the Nevada holding company, including:

(i)
Our contractual arrangements may not be as effective in providing us with operational control, and shareholders of the VIE may fail to
perform their obligations under the contractual arrangements.

(ii)
We may incur substantial costs to enforce the terms of the arrangements with the VIE.

(iii)
The legality and enforceability of the contractual arrangements by and among our PRC subsidiaries and the VIE have not been tested in
a court of law in China.

(iv)
The equity holders, directors and executive officers of the VIE as well as our employees who execute other strategic initiatives may
have potential conflicts of interest with our company

(v)
There are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules
regarding the status of our Nevada holding company with respect to the contractual arrangements with the VIE.

(vi)
It is uncertain whether any new PRC laws or regulations relating to VIE structures will be adopted or, if adopted, what they would provide.

(vii)
If we or our VIE is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of
the required licenses, permits, registrations, or approvals, the relevant PRC regulatory authorities would have broad discretion to take
action in dealing with such violations or failures.

(viii)
If the PRC government finds that the agreements that establish the VIE structure for operating our business do not comply with PRC laws
and regulations, or if these regulations or their interpretations change in the future, we would be subject