Company: KPEA
Filing Date: 2025-01-14
Form Type: 10-K
Source: 0001493152-25-002124
Chunk: 486

Company: Kun Peng International Ltd.
Filing Date: 2025-01-14
Form: 10-K
Item: Item 1
Chunk 486
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 the imposition of any of these government
actions causes us to lose our right to direct the activities of our VIE or to otherwise separate from them and if we are not able to
restructure our ownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial
results of our VIE in our consolidated financial statements. Any of these or similar actions could significantly disrupt our business
operations or restrict us from conducting a substantial portion of our business operations, which could materially and adversely affect
our business, financial condition, and results of operations.

We
conduct substantially all of our operations in China through our PRC subsidiary, King Eagle (China) and our VIE, with which King Eagle
(China) maintains contractual arrangements. There are risks associated with this structure as the PRC has not yet ruled on its legality.

We
are not a Chinese operating company but rather a Nevada holding company with substantially all of our operations in the PRC conducted
by our PRC subsidiary, King Eagle (China), through contractual agreements with King Eagle (Tianjin), our VIE. Investors have not purchased
an equity interest in the VIE but have purchased equity interests in a holding company incorporated in the State of Nevada, and will
never directly hold equity interests in any of our subsidiaries or in our VIE in China.

A
series of contractual agreements, including the Consulting Service Agreement, the Business Operation Agreement, the Proxy Agreement,
the Equity Disposal Agreement, and the Equity Pledge Agreement, have been entered into with our VIE. We have been advised by our PRC
counsel that the ownership structure of our VIE in China does not violate any applicable and explicit PRC laws and regulations currently
in effect, and each of the contractual agreements governed by PRC law is valid, binding, and enforceable in accordance with 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